Jan. 5—GRAND FORKS — Grand Forks’ principal animal shelter is $15,000 short of making its next payroll and will begin cutting staff and services without a significant cash infusion.

Circle of Friends rolled over some $42,000 in unpaid bills from December, has effectively exhausted its reserves and may close its Adoption Center at 910 S. Washington St. by the end of the month, the nonprofit’s senior leadership told the Herald in a Friday meeting.

The nonprofit, whose leaders also met with city and police leadership Friday, will continue its contracted services as the city pound at its Medical Center at 4375 N. Washington St., but may have to cut services like microchipping its animals, spaying and neutering adopted pets and housing pets when the pets’ owners are in crisis.

Leaders from Circle of Friends and the city are expected to meet again in early February to discuss the nonprofit’s future and how its relationship with the city may change.

“We all know there are cuts that have to be made,” Circle of Friends Executive Director Lauralee Tupa said. “The good place we’re at is now, collectively, we’re going to decide what the cuts are.”

Up to this point, the animal shelter has offered an array of services, including operating a medical suite equipped for surgery and a 24/7 on-call veterinarian, and prided itself on markers of strong accounting practices like a string of clean outside audits and a Platinum Seal of Transparency on nonprofit information service GuideStar.

But then the shelter launched an ambitious, around-the-clock sit-in in November in a bid to raise $1 million, and began posting increasingly dire statements about its future on Facebook.

“We are DAYS away from closing our Adoption Center,” read a Dec. 14 Facebook post from the shelter. “DAYS away from having to say no to someone who is looking for a place for their pet to stay because they were rushed by emergency to the hospital. DAYS away from turning away someone who is facing financial hardship and doesn’t want their pet to go hungry.”

Some were critical of the nonprofit online for the six-figure salaries paid out to its leadership, including Tupa, and made insinuations of financial impropriety.

Tupa said she’s waiting to hear back from two potential donors, a business and and individuals. She said the shelter in fact needs closer to $1.2 million in outside donations to keep all of its current services intact.

“Do we need more than ($1 million)? Yes,” Tupa said.

“But the sign would have looked really awkward,” she joked.

In recent weeks, Circle of Friends has petitioned the city to renegotiate its contracted role as the city pound, saying the approximately $200,000 the city pays the shelter each year doesn’t begin to cover the cost the shelter incurs from strays and abandoned animals brought in by Grand Forks police. (Grand Forks County also pays the shelter $20,000 for shelter services under different terms.)

Tupa said approximately 94% of the animals brought to Circle of Friends originate in the city and the payment the city currently gives to cover five-day holds for strays doesn’t begin to cover the combined cost of the stay, spaying and neutering, vaccinations and other medical care the shelter provides — or the animal’s likely extended stay in the shelter as it waits to be adopted or picked up by its owner.

“We’re having a lot of conversations about how the animals are coming in, why they stay so long, and how it’s taxing everybody,” Tupa said.

She stated repeatedly that the shelter is only bringing in $50,000 per month from adoption fees and donations, while it costs the shelter three times that to operate.

Tupa said the shelter intends to continue “business as usual” through the end of the month before it begins cutting back on services.

City Administrator Todd Feland said the city has asked the shelter to document its per-animal costs throughout January so city officials can better understand the services Circle of Friends provides and the costs they incur to do so.

While the city has agreed to meet with Circle of Friends monthly to discuss finances, Feland said the city will need more information before it agrees to raise its allocation to the shelter.

“If we were to consider additional funding, we would need more specifics so we can further justify it,” Feland said.

Financial documents provided to the Herald by Circle of Friends show the shelter entered fiscal year 2024 with a $1 million budget deficit, which the agency’s leaders attributed to a confluence of factors that have hit animal shelters nationwide, including an uptick in pet intake, increases in the cost of medical supplies and rising wages.

Attempts to make up the budget gap through grant-writing and soliciting donors fell through — the shelter had collected only $456,693 of its budgeted $1.57 million in revenue by November — and the shelter burned through most of its $1.2 million in reserves to maintain service.

As of Friday, the shelter has some $100,000 in investment income, according to Chief Financial Officer Judi Marvin, dividends from which are set aside to pay the mortgage on the shelter’s Medical Center, along with two endowment funds, one independent and one with the Community Foundation of Grand Forks, East Grand Forks and Region.

Neither has funds that can be directly accessed easily — or at all, in the Community Foundation endowment’s case, Marvin said.

The recent around-the-clock lock-in fundraiser did successfully raise some $123,213, mostly in cash, which Marvin said has kept the shelter running in the last few weeks.

“Without the fundraiser in the parking lot, we wouldn’t be here today,” Marvin said.

Tupa said Circle of Friends will inform the owners of the Adoption Center on Jan. 15 whether it will continue its lease past the end of the month.

The shelter’s current payroll cycle ends Jan. 17. Without further donor support, Tupa said the shelter will cut staff hours in the coming days so working employees can be compensated for their time.

“We have people who will just clock out and keep working,” Tupa said. “We’re so much so in survival mode. … That’s really where everybody is at.”