The community was stunned this week by the sudden announcement that the Martin Luther King Jr. Multi-Service Center, a fixture in the Butler-Tarkington neighborhood for 42 years, is being placed on “hiatus” for “60 days to 120 days” because of a financial crisis.
There had been rumors of financial problems at the center for several months. But on Tuesday the MLK Center’s current executive director told a meeting of community leaders that the center would “close” on Feb. 28, that she and her four other employees would be out of a job and programs of the center would end.
The firestorm of reaction from African-American and other civic leaders was swift – a mixture of shock and anger.
Reacting to the growing firestorm of concern and criticism, Dr. Kimberly Sterling, the chair of the center’s board of directors, tried to “set the record straight” in a live interview on WTLC-AM (1310) “Afternoons with Amos” program on Wednesday.
Sterling said that beginning on March 3, the MLK Center would start a “hiatus so that the board could address an immediate financial crisis.” Sterling acknowledged the community’s concern and sensitivity and said the “hiatus could be 60 days or 120 days.” The board chair said the organization had been running in the red.
The major funder of the MLK Center has been the United Way. Though in the interview Sterling said other funders had been reluctant to assist the center because of its ongoing financial concerns and situation.
Sterling said the “United Way has come along side us” and said they would be paying “for a consultant” to help the board set up a turnaround plan for the center.
But under repeated questioning, Sterling couldn’t specifically say exactly what the serious financial condition of the center is. Sterling acknowledged that the MLK Center does own its building, the former Triple-A building at 40 W. 40th St. But admitted the organization has a bank line of credit with the building as collateral.
Sterling said the center’s board made the decision “at the end of January” to shut down for a hiatus, but hadn’t wanted to make a public announcement until they could fully announce plans on how the center’s programming and services, including after-school programs and senior citizens programs, could be absorbed by other organizations.
Asked directly whether the center’s few employees were fired or laid off, Sterling indicated that this was a layoff.
In the interview, there was a lot of information that wasn’t forthcoming, including detailed plans for how the MLK Center’s programs would be handled and by whom. There was also confusion in the interview about whether the center’s building would be open for limited events during the hiatus period.
The lack of financial specifics was disturbing. Host Amos Brown repeatedly asked whether more recent financial information about the center’s finances would be released.
Late Wednesday, the Recorder received the title page of the MLK Center’s 2012 IRS Form 990 tax return, which is a public document. The return covers the fiscal year July 1, 2012, to June 30, 2013.
The center’s tax return doesn’t paint a picture of an organization in seemingly severe financial crisis. For the 12 months ending June 30, 2013, the MLK Center reported revenues of $538,099 up $107,561 or 25.0 percent; and expenses of $503,108, down $168,135 or 28.3 percent from the previous fiscal year. The center’s deficit increased 37.0 percent from $163,682 to $224,256.
One surprise in the financial information was that in its last fiscal year ending June 30, the center had program service revenues of $215,122 compared to just $11,869 and $17,797 the previous two fiscal years.
The radio interview unfortunately raised more community questions than it answered.
The Martin Luther King Multi-Service Center is going to have to be much more forthcoming, especially in providing financial data from the past seven months to show how its financial condition deteriorated so much to require a step no major Indianapolis nonprofit has taken for some time.
