strategic-management

164 MARY E. VRADELIS
EXHIBIT 5 Financial Overview
Goodwill Revenues
FY 2007–2008 FY 2006–2007
Retail Stores $20,920,001 $20,048,814
Education, Training & Employment $ 211,796 $ 174,597
Salvage/Recycling $ 3,012,885 $ 2,579,886
Corporate Services $ 1,069,851 $ 472,864
Public Support $ 2,843,483 $ 3,094,790
Total Revenue $28,058,016 $26,370,951
Goodwill Expenses
Education, Training & Employment
(includes collecting, processing, selling
donated goods) $18,853,894 $17,415,497
Fundraising $ 26,419 $ 189,646
Operating Expenses $ 5,090,583 $ 3,439,955
Occupancy $ 3,909,105 $ 3,691,013
Investment in Plant & Facilities $ 1,078,884 $ 1,020,244
Total Expenses $28,958,885* $25,756,355
Surplus (Deficit) ($900,869) $ 614,596
*87% of this figure equals direct services and 13% equals overhead.
Source: Company documents.
Job Development and Placement Services
The normal competitors for Goodwill programs were nonprofit and government-run
workforce development programs. Goodwill has adopted a “coopetition” strategy, however,
in which it has reached out to former competitors to develop collaborations that can
provide mutual and community benefits. Goodwill now partners with former competitors,
such as Jewish Vocational Services and Rubicon, in the new city-sponsored One-Stop
System to increase job training services and placements for San Francisco residents. The
greatest threat to the job placement industry is a national economy in crisis. It is likely
that many of the hotels, retail stores, and transport companies will be forced to reduce
staffing levels during the recession. According to the Wall Street Journal (March 6, 2009),
“U.S. nonfarm payrolls dropped 651,000 in February, almost right on expectations of a
652,000 loss. The unemployment rate rose to 8.1%, from 7.6% in January. The jobless
rate is the highest since 1983. The economy has now shed 4.4 million jobs since the recession
began in December 2007, with almost half of those losses occurring in the last three
months alone.” That high rate of increase has not been seen since World War II.
Conclusion
The recession has threatened Goodwill’s ability to raise money from individuals, private
and corporate foundations, and city and state governments. Without new funding, the necessary
investments in innovation, scale, and impact may need to be delayed. And as a nonprofit,
the organization doesn’t have access to equity markets. It has done what
streamlining it can to protect its core delivery of services. Deeper cuts could impact the
technology, marketing, fund-raising, and retail functions that are essential to its revenue
stream. Exhibit 6 reveals Goodwill’s historical revenue growth.
Alvarez-Rodriguez needs to act fast to close the projected budget gap. Her goal is to
raise $1 million in new donations. If Goodwill is not able to meet this goal soon, what steps
would she need to keep the organization solvent?