Assignment 3: Case Study Analysis
Freedman, Ethan
March 31, 2026
Columbia University School for Social Work, New York
Submitted in partial fulfillment as Assignment Three within the requirements for Columbiaâs School for Social Work program and Prof. Monica Footeâs Financial Management class.
Acknowledgements:
In introducing the following work, I would like to begin by acknowledging the traditional, ancestral, and unceded territory on which we learn, work, and resource from at Columbia University School of Social Work is land of the Lenape and Wappinger indigenous peoples. Let us commit ourselves to the struggle against the forces that have dispossessed the Lenape and Wappinger, and other indigenous peoples of their lands.
I would also like to acknowledge Prof. Monica Foote and their facilitation of SOCWT7125. With Prof. Monica Footeâs lecturers, recommended readings, and my additional thoughts â this piece took form. Moreover, to all my peers in class who contributed to discussions and building ideas that related to the present topic. With these acknowledgements, I present my following work.
To: Board of Directors, Sexuality Information and Education Council of the United States (SIECUS)
From: Ethan Freedman, Strategic Consultant at Columbia School of Social Work (CSSW)
Date: March 31, 2026
Re: Assessing Financial Risks of SIECUS in Comparison to the FEGS Collapse
Executive Summary:
The memorandum was prepared in response to the SIECUS board of Directorsâ engagement of CSSW to analyze SIECUSâs financial position and identify pathways to long term sustainability. SIECUS is a 501(c)(3) advocacy nonprofit founded in 1964 that advances comprehensive sexuality education and reproductive health policy. The analysis takes place in comparison to the 2015 collapse of the Federation Employment and Guidance Service (FEGS), which left tens of thousands of clients without services, approximately 2,000 employees unemployed, and creditors holding more than $47 million in debt (Human Services Council of New York [HSCNY], 2016). This crisis exposed the financial vulnerabilities to which any nonprofit organization is susceptible. Drawing on SIECUSâs form 990 filings from fiscal year (FY) 2023 and FY2024, audited financial statements for FY2022, in tandem with their FY2025 annual report, this memorandum identifies four financial challenges and proposes concrete recommendations necessary to avoid issues FEGS faced. Between FY2023 and FY2024, SIECUSâs operating deficit grew nearly tenfold from $100,140 to $942,788, as revenues fell 60% from $1,154,291 to $464,325, while total expenses rose from $1,254,431 to $1,407,113 (SIECUS 2023, Part I, SIECUS, 2024, Part I).
The four challenges addressed are: 1) Adverse revenue decline and the risks of concentrating on philanthropy with contributions falling 70% year to year from $1,092,724 to $325,989, and declining 93% from FY2022 peak of $4,985,403 alongside zero revenue in programming (SIECUS, 2023 Part I, line 8; SIECUS, 2024, Part I, line 9; Part VIII line 1h; Schedule A; SIECUS, 2022, Statement of Activities). 2) An operation deficit driven by a misaligned cost structure, as staff doubled from five to ten employees in tandem with revenue contracting 60% and driving costs from $687,879 to $896,547 SIECUS, 2023, Part I, line 5, 15; SIECUS, 2024 Part I, line 5; Part IX, line 5, 7, 9-10). 3) Severe breakdown of liquidity and unsustainable spending of reserves as cash declined from 3,828,745 to $704,863 in a single fiscal year with net assets on pace for complete depletion SIECUS, 2024, Part I, line 19; Part X, lines 1, 32). 4) Fundraising inefficiencies as SIECUS spent $0.69 to raise each dollar of contributions in FY2024, nearly three times the sector benchmark (Finkler et al., 2017), while writing off $82,697 in uncollected donations (SIECUS, 2024, Parts VIII, line 1h; Part IX, lines 24a, 25; SIECUS, 2022, Statement of Functional Expenses).
Organizational and Financial Background of SIECUS
Founded in 1964 by Dr. Mary Calderone, SIECUS is a 501(c)(3) nonprofit whose mission holds that sexuality is a fundamental part of being human and advocates for the rights of all people to accurate information, comprehensive education, and the full spectrum of health services (SIECUS, 2024, Part III). Its sole program is public policy advocacy, partnering with national and state organizations to advance federal funding for sexuality and reproductive education related policies, programs, and agendas (SIECUS, 2024, Part III).The organization employs 10 full time staff, is governed by 10 board members who are not compensated for their work, and generated $0 in program service revenue in both FY2023 and FY2024, highlighting complete dependence on philanthropy, government grants, and investments (SIECUS, 2024, Part I, VII). This dependence is made more uncertain with a hostile policy environment, as the FY25 Annual Report documents the national rollout of Project 2025, more than 650 regressive state level bills tracked in 2025, and the Department of Health and Human Services (HHS) directives requiring censorship of inclusive content on gender and sexual orientation, narrowing the funding streams SIECUs could pursue to stabilize its revenue (SIECUS, 2025).
Positioning of FEGS Comparison
The FEGS collapse provides the analytical framework for this memo. At the time of its closure in 2015, FEGS was one of New Yorkâs largest human service nonprofits serving approximately 120,000 people annually across workforce development, mental health, and disability services, with revenues exceeding $250 million and a workforce of more than 2,000 employees (HSCNY, 2016). This was not a sudden breakdown as the HSC documented years of accumulating operation losses driven by government contracts the routinely reimbursed âonly about 80 cents or less of each dollar of true program delivery costs,â leaving structural deficits that reserves could eventually not cover (HSCNY, 2016, p. 4). FEGS aggressively attempted to expand programming, staff, and real estate commitments without the necessary infrastructure or internal financial controls. The board âdid not fully grasp the extent of the organizationâs financial distressâ because management reporting systems failed to reveal warning signs in time (HSCNY 2016, p. 13). The issues FEGS experienced were not isolated to them, as âmany human services nonprofits operate on margins so thin that a single shock can be catastrophic,â and the conditions that produce the FEGS collapse are present across the sector (HSCNY, 2016, p. 5). The present memo demonstrates several conditions that are currently visible in SIECUSâs financial statements, and correspond to the threats FEGS and other organizations face.
Challenge 1: Revenue Decline and Risk of Philanthropic Concentrations
SIECUSâs five year contribution history reveals a funding base in crisis. Contributions peaked at $4,985,403 in FY2022, a period coinciding with the Dobbs decision to overtone Roe v. Wade led a surge in reproductive health philanthropy, before declining to $1,092,724 in FY2023 and $325,989 in FY2024 â a 93% decline from peak (SIECUS, 2024, Schedule A; Candid, 2026c, Revenue & Expense). Audited financial statements for FY2022 reveal the structural fragility underlying that peak, as $4,150,000 of the $4,985,403 in total FY20022 revenue consisted of current promises to give. Net cash activities in FY2022 was only $200,119 despite $4,985,759 in recognized revenue, as $3,730,000 in new pledge receivables were non-cash accruals (SIECUS, 2022, Statement of Financial Position; Statement of cash Flows). When those commitments were not renewed, revenue collapsed and the $82,697 in pledged not yet collected written off in FY2024 represents the trailing failure of that pledge portfolio (SIECUS 2024, Part IX, line 24a). Investment income of $119,376, comprising $91,263 in dividends and interest (line 3) and $28,113) in net securities gains (line 7d), provided 26% of FY2024 revenue. This is not a recurring operational stream, and depends on continued portfolio appreciation that is not available for mission deployment. Program service revenue was $0 in FY2023 and FY2024, and the degree of dependence on a single and volatile philanthropic stream constitutes what Finkler et al. (2017) describe as concentration risk, as ârevenue risk is especially important for nonprofit organizationsâ because funding may be limited in time and contingent on politics (Chapter 7, p. 220). FEGS mirrored this problem, with 90% governance dependence highlighting that one pathway of funding produces vulnerabilities when that stream is contracts (HSCNY, 2016)
Recommendation:
SIECUS should develop earned revenue by converting its training resources, policy expertise, and advocacy curricula into sliding scale paid consulting engagements for school districts and state health departments, targeting $75,000 to $100,000 in fee for service income within 18 months. The organization should also consider expansion of its government grant base, currently at $55,713, through Title X and CDC funded health education programs aligned with existing mission activities. The board should formally adopt a way of diversifying its revenue to prohibit any single source from exceeding 40% of projected annual revenue within three fiscal years, operationalizing the principle of risk mitigation Finkler et al. (2017) identify as foundational for sustainable nonprofit financing (Ch. 7).
Challenge 2: An Operation Deficit Driven by a Misaligned Cost Structure
SIECUSâs FY2024 operating deficit of $942,788, with revenues of $464,325, represents an operating margin of negative 203% compared to a negative 8.7% margin in FY2023. This deterioration is structural rather than cyclical with revenue falling 60% between FY2023 and FY2024, as total expenses rose from $1,254,431 to $1,407,113 revealing a $152,682 increase in a year of sharply declining income (SIECUS, 2024; Part I; SIECUS, 2023, Part I). The primary driver is personnel. SIECUS doubled its employees from five to ten, increasing compensation, benefits, and payroll taxes from $687,879 to $896,547, a $208,668 increase (SIECUS, 2024, Part IX lies 5, 7, 9, 10). Personnel costs now equal 193% of total annual revenue, compared to the 10.7% at the FY2022 revenue peak. The audited functional expenses show salaries and fringe totaled $531,566 on $4,985,759 in revenue (SIECUS, 2022, Statement of Functional Expenses). At FY2024 expense levels, the organization would require revenues of $1,407,113 to break even, which is three times its actual statements (Finkler et al., 2017, Ch. 4). The cost structure is dominated by fixed costs of salaries, occupancy ($29,223), and IT ($77,863), confirming Finkler et al.âs (2017) observation that âfixed costs do not change the changes with changes in volume, at least in the short runâ (Ch. 4, p. 129). The HSC identified the same dynamic at FEGS as organizational expansion was treated like a marker of success rather than a risk factor with costs âgrowing faster than its internal systems could supportâ (HSCNY, 2016, p. 11). Colby and Rubin (2003) argue that economic clarity about the true cost of program delivery is a strategic asset, and without it organizations cannot make sound decisions about staffing and program sustainability.
Recommendation:
SIECUS should conduct an analysis of cost structure classifying all Part IX expenses as fixed, variable, or mixed, and identifying reductions that preserve core mission delivery. The results should inform a three year financial sustainability model with conservative, based, and optimistic revenue scenarios presented to the Board quarterly. The board should adopt a policy based on the ratios of staffing and revenue that require adjustment to approximately six or seven positions at current average compensation levels or equivalent revenue growth.
Challenge 3: A Severe Breakdown Liquidity and Unsustainable Spending of Reserves
SIECUSâs balance sheet reveals a liquidity crisis in formation, if not present already. Cash and cash equivalents declined from $3,828,745 at the beginning of FY2024 to $704,863 at year end, a reduction of $3,123,882 in occurrence with the organization shifting liquid cash into a managed investment portfolio totaling $2,985,968 (SIECUS, 2024, Part X, lines 1, 11-12; Candid, 2026a, Balance Sheet). Total net assets declined from $4,576,091 to $3,891,644. Notably, net restricted donor assets also declined from$825,000 to $325,000, indicating that restricted funds are being used alongside unrestricted reserves (SIECUS, 2024, Part X, lines 27-28; Candid, 2026a, Balance Sheet) Per part XI, $258,341 in unrealized investment gains partially offset the operating loss in accounting reconciliation, but those gains are not available for operations. The true cash usage of $942,788 annually is what drives the capacity of SIECUS. At that rate, net assets of reduction in a single fiscal year with liquid unrestricted net assets declining from 36 to 30 months over the same period (Candid, 2026b). Although months of cash and investments stood at around 31 months for FY2024, that figure includes the $2,985,968 investment portfolio that carries risk and does not represent operating cash. As Finkler et al. (2017) warns, âan organization can have positive net assets and still face liquidity problemsâ (Ch. 3, p. 59), and the HSC documented how FEGS masked its deteriorating position through reserves until its board lost sight of financial distress (HSCNY, 2016, p. 13).
Recommendations:
The board should consider adopting a formal reserve policy to establish a minimum operating reserve of three months of expenses (approximately $1,407,113 / 12 x 3 = $351,778) that cannot be drawn below without a board vote, written explanation, and a remediation plan with specific milestones. SIECUS should formally segment its $2,985,968 investment portfolio into three funds of an operating reserve, an endowment with a defined maximum annual withdrawal rate, and restricted funds â each with clear access policies. Management should implement a dashboard showing monthly cash flow that distinguishes between operational burn and investment portfolio movements to provide visibility of true liquid assets in real time.
Challenge 4: Fundraising Inefficiency and Weakness in Development Infrastructure
In the FY2024, SIECUS spent $226,242 on fundraising to raise $325,989 in contributions, producing a cost to raise a dollar ratio of $0.69. This is nearly three times the benchmark of $0.20-0.25 emphasized by Finkler et al., 2017, ch. 8), and a massive deterioration from FY2022 when audited functional expenses show $98,437 in fundraising costs against $4,985,759 in contributions. This is a ratio of approximately $0.02 per dollar raised (SIECUS, 2022, Statement of Functional Expenses; Candid, 2026c, Revenue & Expense). Compounding this, the organization recorded a credit loss of $82,697 (Part IX, line 24a), representing pledges written off as uncollectable and marking 18% of total annual contributions. Pledges and grants receivable declined from $650,000 to $255,713 on the balance sheet, reflecting both collections and write offs (SIECUS, 2024, Part X, line 3; Candid, 2026a, Balance Sheet). When fundraising expenses and credit losses are combined ($226,242 + $82,697 = $308,939), the net yield from SIECUSâs entire development function is approximately $17,050, which is about five cents per dollar of contributions raised. This pattern reflects what Gregory and Howard (2009) describe as the Nonprofit Starvation Cycle, which is chronic underinvestment in the donor management infrastructure of pledge tracking, stewardship systems, relationship building capacities, and processes that make fundraising more efficient over time (p. 49). The FEGS collapse was similarly accelerated by weak data systems that failed to surface early warning signals, and the HSC identified inadequate financial reporting infrastructure as a primary contributor to its governance failure (HSCNY, 2016). Pallotta (2010) argued that the sectorâs bias against overhead investment ultimately harms the very organizations it means to protect, and SIECUSâs development function illustrates this paradox. Overspending on development activities while underspending on infrastructure would make these activities more productive.
Recommendation:
SIECUS should implement a donor relationship management system to track fulfillment rates from pledges, donor retention, and contributors who have lapsed, in order to directly target the $82,697 annual credit loss with proactive stewardship. The organization should pivot fundraising strategy from broad acquisition toward the cultivation of major gifts, targeting the top 20-30 donors from the FY2022 surge with a structured stewardship plan at retaining 50% as recurring contributors. While this is a challenge with shifting political ideologies, the SIEUC board should adopt a fundraising efficiency target of $0.35 cost to raise a dollar or lower within two fiscal years. This should be reported as a standing metric in financial statements produced quarterly alongside a pledges receivable schedule that documents the timeline of receiving donations.
Conclusion:
Comparing SIEUCSâs FY2023 and FY2024 Form 990 filings alongside their annual report and audited financials from FY2022 reveals an organization accelerating in the direction of financial distress. Revenue contracted 60% in a single year, their cost structure expanded in the wrong direction, reserves were withdrawn at an increasing rate, and their development function yielded negligible returns. These four challenges mirror the HSC identified at FEGS, a breakdown that goes beyond an isolated failure to a âsymptom of deeper structural problemsâ in the nonprofit sector (HSCNY, 2016), p. 4). The warning signs the commission documented of thin and narrowing margins, one pathway for funding, weak governance oversight of financial risk, and inadequate reporting infrastructure, are visible in SIECUSâs 990 data when compared between fiscal years. The critical distinction is that SIECUS retains time and net assets to act. The recommendations across these four challenges of earned revenue development, realigning cost structure, governance of formal reserves, and infrastructure for fundraising and development, are grounded in the organizationâs own financial data and achievable within its current regulatory environment. As the HSC Commission concluded, âpreventing another FEGS requires systemic changeâ (HSCNY, 2016, p. 19) For SIECUS, that change is both urgent and still possible.
References:
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Candid. (2026b). Financial trends analysis: SIECUSâSex Ed for Social Change [Data report]. https://candid.org
Candid. (2026c). Revenue & expense data for SIECUS [Data report]. https://candid.org
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Gregory, A. G., & Howard, D. (2009). The nonprofit starvation cycle. Stanford Social Innovation Review, Fall, 49â53.
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