A House in Order

Ruby White, like a lot of other elderly homeowners in the Atlanta area, was house-rich but cash-poor, living on $1,143 a month from Social Security and other benefits. She refinanced her home in the fall of 2006 for some extra cash to make repairs. But the terms of her refinance required her to pay $1,287 per month.

Eventually, she says, “I had gotten myself where I couldn’t pay all that.” She was facing

SURVIVAL STRATEGIES Save money, and let donors know about it. Raise funds from a variety of sources; don’t rely on that one big grant or foundation. Capitalize on timely topics by reaching out to new sources of revenue for support on “hot” issues. Tell stories about the people you help, and avoid jargon when speaking to donors. Find ways to reduce staff turnover, to reduce time and money spent on hiring new employees.

foreclosure for taking out a loan that her lawyer, Donald Horace, says should have never been made in the first place.

A nearby church referred her to the Atlanta Legal Aid Society, an organization that assists poor, elderly, and minority people with legal issues, and she began to work with Mr. Horace to save her house. He negotiated with the owners of the loan and kept her house from foreclosure.

As the subprime mortgage crisis comes crashing down, nonprofit groups such as the are receiving more money for projects like the Home Defense Program, designed to assist low- and moderate-income homeowners like Ms. White who have been hurt by predatory-lending scams.

But Steven Gottlieb, the society’s director, says the reason his group is weathering the turbulence of the current economy is not just because of influxes of money to deal with pressing social issues.

He and other staff members began diversifying Legal Aid’s sources of money nearly 30 years ago, and they pinch their pennies. The group increased donations by 7 percent last year, up to $9.2-million, and Mr. Gottlieb expects another modest increase for 2009.

‘We’re Already There’

The Home Defense Program, which began in 1988, is currently receiving a lot of attention, but officials at Legal Aid say their lawyers saw the current mortgage crisis coming years ago.

“We knew it was happening,” says Mr. Gottlieb.

This year, the society raised $236,000 in new foundation and government grants specifically for the home-defense program, an increase of 181 percent from 2007, and expanded the number of staff members working for the program from four to seven. Mr. Gottlieb says the grants are “clearly a result of the new focus on the foreclosure crises.”

Although the group is receiving increased money and attention for this program, Mr. Gottlieb says the charity offers services based on client needs, not grant-making trends.

This approach allows the group to anticipate crises, such as the foreclosure and predatory-lending disaster, so that it is able to take advantage of increased attention and money when issues become widespread among the public and the news media.

“We’re very basic in what we do, and our services are very attuned to the needs of our poverty population,” says Angie Tacker, director of annual giving and communications. “As things come up, we’re already there.”

The wide variety of programs the group has built — which includes efforts on behalf of people suffering from cancer and AIDS; family-law programs, including adoption assistance; and a project that provides Spanish-speaking lawyers and paralegals to Hispanic clients — allows less-topical areas to stay financially secure while Legal Aid takes advantage of special grants for the attention-getters.

“We have the various projects, and when something is not ‘in vogue,’ we use our regular funding to support that,” says Mr. Gottlieb. The “regular” sources of support include an annual campaign, which brought in $1.7-million last year, and an endowment that currently holds $4-million in assets.

The variety also encourages further growth.

“Having the annual campaign and the endowment as the backstop allows us to take risks and start new projects as client needs evolve,” says Ms. Tacker.

Diverse Sources of Money

As executive director of since 1980, Mr. Gottlieb has seen tough financial times before, and learned from them. In 1980, the group received about 75 percent of its $2-million budget from the Legal Services Corporation, the federal program that makes grants to legal-aid groups.

Looking back, he says, “We were too dependent on it.”

When President Reagan took office, he ordered cuts in legal-aid and other programs. In 1982 the Atlanta group suffered a sudden 20-percent cut in aid. The charity was forced to lay off workers and close some satellite offices.

Mr. Gottlieb says that he and Paula Lawton Bevington, who was the president of the Legal Aid board in 1984 and has since become its planned-giving director, realized that the charity needed to diversify its revenue sources.

The group began its annual fund-raising campaign and started soliciting donations from members of Georgia’s bar association.

They solicited money from the Interest on Lawyers Trust Accounts fund, which provides legal-aid groups with the interest from funds put into trust accounts by lawyers in Georgia. The Atlanta group began to create special programs based on the needs they saw among city residents, such as the Mental Health Project, which assists people in psychiatric facilities, hospitals, and nursing homes whose rights have been violated, and the Home Defense Fund.

With these new projects came more diverse opportunities to seek foundation grants and other sources of aid.

In 1995, the Legal Services Corporation instituted further restrictions and cuts, and the group responded by raising $1-million to set up an endowment and, five years later, raised its annual campaign goal to $1-million.

As the group embarked on its annual fund, it became woven into “the fabric of the legal community,” says Ms. Tacker.

“Firms of 400 or more attorneys, we’re part of their budget every year and their giving to us is based on the number of people they have,” she says. “So as the firms have grown, our campaign has grown. We’ve seen a huge upsurge in the size of law firms in the city in the past 20 years, so it’s really helped maintain our campaign and keep it stable.”

Today, the group receives less than 30 percent of its budget from the Legal Services Corporation.

“The diversity of our funding base is the core of what protects the program,” says Mr. Gottlieb. “If we run into trouble on one front, it gets buffered by the fact that we’re not dependent on anybody quite as much as we used to be.”

The group is also what Mr. Gottlieb calls “very careful” with money.

“It would be too easy for someone to say in bad times, ‘Well, they don’t really use the money very well, anyway,’” he says, but donors “know that we’re so close to the bone.”

A few years ago, he notes, officials of the group sat down with its budget and discovered that, on average, they spend only 10 percent of their money on fund raising and management. The charity frequently includes this figure in fund-raising appeals.

“Folks on our board say that 25 or 30 percent is not bad, and we’re 10,” says Mr. Gottlieb. “So when you have that message, people understand that you’re being careful to begin with, and they’re not throwing away their money by supporting you.” (Most watchdog groups say nonprofit organizations should spend no more than 30 to 35 percent on fund-raising costs.)

Pinching Pennies

His staff members joke about other ways that the frugality manifests itself. has been in the same building for almost 30 years, and has never made major renovations to improve the office’s aesthetics. Mr. Gottlieb looks around his modest office.

“We’ve replaced the carpet,” he says. “The blinds, maybe, are original. My wife gets very upset because she hates the color of the blinds,” he says. The blinds are a deep brownish-orange.

“We just need a little avocado green to go with it,” jokes his grants manager, Jan Heidrich-Rice.

“I actually don’t mind that color, but a lot of people do,” says Mr. Gottlieb.

“Are you colorblind?!” asks Ms. Tacker.

Ugly blinds aside, the group is careful in other ways. Mr. Gottlieb receives an annual salary of about $125,000, which he says is less than the typical starting salary for a lawyer at a major firm in Atlanta. The starting salary for a lawyer at the charity is $42,500.

As Mr. Gottlieb began to advertise the low salaries when speaking with lawyers who are prospective donors, he says, they made more of an impression than information about the group’s programs.

“When people in larger law firms understood how low the salaries were,” he says “it really was an impetus — in terms of actually having an impact — that in some ways was actually more dramatic to them.”

The group also saves money on the little things, like printing costs and events. “We don’t do flashy parties,” says Ms. Tacker.

Mr. Gottlieb says the prudent spending is an important part of the group’s overall reputation in the city. Another aspect to this reputation is the group’s relationship with its employees.

“One of the reasons I think we do OK is because we have an organization where by and large people get along and we want to take care of folks,” he says. “When you have that kind of staff, and you treat them right, which we try to, then you end up with some stability, which people recognize.”

He says that although his staff is not well paid, he tries to keep them happy in other ways. The group helps lawyers repay their school loans. Work hours are flexible, and staff members can work at home. Their medical and dental coverage is completely paid for by the charity, and they receive three weeks of vacation time in each of their first two years, which roll over each year and increase with seniority. Mr. Gottlieb says those benefits increase productivity, and thinks that this can help tame turnover and save money.

But he insists this is not the reason for the benefits; it’s just a positive side effect. “You want to have a place where people want to work,” he says. “Just for its own sake.”