NRC Faces Big Climb

Any good mountaineer will tell you that reaching a summit is optional but that surviving the trip is mandatory. The National Recycling Coalition (NRC) is learning that lesson.

After encountering a crushing avalanche of financial burdens earlier this year, a group comprised of 14 of the 16 past presidents of the NRC is working on a plan to get the organization back on its feet. A rescue attempt by Keep America Beautiful Inc. (KAB), Stamford, Conn., fell short of receiving the required two-thirds majority vote earlier this year.

“The presidents’ plan has a shot,” says Mike Mitchell, executive director of the Illinois Recycling Association. In fact, the past presidents’ plan may be the only thing that will save NRC from going over the cliff.

RESCUE ATTEMPT
In August, a membership vote to combine NRC and KAB fell short of the two-thirds majority required. Forty-six percent of NRC’s membership voted on the proposal, with 57 percent favoring it. Both groups’ boards of directors approved the proposal. But, the NRC is incorporated in New York state, and without the super majority required under the state’s law, the measure failed.

“We recognized from the beginning that the two-thirds majority was a steep hill. The results reflect that,” Melinda Uerling, president of the NRC board, said at the time of the vote.

In early September, NRC’s board, on advice of legal counsel, voted to look into filing bankruptcy under Chapter 7. The group was saddled with $1.58 million in debt. However, at a board meeting at the end of September, the past presidents asked NRC to postpone any final decision to give them time to look for alternative funding or another possible partner—anything to save the group. Because Chapter 7 reorganization is a long process, the time and energy required for the detour to explore other routes was not unreasonable.

“All the past presidents agree that bankruptcy, particularly Chapter 7, was something to hold off on,” says Mark Lichtenstein, a founder and former president of the NRC. Speaking from his Syracuse, N.Y., office, Lichtenstein says the group working to save NRC is an inclusive, broad-based group focused on making the NRC viable. “We were split on KAB but we are of one mind to do what we can to help NRC move forward,” he says.

Uerling formed four committees that are working simultaneously to address the NRC’s issues: Creditor Negotiations, Fund Development, Reorganization Planning and Communications and Member Outreach.

Creditor Negotiations scored big when it brokered a deal with the NRC’s landlord to get out of its $13,000-per-month long-term lease in downtown Washington, D.C. Several sources contacted said the lease was, as one NRC board member termed it, “crazy.” That long-term lease, at $801,000, was the biggest number on the NRC’s budget. Getting out from under that juggernaut made the organization’s debt more manageable. Office furnishings went into storage. Paid staff was terminated, though $10,000 was allocated in October for legal guidance. Otherwise, only expenses deemed necessary, like keeping the group’s Web site (www.nrc-recycle.org) active, are being incurred.
“NRC was in financial disarray,” says Bill Heenan with the Steel Recycling Institute, Pittsburgh. “As one of the people trying to get the patient resuscitated, I have to say there is hope.”

He says he agrees that getting the rent off NRC’s shoulders was a big step forward. “But there are still other people who need to be compensated,” Heenan notes. “The question is how we go about doing that.”

Beyond real estate, NRC has other peaks to climb, but right now its biggest challenge is surviving the current avalanche of conditions so it can stand up and attack the mountain another day.

DOLLARS AND SENSE
Uerling says the NRC is just beginning confidential conversations with its creditors. However, look for the NRC to try to negotiate a 24- to 36-month time line for paying down its debt.

The Fund Development committee faces an uphill fight. Its task is twofold: settle existing debt and, longer term, raise money for future operations.

“It is very difficult to do fund development to pay off debt,” says Lichtenstein. Yet the group is making inroads, and its work will be key in helping the Reorganization committee fund its plans.

 “The economy hasn’t changed in any great way since the beginning of the year,” Uerling notes. “We are talking to people behind the scenes, looking for donors to help us get back on our feet.”

One big question is whether past supporters like the Coca-Cola Co. will come on board. Coca-Cola provided about one-third of NRC’s budget throughout the years. “The key,” Lichtenstein says, “is to have a diversified fund development portfolio.” He would include everyone from Fortune 500 companies to baler manufacturers to small organizations. Already, International Paper has forgiven an outstanding $15,000 bill. Another group volunteered to host the organization’s Web site.

In addition to looking at corporations, Lichtenstein says the Fund Development committee will reach out to foundations and even the federal government, which has targeted grants available.

READING THE MAP
Not everyone involved with the NRC reads the map the same way. While some saw the KAB merger as a road to survival, others see it as a trap.

“KAB was not the right home for NRC. KAB is not a coalition or a member-focused organization, whereas NRC is,” says Amy Perlmutter, principal with Perlmutter Associates, Cambridge, Mass. She helped to spearhead opposition to the KAB deal and to coordinate a group called Save the NRC. Members object to KAB’s opposition to legislative involvement and solutions.

Others say they see KAB as being all about voluntary consumer action. Perlmutter and others opposed to the merger say they wondered what would happen if the NRC unit (which is how the NRC would have been organized under KAB) issued a statement saying that extended producer responsibility was a key part of any successful recycling policy. Would KAB change its policy focus?

KAB’s reply was that it did not know. This was unsettling for NRC members who were deeply involved in policy-making issues at the state level.

While she concedes that “KAB is masterful at education,” Perlmutter says she was concerned that KAB and NRC had no track record of joint programs or activities. “To sell KAB the NRC name without having a track record together was risky,” she maintains.

“But to go to the next level you have to talk about product design, policy making and a range of carrots and sticks. I don’t see [KAB] changing,” she adds.

Mitchell says he is not so sure. “The animus against KAB was largely rusty axes from the old bottle-bill wars,” he says. “It was people who felt KAB could not get the mantle as the voice of recycling,” he says. “I think Save the NRC was ironically titled.”

Mitchell, who has been active in the NRC for a decade, says some old-timers want to see the organization return to its origin. “The organization of 30 years ago—grassroots based and corporate funded—is not the NRC that I know.”
Mitchell says he had not given KAB a minute’s thought before the merger vote. “I suppose I had a vague impression based on the local community work they do as a small, volunteer, grassroots organization. I felt the NRC I knew for the past 10 years would function better with support from KAB rather than struggling on its own.”

He says of the Illinois Recycling Association, “We supported the (KAB) merger.” But that support was not unanimous in Illinois. The 12-member Illinois board voted 7-4, with one absent, in favor of the merger. Mitchell read the feelings of other members the same way the Illinois delegation saw it: KAB might not be the perfect partner, but, he says, “Faced with obliteration or consolidation with KAB, the latter was the better choice.”

Uerling promises the group will continue to be a coalition of members, drawn largely from the government sector but also from other interest groups that promote recycling and want shared best practices.

“We will continue to play an active role on the Hill (in Washington, D.C.). That is one of our strengths,” Uerling says. “We have great name recognition on the Hill.” She adds, “The key right now is to let people know we are still here, still playing a role.”

Heenan says the key to the group’s future success will be focusing on a couple of good things for the NRC to do and to take care of the creditors who supported the organization for so many years. “The patient will live,” he assures.

“Whatever happens, this will not be the NRC of old with the money we had,” Maia Corbitt, executive director of the State of Texas Alliance for Recycling, says. “We hope this is a good lesson learned for future boards. When it is over, we hope state recycling organizations will continue to have a larger role and say in the organization,” she concludes.

The author is a freelance writer based in the Cleveland area. He can be reached at curt@curtharler.com.