• December 17, 2014

Girl Scouts’ Financial and Leadership Woes Threaten 100-Year-Old Group

The charity faces a slip in donations, big losses in its pension plan, and fissures over its restructuring.

Financial and Leadership Woes Threaten the Girl Scouts 2

Nikki Kahn/The Washington Post/Getty Images

Girl Scouts groups nationwide are emerging from a year of celebrating the 100th anniversary of their movement, which attracted plaudits from the news media, celebrities, politicians, and others.

But now the charity faces the daunting financial and strategic task of figuring out how to ensure that it thrives for another century.

Girl Scouts has been losing young members steadily since 2003, donations have slipped since 2007, many local councils face financial difficulties, and emotions are still raw in the wake of mergers that shrank its 312 local councils into 112.

What’s more, some council officials fear that the entire organization’s finances could be threatened by a deal the national headquarters made to help staff members whose jobs were at risk because of the mergers. By expanding opportunities for workers to get generous early-retirement benefits, it added to the liabilities of the group’s pension plan, which now has a deficit of at least $340-million, according to a lawsuit filed by a local council.

“I really do worry that with all of the challenges we are experiencing, the organization may not survive,” says Suellen Nelles, executive director of the Farthest North Girl Scout Council, in Fairbanks, Alaska. “We may not be here in 10 years.”

Trying to Modernize

Girl Scouts of the USA is leading a major effort to modernize the group to appeal to today’s girls, backed by a $1-billion fundraising campaign.

Anna Maria Chávez, its chief executive since November 2011—and first Latina leader—is charismatic and media savvy. However, some employees have raised questions about her leadership skills and implored the board to intervene.

Others are more optimistic about the future but agree changes are needed. “Girls are busier, and our world is changing. It is harder to retain them than when I was a girl,” says Sue Dow, chief development officer at Girl Scouts of Montana and Wyoming, in Billings.

Effects of Mergers

A key issue facing Girl Scouts is whether the mergers of local councils—completed in 2010 and meant to achieve greater efficiencies—will help serve more girls and attract more charitable contributions.

The councils have relied heavily on selling Girl Scout cookies, with sales accounting for close to 80 percent of some councils’ revenues, but national headquarters wants donations from private sources to equal at least a third of their income.

The national office last year announced an organization-wide campaign to raise $1-billion by 2017—$100-million by the national office and $900-million by the local councils.

The money will help pay for a new advocacy campaign to promote leadership activities for girls both in the United States and abroad, for example, to encourage more of them to pursue science careers.

Deborah Taft, senior vice president for fund development, says Girl Scouts is working to develop a new culture of philanthropy, especially by tapping its estimated 58 million Girl Scout alumnae.

“This is a huge build,” she says. “It’s not to say Girl Scouts hasn’t done some fundraising over the years. But frankly, we’ve been bashful.”

Ms. Taft says she has boosted her staff, which was about eight or 10 fundraisers when she arrived in 2011, to 20 today—and plans to add five more people by the end of the year, partly to give local Girl Scout groups more fundraising help.

Tough Goals

However, the ambitious fundraising goals have proven difficult for some councils to meet.

For example, Girl Scouts of Montana and Wyoming last year managed to raise about $100,000, after setting a goal of $155,000.

Fundraising is led by Ms. Dow, who says she’s able to work only part-time on fundraising. “We have recognized the need to add more staff,” she says.

“We just haven’t found the budget to fund that.”

The Mountains to Midlands Council, in Greenville, S.C., was forced to scale back its plans to raise $15-million after losing several fundraisers. With a still-to-be-determined reduced goal, “we at least get moving,” says Kim Hutzell, the council’s chief executive.

Other fundraising efforts have been more successful, although sometimes difficult. Girl Scouts of Northeast Texas, in Dallas, raised $5.2-million last year, up from $1.2-million four years ago—but that came after it spent more than $500,000 on a donor database, additional staff members, and consulting help, says Jennifer Bartkowski, executive vice president.

The Girl Scout Council of the Nation’s Capital, now the second-largest in the nation, teamed up with Girl Scouts of the USA to plan a 100th-anniversary event on the National Mall that drew 250,000 people. Girl Scouts Rock the Mall, as the event was called, raised $2-million, more than double the council’s goal for the year.

Camp Closure

The fundraising challenges come as the councils are still adjusting to the mergers of recent years, which were for many a rough transition.

As one example, Girl Scouts of North East Ohio has been sued by local residents who want to preserve a camp it decided to close after five councils merged in 2007. In protest, some Girl Scouts and their families have even refused to sell cookies.

The national headquarters adopted the merger plan in 2006 as part of a broader blueprint for moving the Girl Scouts beyond its traditional focus on cookie sales, camps, and badges.

Since then, the youth group has developed a new leadership program, more flexible ways for girls and adult volunteers to become members, and a Spanish-language campaign to attract Hispanic girls and adults.

However, membership has continued to fall, according to Girl Scouts figures—from almost 2.9 million in 2003, before the new strategy, to about 2.3 million in 2012, a 20-percent drop.

Giving Locally

Fundraising dollars nationwide have also fallen, from $147.8-million in 2007 to $104-million in 2011 (the most recent figure available)—a decline Girl Scout officials attribute to the bad economy and the impact of the restructuring plan.

Other big household-name charities in recent years have undergone mergers and consolidations, or at least have considered them, but they have taken different approaches than Girl Scouts.

The American Red Cross, for example, has reduced the number of its local chapters over the last several years but has left more than 500 of them open. To free its chapters to provide disaster relief and other services, the charity created eight regional divisions that provide chapters with assistance in accounting, human resources, and other needs.

Boy Scouts of America has concentrated on providing financial help from its national headquarters to any of its nearly 300 local units that face financial struggles.

Those charities have both done more than Girl Scouts to preserve the local presence of their organizations.

“It might look smart to cut, but people want to give locally,” says Terry Axelrod, a Seattle fundraising consultant who has worked with all three organizations.

That was the thinking of leaders at the Girl Scouts of Manitou Council, in Sheboygan, Wis., who analyzed the plan to merge its small council with several others in the state.

“There are some economies of scale from a merger,” says Denise Schemenauer, the council’s chief executive. “But the smaller you can afford to be, the more you are able to serve girls and serve them well. And my board believes they’ll be more successful at raising money from people they know.”

The council refused to participate in the merger and sued Girl Scouts of the USA in federal court to prevent it. It lost that bid but won on appeal in 2011.

Paying for Pensions

Not all the mergers have caused problems. Sharon Gleason, director of development at the Washington, D.C. council, which absorbed members from a West Virginia council, says its merger went smoothly.

But, more than two years after the mergers, some councils still don’t feel good about them, particularly those now responsible for covering pension liabilities for 1,850 employees who were added to the Girl Scouts pension plan at the time of the consolidation.

Many pension plans are suffering because of the low interest rates that were introduced to help heal the bad economy. But the Girl Scouts council in Nashville said in a lawsuit that the charity’s national headquarters exacerbated the plan’s problems by offering extra financial incentives to people who opted to take early retirement as a way to soften the blow of merger-related layoffs.

Ms. Nelles, the Alaska Girl Scout official, and other council executives who have participated in conference calls about the pension issue with national headquarters, say that its deficit has now ballooned to more than $400-million, and councils are being asked to set aside a growing percentage of their payroll to cover the losses.

Officials at Girls Scouts headquarters declined to comment, but the organization has filed a motion to dismiss the lawsuit.

Like Zappos.com

In an effort to improve relations with the local organizations, Ms. Chávez is leading a project to make the national office, now staffed by 336 people, more responsive to its various “customers”­—the councils, scouts, and adult volunteers.

More than 2,000 employees nationwide are working with girls and adults on a plan to create a “customer-centric” operation like that of the online shoe company Zappos.com, which entails creating new positions like chief customer officer and chief strategy officer. Ms. Chávez says she also hired a chief information officer, the first one in about a decade, to help develop a nationwide technology plan.

Meanwhile, supporters of the Girl Scouts are hoping all of the adjustments make a difference. “We are building the plane as we fly it,“ says Ms. Bartowski of the Dallas council. “As a movement, we are at a tipping point.”


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