The CEO of Goodwill Industries of Toronto says she is “examining all possible solutions” to the “cash flow crisis” that forced the charity to suspend operations in the GTA over the weekend.
On Sunday the organization sent out a statement announcing that it would close 16 stores, 10 donation centres and two offices in Toronto, Mississauga, Brampton, Newmarket, Barrie, Orillia and Brockville, affecting about 430 employees.
Speaking with reporters on Monday, Goodwill Industries of Toronto CEO Keiko Nakamura explained that the sudden closures were unavoidable due to a “cash flow crisis” that has left the organization with insufficient revenue to pay employees or cover basic operating costs.
Nakamura, however, said that she has already heard from a number of government leaders, including officials in Mayor Tory’s office, and is in the process of putting together a “plan of action” that could make the organization viable.
“I recognize this has all happened very suddenly. To those employees and other members of the community who benefit from Goodwill services please know I am thinking about you,” she said.
“I am examining all possible solutions and I humbly ask for your patience during this tremendously difficult time. This is going to take some time.”
Charity has “very low margins”
Nakamura told reporters that 85 per cent of Goodwill’s revenues come from its retail operations, leaving it with “very low margins” that make the charity particularly vulnerable to increased competition in that sector.
The CEO noted that the organization did act to improve its bottom line by reducing employee work hours and “starting the process of real estate consolidation” in recent years and had seen “definite signs of progress.” Nonetheless, Nakamura said that revenue remained a problem with the organization often seeing a negative cash flow from December to March of every year, a situation that came to a head this weekend.
“I think there is a misunderstanding in terms of the donations that come in and the amount of effort it takes to get them out to the sales floor,” Nakamura said. “It requires a massive amount of staff labour to be able to recycle and separate (the items) before any of them go out for potential resale. We also have high rental costs. We have to rent all of our locations, we don’t own them.”
In a release issued earlier on Monday, the union representing the 450 employees affected by the sudden closure of Goodwill stores and donations centres appealed to government leaders to help the charity get back on its feet.
“The 450 workers are now suddenly without jobs, which is devastating on its own. But Goodwill stores also help a lot of low-income people with community programming and affordable shopping. We need to get these stores open and our members back on the job,” Canadian Airport Workers Union representative Moe Rutherford wrote in a statement.
In 2014, Goodwill Industries of Toronto had total revenues of $28 million, though retail sales were down more than $2 million from the year before.
