YMCA's revenue drops due to COVID-19 closures of child care and fitness centers in Minnesota

The YMCA is reopening fitness and child care centers across the Twin Cities and western Wisconsin, but closures of programs this spring from the COVID-19 pandemic caused revenue at one of Minnesota's largest nonprofits to drop by 30% so far this year.

The YMCA of the Greater Twin Cities — the third-largest YMCA in the U.S. — closed two-thirds of its camps and fitness and child care centers during the outbreak.

Some of its 82,000 members canceled or paused memberships or stopped child care when buildings closed from March to June. As a result, the YMCA furloughed 90% of its 6,700 employees, and top leaders have taken salary cuts.

Now, as 18 facilities have slowly reopened at 25% capacity, the organization is hoping money starts to flow in as they also look for new ways to drum up donations and grants. The YMCA normally draws $168 million in revenue a year.

"The Y will continue to meet these challenges, embrace them," CEO Glen Gunderson said. "We're really focused on arriving at a new reality, not returning to normal or returning to a new normal."

Minnesota's nonprofit sector has been especially hit hard by the pandemic since many nonprofits were forced to close programs and events that bring in a bulk of their revenue, leading to mass furloughs, layoffs and other cuts.

Unlike a lot of smaller nonprofits, the YMCA also has $30 million in debt in public financing bonds for building projects such as the opening of the Douglas Dayton YMCA facility at Gaviidae Commons in downtown Minneapolis. Moody's Investors Service recently downgraded the rating on the bonds "based on an expected deterioration" of finances after declining membership and revenue.

The nonprofit dipped into its reserves to cover budget gaps, according to Moody's statement, but Y leaders have "responded forcefully to the unprecedented revenue declines."

"Revenue has fallen significantly," said Karen Larson, the YMCA's chief finance and administrative officer. "How this all shakes out in the end here as we're back up and running has yet to be seen. But we feel there are challenges ahead and there's opportunity ahead."

YMCA officials said the change won't affect the organization's current finances unless they pursue additional financing.

"Obviously recovery from COVID for all organizations is going to take some time," Larson said.

Starting in March, the COVID-19 pandemic closed gyms and child care centers across Minnesota.

The Y — which has 30 locations in the metro, southeastern Minnesota and western Wisconsin — started live online fitness programs and created a virtual or phone well-being service for senior citizens. By June 10, the YMCA started reopening facilities, and another seven sites, including the Douglas Dayton YMCA, are slated to reopen by Aug. 3.

Day camps, summer programs and family camps are running with modified programs to allow for social distancing, but overnight and wilderness camps were canceled.

During the pandemic, the organization also has expanded other efforts such as helping provide food to people in need, partnering with other nonprofits — Loaves & Fishes in Minneapolis and the Sheridan Story in Roseville — to distribute free food at Y sites.

The Y also has boosted racial equity work, which Gunderson said is even more important after the death of George Floyd at the hands of Minneapolis police in May. Gunderson said the Y is continuing to look for more community partnerships to increase the number of people the YMCA serves and find ways to boost donations.

"We have a strong organization that's had an amazing legacy," Gunderson said. "And the Y has always reinvented itself to serve what the present needs were."