Funding Crunch Led ACORN to Lay Off Employees in N.C.

North Carolina's ACORN branch laid off all eight of its employees "just before" the release of five hidden-camera videos showing staffers assisting a man and woman posing as a pimp and prostitute, FOXNews.com has learned.

State Director Pat McCoy said the staffers were let go at its offices in Charlotte, Raliegh, Durham and Greensboro due to a "rough patch" in the organization's budget. Those employees continue to work as unpaid volunteers, however.

"Even before this recent videotape thing, we had a rough patch in the budget," McCoy told FOXNews.com. "Obviously these videotapes are not helpful to us in terms of fundraising."

McCoy said he expects grant funds to be received within the next two weeks that could carry the state organization through the rest of 2009. He declined to specify the source of that grant money.

The scandal started on Sept. 10 when the first of five hidden-camera videos were posted on the blog BigGovernment.com, depicting ACORN staffers at five offices nationwide giving advice to filmmakers posing as a pimp and prostitute.

McCoy said the videos have had little affect on workplace morale, McCoy said.

"Everybody's continuing to do their job as best they can in the meantime," he said. "I continue to work as if nothing had happened."

McCoy said the employees could be rehired within two weeks.