Yesterday I put together a new table of data to calculate what percentage of the YM-YWHA of Washington Heights & Inwood's income in the 1970s came from the government grants they received to provide social services to older adults. I wanted to know how dependent the Y was on this stream of funding, as compared to its annual allocation from the Federation of Jewish Philanthropies of New York (FJP) or to its revenue from membership dues and special activities fees. I was surprised to find that government grants made up an average of 57% percent of the Y's non-Federation income (Total Other Income, or TOI) between 1973-79.
I was surprised because I had long hypothesized that the Y benefitted from these government grants, because they made the Y less financially vulnerable to fluctuations in their annual allocation from FJP. Clearly, although the government funds balanced out the risk of a possible decrease in their FJP allocations in any given year, it did not do enough to diversify the Y's sources of income. On average, between 1973-79 one-third of the Y's total income depended on the government, one-third on FJP's allocation, and one-third on membership dues and fees. Government money may have buffered the Y in years when their FJP allocation decreased, but it too was subject to fluctuations and possible cuts.
These numbers helped me to recognize a great truth in life: any given solution may not solve all aspects of a problem, and often it can create new problems. While government money provided a measure of financial stability to the Y in the early 1970s, the Y suffered doubly in 1975 when the toxic market forces of hyperinflation, spiking energy prices, and New York City's fiscal crisis led to cuts in both its government and FJP funding. It's a valuable reminder that income diversification is essential for individuals, businesses, and voluntary/charitable organizations alike, and that leaders must consider (and plan for) the consequences of pursuing each new stream of income.