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Struggling nonprofit Hill House Association asking Pittsburgh for support

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Declining revenue

Nonprofit groups that receive public money from the Allegheny County Department of Human Services are required to provide an audit. Completed in March by the Downtown accounting firm of Sisterton & Co., the audit of Hill House Association noted that between 2012 and 2013:

• Grants from government agencies fell from nearly $3.4 million to almost $2.5 million;

• United Way money dropped from $459,493 to $337,895;

• Program service fees decreased from $533,510 to $493,480;

• Facility rentals decreased from $800,123 to $768,787.

By Bill Zlatos
Sunday, July 13, 2014, 9:00 p.m.

An agency whose development arm opened a grocery store in the Hill District but lost money the past two years wants city officials to help it generate revenue and broaden its base of support.

The Hill House Association lost $609,076 last year on top of nearly $2.3 million in 2012, financial records show. The Hill District-based nonprofit funds social and community development programs in the neighborhood.

Concern about its financial course prompted agency officials to meet with Mayor Bill Peduto several times.

“We are having conversations with them about how to provide a stable future,” said Kevin Acklin, Peduto's chief of staff.

Acklin said he could not disclose details, but the agency has not asked the city for money. Rather, he said, Hill House asked for the city's help in generating a steady stream of money by supporting its mission and urging its supporters to give.

Cheryl Hall-Russell, president and CEO of Hill House, did not return calls or emails seeking comment. A staff member said she was unavailable when a reporter visited the group's headquarters.

“We wholeheartedly support Cheryl Hall-Russell and her management team,” Michael Jasper, chairman of the Hill House board of directors, said in an email. “They have shown extraordinary commitment to Hill House and the community at-large, and we continue to applaud them.”

Nonprofit analyst Scott B. Leff said the association needs to watch its operating losses, but he does not consider them daunting, considering the size of the organization.

“They've certainly been impacted by getting the grocery store open, but that's a greatly needed service,” said Leff, senior consultant for organizational development and strategy at Bayer Center for Nonprofit Management at Robert Morris University. “It certainly wouldn't appear that their solvency is in any way threatened.”

During the past decade, the agency shouldered a greater role in improving the neighborhood with the grocery store, a pharmacy and a smaller market, among other businesses.

The Shop ‘n Save store, subsidized with $2.5 million in public money, opened last year on Centre Avenue, along with other businesses. It marks the first food store in the Hill District since the 1980s.

In 2008, Hill House leaders and others s uccessfully urged the Penguins and elected officials to establish a “community benefits” agreement that gave Hill District residents the first opportunity to apply for jobs in Consol Energy Center; a job resources center; and a $2 million contribution split between the Penguins and the Urban Redevelopment Authority of Pittsburgh.

This fall, Hill House plans to open a charter school with a goal of helping dropout-prone students.

The agency's audit, by the Downtown accounting firm of Sisterton & Co., shows an operating deficit of more than $1.4 million last year and nearly $1.4 million in 2012.

Operations represent just part of the overall budget. The 2013 operating loss was lessened by gains in other areas, including transfers Hill House made from other sources, such as its endowment.

The audit attributed the problems to reduced funding from contributors such as the United Way, the loss of certain government contracts and increases in general operating costs. The cost of managing the agency, for example, rose from about $1.1 million to nearly $1.7 million between 2012 and 2013, while the cost of running its services dropped from more than $7.2 million to $5.6 million.

The auditors did not return messages seeking comment. No one from Hill House was available to explain the seeming contradiction.

“Management of HHA has begun to implement a plan, which includes staff reductions, increases in efficiency and reduction of redundant functions, identification of additional sources of revenue, and increased fundraising efforts within the private foundation community,” the auditors noted.

“Clearly, the issue is they have to turn this operating loss around very soon because what was a pretty strong balance sheet last year has become weaker this year,” said Ken McCrory, an accountant and principal with ParenteBeard who examined Hill House Association's audit.

Bill Zlatos is a Trib Total Media staff writer. Reach him at 412-320-7828.

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