Morgan Stanley
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  • Apr 4, 2018

Pro Bono Advice Helps Steer Clearpool into Calmer Waters

New York charity Green Chimneys reached out for pro bono advice from Morgan Stanley to help it make Clearpool, its recent acquisition, self-sustaining.

Joe Whalen was up to his ears in spreadsheets when one of the board members of a neighboring nonprofit knocked on his office door at upstate New York charity, Green Chimneys.

“We knew him well. He was with Clearpool, a nonprofit running camps and nature study day trips for New York City kids, about a half hour’s drive away,” says Whalen. “He told me Clearpool was taking on water and he was asking Green Chimneys to bail them out.”

It was in the mid-2000s and Whalen, who was Green Chimneys’ Executive Director at the time, considered Clearpool a “classic test case” of a nonprofit built on passion, backed by a well-meaning posse of benefactors, but bereft of experience in handling the financial pitfalls of running a charity. Green Chimneys, a 70 year-old farm-school for children with emotional and behavioral challenges, has weathered many an unexpected loss of revenue for a vital service.

“As a nonprofit you have to constantly reinvent yourself, because the rug can be pulled from beneath you at any moment,” Whalen explains. “You are forever at the mercy of whatever a State government agency decides to do with its funding. It means regularly adjusting your size and programming to ensure you have enough cash flow from certain areas to cover programs that might suddenly be running at a loss.”

It also means nonprofits can’t afford to carry any significant net debt on their books.  Like the families they serve, nonprofits are often just one unexpected expense or drop in cash flow away from financial distress; the kind that can force a choice between paying the rent or paying the staff. “That’s why we need pro bono help from companies like Morgan Stanley, to support us when we are making mission-critical strategic decisions,” says Whalen. “Nonprofits support the families and companies like Morgan Stanley support the nonprofits.”

No Room for Mistakes

Green Chimneys took over Clearpool’s lush 400 acres in 2008, but three years later it was still trying to make the nonprofit a self-sustaining entity. An overhaul of its programming was in order, and with no room to make mistakes, Green Chimneys turned to Morgan Stanley’s annual pro bono Strategy Challenge for help.

“We were really at a point where we were thinking, is this something we can continue?” says Kristin Dionne, Director of Fund Development for Green Chimneys. “We needed professional strategic advice on whether our proposed program changes to Clearpool would make it self-sustaining. If you are a nonprofit you literally cannot afford to make a mistake.”

A team of four Morgan Stanley employees, paired up in the Strategy Challenge with Green Chimneys, drove 90 minutes north of Manhattan and delved into the intricacies of Clearpool’s programming mix.

The team spent 10 weeks making a cost-benefit analysis and proposed pricing structure for Clearpool’s four programs, which included a summer camp, an outdoor nature study program, a summer school facility and a much-needed “intensive day treatment” for kids coming out of hospitalization and needing to acclimate before returning to school.

Their proposal included changes to pricing and sizing of the services, so that three of the services made enough to pay for themselves as well as for intensive day treatment.

Yet, just months after adopting the plan, the State Government suddenly pulled the reimbursements it offered for one of the services, making it and the intensive day treatment unviable.

But all was not lost. Green Chimneys’ board — which includes two senior Morgan Stanley employees, Andrew Hershon, Global Head of Operations Risk and Control, as well as Richard Priore, Senior Vice President, Wealth Management — was able to reapply the Strategy Challenge team’s strategic analyses to pivot. “What the Morgan Stanley recommendation showed us was that we could consider using the summer camp cabins at Clearpool as school rooms during the school year,” says Dionne.

Green Chimneys decided to create a new revenue stream at Clearpool by expanding its school to its premises.  By 2014, Clearpool had already hit its five-year fiscal and growth goals. As is life at a nonprofit, Whalen says he wouldn’t be surprised if Clearpool went through a few more tweaks as time goes on. But for now, Green Chimneys has made good use of pro bono advice to keep Clearpool in calm waters.  

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