The Two-Year Assignment That Became a 19-Year Mission: John Hoey and The Y in Central Maryland

Anthony Codispoti (00:00)
Welcome to another edition of the inspired stories podcast where leaders share their experiences so we can learn from their successes and be inspired by how they’ve overcome adversity. My name is Anthony Cotaspodi and today’s guest is John K. Hoey, president and CEO of the Y in central Maryland. The Y runs neighborhood centers, camps, afterschool programs, and community health efforts, all focused on youth development, healthy living, and social responsibility.

Its simple goal is to help every child and adult thrive, no matter their background or income. Since taking the helm in 2006, John has led a sweeping transformation. Under his guidance, revenue has tripled, and the Y has become one of the largest in the nation. His work has earned him honors, such as Ernst & Young’s Maryland Entrepreneur of the Year and the Daily Record’s Most Admired CEO.

Before joining the Y, John spent over a decade in the education center with Sylvan Learning and Laureate Education, and he held executive roles at Citigroup. He holds an MBA from the University at Albany and an English degree from the University of South Carolina. But before we get into all that good stuff, today’s episode is brought to you by my company, Ad Back Benefits Agency. Listen, if you run a business, you’re likely stuck in the cycle of rising insurance premiums.

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to put more money into your company’s bank account. As an example, we recently helped a client increase net profits by $900 per employee per year. Results vary, but the consultation is free. See if you qualify today at addbackbenefits.com. All right, back to our guest today, President and CEO of The Y in Central Maryland, John Hoey. Thanks for making the time to share your story today.

John Hoey (02:20)
It’s great to be with you, Anthony. I appreciate you having me on.

Anthony Codispoti (02:24)
So John, your background includes more than a decade in for-profit education as well as roles at Citigroup. What inspired you to make the move into the nonprofit sector?

John Hoey (02:37)
Yeah, I wish I had this great story where I had this epiphany ⁓ one day and made this big switch. I will say I was very ⁓ much enjoying my career when this opportunity came along. I was ⁓ running the division of a public company called Educate Inc., ⁓ which is a K through 12 services company. ⁓

minding my business, if you will. And I was approached about this role. I will say I had no idea why they were ⁓ interested in me. I really had no interest in the role. kind of ⁓ really didn’t have, ⁓ I didn’t call them back for a while. They kept calling me. Long story short, I agreed to get together with a couple of folks who were on the board here and…

you know, they told me that the organization was in trouble. It had to be turned around. And ⁓ I’m kind of a sucker for turnarounds. ⁓ And at the time in my personal life, I was a single dad with a very young child traveling pretty much nonstop. And so, you know, I loved what I did for a living. ⁓ I loved the business I was running and the people I was working with and everything about it.

But my life was logistically challenging, as ⁓ any time you travel a lot. And ⁓ so the idea of maybe doing something locally, not having to get on a plane every Monday morning, and doing something for the community was kind of interesting. So strangely enough, ⁓ I went and spoke with the folks I was working with at the time. ⁓

I said, these people keep calling me about this job. ⁓ what my boss at the time, the CEO of the company said, he said, why don’t you do this thinking about it as like a two-year thing, like an executive on loan, ⁓ and then just come back? ⁓ really, this guy who was the CEO is just a great guy.

friends and ⁓ you know, he understood that I was I had been divorced, you know, I was a single dad and you know, he was just a very understanding cat. So I said that’s a cool way to think about it. So long story short, I decided to accept the job ⁓ thinking this is a two year thing and this be a lot of fun. would be able to help an organization in my in the community in which I live and ⁓

And they were doing interesting things that related to education and health, both of which are things that I really care about. So that’s what I did. I took the job, I jumped in with both feet, and here we are 19 years later. And I never went back.

Anthony Codispoti (05:49)
So you speak with little bit of humility when you say, had no idea why they were contacting me, but what did they see? Why were they so persistent?

John Hoey (05:58)
⁓ I think at the end of the day, are a few things that, ⁓ reasons I ended up being on their target list. One is I was working in the for-profit education space ⁓ for a very well-known company locally. ⁓ And the why ⁓ is a not-for-profit, but it has to compete against for-profit providers. ⁓ And ⁓ we do a lot.

in the education space and I was in the for-profit education world. So I they thought I would be capable of sort of understanding this world in which they live ⁓ and that the kind of businesses and operations the Y was running are things that I would be able to grasp quickly and give some ⁓ guidance to. ⁓ Also, I had been

and somebody who had been involved in a bunch of local organizations. So I chaired nonprofit boards and chaired capital campaigns locally. And so I think they said, well, you know, he’s very involved in the community. He seems to care. ⁓ And so I think, you know, it was those two things. ⁓ The funny story was, you know, during the quote unquote interview process, I just showed up to meetings. never

I didn’t really think about them as interviews. It was board members. They were really impressive people, smart people. And basically, you know, they would talk about the challenges and the problems and the things they were concerned about. And we would just talk about it as it was a business, like it was a business case. And I would say, well, here’s what I would do. So I was, you know, I was thinking about it more as…

you know, you run into somebody at a restaurant, sit down and you have a two hour conversation and, ⁓ somebody pays the check and we all leave. mean, that was, I really didn’t, don’t believe in my head. was never, I never interviewed for the job. I mean, clearly I did, but I never thought of it that way. I just wanted to be.

Anthony Codispoti (07:59)
Ha ha ha.

You just showed up

and you were being yourself and you were answering the questions that they threw out there. Yeah.

John Hoey (08:10)
Yeah. And we’d say,

and like I said, the board members were really impressive who I met with. that was that made the whole process. ⁓ You know, that kind of got my attention.

Anthony Codispoti (08:24)
So what were some of the big challenges that needed addressed right away?

John Hoey (08:27)
Yeah. Well, the organization, know, the Y is a brand I think everybody knows, but, know, it’s certainly ⁓ not an org. It’s not as an organization or as an entity, particularly here in Baltimore at the time was something that people really fully understood. At the time, the organization had a lot of debt. ⁓ It had no strategy. It was losing money. ⁓ It had some facilities that were frankly just terrible.

⁓ It sort of wandered into different ⁓ grant programs and really had no understanding of how the pieces were brought together to make a of coherent whole. They didn’t really know what they were trying to do. So was kind of, there was no strategy. Financially, they were gonna run out of money pretty soon. ⁓

the assets they had were really in poor shape. And candidly, a lot of the people they had were well-meaning, but not terribly capable. So for me, that was like, that’s fascinating. I love that. ⁓ Candidly, yeah, it’s Ratsnats, but I love Ratsnats. And ⁓ you know, the…

Anthony Codispoti (09:42)
To me it sounds like a rat’s nest, but you’re like, hey, give me that.

John Hoey (09:53)
That, you know, to me, it was a solvable problem. you know, when I was offered the job, I mean, really the only criteria I had was, you know, I would run the organization, that I would talk to the board about strategy and general approach. But if they, you know,

that you have to let me run it. And you have to, there has to be some trust because we’re going to change a lot. ⁓ If you told me, by the way, if they told me everything was great and they wanted me to, I wouldn’t have even had a second discussion because I would have said, great, good. don’t know why you want to talk to me. ⁓ And they were, they, they said, yeah, I mean, we’re hiring you to run this. We’re board members. We don’t want to run the organization.

Anthony Codispoti (10:37)
No interest.

John Hoey (10:52)
Um, and my predecessor, uh, at the time, he was a wonderful man. It’s been his whole career in the wild, but really had no business skills, uh, big heart, but really no business skills. And this is a business, you know, that we are a five and one C three. We do this, uh, our shareholders really are the community, but it’s a business and he really didn’t have business acumen. And so.

⁓ you know they they they had to watch

Anthony Codispoti (11:24)
Well, I think if we can just pause for a second on that,

John, if you don’t mind, because I think what you just said there is going to hit people as a little bit odd, some people anyways, when you talk about a nonprofit being a business. Say more about that, because I think in a lot of people’s minds, they’re like, oh, they don’t have to make money. They’re a nonprofit.

John Hoey (11:38)
Yeah.

Right.

Well, ⁓ you know, it’s funny. People say nonprofit. It’s not an industry because it’s a tax status, right? And it requires you to do everything you do to be a benefit to the community. But there’s very different business models across a lot of, you know, wide range of not-for-profits. You might have a not-for-profit like a United Way.

which is a great organization. Basically, what do they do? They raise money. They’re a fundraising organization, right? ⁓ That’s great. ⁓ The why is totally different. ⁓ We, about 70 % of our revenue comes from the ⁓ consumer. ⁓ We are operating things. Hospitals are not for profits. Universities are not for profits. Some of them. Some are not, but most are.

⁓ We have large capital assets. We have to generate, I’ll call it profit, but in the not-for-profit sector, we call it positive cash flow. But we have to generate profit every year to reinvest back into our assets and the community. the profit, it’s really a matter of where’s the money going? Where is the profit going?

⁓ Obviously, in a for-profit enterprise, it’s going back to the owners or the shareholders, right? ⁓ Or into the business and the owners and the board make that decision. With us, it’s going back into the organization or into the community. But we have to make money. If we lose money, we cannot invest in our assets. We cannot invest in the work we do.

We do have ⁓ a positive operating margin, but it’s much thinner than a for-profit business would have.

Anthony Codispoti (13:52)
And so you said 70 % of your revenue comes from consumers. Where does the other 30 % come from?

John Hoey (14:00)
⁓ It comes from mostly grants. In our organization, we run Head Start, which is federally funded program. And we are the largest Head Start provider in the state of Maryland. So in our case, we have about 25 million in Head Start funding federal government.

We also have other grants that fund things like community schools and ⁓ programming for at-risk youth. And then we raise money ⁓ from the public and foundations and others to support a lot of the different things we do. You know, the wise operating model is ⁓ for, I’ll call it the consumer side, is we try to charge reasonable rates for things like membership and preschool.

in after school. ⁓ But we scholarship people who can’t afford it up to four times the federal poverty level. So ⁓ you and I may both be ⁓ preschool dads, if you will. And you may, I may be paying half of what you’re paying because, you know, I just lost my job. ⁓ And so nobody needs to know that. Our job is to get everybody in and serve the community. So we

we have to raise money to fund that sort of thing. Again, if you were running the Y as a for-profit enterprise, there’s a whole host of things that we do that you would not do. ⁓ And that’s fine, right? mean, we do those things because it’s our responsibility as ⁓ a community-based organization that does have that tax status to…

do everything we can to support the community. it is…

It’s a very complicated thing to do. And in our case, we basically have six or seven, we call them product lines, but they’re basically side-by-side operating businesses that fall under our organization. They all have different business models.

Anthony Codispoti (16:19)
Can you tell us more about those? Because I’m hearing you talk about preschool, I’m hearing you talk about what I know about the Y, which is the fitness center and the pool. What else is there?

John Hoey (16:30)
Well, I’ll start there. You know, we don’t run fitness centers. I think that may be a perception. We run, we call them why, family centers. They’re centers of community. They’re healthy centers of community. And yeah, there’s a lot of fitness and health activities that go on. But we’re providing programming for young people. We’re providing ⁓ opportunities for active older adults to be engaged with one another and others in the community.

We’re doing a lot of ⁓ things that are designed to really serve our core audiences, which are families, kids, and seniors. And so that is health and fitness, but a lot of it is not. ⁓ And so you join a Y, what I’ll call a Y family center. And some people, yeah, they may just come in and use the fitness stuff and leave every day. And that’s fine. By the way, that is a very small percentage of

we serve. Most people come and they engage in a wide range of programs available there. ⁓ We have health care providers, you know we provide health education, we do maybe these prevention programs, we do all this sort of thing. We have book clubs for folks, we have ⁓ you know a bunch of youth programs, we have family you know we have family programming, things to come and do with your family. Parents night out.

So drop your kids off and you and your spouse go and get a few hours of, know, away from the kids, you know. It’s always our most popular offering. So they’re, they’re really, you have to think about centers of community, right? Healthy centers, centers of healthy community. You join that. It’s a membership. ⁓ You pay a monthly membership fee. You don’t sign a contract. And, ⁓

Anthony Codispoti (18:03)
I like that, talking my language.

John Hoey (18:27)
So that membership and family center, I’ll call it business, is in our case about almost 45 % of our revenue, right?

So we also run a series of consumer-paid youth development programs. So preschool programs, traditional preschool programs for kids ⁓ one to five. ⁓ We run before and after school enrichment programs in public schools. parents don’t get off at three o’clock. Most parents don’t.

⁓ So after school, your kid will say, I go to the Y and basically they go down to a program room and they, and we, we engage them and we do a lot of what we enrichment activities, things that they might not be doing during the school day. So whether that’s art, recreation, ⁓ you know, a lot of fun stuff that’s in a school that’s in a school. Right. So that’s a, you know, ⁓ that’s another.

Anthony Codispoti (19:37)
And that takes place on site at the schools or they come to your location. OK.

John Hoey (19:46)
business, youth development business that we run. Summer camp, both day camps and ⁓ overnight camps ⁓ run during the summer. ⁓ Those are, again, all of these are consumer pay with that model that I discussed, which is ⁓ basically a sliding scale for people based on income. ⁓ And ⁓ so those are all ⁓

Those are, you will, businesses we’re running. They’re different, but they’re related. In our case, if you have your child in any of those youth development programs, you become a member of the Y. So you have access to the Y Family Centers. In addition to that, I mentioned Head Start, which is a very highly regulated, federally funded ⁓ program for kids and families. ⁓

basically ⁓ zero, and I’ll explain zero in a second, zero to five, whose families are at or below the federal poverty line. And so that looks a lot like traditional preschool programs, but it provides a whole range of additional services for the children and the families. ⁓ Those include health services, those improve.

include a lot of family support services, because these are people living at and below the federal poverty level. They have a lot of challenges, right? You know, for sure. ⁓ So ⁓ that’s a very big operation for us. You know, it’s very large. It’s across the entire region. ⁓ And ⁓ it’s a very different, it’s highly regulated by the federal government. ⁓ And so it’s

Anthony Codispoti (21:38)
Mm. Yeah.

John Hoey (21:41)
It’s, ⁓ you know, it’s very, well, zero to five, it starts with what we call, with what is called early head start. So a woman ⁓ who is pregnant can participate in early head start. So we work with that mother and the family ⁓ to ensure that, you know, the child comes into the world and is healthy and as…

Anthony Codispoti (21:43)
What did you mean by zero? Zero to five.

John Hoey (22:10)
and the family is as prepared as possible. I always say, I think you’re a dad, I’m a dad. Kids don’t come with handbooks, right? And yet people like you and me, we have enough resources that hopefully we can at least try to be prepared for that. Yeah, right. But if you’re operating…

Anthony Codispoti (22:33)
We’re fumbling through it pretty well. Yeah.

John Hoey (22:39)
at the edge economically and otherwise. It’s an even bigger thing. So that’s what Early Head Start does. ⁓ So we do that. And then another huge thing that we do, called community schools, that is work in schools that are in neighborhoods with high concentrations of poverty. ⁓ And they are designated as community schools where we

work with the principal and the school community to provide resources to that school to help the kids in that school and the families in that school stay on track and deal with some of the major distractions that kids and families like that have that in wealthier school districts or schools you don’t have to worry about. So you’ve got kids who are coming to school hungry, right? So we have food pantries.

You have ⁓ kids whose families are in crisis ⁓ in lots of different ways. So you have a lot of resources you’re providing there. ⁓ You’re running after school programs. All of this is funded through grants and philanthropy. ⁓ And so basically we have people in those schools who work, as I said, with the principal and the school community to ensure that

Anthony Codispoti (23:39)
Yeah.

John Hoey (24:06)
kids can come to school and focus on learning and that we deal with a lot of wraparound things that, know, our kids, we go to the grocery store and we make sure they have everything they need. you know, we sign them up for afterschool programs and et cetera, et cetera. The community school might have, you know, GED programs for parents. So.

They really turn these schools into sort of a much more than a school. It’s, a different kind of hub of community. So that is another, and we do that at a massive scale, 29 schools in the region. So I just ran through, I don’t know how many that was, six or seven.

Anthony Codispoti (24:58)
That’s a lot. I think there’s

John Hoey (24:59)
product lines that are all,

they’re very, they operate very differently. They all have ultimately the same bound by the same mission and the same purpose, but that you getting back to the business discussion, they are, we have to operate them differently, different kinds of skills, different financial goals, and we have to make that all work ⁓ cohesively. So

⁓ It’s fun, but it’s not simple.

Anthony Codispoti (25:36)
Yeah. What would you say to people who have the perception that running or working at a nonprofit is easier than the for-profit world?

John Hoey (25:48)
Yeah, I I would say that. ⁓

Try it. ⁓ The thing that’s really, and I think I mentioned it before, we operate on a really thin margin, Most for-profit businesses, once they reach scale and their model is a margin that is… ⁓

Anthony Codispoti (25:59)
I dare you.

John Hoey (26:22)
you is going to be much higher than what ours is. You don’t do things that don’t make financial sense. ⁓ you stop doing. In our case, we have to do things that make financial sense, but some of them make less financial sense than others, right? And so I have a why in West Baltimore ⁓ in a…

historically African-American neighborhood that has a lot of challenges. It’s a very challenged neighborhood. ⁓ And that why has been there for 107 years. You know what? It loses money. If I was running this as a for-profit business, that would have closed years ago. ⁓ What do I do? I invest in it. ⁓ I invest in it heavily to make sure that

Anthony Codispoti (27:16)
Mm-hmm. ⁓

John Hoey (27:19)
people in that community have as great a Y as people in a wealth community. You wouldn’t do that if you’re running it as for-profit. You would just close it and move on. You wouldn’t give away stuff to the degree that we give away things. You would be fine with fewer members, but all of whom could pay. We have a lot more members, but many of them can’t pay as much.

⁓ You would provide a lot less services, know, you would be a lot less people intensive. You would cut your people costs quite a bit. ⁓ We’re very high touch, high engagement. ⁓ We have a lot more people than you would have in a for-profit, just fitness club, if you will.

Anthony Codispoti (28:14)
and

John Hoey (28:17)
You know, the for-profit, and this is not a knock on them. I it’s a good business. The for-profit fitness club model generally is to get you to sign a contract for a year and hope you never come.

Anthony Codispoti (28:31)
That is the truth.

John Hoey (28:33)
That is the truth.

And if you want anything other than access to their equipment, you have to pay extra for everything. At the Y, pretty much everything is all inclusive with a few small exceptions. So it is more complicated. ⁓ And I will say that I was probably under the delusion when I took this job that it would be a bit of a piece of cake. ⁓

Anthony Codispoti (28:43)
There’s an upcharge.

John Hoey (29:03)
Maybe there was a little hubris involved there, but ⁓ I didn’t think it would be easy. But I thought, well, how hard can this be? ⁓ It’s a business that’s broken. Let’s fix it and move on. ⁓ And you learn a lot. And it’s true, I’m sure, in any business. You walk in any business thinking, if you’ve had some success in your career, I can

Anthony Codispoti (29:04)
So you fell into that same misnotion, that same trap. ⁓

John Hoey (29:33)
I can fix this. And it’s always the stuff you don’t know that kills you. And as long you’re open to the reality that you’re not gonna know a lot of stuff, then I think you can navigate your way through that.

Anthony Codispoti (29:50)
So what’s one big thing you didn’t know?

John Hoey (29:56)
I didn’t know how… I’ll tell you one good thing and one bad thing. One good thing was I didn’t know how deeply people felt about the Y as a brand and was about a… Like people… I didn’t grow up around a Y. I had been a member once or twice of a Y in my life, but it hadn’t been a transformative experience for me. ⁓

People who we have people of the members of our ⁓ Y or our Y or a Y for their entire life who, you know, can’t imagine a world in which they don’t have a Y, you know, that they go to three, four times a week that it is whose kids went to preschool and then they went to camp and, know, they still know their old camp buddies from 40 years ago.

It’s like it blew me away. didn’t know. didn’t. I mean, I knew the way existed, but I didn’t know it was that ⁓ had that much impact on people’s lives. ⁓ You know, one of the biggest supporters of our why you sadly passed away of cancer about five years ago was this gentleman who was born and raised in a small town in New Zealand ⁓ that had nothing going on but a tiny little why in this town. He ended up in the

in the financial world in London, eventually moved to New York and then ended up here in Baltimore running a hedge fund. So he became very, very successful, very wealthy. He told me when I took this job, this was like one of these conversations and the guy, the guy’s wildly successful, very unassuming, but wildly successful. He said, John, you know, the minute the why is not for all, there’s a minute I’ll stop supporting you.

He was supporting us at a nice but not a crazy high level at the time. By the time he passed away, he had probably given us well over $10 million. And since he passed away, his family foundation continues to be incredibly generous to us. The Y was transformative to him. So like these, well, not everybody has a…

those kind of resources, these kind of stories just came out all the time and I was just taken aback. I’m like, wow, I didn’t know that. didn’t know any of that. Maybe I should take that seriously. But I also didn’t know

Anthony Codispoti (32:35)
Yeah.

John Hoey (32:42)
I didn’t realize, you you work in the private sector long enough and I worked in bank, know, Citibank. I worked, ⁓ had helped build a very successful set of for-profit education businesses, started my career in a publicly traded apparel company, et cetera, in New York. You know, you work around really smart people. You kind of take for granted that the people around you will all sort of have a common set of

skills, while they might have different skills, like everybody understands basic financial analysis, everybody understands the concept of ROI, everybody understands, you know, operating margin, they can, they find their way around a P and L, etc, etc. Man, you know, I got here, virtually no one understood any of those things. And

You know, even my CFO at the time was a nice gentleman, but boy, the garbage he gave me for financial information was just appalling. So I had to take all this data he gave me, which was terrible, and set up all my own spreadsheets to figure out what the heck was going on. My predecessor, again, it was a really wonderful man. passed away several years ago. Heart of gold.

Anthony Codispoti (33:51)
Hmm.

John Hoey (34:11)
He didn’t really know the difference between a P &L and a balance sheet.

Anthony Codispoti (34:17)
you were working with people who came from a very different set of experiences and skills.

John Hoey (34:17)
So.

Yeah, I mean a

lot of them kind of more social worker orientation. So really good human beings, good human beings.

Anthony Codispoti (34:31)
So I want to talk more about those first days, the first year, because you talked about sort of the bad state that things were in. They were about to run out of money. Facilities were in bad shape. What was the first thing that you did or first series of things that you did? Because it sounds like this was on the verge of collapse. What was your plan to turn it around?

John Hoey (34:52)
Yeah.

Well, the first thing I did was I, you know, well, I did two things. I really did several things. I really spent a lot of time going out and about. needed, you you need to see stuff, right? Like I’m a very tactile guy. I need to see things. I need to see what we’re doing, how we’re doing it, you know, not to judge, but just I need to see it. I don’t want to be theoretical about anything. So I went around and I saw

a lot and it was alarming. ⁓ I also spent time talking to people I respected in the community to get their impressions of the organization. ⁓ And then the third thing, very data well, then I really dug into data, both our own data, which again was in poor shape, things were not tracked, even the financial data made no sense. ⁓ And then I

I spent money in an environment where we had none. I spent a little money to do some ⁓ market research and to get an understanding of what the community thought about us and our services. ⁓ Long story short, they didn’t think much. And they thought the Y was kind of yesterday’s news and

So our bread taken a big hit. so, you know, so you got to ground yourself in data and information, you know, both quantitative and qualitative information before you kind of, and then I really, ⁓ made a decision that, you know, we were gonna, it’s gonna take a little time to fix a lot of this stuff. And, ⁓

We actually had a few building projects that they had borrowed a lot of money for that were on the books. ⁓ And ⁓ so I decided two things. I decided that it’s gonna take some time to fix a of this stuff, but I needed for people, I needed to tap into that feeling that so many people had about the wire that it was so essential in their lives, even if it stunk.

even if the current, the why they’re engaging with was really not very good. And so we actually created a marketing campaign to kind of

get people excited about the Y again, even though candidly a lot of it was, you know, the house was under some serious renovation. And ⁓ the tagline was, it’s deeper here. So we came up with this, I had a really talented marketing person, we came up with this imagery of a pool, everyone knows why I have pools, of two young people sitting at the bottom of the pool playing chess.

⁓ And then we put other images, we exchanged this with other images of things we did doing at the bottom of the pool. And the pool was just simply the image of, think we’re just a pool, if you think we’re just a pool, ⁓ it’s deeper here. And so that got a lot of people’s attention. It started to allow us to tell a bigger story ⁓ that

In we weren’t just a crappy fitness center and a very smelly pool. ⁓ We were an organization that really, even though we didn’t do things terribly well, quite honestly, ⁓ that we were trying to have a lot of impact, that we were trying to serve people. So that got a lot of attention. While doing that, we basically, became, I told everybody that, look,

We’re going to embrace quality. We’ve ⁓ really raised the bar while we don’t have new buildings yet, we don’t have new this, but everything we do has to be high quality. And we’re going to measure that and we’re going to have, basically we’re going to be ruthless around quality. And that was like, for our organization, people were just stunned.

I, that we would, that they, it’s a big culture. Yeah. I’m like, I don’t care. You know, I mentioned that why that we have in West Baltimore. ⁓ And, you know, I went in there and it was really dingy and really poorly maintained and kind of the, the, the attitude people had was, well, you know, it’s in a very challenged neighborhood. what do people expect? I’m like, hell no.

Anthony Codispoti (39:38)
It’s a big culture shift. How did you get people to buy in?

John Hoey (40:06)
You know what? It’s what do people deserve? We all deserve ⁓ well-maintained things. We all deserve clean things. We all deserve people to look us in the eye and engage with us, right? So quality in terms of also human engagement. So we really set the bar and said, gigs up.

Anthony Codispoti (40:31)
So how did

you start to implement some of these big changes though, John? You guys don’t have any money. You need money to start improving things. And I appreciate what you’re talking about around changing the culture of raising the bar. But it takes money to do some of the things that you’re talking about.

John Hoey (40:48)
Yeah,

it does. so ⁓ a couple of things, like I said, they had borrowed some money ⁓ to start some building projects. ⁓ And so I had some of that capital. ⁓ So we started to think about what those projects were going to look like. And we started to reinvent what a Y could look like. ⁓

And ⁓ so we started to think about that. Some of the other things we did were really, ⁓ the truth is,

we were starting, because we were changing the quality level of a lot of things, our revenues started to creep up a bit, not wildly. So we got to slightly positive cash flow in the first 12 months. ⁓ And so we started to build some confidence. And ⁓ then we… ⁓

We restructured how we were organized. ⁓ And I sort of brought in people to run these various product lines as businesses, which is not how they ever ran things before. So ⁓ I brought in better people. ⁓

⁓

We also then, not long after I started was the big financial crisis of 2008, right? So all of a sudden we hit that, we all remember that, not so fondly, but we remember it. It actually proved to be a godsend because two reasons. One is real estate became very cheap.

And so we did a bunch of deals ⁓ for new spaces at crazy low rates. ⁓ And so we jumped on those. We did some interesting things on our balance sheet, which I won’t get into. We did some set lease backs to free up capital and things like that. Things that people are like, you’re going to do what? ⁓ This is what we’re going to do. And ⁓ so we were able to generate some capital.

some opportunity. The other thing that happened during that financial crisis, because again, we were starting to change things. And even though the built, not all the buildings looked that great, they were clean. The programming was better. The people were more engaging. And the truth is, you know, as to why you have a bit of a halo, you know, if you can do those things, the controllable things, right. It’s amazing. I mean, our membership really began to grow. And

⁓ So we were able to actually open some new Ys that were result of getting some great opportunities during that financial crisis when real estate was really cheap. ⁓ And we really start, the flywheel really started to move. ⁓ And the other thing during the financial crisis, I will say was, what I’ve always said is Y needs to be essential.

in your life. it can’t be a, if people think of it as sort of a discretionary item, like, you know, a lot of things, we’re in trouble. They have to think about the Y membership as essential in their life. And so during the financial crisis, we were really, we doubled down on the value proposition for families. And a lot of families, you know, they stopped going to do

Disney, right? You know, the big vacation every year. But they still wanted to do stuff as a family. We became the more modestly cost-effective thing that they could do as a family. So they weren’t just like, sorry kids, we’re not, it’s going to be a rough year. It’s like, all right, well, we’ll join the Y. And I’m doing something for my family, but in the midst of a time when I don’t have the same resource. So we really

Anthony Codispoti (44:53)
Mm-hmm.

more cost-effective entertainment option.

John Hoey (45:21)
To me, that old phrase, I don’t know who invented it, everyone claims it, but never waste a good crisis. We were very much, that was really kind of our motto at the time.

Anthony Codispoti (45:28)
Mm.

So quick sidebar, throughout this entire conversation, we have always said the Y, not YMCA, not YWCA, the Y. And as I look at your website address, which we’ll provide to folks again at the end, it’s just the letter YMaryland.org. Why is that?

John Hoey (45:56)
Yeah, well, there’s a great story. ⁓ And it was another thing I did, which I’m glad you brought it in. didn’t bring it up yet because I thought we were going to get to it, and it bears a little bit more explanation. So the other thing, I came back to our board ⁓ with sort of this plan, some of which I’ve explained already, right? And the thing I said is we’re going to rebrand. We’re going to rebrand as just

the Y. Well, why is that? Well, it’s based on research. It wasn’t me just seat of the pants, hey, I got a great idea. People were confused, understandably, about the Y, YMCA. Like, ⁓ are you guys just for Christian men? Because kind of like that’s what your acronym. And yes, the YMCA was founded in the 1840s in London. ⁓

been to serve Christian men who were coming in from the farms during the Industrial Revolution coming into London and wreaking havoc. And so it was the way of socializing these young men around organized activities, which had a religious bent, but that also included exercise and all these other things that the Y ended up inventing over the years. ⁓ So yeah, that’s our origin story. man, it’s a long time.

Anthony Codispoti (47:24)
So there was some

confusion there and the rebranding, you did some market research and came up with this idea.

John Hoey (47:27)
Yeah. And so,

you know, to me, we say we’re for all, but our name does feels like we aren’t. There’s a cognitive dissonance there. And so the truth is, the way most people refer to us anyway, is the why. It’s just shorter. And I used to joke like with the,

the acronym can be challenging because not everybody ⁓ is a male, not everyone is Christian, and no one cares about the association part. But we’re either young once or we are young, right? We all aspire to be at least youthful in the way we think about things. So that’s like, can all rally around that part of the acronym, right? Let’s do that. so we embraced that.

And we were the why is what’s called a federated organization. So all the wise across the country are independent 501 C3s. We’re not, you I don’t report to somebody, you know, in a home office somewhere. ⁓ We’re kind of what I call loose confederation of states. And so ⁓ the there is a national organization that we fund. at the time, I mean, they had no control over the brand.

Everybody was expressing it different. The logo looked different everywhere. It was a mess, quite candidly. So I just said, you know what? Everyone seems to be doing their own thing. We’re going to do our own thing. We’re the why. And we redesigned the logo and we embraced that. ⁓ It really resonated locally. ⁓ I did get a ton of crap for it nationally. I people said, you know, I got called all kinds of names.

Anthony Codispoti (49:17)
Amen.

John Hoey (49:21)
none of which I could repeat on this podcast, for what I did. like, don’t, you know, are you, you know, do you, are you, you don’t care about our Christian heritage, that’s, you know, that’s sacred, blah, blah, blah. And I was like, no, I just follow the research. You know, we want to be for all, so we need a name that’s for all. Like, don’t make this complicated. And I got,

You know, I got threatened by a lot of people in the national office, we’re going to pull your charter. I’m like, you know, go try. Look around the country. Everybody’s doing this differently. You guys are not serious people. ⁓ And eventually, the cool part of this, eventually, I convinced the national office to do a national market study like I had done. And they did one, finally.

they got the same results, basically. That people were confused. ⁓ The why was what was kind of universally thought of, and that the brand had a lot of equity, but it was confusing to people. A lot of people did not see themselves in the brand, whether that was women or people of certain, either have other religions or not religious.

And a lot of women, which is by the way 51 % of the population.

Anthony Codispoti (51:02)
So did any of the other offices follow suit?

John Hoey (51:05)
So they did the research, they saw that, and the national organization ultimately rebranded as the Y. Now, they did some stupid things in addition to that, which kind of kept the YMCA to the side and they still use it in different ways. I won’t get into the wherefores and why. So they couldn’t quite give it up, but at the end of the day, they did rebrand and ⁓ I think

they will admit that it was the best thing they did. So yes, we’re still technically the YMCA and a lot of people call us the YMCA, that’s fine, but we’re the Y and yeah.

Anthony Codispoti (51:47)
why.

Okay, as we head into the homestretch here. Yeah, right. That’s how my kids know it. ⁓ So what’s a big challenge, John, that you’ve had to overcome in your life, personal or professional? We’ve already talked about, obviously, some of the big ones with the why, but maybe you’ve got a different one you want to focus on here just for a few minutes.

John Hoey (51:51)
everyone thinks of the village people, right? You know, it’s like the village people. But you and that’s fun.

Yeah, well, ⁓ I think the biggest existential challenge we’ve had to deal with here, and it was personal too, is COVID, right? COVID affected everyone, but it affected different things, different entities differently. In our case, ⁓ we were really rolling.

You know, we were really rolling in 2019. We had an amazing year, lot of optimism into 2020. We were starting to think bigger about some new things, et cetera, et cetera. And, you know, I grew up in an Irish Catholic family and sort of one of the Irish ethoses is every silver lining has a cloud. So I was always a guy who like didn’t

didn’t quite trust success. Whenever you feel like things are going well, something bad is going to happen. We’re all products of our upbringing. So I’m not saying I saw COVID coming, but I was just like, ah, things are going really well. Something’s going to trip us up. I didn’t think it was something major. So then COVID hit, we all know.

Anthony Codispoti (53:20)
the other shoe gonna drop?

Yeah.

John Hoey (53:39)
and closed the country down in March of 2020 ⁓ and closed our Y and Ys across the country down in March of 2020. ⁓ In our case, you know, I mean, that’s 50 % of my revenue. It also shut down my preschools. Schools got closed, so my before and after school was shut down. Basically, it shut down my business. ⁓

You know, we…

⁓ you know, we had to lay off about 1,500 people overnight. ⁓ you know, the, there were all these federal programs that got quickly developed, you know, PPP program, we all remember that, right? ⁓ Well, that, we weren’t eligible for that because we had too many employees, you know, it was, and, ⁓

Anthony Codispoti (54:20)
Cheers.

I didn’t realize there was an upper cap.

John Hoey (54:41)
And there were special programs developed for hospitals, special programs developed for universities, so large public serving, but not for large public serving organizations like ours. A lot of Ys across the country did get the money because they’re so small. I think you had to less than 500 employees. I think that was the criteria. Because it was run out of the small business administration.

And they’re only authorized by Congress to ⁓ work with businesses at 500 people and below.

Anthony Codispoti (55:16)
So how did you guys make it through? What did you do?

John Hoey (55:20)
Well, a couple of things happened. ⁓ Well, several things happened. One is for several months, we basically messaged the members, please don’t leave us. We know we’re not open, but there may not be a why here if you don’t hold on. So that was proved to be amazingly effective. We lost probably about 20 % of our members initially.

⁓ That was ⁓ helpful. We also started up a whole bunch of stuff working with the state of Maryland. We did emergency childcare for ⁓ emergency workers. So our Y’s were closed, but for firemen and policemen and nurses, the state was funding us to watch their kids in a Y while they had to go to work.

Anthony Codispoti (56:18)
Mm-hmm.

John Hoey (56:19)
right? They were essential workers, right? Now we remember that term, right? Essential workers. So, and then we also did things like schools closed and the public schools in Maryland stayed closed for the rest of that school year and the next year. So we did virtual school for kids, you know, so we tried to be inventive. We also got really involved in food distribution using our footprint to help working with

Maryland Food Bank and others to kind of get food to people. So we tried to be of service. We had some short-term funding. We went out candidly and begged for money. know, ain’t too proud to beg, right? That’s for sure. ⁓ And then interestingly when we were finally able to open our doors, ⁓

people who had stayed with us, a lot of them left us, because they said, you’re open now. I don’t want to go, because that was in the summer of 2020. We didn’t have a vaccine yet, right? So I lost, we were down to half of our membership base once we reopened. ⁓

Anthony Codispoti (57:27)
But they figured you were out of the tough spot and they didn’t need to support you anymore.

John Hoey (57:40)
In all candor, I I thought we were going to go bankrupt. We were starting to prepare for that process. You know, was really, I was seething about the fact that there was no government program to help us. And yet people whose businesses were actually growing as a result of COVID were getting PPP money. You know, it crazy. Like one of the ways I kind of got myself through COVID mentally was, you know, I came to work every day.

A, just to try to be present for the few people who are still coming in every day. ⁓ But I would leave sometimes in the afternoon early and go play nine holes golf. And I was in my course and I was playing with this guy. I didn’t know him well. And we were talking and he was like, you know, talking about how COVID affected us. my God. We’ve never made more money. You he worked for a business that was in the construction world and some

Anthony Codispoti (58:22)
and

John Hoey (58:40)
reason construction took off during COVID, right? And he said, we’ve never sold more stuff. I guess they did heating and air conditioning supply. And he’s like, we’re killing it. And we got PPP money. And I was just like, did I get paired with this guy? And so he’s like, hey, what do you do for a living?

Anthony Codispoti (59:00)
Ha

Well, I’m prepping the Y for bankruptcy. Thanks for asking.

John Hoey (59:05)
Right.

So, ⁓ so we were we really thought we were kind of running out of options. But a couple of things. One is I did one thing our national office does well is federal government affairs. And we worked on trying to get the ⁓ PPP program, ⁓ get large not for profits like

ours to be eligible for the PPP program. ⁓ And we would have been eligible, you we’d be eligible for the maximum amount, which was 10 million at the time. And so fortunately, and life sometimes is serendipity, right? Fortunately, ⁓ Senator Ben Cardin, who has since retired, was the chair of the Senate Small Business ⁓ Committee, which oversaw the Small Business Administration.

And so working with our national office and Senator Cardin and his staff, we were like, we got to get this changed, you know, and he was very sympathetic. Like we, you know, we can’t have organizations like the Y go under. But they came back and they said, we looked at it. We got to figure out what we could actually get past if we do it legislation. They came up with this brilliant idea to change the regulation.

that would allow the Small Business Administration to work with any entity that had no more than 500 employees in one location, as opposed to for the entire organization. So government can sometimes work funny in funny ways. And…

Anthony Codispoti (1:00:38)
⁓

and we’ll edit.

John Hoey (1:00:46)
that would make us eligible. So I ended up testifying at a Senate hearing ⁓ that, I forget when that was, but during midst of COVID ⁓ to sort of plead the case. ⁓ so we were ultimately able to get that changed and.

Anthony Codispoti (1:01:09)
And so that was a big part of what helped get you guys through that time.

John Hoey (1:01:10)
So ⁓

we got that 10 million. Another thing happened which was totally serendipity. ⁓ It was ⁓ two weeks before Thanksgiving in 2020. I was sitting in my office on a Friday. ⁓ I got an email from somebody who said, I represent a philanthropist who would like to support your organization. ⁓ And you get some of these

emails sometimes and lot of sometimes they’re just crazy and but you know I don’t know so I figured I followed up on it responded and I said be happy to talk to you she said well I want you to talk to ⁓ this person at this consulting firm ⁓ who we’ve been working with and ⁓ would you be able to do that I was like well that’s odd but ⁓ so the person was in a

Anthony Codispoti (1:01:46)
You gotta follow up on it.

John Hoey (1:02:10)
consulting firm, their office was in San Francisco. So we ended up like late on a Friday at like 530 at night. It was dark because it was during the fall and you’re kind of like a last thing. It was on a Friday, last thing of the week and I’m out of here. This nice person is going to give us $5,000. So I got a call and I spoke to the consultant and the person was representing McKenzie

Scott, who is Jeff Bezos’ ex-wife, who decided at that time she was going to start giving away large sums of money to organizations with…she had this whole consulting firm vetting them. You don’t know anything. And the woman said, ⁓ do you know who Mackenzie Scott is? Of course, I said yes, even though I didn’t. ⁓ So I was Googling her as she said that, and I

saw quickly like Bezos and like, oh, okay. And, you know, I think we’d all heard that they had gotten divorced, right? So we knew. And she’s going to give you $18 million. And of course, you’re like, what? And, you you think it’s kind of a crank call, but it’s a, you know, I won’t name the firm, but it was very legitimate consulting firm that I actually know well. So I mean, I didn’t know that

Anthony Codispoti (1:03:23)
Wow. Fantastic.

John Hoey (1:03:40)
this woman, but I saw her on their website. She was definitely a partner. So she’s a legit person. And so I, you would think there’s probably a million restrictions, right? Said, no restriction. You do with it what you need. And then I thought, ⁓ we probably get it over an extended period of time. A week later, we had a wire transfer. 18 million. Yeah. So

Anthony Codispoti (1:03:45)
Yeah.

the full amount. Spectacular.

John Hoey (1:04:09)
between those various things. So sometimes, you know, it pays to be lucky. ⁓ It also, you know, flotting it. Yes, the Irishman in me was, you know, like that was a four leaf clover there. ⁓

Anthony Codispoti (1:04:18)
There your cloud had the silver lining rather than the other way around. Yeah. Yeah.

John, I want to transition into our last question, but before I ask it, I want to take care of three quick things. First of all, anybody who wants to get in touch with the why or John, you can go to their website, which is just the letter why Maryland.org. And they’ve got contact information on their why Maryland.org. And as a reminder, if you want to get more employees access to therapists, doctors and prescription meds that as paradoxical as it seemed.

actually increases the company’s net profits, reach out to us at addbackbenefits.com. Finally, if you’re enjoying the show, a quick comment or review on your favorite podcast app goes a long way towards helping others discover our show. So thank you in advance. So last question for you, John, a year from now, you and I reconnect and you’re celebrating a big thing. What’s that big thing you hope to be celebrating a year from today?

John Hoey (1:05:23)
Yeah, there’s so much that I could say. ⁓ You know, I think…

I had mentioned to you that January is our big membership month. you know, I think the world has changed a lot since I came into this job and since COVID hit, right? You know, it’s changed a lot. And we’re all dealing with a lot of things, a lot of technology, a lot of issues in the world. And, you know, there’s this notion that, you know, people are not able to engage with each other anymore in ways that they used to.

⁓ And so I’ve heard people say, the Y’s whole model may be flawed because people are gonna wanna engage through phones and other ways and not really do things in person, whether that’s work out or whether that’s do group activities or engage with their neighbors anymore. Reality is that’s totally false. I think because of all this, are,

We are going to, we’re actually this month going to go pass our high water mark before COVID in membership. ⁓ We have more people from more parts of the community ⁓ engaging with us than ever before. And so we had doubled down on saying like, we’re going to serve all, we’re really going to do this. We’re going to be intentional about reaching parts of the community we hadn’t reached before.

Anthony Codispoti (1:06:37)
Nice.

John Hoey (1:06:59)
⁓ as well, and that we’re going to reinvent ourselves. And we didn’t really talk a lot about sort of the reinvention since COVID, but we’ve done a lot of things differently, as most businesses have had to, right? We to rethink. And we’ve done lot of, again, a lot of crazy things that a lot of people think are crazy, ⁓ and they’re working. And so in a year, I would really like to see that further validation of that.

⁓ I’m guardedly optimistic as that Irish kid who’s always looking for the cloud behind the silver lining. But I really do believe that fundamentally what we do is essential in people’s lives and that the relevance of our work has never been greater than today. And so, you know, I’m excited about the future. I’m also, I’m naive. I’m not, ⁓ you know, somebody who

Anthony Codispoti (1:07:49)
Yeah.

John Hoey (1:08:00)
leaves his own BS. But I see with my own eyes that when we do things right and we serve people appropriately, that we can build community like no one else. And it’s working. So I want to see that further validated.

Anthony Codispoti (1:08:17)
love it. John Hoey from the Y in central Maryland. I want to be the first to thank you for sharing both your time and your story with us today. I really appreciate you.

John Hoey (1:08:27)
been my pleasure.

Anthony Codispoti (1:08:29)
Folks, that’s a wrap on another episode of the Inspired Stories podcast. Thanks for learning with us today.