UOR switches retail plans
by Seth Hemmelgarn
A San Francisco nonprofit that's provided dwindling payouts to beneficiaries over the years is set to move into a swanky Financial district mall, despite the fact that it just dumped its costly Castro Street shop and hadn't previously announced plans for another permanent storefront.
Under One Roof, which was created in 1991, has said that after the agency paid for operating expenses, all the money shoppers spent on everything from books to shot glasses went to the store's community partners. But in recent years, the store has spent most of its money on rent and other expenses, and community partners receive only a sliver of what they used to.
Now, the organization is set to move into the Crocker Galleria in April. A ribbon cutting at the new location is scheduled for Friday, March 1.
Last October, Under One Roof announced a strategy of relying on temporary stores and other ideas designed to increase money going to partners. At a community meeting, nothing was said about opening another store.
These developments at the nonprofit have prompted the head of one longtime partner agency to suggest it may be time for Under One Roof to shut down.
John Cunningham, executive director of the National AIDS Memorial Grove, expressed appreciation to UOR's staff and board, but said, "Like any organization, there comes a time to realize that perhaps your work and your effectiveness has come to an end."
The Bay Area Reporter had scheduled an interview with board Chair Tony Hart and member Jennifer Kutz for this story, but the day before the appointment, Kutz sent an email that said, "[W]e're going to pass on an interview at this time." She didn't offer an explanation.
Other AIDS service organization leaders expressed disappointment with the change in plans.
"I had thought their new business plan was to cease retail operations and focus on special shopping events and other fundraisers," AIDS Emergency Fund Executive Director Mike Smith said. "I'm surprised that they've chosen to open a new retail location, especially one that's downtown and not in the Castro."
He added, "They seem to be choosing the potential visibility of tourists over their most loyal customers who live in the Castro."
A drain on finances
After Under One Roof moved to 518A Castro Street in 2008, the annual rent went from $85,000 to more than $200,000. A former board member helped with those costs, but the space became a money pit. The agency announced last year it would close the shop early in 2013, and did so January 31.
In recent years, UOR has distributed about $40,000 a year to about two-dozen partners, down considerably from what the shop had shared in its peak years. (Beneficiaries aren't required to do anything, but are asked to promote UOR's work.)
"We just hope by moving in this direction where we're not so hampered by these heavy costs we can actually help [beneficiaries] even more," Hart said in an interview in October.
But the agency recently announced it's moving into the space at Crocker Galleria, the glass-domed, three-level pavilion at 50 Post Street that opened in 1982 as a home to luxury retailers. Under One Roof's new store will officially open April 1.
The nonprofit hasn't shared how much it's paying for the Crocker space, but a letter to supporters that Hart sent January 29 says the mall is offering the location at "a fraction" of what the nonprofit was paying in the Castro.
Asked in an email how much UOR would be paying in rent and how long the lease is, Sabrina Goris, who's with Crocker's property management company, responded by saying, "We are unable to discuss specific lease details."
She also crossed out the line in Under One Roof's letter that said the nonprofit's getting the space for a fraction of what it was paying in the Castro.
UOR's letter also says the new space "allows us to maintain a physical, retail presence – and generate revenue to support our partners – while we continue to execute on our restructuring plan."
That plan, which the agency introduced in October, includes reaching out to individual donors, corporations, and others. UOR also plans a Castro holiday store, temporary pop-up shops, and "an expanded focus on education and awareness of HIV/AIDS and GLBT issues," among other aspects, the agency's recent statement says.
According to information provided by Kutz last year, total expenses for the fiscal year March 2012 through February 2013 were expected to be $451,310. Salaries were anticipated to be below $200,000. Hart had said that after the agency closed the Castro shop, there wouldn't be a need for retail staff. UOR would likely hire contractors for future needs, he had said.
Cunningham, who joined the agency that oversees the AIDS grove in Golden Gate Park in 2009, said it appeared his group's relationship with Under One Roof began in 1992. Since then, UOR has provided almost $130,000, putting the average at about $6,500 per year.
The funding was "very instrumental in the early years of the grove," he said.
But the shop's payments to beneficiaries have shrunk, and Cunningham is troubled by the changes at UOR.
He pointed to the store's high overhead and small disbursements, and he also said if Under One Roof is doing the "vast majority of their fundraising through corporate sponsors and individual donors," that puts it "in direct competition" with beneficiaries, who also rely on those funding streams. Rather than competing with partners for that revenue, UOR's original mission "was to raise money through a retail store and through donated product," Cunningham said.
The new model is not "in any way serving its beneficiaries," while "the retail model has been somewhat dead on the vine," he said.
At Friday's ribbon cutting, which begins at 5:30 p.m., Under One Roof will be presenting quarterly payouts to partnering agencies.
Cunningham didn't know how much the grove is supposed to get at the event and he hasn't decided whether he'd keep the grove's relationship with UOR.
Smith also didn't know how much AEF is set to get this week.
"They haven't told us," he said.
His agency will continue to partner with Under One Roof, though.
"We have a motto here: Every penny counts," Smith said.
One beneficiary expressed strong support for the retail nonprofit.
Brian Basinger, director of AIDS Housing Alliance-San Francisco, said UOR has "a deep well of good will with me, and I feel love for that organization. I wish them the best, and I really hope they pull through it."
Asked if he had concerns about the nonprofit again putting money toward rent when the plan had been not to do that, Basinger said, "I don't have any problems with investing in a business plan. It takes money to make money, and I'm assuming that they've had a longstanding relationship with Crocker Galleria. Especially with everything they've been through, one can only assume the board is vetting any kind of opportunities that come up."
He added, "If it was me and I had to reinvent my business plan, and especially in such a public way ... I would be pretty darn confident that it was going to work out, and that the numbers crunched properly, and I can only assume that's what they're doing, too."