The following is a letter that I sent to our grantees last week. It will provide you with a snapshot of what we at LFW have been working on and what we can anticipate for the remainder of the year.
Dear LFW Grantees:
As midsummer approaches, I wanted to update you on a couple of topics since my board chair and I last wrote to you in January. My hope is that these updates will inform your planning, budgeting and general awareness of some key issues facing the Alliance now and in the near future. They also set the stage as you prepare your upcoming annual grant application, due September 15th.
LFW Planning, State Planning
This has been an important year for planning both within LFW and the greater Alliance. Several months ago, we embarked on a strategic planning process to identify issues and challenges facing our organization over the next three years. While our strategic plan will not be finalized for a few months, the general areas of focus are: 1) Building more reliable revenue; 2) Increasing transparency and improving communication; and 3) Strengthening relationships and responding to Alliance priorities.
At the same time, we are aware of and involved in the Access to Justice Board’s work to develop a new State Plan for the Delivery of Legal Services in Washington. We are eager to incorporate the values and recommendations embodied in that document into LFW’s Strategic Plan, addressing our goal of responding to Alliance priorities.
Status of Special Grants
As you probably know, LFW was the beneficiary of a national settlement between Bank of America and the U.S. Department of Justice over the bank’s role in sub-prime lending during the recession. Earlier this spring, we received $6.7 million to distribute to legal aid programs engaged in community redevelopment and home foreclosure prevention. Additionally, we had a small unallocated portion of money from the settlement of Judd v. AT&T to distribute to programs that provide services to incarcerated people, their families and people recently released from prison. The LFW Board of Trustees solicited letters of inquiry in May and appointed two outside panels of independent experts to evaluate initial proposals and recommend which programs should be invited to submit full grant applications. That process is ongoing and we expect the LFW board will make final decisions about these special grants in September. (Visit our Special Grants page for more information on this process.)
The following sections give updates on LFW’s major sources of revenue:
1. Campaign for Equal Justice
The Campaign for Equal Justice is our statewide, annual fundraising drive for legal aid. The Campaign is in full swing and we are looking forward to kicking off our law firm campaigns in King and Pierce Counties, which will generate a significant portion of funds for grants in 2017. Similarly, the Endowment for Equal Justice will spin off nearly $800,000 for grants next year. Thanks to all of you who lend your time and skills to help us raise support from attorneys and judges for legal aid network.
2. Interest On Lawyers Trust Accounts (IOLTA)
Regarding IOLTA revenue, there remains a lot of uncertainty. Although the Federal Reserve increased interest rates for the first time back in December, we have not seen any interest rate increases from banks that offer IOLTA accounts in Washington. While there has been some modest increase in our total amount of IOLTA revenue, it is due to higher balances in those accounts (most likely as a result of increased real estate activity) and not because of a general upward trend in rates. For now, we must plan to move forward without a dramatic increase in IOLTA funds.
3. Class Action Residuals (Cy Pres)
Cy pres revenue has been disappointing—these funds have totaled less than $25,000 so far this year. Nevertheless, this has been a significant funding source for legal aid in the past, and later this year we will submit a rule change to the Washington Supreme Court asking that they increase the portion of residual funds in class actions from 25% to 50%. This fall, we will ask your programs to submit comments in support of this request—stay tuned.
4. State Funds (OCLA)
Our biggest chance at a significant funding increase for civil legal aid appears to be through the State Legislature. While that may seem like a long shot given the funding challenges facing our state budget, we are confident that the sobering results from the Civil Legal Needs Study Update make a compelling argument for our state legislature to significantly increase legal aid funding. You will be hearing more from us and the Equal Justice Coalition later this fall about how to become involved in the grassroots effort to increase the state’s investment in legal aid.
In summary, several sources of revenue for LFW remain steady and our strategies to grow resources are promising. But in the short term – setting aside the special grants, which are highly restricted funds – the continued shortfall of IOLTA revenue means that LFW is unlikely to be able to make increases to annual grants in 2017. The reality is that for the last few years our recurring revenue totaled significantly less than our grants and operating costs. We have been using reserves of one-time funds that the LFW Board of Trustees set aside for this purpose to sustain our grants. Those funds are nearing depletion. Unless there is a major new influx of resources, from the Legislature, IOLTA, cy pres or something new, we may be facing annual grants reductions in 2018. For now our plan is to hold grants steady next year and work on increasing revenue. We will keep you posted about any new developments along the way to help you plan for the future.
LFW Impact Report
Although we face challenges ahead, I also want to underscore the incredible accomplishments we have achieved over the past year. Please take a moment to look over LFW’s 2015 Impact Report. This document is a testament to the life-changing work of all of our grantees. We are lucky to have you as colleagues in this movement. We are truly grateful for your commitment, passion, and drive to make Washington a more just place for all.