When WorldCom filed bankruptcy on July 21, the blow to nonprofits and other organizations, such as Mississippi College and the Heritage Classic PGA Tour Event, was not as damaging as some people might have expected.
Because the United Way of the Capital Area in Jackson did not receive corporate support from WorldCom, there was no concern about a budget shortfall this year. But metro Jackson WorldCom employees pledged nearly $24,000 via payroll deduction during last year’s fund-raising campaign, a goal that might not be met, said Carol Johnson-Burger, president and CEO of the United Way.
“Right now, we don’t know how many employees will be able to honor their pledges,” said Johnson-Burger. “Unless they are leadership givers, there’s no way to track it. Within the next three months, we will probably find out how much we stand to lose.”
Because the United Way operates on promises and pledges, a certain percentage of uncollectibles is routinely written off annually, “just like with any other business,” said Burger. “We don’t ever want to have to go back and cut our programs once we fund them. If we don’t need to write off the entire percentage, after a couple of years, the board usually decides to put that money back in programs.”
Chris Cherney, executive director of the Mississippi Children’s Home Society and CARES Center Inc. in Jackson, said former WorldCom CEO Bernie Ebbers and his wife, Kristie, have been “very supportive and generous” to the organization. “I can’t say enough nice things about how much they’ve helped us.”
Cherney would not disclose the amount of Ebbers’ contributions and declined to say whether the gifts were in the form of cash, stock or a combination of assets. “I can tell you that if contributors give stock, and if it is available to sell immediately, that’s what we do.”
Overall giving may decrease this year because of the sluggish economy, not because of WorldCom’s problems or Ebbers’ situation, Cherney said.
“A general tightening in the budgets, both of corporations and individuals, has been affecting charities like us across the country,” he said. “But I consider it a sign of our economic times, not a lack of concern about other people or a willingness to be supportive. The availability of philanthropic dollars is probably not at the same level. That’s been the case with me. My retirement account has shrunk. I know my wife and I have done everything possible to maintain our philanthropic activities with organizations, our church, and causes we support. Everybody reevaluates, based on the their capability at that particular time.”
Cherney said most donations come in at the end of the calendar year. As of August 31 — or the 66% mark — contributions were at 19%, with special events at 26% of projections.
“We generally rely on a very generous Christmas,” he said. “We had a tough year last year, but we brought in enough money at the end of the year to break even. We’re hoping for a strong year-end, with two more special events. We’re a beneficiary of KidZone, and we host a sporting clay shoot that has been very successful. I’m optimistic. But that doesn’t mean we don’t need to go through belt tightening.”
Ebbers also made significant contributions to the Baptist Children’s Village in Jackson. “Donations we received from Bernie were in the form of cash,” said Chrystelle Thames, spokesperson for the children’s home. “We didn’t get any stock.”
Thames could not disclose the amount of contributions Ebbers has made, but said problems related to WorldCom “would not make a difference in pledges.”
When WorldCom filed for bankruptcy protection, nearly two months after Ebbers resigned as CEO, many people wondered what the backlash would be for Mississippi College. Over the years, Ebbers had generously bestowed gifts, including stock, to his alma mater.
“Even though there have been a few exceptions, none relevant in this case, we sell stock the day that we receive it,” said Dr. Lloyd Roberts, senior vice president for administration and CFO for Mississippi College. “We have a policy to give a gift receipt, with an average of the high and low in the market that day, to the person who gives us stock. In Bernie’s case, it was never a problem. We just sold it.”
Roberts declined to estimate the value of the stock Ebbers gave to Mississippi College.
“Bernie’s gifts came to us before the stock started its precipitous drop, when it still had significant value,” he said. “We were not affected by the recent news.”
On July 19, citing “regrettable, but necessary” reasons, the Heritage Classic Foundation, host organization of the Heritage Classic PGA Tour event, terminated its contract with WorldCom as title sponsor. The announcement was quietly issued on July 22, a day after WorldCom filed for bankruptcy protection, because “we didn’t want to add salt to the wound,” said tournament director Steve Wilmot.
Held annually at the Harbour Town Golf Links in the Sea Pines Resort of Hilton Head Island, S.C., since 1969, MCI had been the title sponsor of the prestigious PGA tour event since 1987. WorldCom bought MCI in 1998 and retained the rights to the sponsorship.
At the last WorldCom Heritage Classic, which ended April 21, pro golfer Justin Leonard set a 54-hole scoring record on the recently renovated golf links and closed with a 14-under 270 total to win the title and $720,000.
“Our golf tournament represents an enormous economic impact for our entire community, which we are not willing to jeopardize,” said foundation chairman Joseph B. Fraser. “It has become obvious that we must find a new title sponsor in order to maintain the tournament’s forward momentum.”
To help fill in the $2.3-million gap to cover the 2003 event’s estimated $8.2-million cost, Hilton Head Island Mayor Tom Peeples and the town council unanimously adopted a one-year 1% hospitality tax increase on September 17. The temporary increase should bring in roughly $1.8 million while tournament officials seek major sponsors.
“That’s assurance for us to move forward,” said Wilmot. “We regretted the need to make the decision to terminate our contract with WorldCom. I’d had a great 16-year relationship with the same folks — Cindy Palmer in the D.C. office had worked with me the entire time — so it was tough because there were emotional ties. But the relationship needed to be severed.”
Contact MBJ contributing writer Lynne W. Jeter at (800) 993-3392 or firstname.lastname@example.org</a.
BEFORE YOU GO…
… we’d like to ask for your support. More people are reading the Mississippi Business Journal than ever before, but advertising revenues for all conventional media are falling fast. Unlike many, we do not use a pay wall, because we want to continue providing Mississippi’s most comprehensive business news each and every day. But that takes time, money and hard work. We do it because it is important to us … and equally important to you, if you value the flow of trustworthy news and information which have always kept America strong and free for more than 200 years.
If those who read our content will help fund it, we can continue to bring you the very best in news and information. Please consider joining us as a valued member, or if you prefer, make a one-time contribution.Click for more info