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Running Aces moves to add new nonprofit

While Running Aces starts a new area nonprofit funded through charitable gambling at the casino, Lakes Center for Youth and Families is left with concerns over its future due to the impact of the loss of revenue with the end of its charitable gambling lease with the casino on July 1.

In mid-March, LC4YF was notified that Running Aces would terminate the lease agreement for charitable gambling at the casino, and continue its own charitable gambling for a newly founded non-profit, dedicated towards giving grants to the community. Running Aces president and CEO Taro Ito said this decision was sparked by a conversation he had in 2018 with then-Executive Director Matt Howard of Lakes Center for Youth and Families. 

Howard had expressed to Ito concern over the ethics of charitable gambling through the casino, though no such motion or decision was made by the LC4YF board. Ito’s conversation with Howard got him and others at Running Aces thinking about what might go in its place if LC4YF were to pull out, or if they wanted to pursue other options completely. Running Aces ultimately decided to pursue their own nonprofit, which they titled North Metro Racehorse & Community Foundation, which will fund other nonprofits or entities through grants. But because the North Metro Racehorse & Community Foundation will use the funds through charitable gambling at the casino, the lease with LC4YF for charitable gambling will end.

LC4YF in jeopardy

LC4YF was founded in 1976 by Forest Lake Police Chief Jim Trudeau, who created the program focused on intervention to keep local juveniles out of the criminal court system. Since then, it’s expanded into a much larger enterprise. LC4YF offers counseling services to youth and their families, intervention programs, and extension programs that help teach youth various skills that may help them on a career path or give them an outlet. Three of their four full-time counselors have been added within the last four years, and the other full-time counselor was moved from part time to full time within the last four years. LC4YF hopes to add a fifth, as the demand for counseling services has outpaced the counselors available at the nonprofit.

Since 2013, LC4YF has partnered with Running Aces for charitable gambling. LC4YF Executive Director Linda Madsen was on the board prior to her current role and said that the decision to use charitable gambling helped expand the services it can offer. 

“One of the things we’ve been able to do is to really, I think, solidify and expand what we’re doing in the community, and Running Aces has allowed us to do that,” Madsen said. 

But now, due to funding shortfalls during the COVID-19 pandemic, and the loss of funding through Running Aces, the financial shortfall represents a significant portion of the budget and is complicated in nature. Out of a current estimated $1 million annual operating budget, charitable gambling through Running Aces brings in roughly $200,000, representing 20% of its budget. Madsen says that even though she’s been verbally assured LC4YF will be a grant recipient, not knowing how much money to expect and when those dollars would come in makes budgeting for the year uncertain. She is hoping to find other businesses who currently offer or want to start charitable gambling to take on LC4YF as a partner.

“We have our license, we have experience, we have staff that can do this in other locations. We are ready to go if we can find those other locations that would like to support us,” She said.

But making up the roughly $200,000 lost annually is a lofty goal, she said, and one that is complicated by even more revenue streams being lost if the organization has to make staff cuts. She said that bringing in new counselors actually adds to revenue due to insurance reimbursements, which make up roughly a third of the revenue stream right now. In addition, because of state and local contracts that come with grant dollars, other programs can’t be cut.

“We’ve carefully looked at our staff and asked where we could [cut]. If you cut a counselor, then you’re cutting revenue. If you’re cutting intervention, well, we have county contracts. Everything is intertwined together to make it work,” Madsen said. “Right now I’m viewing this as we have to find other places for charitable gambling because we don’t have an option. I don’t know what we’ll do if we don’t find them.”

New nonprofit

The creation of the foundation was sparked by that conversation between Howard and Ito. 

“That started our thinking of ‘What’s going to happen with charity or bingo? Do we need to start looking at options of continuing this operation?’” Ito said.

The North Metro Racehorse & Community Foundation will begin pulling proceeds from Running Aces charitable gambling beginning July 1 and will open up its grant application process this December, which means that LC4YF will get any funds from charitable gambling through June 30. 

Aaron Bedessem, the president of the new foundation and Running Aces director of marketing, said: “I think it’s good for us to have this element to be part of the community and help out the way it’s going to. I think it’ll be a lot of good that can come of it.”

While Bedessem said that a portion of the proceeds will still go to LC4YF as long as the nonprofit wants to apply for grant dollars, there are other area nonprofits that are of interest and likely candidates for future donations, such as two that have connections to Running Aces. Acres for Life, a Forest Lake-based nonprofit equine-based therapy program, was one Bedessem specifically mentioned. The other was The Old Horse, based in Hastings, which is a nonprofit equine retirement home. The foundation will focus on grants for north-metro recipients, though Bedessem noted there weren’t any particular geographical boundaries.

Madsen said one of the difficulties was what she considered an unexpected timeline and confusion over communication.

In late 2018, after Madsen had taken over the executive director position on an interim basis, she and LC4YF board member Kathy Lillis met with Running Aces, which is when she first learned of the discussion Howard had with Ito earlier that year. During that conversation, both Lillis and Madsen indicated that LC4YF had no prior discussion or plans of discontinuing the charitable gambling lease. 

“We had a lot of discussion at the beginning [prior to 2013] before we agreed we were going to do it, and once we did and saw the revenue and the good work we can do and expand our services — and Running Aces was and is a great partner — so the board was always thinking that, yes, we would continue, and never had a discussion about discontinuing it and certainly never voted to discontinue charitable gambling,” Madsen said. 

She said she believed there would be more communication if and when Running Aces went through with the creation of their own non-profit, and so the notification of the termination of the lease came as a surprise to her. Ito and Bedessem said did express they thought they had adequately communicated their intentions. 

Though 30 days is the legal timeline for official notice of ending of a charitable gambling lease, “We thought there would be more [time] if it was actually going to go through,” Madsen said. “I think we thought it wasn’t because we hadn’t heard anything through the pandemic. ... It was a lot of months of no conversation about it, so we were thinking, well, maybe they changed their mind or it’s not going to happen.” Bedessem did acknowledge that communication dropped off during the pandemic, and offered assurances that LC4YF will be the main benefactor through 2021, and will likely be grant recipients moving forward. 

“We acknowledge that this is going to be a change and be a disruption to Lakes Center. There’s no way I can change that. We’re not trying to minimize that, or deflect that reality,” Ito  said. “But I think that in the long-run, this can be a win for the community. ... LC4YF has had a very long run. It’s time to maybe now expand who benefits.”

Pandemic impacts

In addition, due to the COVID-19 pandemic, incoming funds have also decreased, the biggest of which was a roughly 50% decrease in charitable gambling funds from Running Aces due to the casino and hotel’s closures during the pandemic. Because LC4YF went to telehealth only, they lost a handful of their clients for a duration, which decreased the insurance reimbursements. Because fundraising events couldn’t be held, giving was down, and she said other personal giving was also down, as well. In addition, certain grant dollars weren’t available to LC4YF because of the school closures. 

“We have a grant through Anoka County for kids uninsured, underinsured, or have a high deductible. We can use that money if they’re Forest Lake Area School District students. When school was closed, we weren’t able to go into the schools, and that’s the whole idea of the grant,” Madsen said.

But even with funding down, LC4YF remained open as usual, other than the move to virtual care. During the initial weeks of the pandemic, the LC4YF board decided to keep employing the 10 full-time staff members, including counselors, full-time with benefits, something Madsen said she was “proud of.” 

“Some people might’ve said it would’ve been smarter to cut them.

“[We felt] a responsibility toward them and also looking to the future, we will emerge from this and we will be full,” she said. 

She did note that LC4YF did receive a Paycheck Protection Program loan both times it was offered; the first was forgiven, and the second she expects to be. But it didn’t cover enough to make up for lost revenue, so in order to shore up some of the dollars lost, LC4YF cashed in a certificate of deposit from the bank and is making plans to sell one of their meeting room spaces. The problem with that, she said, is it’s one-time revenue. She said that she’s had to get creative in where to cut — an experience she isn’t unfamiliar with, as she had to make similar cuts as superintendent of the Forest Lake Area School District. 

“We’ve tried to make sure we’ve been as efficient as we can be with the funds, but also there are places we’ve had to spend more in order to make sure we’re doing the right things the proper way,” Madsen said. She says there’s really no area she feels she can cut further without cutting threads that lead to more income.

And that’s what makes the loss of a consistent revenue stream at Running Aces difficult. 

“We’re sad we’re leaving, for a number of reasons. Obviously, for the revenue that was there, but also they were good partners. It was easy to work with them. ... It’s sad, but it’s the way it goes,” she said. 

Yet Madsen remains driven about getting to her goal of the revenue dollars raised, whether through charitable gambling or other fundraising.

“I can’t waste energy and think-time about the very legitimate question [of what will happen]. We’ll have to deal with it later if that’s where we land. All of my energy has to be into trying to get that money and let’s get this going,” she said.

Celebrating 45 years, hope for future

Despite the concerns over the financial future of LC4YF, Madsen is determined and hopeful for the future of the organization as it celebrates its 45th anniversary. 

“It’s been exciting to see the movement ahead of being more of a force and more of a presence to help people within the community as we’ve grown, especially in that counseling area,” she said. “We were hit hard [by the pandemic], but I’m very proud we could continue to serve those to access telehealth and keep our employees on full time with benefits.”

Since the governor lifted capacity restrictions in May, fundraising event planning is back at LC4YF. The first event being planned is “The Taste,” which is expected to be held sometime in July. Other events will be determined at later dates as the team reaches out to donors or vendors to ask about comfortability levels and to gauge interest in certain events.

Hannah Davis is the Area Editor at the Forest Lake Times. You can contact her at hannah.davis@ecm-inc.com or (763)233-0709

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