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Inside the financial struggles of Charlotte's YMCA

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The Johnston YMCA.

Years after many industries and businesses bounced back from the Coronavirus pandemic, the YMCA of Greater Charlotte is still struggling. Tax records show the Y’s total revenue was down more than 28% from 2019 to 2021, while membership today is down 25% since 2019. The organization this spring announced it’s selling its Johnston location in NoDa to a developer, citing in part the system’s losses.

Reporter Jodie Valade looked into the financial woes of one of the region's most prominent nonprofits for The Charlotte Observer, and she joins WFAE's Morning Edition host Marshall Terry to discuss.

Marshall Terry: The YMCA relies heavily on membership and gyms, of course, got hammered during the pandemic. So what's keeping people from signing up since then?

Jodie Valade: That is a great question, Marshall. And I think the simple answer is that people's habits changed. A few people I spoke with at the Y said that everybody has a Peloton now. I don't know about you, but I was one of those people. I quit my gym membership during the pandemic and I bought a stationary bike. It's not a Peloton. It's a little cheaper version. That's how I exercise at home now. A lot of people also either work from home or have some kind of hybrid schedule where they don't stop at the gym on the way to the office or on the way home. So that's what the YMCA is dealing with right now. People just aren't coming back and they don't know if they will.

Terry: Now, the Y got some aid during the pandemic, right?

Valade: They did get some pandemic aid. They got about $9.6 million in PPP loans, along with some other COVID-related grants. And I think a lot of people remember the big Mackenzie Scott donation. She's the billionaire philanthropist who gave $18 million to the Y in 2020, but the Y earmarked that money specifically to go to programs in Charlotte's corridors of opportunity, so places like Beatty's Ford Road and West End. So they couldn't use that money to help with staff salaries or upkeep of any of the facilities, which is where they needed it, honestly.

Terry: So the sale of the Johnston Y really highlighted the Y's financial struggles. How much is the Y getting for the sale and what would they have to do without the proceeds of that sale?

Valade: Well, I didn't find any record of the sale being finalized yet, but the YMCA has said they've reached an agreement with a developer and the land is valued at about $19.4 million. We don't know if that's the agreed upon price yet. A developer recently filed permits to build something called NoDa Village at that site, and it will include apartments. The proceeds will go to just keeping the Y running. The board chair, Charles Bowman, he told me that they had to delay a lot of maintenance on places like the Johnston Y during the pandemic when they had to cut down to bare bones just to stay afloat. So this money won't rescue them entirely, but it will help them for sure. You know, their total revenue went from $100 million in 2019 to just $72 million in 2021. And they're a nonprofit, so they're just trying to break even. But right now, they just have too many facilities for that amount of money that they're bringing in. And that's part of what led to this decision.

Terry: Now, is this something that just the YMCA of Greater Charlotte is facing or is it happening elsewhere as well?

Valade: I think to some extent it's happening everywhere. I saw a story recently that the downtown Dallas, Texas YMCA was closing, too. So other places are having to do this. But I think Charlotte is realizing that they had a bit of a unique combination with things that made it worse. You know, gyms in North Carolina were shut down for a relatively long time during the pandemic, and the Y here probably had too much of a reliance on membership funds for their revenue. So both of those factors combined to put them in a really bad place.

Terry: You also write that the leadership of Charlotte's Y has been unstable recently. Its president and CEO retired last month after only a year and a half on the job and the organization's longtime COO left last month as well. Were those departures related to the money problems?

Valade: Short answer, I would probably say yes. Unfortunately, the CEO, Stan Law, declined to speak to The Observer for this story, but he did talk to QCity Metro and he told them that his retirement was 100% stress related. He said he'd had three full nights of sleep in the last four months. So yeah, I would say that's related. And it does seem like the YMCA is just trying to bring in some new leadership to figure out how to turn things around here.

Terry: Well, what do they have to do to turn things around? I mean, is it time to rethink its business model?

Valade: That's exactly what the Y is doing right now. They're rethinking their heavy reliance on membership for revenue. I wrote in my story for The Observer that the board of directors met weekly at the start of this year to figure out how to diversify where their money's coming from. And they settled on four main areas to focus on — philanthropy, camping, programs and services and footprint. That means they're going to do things like reach out to more people who have connections to the Y to ask for donations, and they know they've always been really good at running their summer camp programs so they're going to look at ways to use the facilities year-round for things like retreats. They're evaluating every class and every program just to see what's working, what's not. What do they need to improve? And then footprint is the last thing they're looking at. And that means shrinking their physical footprint where they can. And so that's exactly what happened with the Johnston Law, unfortunately.

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Marshall came to WFAE after graduating from Appalachian State University, where he worked at the campus radio station and earned a degree in communication. Outside of radio, he loves listening to music and going to see bands - preferably in small, dingy clubs.