Two board members resigned Tuesday and United Way and the Milwaukee Area Labor Council pulled future support from the Social Development Commission, dealing another blow to the anti-poverty agency as it faces a $3.5 million estimated net deficit and considers filing for bankruptcy.
SDC leadership attempted to address the deepening crisis during a Tuesday press conference, revealing the agency currently has just $2,770 in cash left as it tries to chart a path to restart services after a two-year shutdown.
Despite the organization’s current challenges, SDC leadership attempted to sketch a path to restart services and highlighted an opportunity to apply for an IRS program during a press conference at the NAACP Milwaukee Branch, 2745 N. Dr. Martin Luther King Jr. Drive, on Tuesday.
SDC leaders plan to work to reestablish the Social Development Foundation, a separate 501(c)(3) fundraising nonprofit, which could accept unrestricted private funding while the organization works to rebuild trust with the community and government funders, according to Jorge Franco, chair of the SDC Board of Commissioners and interim CEO.
“It’s really a complicated situation, but the good news is we are now in a position to begin the process to restore,” Franco said.
Franco was reelected as board chair at a hectic Sept. 23 meeting, with Commissioner Spencer Coggs elected as vice chair and treasurer and Commissioner Peter Fetzer elected as secretary.
Plans to address debt
Before the press conference, SDC shared documents that revisit its founding in 1963 as an intergovernmental commission on poverty and decades serving as an anti-poverty and community action agency that offered social services ranging from career and educational programs to food, housing, senior and youth services.
The documents also mentioned the weakening of internal financial controls that contributed to the agency not being able to pay employees and eventually shutting down in April 2024.
“We had some unfortunate circumstances happen, but that is never enough to stop fighting for the people that we serve,” said Diane Robinson, executive director and chief operating officer for SDC.
SDC tried to reopen in a limited capacity in December 2024, but wasn’t able to restart services. Now, the agency is facing a preliminary 2026 net deficit of just under $3.5 million and has about $2,770 in cash, according to SDC documents.
“I believe SDC must repay every dollar it owes to whoever it owes it to,” Franco said.
The board is considering filing for bankruptcy or taking other actions to address its debt.
“Yes, we’re looking at bankruptcy alternatives, but all of that can run in parallel as we navigate and receive, assuming we have proper management and those things, and we’re working on those things now and bringing that to the table,” said Franco.
Board resignations
Ahead of the press conference on Tuesday, Commissioners Pam Fendt and Richard Diaz submitted resignations to the board.
According to a letter that Amy Lindner, president and CEO of United Way of Greater Milwaukee & Waukesha County, sent to Franco and others Tuesday, Fendt resigned immediately and the organization will not be nominating any new member due to “serious and ongoing concerns with the management and governance of SDC.”
“Equally importantly, we also have seen no meaningful progress in the past two years to secure funding that would allow SDC to provide services of value to the community,” the letter stated.
Fendt, president of the Milwaukee Area Labor Council, was initially appointed to serve its seat on the board in 2025. She switched appointments to serve on behalf of the United Way of Greater Milwaukee & Waukesha County later that year to allow Diaz to join the board as the labor council’s representative.
Diaz sent his resignation to members of the board via email on Tuesday afternoon. Fendt confirmed his resignation in an emailed press statement sent on behalf of the Milwaukee Area Labor Council.
Concerns cited by Diaz included the decision-making ability granted to Franco as both the board chair and CEO, the board not responding to community concerns and a lack of strategic vision or plan.
Diaz said his reason for joining the board was to see SDC restore services.
“I will continue to believe that it is possible to restore SDC services but based on the facts and the tendencies of existing leadership, I find it inextricably unfathomable to consider that to be more than a belief,” he wrote.
In response to a reporter’s question on the resignations, Franco said he continues to serve at the request of SDC commissioners who believe in him and his ability to turn things around for SDC.
He said he is not concerned about appointing agencies not filling seats, and predicted that United Way would appoint a representative and fund SDC again some time in the future.
“I’m happy to navigate that and work through that and it ain’t my first rodeo in this kind of situation,” he said.
Restoring tax services
SDC leadership met with IRS officials and was invited to reapply for the Volunteer Income Tax Assistance, or VITA program, according to Franco. SDC used to run Milwaukee’s largest VITA program, which helps underserved and low-to-moderate income individuals file income tax returns for free and eligible households to access the Earned Income Tax Credit, Franco said.
Any application would be subject to IRS review, and SDC would not accept funding until an “appropriate structure” to manage the program would be in place, according to a memo circulated before the press conference.
The IRS did not respond to a request for comment on SDC.
Also discussed was the possibility of revisiting a proposal for a revolving credit facility of up to $15 million from Wings Credit Union, which could help SDC address the funding gap when waiting on reimbursement-based grants, according to Franco.
Franco said that this option could work with government grant or private sector funding, and that the lender is still interested after board members voted in December to not advance it at the time.
“I think we have a commission now with board members who are on the commission who are prepared to march and to move forward with that,” Franco said.
Board to meet Thursday
The board will meet virtually at 5:30 p.m. on Thursday, Oct. 15. Included on the agenda is a presentation from law firm Foley & Lardner about bankruptcy restructuring alternatives, including pathways under Chapters 7, 9 and 11.
Jonathan Aguilar is a visual journalist at Milwaukee Neighborhood News Service who is supported through a partnership between CatchLight Local and Report for America.
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