New York City group leads the way toward a more optimistic future for ASOs

ASO went from near bankruptcy to $26 million

Many AIDS service organizations (ASOs) and tax-funded HIV/AIDS prevention programs have struggled in recent years with budget cutbacks, new grant and oversight requirements, and program censorship — either overt or subtle.

While many HIV/AIDS advocates have been lobbying Congress and the White House for improvements in the funding situation, Housing Works Inc. of New York City is proving there is another solution that also can work effectively over the long term.

The nonprofit organization has revenues of more than $26 million per year, of which more than 75% is raised from money the organization and its businesses earn through retail sales, food catering, and health care clinics that accept Medicaid funding.

"In the 21st century, what you need are economically savvy folks who help you identify ways of creating resources that don’t carry all of the stipulations of funding guidelines and that provide you with access to unrestricted dollars," says Darrell P. Wheeler, PhD, MPH, ACSW, assistant professor at the Hunter College School of Social Work in New York City. Housing Works is a good model of this approach, he says.

The ASO was founded in 1991 by AIDS activists and initially provided leased housing to AIDS clients, says Andrew Coamey, chief financial officer and senior vice president for housing development and operations.

"We leased apartments in the community and subleased to our clients after renovating the building," he says. "The government in New York City gave us a per diem contract of $50 per day per client to pay the rent and as an arrangement for social services."

Housing Works now provides a variety of prevention, social assistance, job training, medical care, and other services.

"We look at various aspects of prevention programs that would help the community at large address issues surrounding HIV/AIDS," says Linney Smith, senior vice president for prevention and services. "Particularly, we look at prevention in terms of case management, counseling, and testing for HIV/hepatitis C and for general health care and outreach education," Smith says. "We provide services as community-based case management and are the largest in the state of New York."

Housing Works’ health care program is a one-stop shop, says Errol A. Chin-Loy, senior vice president for health services. "We have three facilities; two are located in Manhattan, and one is in East New York," he notes.

Each facility has a day treatment program for people with HIV/AIDS, primary care services, mental health services, and everything that goes with primary care, including subspecialties, Chin-Loy says.

For the first two years, the organization’s funding was almost entirely from the government, with individual donations accounting for only 2% to 3% of its budget, Coamey says.

Then in 1993, Housing Works opened its first thrift shop, which was successful and contributed to the bottom line, he explains.

However, Housing Works never lost sight of its activist roots and did not let its millions in New York City contracts stop its founders from protesting HIV funding cuts made by Mayor Rudolph Giuliani shortly after he was elected mayor in the late 1990s, Coamey says.

"By 1995 and 1996, we were the largest housing provider for New York City for people with AIDS," he says. Then Giuliani was elected, and he made significant cuts to AIDS services and health care services, Coamey adds.

"We quickly decided we didn’t like him and didn’t think he had the best action for people with AIDS, and so we staged a large vocal demonstration against him, joining with students, welfare moms, etc. in a massive demonstration that shut down rush-hour traffic and resulted in 500 people being arrested," he recalls.

According to Coamey, the Giuliani administration immediately targeted Housing Works by charging the group with financial improprieties that were later found to be groundless or trivial and by suspending its contracts.

Housing Works sought bankruptcy counsel, laid off employees, and went from a $12 million budget to a $6 million budget virtually overnight. The remaining employees took 10% pay cuts; the co-presidents worked without a salary for a year, and some of the executive managers, like Coamey, took 30% pay cuts, he says.

"We survived, and one of the reasons we survived is because we controlled our own destiny with the thrift stores and with our Medicaid programs," Coamey explains. "They couldn’t shut down our health care clinics or Medicaid contracts because we had applied to the state to provide those services."

Those two sources of revenue helped the organization grow out of its financial mess, and now Housing Works, with its $26 million per year in revenues, offers a wide range of services that mostly are funded through its own business success, he says.

At the time the Housing Works leaders chose to protest against the city’s mayor, other ASOs advised them to tone it down so they wouldn’t lose their contracts. Since activism was one of the founding principles of the organization, they refused to heed the warnings and went through hard times as a result.

"Our advocacy has hurt us, but it also has pushed us to be as self-sufficient as possible, so we don’t have to worry about biting the hand that feeds us," Coamey points out. "We want to be free to say what we want and not be beholden to anyone."

That’s a gutsy stand in the present political environment that has ASOs and others competing for smaller slices of the AIDS funding pie. In addition, some ASO leaders have expressed fears in recent months that they will be prohibited from criticizing President Bush or his policies six months prior to the election, based on new interpretations of election rules, or else they will lose their federal grants, Coamey notes.

Add this fear — whether it is warranted — to the very real problem of HIV-prevention grant money being earmarked for faith-based organizations and unproven abstinence-only education, then the financial bottom line is that many existing programs will be on the losing end of the competition for federal funding.

"The Centers for Disease Control and Prevention [CDC] has always required that when you put out materials for your program — for marketing or prevention — that you send it to them, but it was a rubber stamp," Coamey says. "Now those materials are being stridently reviewed for what they consider overly sexually explicit material, but you can’t do HIV prevention without talking about sex."

Relying on funds raised through business enterprises might be the only way to avoid political ups and downs, and more nonprofit organizations — if not ASOs — have begun to realize this, he notes.

"Social Enterprise Alliance is a national group of organizations that engage in social ventures," Coamey says. "So we do this very well, but we did not invent this; there were folks out there long before us doing thrift stores and great things."

For example, there’s a group in Wisconsin that runs a program for developmentally disabled adults. After one donation of a used car, the organization began to repair and sell used cars, building the enterprise until it became the second largest used car lot in Wisconsin, he continues.

"So people have seen the writing on the wall for a long time, and ASOs probably are the slowest to jump into it," Coamey says.

Housing Works managers offer tours to other ASO managers and will contract with groups to write business plans for launching a business enterprise, he adds.

Housing Works’ approach to assisting HIV/ AIDS clients harkens back to the settlement houses of the early 1900s, which were begun as charitable organizations to help immigrant families become independent, Wheeler says.

"These are models of absolute community organizing that draw on the understanding that people need more than behavioral intervention," he explains. "They need housing, economics, social, and emotional support; and the way to do that is you don’t run in from 9 to 5 and leave."

The difference between settlement houses of a century ago and groups such as Housing Works is the settlement houses were the pet projects of wealthy philanthropists and their wives who funded their work, while today’s model typically requires alternative funding, Wheeler says.

"Housing Works has seen ways of creating money in a capitalist society," he points out. "I think they are a fine example of getting their backs pushed to the wall in New York City and having to develop a strategy of survival."