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big Year 2000 problems

Non-profits could face
big Year 2000 problems

As the year 2000 inches closer, many Rochester-area non-profit organizations have one question: Will we be ready?
“First, you panic,” says Kelley Ribis, director of finance and human resources at the Family Resource Centers of Rochester. “Then you say, ‘How will we handle this? We don’t have much time left.'”
Without corrections, many computers will not read the year 2000 properly because of faulty programming of the past. If computers are not programmed right, the Y2K bug could cause malfunctions in everything from record-keeping and retirement accounts to payroll processing.
Smaller non-profits are particularly vulnerable. Many work with outdated, donated computers and software, and have limited funds to upgrade their equipment.
“Being non-profits, we’re just starting to get into the ’80s with our equipment. It’s like working with dinosaurs,” says Ribis.
She does not expect Y2K to stop the center’s early-childhood, parenting-education and pre-kindergarten classes for low- and moderate-income families. But Ribis said it could force the organization to go back to manual accounting, which she admits is a scary thought when working with an annual budget of $1.1 million.
Ribis recently took the first step in making her organization Y2K-compliant. She enrolled in a seminar presented by Heveron & Heveron CPAs P.C. in January.
Awareness about Y2K is long overdue, says Heveron accountant Joyce Martelli. Now there is a very short time frame to get organized.
Yet the accounting firm did not get as much interest as it expected in the January seminar. “Some don’t think they have a problem,” she says. “They think, if they wait long enough, something will take care of the problem.”
But the problem will not take care of itself. In fact, Ribis says, compared with other businesses and individuals, “not-for-profits will have a harder time (dealing) with Y2K because of money and manpower.”
Many smaller non-profits are working with donated money and fewer people–both employees and volunteers. And Y2K is an expensive problem to correct. Costs vary depending on the size of the organization and the amount of information involved.
James Pierce, owner of Computers Hear Inc., specializes in the Y2K problem. His company works with Heveron & Heveron to move people and organizations toward compliance. Computers Hear’s staff will completely test, analyze and correct the problem for a client.
“We’ve worked on three machines in less than a day for $500 to $600, 10 machines in several days for a couple thousand dollars, and we spent a week doing 20 to 25 machines with the (bill) ranging (from) $3,000 to $4,000,” says Pierce.
In spite of the obstacles, some larger Rochester-area non-profits are ready for the Year 2000. Take the United Way of Greater Rochester Inc., for example–the largest non-profit fund-raiser in the area, raising $38.1 million dollars last year.
Executive Director Joseph Calabrese says the organization has been getting ready for the Year 2000 for more than a year now, mainly because there has been pressure from the national level to comply. This will help the more than 400 area non-profits the Rochester United Way helps fund.
But even though the United Way believes it is ready for 2000, the organization still could have problems.
“We don’t foresee glitches,” says Calabrese, “but we don’t know what will happen with service providers and vendors. Hopefully, they’ll address their problems.”
Fund collection also could be a problem, he says. Most contributors have their donations drafted from their companies’ payrolls. If a company is not Y2K-compliant, that could temporarily slow down fund collection.
United Way is prepared for the worst, Calabrese says. “We have meaningful reserves in case of problems.”
Those non-profits not thinking about Y2K could have some big problems on the horizon. Financial and legal liabilities could mount if they are not completely ready for 2000.
For example, these non-profits could jeopardize their funding from both private and government sources. Many funders require various reports and data before they give donations. Y2K-damaged information or data that is not retrievable could cause some funding to be delayed or canceled, Martelli says.
Suspension of funding could cause legal problems for non-profits.
“They have a legal obligation to run certain (community) programs,” says Martelli. “Their obligation could halt because they could not have funding because the agency they deal with could have a problem.”
Non-profit or not, it will continue to get harder to do business in 1999 if there is a question about compliance.
Robert Brown–a partner at Boylan, Brown, Code, Fowler, Vigdor and Wilson LLP–says the law firm is advising clients about disclosure statements that banks and insurance companies are sending out, trying to keep its clients out of litigation. The way to do that is to ensure that their computers are Y2K-compliant.
The more the organization is computer-dependent, the more it will be affected by Y2K.
For those non-profits not ready, Martelli offers suggestions to make a smooth transition into 2000.
“The first thing to do is to just get started,” she says, “Talk to software companies, see if they have something to get you in compliance.” She also advises everyone to keep a paper backup of all transactions.
Family Resource Centers is moving forward with a compliance plan. Ribis says the non-profit is taking inventory of its equipment, seeing what can be fixed. It also is trying to find generous donors and computer-savvy volunteers to help out.
The year 2000 is just 10 months away, but many agree it is still early enough to budget for it or raise the extra funds needed to become compliant.
“They look for money to run their organization,” Martelli says. “Now they’ll look for (more) money to upgrade.”

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