The Ridges appears to be shifting its financial intentions, meriting scrutiny by the Highway & Facilities Committee
https://www.ridgessanctuary.org/wp-content/uploads/RPT-TRS-Master-Plan-11x17-V3_LoR.pdf is the only copy of the new Ridges Master Plan which I am aware of on the internet. It was written some months ago, and may differ from what actually was approved. The document mentions appendices at the end, but they aren’t included in this file. One of them is supposed to have financial information in it.
Adding up the dollar amounts, it comes out to between $21.367 million and $32.152 million worth of improvements. These capital costs compare on the steep side to the annual budget, which back in 2020 was stated as approximately $1 million. That figure reflects income, because expenses are lower than that based on the 2020 990 form.
This 20-year plan comes after their earlier plan, called the Strategic Plan, which was for the years 2021-2025. It had several goals urging the pursuit of “financial stability” for several of positions, and it anticipated revenue growth only in the tens of thousands of dollars: https://www.ridgessanctuary.org/wp-content/uploads/The-Ridges-Strategic-Plan-FINAL.pdf
This gives the appearance that the two plans are competing with each other. The earlier Strategic Plan is concerned about operating expenses, while the new Master Plan is concerned about capital projects.
Yet on one of the advice blurbs in the Master Plan, midway through, says “Be financially frugal so the Ridges doesn’t incur more debt than it can handle.” Exactly who said this is not stated. This could be taken from a SWOT analysis commenting event which the Ridges held, but didn’t publish online.
The 2020 990 form for the Ridges outlines some of their finances: https://projects.propublica.org/nonprofits/organizations/391044657/202122779349301307/full.
This shows the Ridges having a little over $1 million in expenses, and few liabilities, only in the tens of thousands of dollars. That the comment mentions debt, but the form from a few years ago doesn’t reflect debt, makes me wonder what has gone on since then.
The form shows that they paid $461,728 in salaries and other compensation. This shows that concern over payroll sustainability in the earlier Strategic Plan is satisfied; compensation is not too high for their expenses.
It had 176 volunteers and received $70,260 in membership dues and $58,546 in trail use and nature center fees. Divide the second figure by $5 and that is a little over 11,700 non-members who paid the fee to visit during the year. Curiously, they are doing well enough financially that they could drop the $5 fee and the Ridges would be just fine. It is just a drop in the bucket compared to their other revenue. Besides the 11,700, their website says they have over 1,700 members. At $45 each, that would come out to $76,500 annual membership dues, but with the different types of memberships that can only be an estimate.
This suggests that the main purpose of the $5 fee is social, rather than financial. It has the effect of encouraging memberships. The fee also discourages some people who might show up if it were free. The fee also makes it seem more exclusive, which could help wealthier people value the non-profit more than they would otherwise.
By charging, they can make the use of the Ridges into a Veblen good, a status symbol good which shows that people can afford to pay money for it.
The Ridges had somewhat over $700,000 in cash or savings account and similar type funds, and two and a half million dollars in investments. The investments had gained in value. Most of the total $11 million in assets were in its property.
Besides this, the Master Plan has maps showing plans for new trail construction. The proposal to put smaller loops on the Family Discovery Trail looks like it will lead to family members taking the wrong turns and getting lost or separated. The plans for the Ridges Beach show an intent to cooperate with the county’s plan: https://www.co.door.wi.gov/DocumentCenter/View/1262/DRAFT-Door-County-Parks-and-Open-Space-Plan---2020-2025
The financial situation anticipated in the new plan is odd enough to justify intervention from the Highway & Facilities Committee. The county supports the Ridges through a lease. It can’t afford to have the Ridges fail through poor management of finances or issues with donor trust. It is a 99 year lease: https://www.ridgessanctuary.org/wp-content/uploads/Door-County-The-Ridges-Sanctuary-Lease-Agreement.pdf
The lease does not give the county authority over the areas where the new plan anticipates doing things with buildings, since this is outside of the leased area.
It includes a vague clause that the county-owned portion may not be "otherwise objectionably used".
Using the credibility of the county property as part of a financially unsustainable operation would be an objectionable use. Also, should the Ridges take on debt and be unable to repay it, that could in theory lead to a situation in future years where the termination clause could be triggered due to poor finances. This clause states "that if the Lessee does or shall neglect or fail to perform and observe any or either of the covenants or conditions", the lease can be terminated immediately at the county's discretion.
Not that they would be unable to pay the dollar-a-year lease, but were the Ridges to take on, and then default on debt, they would not be able to pay premiums on the insurance required in the lease.
County supervisors would not legally be able to demand information, but they could ask for it as a courtesy. The lease agreement gives them the moral authority to request information from the Ridges in the interests of ensuring public confidence in the long-term fulfillment of the 99-year contract.
Questions which county supervisors could ask members of the Ridges board:
Does the Ridges expect to more than double its expenditures for the next twenty years in order to undertake capital projects with a cost roughly twice their current assets?
Are the improvements in the Master Plan to be implemented on a pay-go basis? Or will the Ridges take on debt, and if so, how do they expect to repay it?
Has there already been debt incurred for capital costs at the Ridges in the last few years, which is not reflected on the 2020 990 form?
Would the Ridges be willing to submit future annual 990 forms directly to the Highway & Facilities Committee for review in the agenda packet?
With status symbol goods, reckless behavior can be encouraged by the Veblen good effect, since the desirability of something increased by its cost. Board members in a leadership role at a non-profit, according to the theory, they can acquire greater status by engaging in riskier behavior than they would by playing it safe. This theory explains why some non-profits become consumed with group-think and then fail spectacularly with self-inflicted financial wounds. In such cases, the greater the cost imposed by the risks incurred, the more desirable it became to take on the risks.
The same effect could explain consultants’ behavior. A consultant firm that offers a boring, but safe plans for continuing operations for the next twenty years will not gain the sort of status as a consultant firm which has a bold, but risky plan to take on lots of debt and assets.
For established for-profit businesses, an obstacle to things going wrong is that growth and corporate valuation is constrained by income, and expenses are constrained by ordinary spending patterns. But for non-profits, there is a greater risk of expenses growing through a lack of restraint, and it is possible to increase growth by fundraising in ways which rake in cash, while at the same time consuming the intangible trust which once sustained the charity.
Maybe someone at the Ridges has given consideration to the average age of the over 1,700 members. What if you add twenty years to the age? How is this going to effect their ability to contribute? Then, looking at the future members expected to join over the next twenty years, how many will want to help pay down debt incurred by those who came before them?