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Nonprofit Radio for February 21, 2020: Hiring Your Audit Firm & Equitable Compensation

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My Guests:

Yigit Uctum: Hiring Your Audit Firm
When it’s time to change your auditors, what do you look for? And how best to work together? I talk through the relationship with Yigit Uctum, a partner at Wegner CPAs.

 

 

Gene Takagi: Equitable Compensation
Gene TakagiIs your compensation schedule fair? What does that mean and why should you care? Gene Takagi returns for a full discussion. He’s our legal contributor and principal of NEO, the Nonprofit & Exempt Organizations Law Group.

 

 

 

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[00:00:14.24] spk_1:
Hello and welcome to tony-martignetti non profit radio. Big non profit ideas for the other 95% on your aptly named host. We have a listener of the week. It’s Debra Elizabeth Finn in Boston, Massachusetts. She shared non profit

[00:00:28.99] spk_2:
radio with her group, Mission based Massachusetts. I’m always grateful to those of you who share the show. If you do, let me know. I will shout you out as

[00:00:38.00] spk_1:
well. Many thanks, Deborah. Thank you so much. Congratulations

[00:00:45.00] spk_2:
on being our listener of the week. I’m glad you’re with me. I’d be hit with Roman. Is, um if you poison to me with the idea that you missed today’s

[00:00:49.97] spk_1:
show hiring your audit firm when it’s time to change your auditors, What do you look for? And how do

[00:00:55.96] spk_2:
you best work together? I talked through the relationship with you. Eat each tomb, a partner at wegner-C.P.As

[00:01:09.51] spk_1:
and equitable compensation. Is your compensation schedule fair? What does that mean? And why should you care? Jean Takagi returns for a full discussion.

[00:01:11.77] spk_2:
He’s our legal contributor and principle of neo the non profit and Exempt Organizations Law

[00:01:47.61] spk_1:
group. And he’s in the studio. Authorities take two planned giving relationship stories were sponsored by wegner-C.P.As guiding you beyond the numbers wegner-C.P.As dot com But Cougar Mountain Software, Denali Fund is there complete accounting solution made for nonprofits tony-dot-M.A.-slash-Pursuant. Martin for a free 60 day trial. And by turned to communications, PR and content for nonprofits. Your story is their mission. Turn hyphen to DOT CEO. I’m very pleased to welcome back to the show and to the studio you coach Doom. He’s a partner at wegner-C.P.As

[00:02:06.41] spk_2:
with over 13 years of experience. He works exclusively with tax exempt organizations. He oversees Wagner’s Form 9 90 nationwide preparation practice and leads their New York City operations. The firm is that wegner-C.P.As dot

[00:02:07.94] spk_1:
com. You know that And at wegner-C.P.As. Welcome back.

[00:02:12.68] spk_3:
Thank you for having your back.

[00:02:13.94] spk_1:
That’s a pleasure. Stand a little closer to the

[00:02:15.72] spk_2:
mike so we can hear you. Yes. There. Thank you.

[00:02:18.34] spk_1:
Um, getting from Madison, Wisconsin.

[00:02:21.16] spk_2:
Thank you. How cold is it? There now is pretty called people.

[00:02:26.03] spk_3:
When I left, it was like like 10 degrees. I don’t know. I don’t pay attention after I leave. Okay.

[00:02:32.36] spk_2:
When it gets below 20 does it matter? And it

[00:02:35.14] spk_3:
doesn’t matter. What

[00:02:35.93] spk_1:
Can you tell that between 10 and zero.

[00:02:38.90] spk_3:
I can You can’t. The marginal difference it is called. It’s

[00:02:42.71] spk_2:
just all called anything

[00:02:45.12] spk_3:
below one of the state f

[00:02:47.84] spk_1:
in cold. Okay, um, so we’re talking about the audit relationship. So first of

[00:02:50.63] spk_2:
all, what? What goes into What are we asking an order for him to do before we get into how to hire them. What is it we’re expecting from an audit?

[00:03:20.94] spk_3:
So, basically from an audit by the professional standards, you expect someone independent to go over your and simple terms like, I’m gonna get technical, go over your accounting records and internal controls, overcome over financial reporting and basic issue. Their opinion based on their all its procedures bedroom, not your financial statements are fairly stated in accordance with generally accepted accounting principles.

[00:03:30.63] spk_1:
Yeah, I know. And

[00:03:31.50] spk_3:
I

[00:03:31.62] spk_2:
don’t have my college accounting class.

[00:03:58.16] spk_3:
Yeah, absolutely. And based on the audit, he also expect some recommendations like they don’t have to give one, but ah, that the relationship is auditors have the expertise working with similar organizations and know the best practices. And if they identify any weaknesses in your systems, they’re also required to report that. But in addition, they also make recommendations as evaluated service.

[00:04:01.79] spk_2:
So it’s much more than just a numerical analysis. Absolutely. You’re talking about going into processes, trains, accountability, etcetera,

[00:04:10.88] spk_3:
right? Absolutely. Yeah. We going to accounting systems, looking at the system’s looking, get who’s involved in certain procedures and what controls are in place and everything. So

[00:04:24.65] spk_2:
meaning board members, senior employees going into those depends

[00:04:27.80] spk_3:
on who were working it, like really small organizations that may be one person organization. Then he would want board the moment as part of the internal controls. If the non profit is large enough, they can have the internal control environment between the organization but typically organizations. Most nonprofits. They’re off a certain small size, and you you want some board government’s involvement in Internal Control says Okay,

[00:05:01.30] spk_2:
and then and then these recommendations. You’re saying that’s based on having done hundreds of audits of similar type organizations. You could make some recommendations, give advice about I could be doing some things better. Absolutely there. I guess they’re okay, but you could be doing things will smarter,

[00:05:14.40] spk_3:
like doing it more efficiently or doing it a little differently and again like that can be some best practice recommendations as well as some recommendations to address certain weaknesses in the internal control system. So that can be two different things.

[00:05:30.04] spk_2:
Okay, so it’s so It’s like including business practices is we’re

[00:06:16.49] spk_3:
losing business practices as well, so we’re not required to his auditors to look at certain things. But people expects us to look at things, even if it’s not part of thought. It se RV makeover some insurance invoices gonna required to make sure that they have enough coverage for certain things. But that’s something that, based on looking at it, such as like external fraud coverage, like looking at the today’s environment. Barry People’s a concert, getting hacked and everything. You may have an insurance policy for cyber security. Let’s say it may cover up to $10,000 with a $5000 deductible. Well, that’s not really very much money, exactly. So if someone, then the may look at that and maybe recommend that you know you may want topped us a little bit by paying just a little in premium. Say another 100,000 premium, you increase that coverage from 110,000 or something like that.

[00:06:29.20] spk_2:
Okay, Okay. So I mean there’s so there’s lots of different areas you can just

[00:06:32.48] spk_3:
a little bit.

[00:06:33.64] spk_1:
Okay. Um, so we have a couple

[00:06:39.89] spk_2:
of minutes before our before our first break? Uhm, why don’t we get into the, uh

[00:06:42.11] spk_1:
oh. I do want to ask

[00:06:43.00] spk_2:
you how long is an audit process that’s based on the size of the farm? Really?

[00:07:00.19] spk_3:
Yeah. Absolutely. Yeah. On the duration depends on how responsive each part iss basically so and so it can very quickly

[00:07:02.05] spk_1:
doesn’t have to be done on site or

[00:07:48.06] spk_3:
it does not have this day and age like out of organizations keep records electronically and it can be them through video conferencing, teleconferences and looking everything online and just document sharing. Yeah, and and absolutely and out off times, man. Dorrit is done on site daughter. They’re sitting in a conference room. Email the client email E Glendale back. So it’s like, you know so. But it’s face to face is good summits depends on preference. A cz Well, so are some people prefer it that pay and there’s advantages and dissidents just off face to face, like onside auditing versus virtual Auditing one is flexibility, but the danger is the order can direct longer if it’s totally virtual. And if both parties will not commit to the timeline. So,

[00:07:53.24] spk_2:
yeah, the timeline and document sharing like responsiveness,

[00:07:57.83] spk_3:
but it does not have to be done on site.

[00:08:08.83] spk_2:
Okay. Okay. Cool. Um, all right. So we got another minute or so before before break. And so I So let’s start to get into what we’d be looking for in a firm, and then we’ll go more detail after our parents just want to be looking for

[00:08:16.64] spk_1:
I think

[00:08:48.37] spk_3:
the number one thing, that’s the most important thing. The expertise and experience. You want a firm that is capable off doing the audit. They have experience working with organizations that ah, have your the same needs. You may be operating under a separate federal grant. Let’s stay and on everything is different. Like just because an organization is a non profit, it doesn’t mean they’re doing the same things. They don’t have the same requirements. I think number one thing is to have the expertise toe do the audit. Okay,

[00:09:03.48] spk_2:
so that’s interesting. Like if your revenue stream is different than a similarly sized organization than the order is going to be very different. You’re saying if it’s your old federally funded versus revenue for service is

[00:09:05.10] spk_3:
or purely foundation

[00:09:10.11] spk_2:
foundation. Okay, so the different character of revenue not just don’t base it on they do audits of organizations that have 20 employees. And that’s about what we have, so that

[00:09:20.17] spk_3:
I know it’s all different. Okay,

[00:09:22.83] spk_1:
okay. All right. So let’s take this first break, which you’re a part of because it’s wegner-C.P.As, which I’m grateful for. So wegner-C.P.As, of course. Thank you. I’m saying all time

[00:09:43.53] spk_2:
forgot. Take their CPS way. No, we’re getting a dick. We’re getting detail about what the audit is, but basically, it’s kind of like a dentist. You get an idea of what? An order what wegner-C.P.As firm does for you. I’m typically saying, start your due diligence at wegner-C.P.As dot com and then pick up the phone because that’s how I like to communicate. But it is going to

[00:09:49.38] spk_1:
talk to you because you know, a partner in the firm, cause serious. So what’s that? If I’m picking up the phone

[00:10:08.10] spk_2:
and calling you and saying I looked at your was on the website, you might help us. We need some help with our, uh 9 90 Wait. I feel like we can’t. It’s beyond our capability doing in house anymore. What would that What would that look like? That call look like

[00:10:34.01] spk_3:
that Cole would look like. Basically, I would be asking some questions. Will identify your needs better on Do we have, like, Haman states? Are you registered then? And kind of try to understand what you have kind of try to understand your organization. And I would liketo look at your previous 9 90 kind of to someone else’s and such. And basically that you know what we can do for you. And if it works out, you will start working together. So

[00:10:41.70] spk_1:
Okay, Thank you. Start your

[00:10:42.09] spk_2:
due diligence at wegner-C.P.As dot com and then pick up the phone.

[00:10:45.04] spk_1:
Talk to you. It’s friendly, guy. I mean, he wouldn’t be on the show. I wouldn’t have it back

[00:10:51.13] spk_2:
if it wasn’t that way. So wegner-C.P.As dot com. Okay, let’s go back. Thio.

[00:10:56.35] spk_1:
So now this is a This is gonna

[00:11:01.03] spk_2:
be our audit. Hiring already firm is an

[00:11:01.34] spk_1:
r f p. Typical in this

[00:11:11.66] spk_3:
kind of peace. Typical. Like I would say 80% 90% off the time we receive an R F P and on. Then the process starts after that.

[00:11:15.16] spk_2:
Okay, how do we, as an organ, decide who to send the R. P too?

[00:11:55.88] spk_3:
Basically, um, ask for references, referrals from from somebody that you trust. So usually ah, it can be the board that may be deciding that. And they may be serving in other other organizations, which they may be familiar with. Their audit firms. Like that might be one thing. The other thing is a lot off firms are now using our source accounting firm that dough there today. Today, accounting. And they may. They work with a lot of water firms as well, and they may give you some recommendations based on your size and such. And or you can go Google firms. Yeah, Lam profits in the year, for example, and see who come up and then send our fees that day. So it’s got multiple ways off.

[00:12:13.56] spk_1:
It doesn’t have to

[00:12:16.45] spk_2:
be local, though. I mean, the point was you could do this. Could be done virtually. It

[00:12:19.26] spk_3:
doesn’t have to be a local. No,

[00:12:20.79] spk_1:
but use your networks

[00:12:21.94] spk_2:
absolutely aboard other CEOs, you know, rather CFO’s. You know, if that’s your situation, you know, use your networks. Okay. Um

[00:12:31.08] spk_1:
are there other sample R f p C

[00:12:41.24] spk_2:
o r. I mean, is this stuff on the web like, all crappy are thes. I mean, how do you develop this R p? Basically,

[00:12:52.84] spk_3:
you can start with a template and there’s a lot off them on stone line. You can point some, but I highly encourage people organizations toe really like first determine why you are looking for a change. Like, what is that you did not like with your current relationship and make sure that how you want that relationship change, make sure that you put those criterion the ft so that you’re looking like you kind of identify your needs and what you’re looking for. What’s important to you.

[00:13:13.84] spk_2:
OK, so, like, of turnover bothered you or fee or timetable?

[00:13:20.44] spk_3:
Absolutely. I think timetable is one of the many reasons by organizations Look for a new firm because the day prior firm are the firm that they use are not meeting their timelines.

[00:13:44.48] spk_2:
Okay? Meaning what? Like the organization should How does how does the timeline get get determined that that the firm may not be, er yeah, complying with

[00:14:26.74] spk_3:
to say, um and you’re an organization and you want to present your audit in June, tow the board of directors. Okay, The audit firm somehow cannot meet that deadline or a lot of times thes here. Some complaints from prospects, they say, Okay, our audit is done. Mother 9 90 doesn’t get done for another six months. So that maybe like a I was look at the tax and the audit as one engagement. Okay, it’s part of one relationship and that maybe time spared the audit is done on time, but then maybe the audit firm are the accounting firm has a separate department that does the tax work your 9 90 maybe that gets late. Guess it. Still, it is also, I think, is the point is like, I know what you want and have kind of like try to think about how you want that relationship to look like and put all those as your criteria in therapy. And as questions about have the firm would address those.

[00:14:50.09] spk_2:
What’s another reason besides the number one timing failures? What’s another reason you see people wanting toe change firms,

[00:15:25.64] spk_3:
increasing fees, and the other reason is if you’re a startup organization or some changes are happening, they say your small organizations. But you have growth plans, and the firm we are working with doesn’t have the expertise that you need as you grow so certain times like the small. When you’re small, you start with one firm. As you get bigger, your niece change and your current form is not able to meet them. And the other part might be responsiveness like you may not. You may be contacting your audit firm, and they don’t get back to you for weeks or, like the relationship kind off way,

[00:15:57.14] spk_2:
will feel that crappy customer service. Right? You are a vendor, you’re providing service. I don’t expect an email back in five minutes, but I think within 24 hours somebody should get back. Even if it’s this is a really busy day, you know? Can we talk later in the week or something? Give me something you’re inviting service something for

[00:16:07.53] spk_3:
the other reason is errors like sometimes errors are made and they don’t get found out until later. And once that’s why not. You know they may wanna change firms because then your expertise is being questioned.

[00:16:16.15] spk_2:
Yeah, How do? How do audit errors get found? I mean, it’s the audit. That’s just be finding errors. How do you find errors in your audit?

[00:16:32.34] spk_3:
Basically, maybe the audits firm missed procedure or Mr An Error that was present in the financial statements, Baby, they didn’t do enough. That’s thing. Maybe something may happen. I mean, that can’t be errors. How

[00:16:35.34] spk_2:
do you just how does the organization discovered the error

[00:16:38.18] spk_1:
It’s got me

[00:16:48.38] spk_3:
discovers in to waste. One is internally. Someone looks at it in a different from a different perspective, or something else comes up, they need to go back. And something doesn’t make sense. For example, today and then you go back and look at previous documents and find out that all this should have been treated differently, for example, and the audit firm did not catch it. Okay,

[00:17:05.89] spk_1:
okay. I’m guessing it’s probably

[00:17:07.13] spk_2:
not a board that often, you know, in in its review of the audit, I don’t see your average board member finding the mistakes in the audit.

[00:17:15.28] spk_4:
Typically not. They

[00:17:17.80] spk_1:
may

[00:17:37.69] spk_3:
find errors in maybe some narrative descriptions and such, but sometimes they do like some some board members are financial is everyday, be sits on the boards. They look at all the financials and they may be finding errors. But those errors are found before the artist gets issued, but still an error. So that kind of like whenever there’s an area that auditor didn’t catch, kindof like damages the credibility.

[00:17:46.96] spk_2:
Right? You’ve submitted it to the board as final. Okay.

[00:17:51.11] spk_1:
All right. So yeah, I mean, some

[00:17:52.95] spk_2:
organizations even have an order committee. Those are bigger non profit maps. Probably the universities, hospitals or whatever. Just a bigger. So they have no other committees, or presumably, yes. Then there’s expertise in that committee to scrutinize

[00:18:11.52] spk_3:
supposedly, hopefully rebuttable presumption in the year. For example, if you are required to have an audit your also required in order to comedy.

[00:18:18.78] spk_1:
Is that right? New York, you have to have an order

[00:18:20.31] spk_3:
committee will have toe.

[00:18:21.25] spk_2:
Okay. And what’s the threshold for an audit in New York? Current

[00:18:28.73] spk_3:
$750,000 in total revenue, assuming you have more than $25,000 in donations from New York.

[00:18:34.88] spk_2:
Okay, 25,000 in donations from New York and and 750,000 in total revenue

[00:18:40.80] spk_3:
or more yet

[00:18:42.15] spk_2:
born What? Right then That’s the trigger for in order to New York State. Yes, And I’m sure it varies widely across the States.

[00:18:48.65] spk_3:
It does. It does not. Every not every state has an audit committee requirement. For example, California has it, but their trash Holt is two million depends. And it’s also all its committed Rules are different in every state. Ho can be on the committee what they have to do. Everything is different. So

[00:19:06.82] spk_2:
you’ll be gratified to know that that Gene Takagi is in background nodding when you said the $2 million.

[00:19:15.74] spk_3:
That’s good to hear. I was right. You’ve indicated? Yeah,

[00:19:19.33] spk_2:
because I certainly don’t have the expertise. Not this question. Um

[00:19:21.34] spk_1:
okay, s so anything else you want to say

[00:19:23.71] spk_2:
about the therapy process before we get to evaluating the proposals that come in?

[00:19:30.86] spk_1:
Um, I think

[00:19:32.96] spk_3:
I think that’s pretty much it again. Like that said yes, you’re a portrait. It toe make

[00:19:37.24] spk_1:
it

[00:19:37.38] spk_3:
like a visual ist like, what do you wish tohave in your audit relationship and kind of go with that?

[00:19:44.16] spk_2:
Okay. All right. So now you get these, Uh, I guess you get what’s a reasonable. Number 44 proposals back or

[00:19:51.03] spk_1:
usually I

[00:20:13.75] spk_3:
see an average off three threes. The most common sometimes Thio. Sometimes more than that. I’ve seen up as much as 10. Yeah. Yeah. So they kind of issue for will not respond And something like that sometimes. Like something like when you center FB you asked, like, Are you going to respond or not? You know, So that’s the wrong questions that gets asked something. So

[00:20:20.75] spk_2:
and then if the firm doesn’t even respond to that

[00:20:23.01] spk_3:
than their low life Yeah, yeah.

[00:20:37.52] spk_2:
Don’t never refer them again. Exact. They don’t respond to your Are you going to respond to our f B question? Okay. All right. So you got you got your 3 to 4 proposals back. What are we doing now? I was looking for I would

[00:21:32.03] spk_3:
actually look for the, um, the overall response process like, are they? How did they respond to your initial when you sent direct appeals? Say, usually, now they come in e mails like, how are they responding to their art? A timely. And when you make appointments, are they late? Are they not late? Like in this stage, like a proposal stage if they’re not giving you the attention. Yeah, on. Very That’s a very bad sign off the overall relationship. I think the first impression, maybe last impression tow the time. So it’s really important to see how they handle things and always look for writing. What’s important relationship is not never make errors. But once you make an error, how do you recover from that? And I think it’s really important as well. And during the process, I think initially they take the time toe, ask us questions and today, or are you just sending like a blanket proposal without even

[00:21:47.09] spk_1:
That’s like asking a couple questions

[00:22:00.68] spk_2:
about what the perp, the R F P, says. That’s a good That’s a good sign. I mean, the firm is actually scrutinizing it. Paying close attention wants to be responsive to exactly what you’re asking. But they’re not sure exactly what you’re looking for, but also, but

[00:22:39.03] spk_3:
also basically see if they’re trying to identify your knees. I mean, you can put so much in writing in the Riviera. Peas are usually standards, and there’s so much else goes on at the firm. Are they trying to like understand? You’re really needs and how they can add value. Are they asking questions? So usually photography. You sent your most recent order to report and your 9 90 and ah, nde sometimes, like, put some description off what organization looks like now. But I think, um, the audit firm should be interested in the organization enough to ask some more questions on Try to learn more, as opposed to just

[00:22:48.29] spk_2:
just giving back the RP. But yeah, by the deadline,

[00:22:50.92] spk_3:
you have just told me in the other budgets for to me in the other speech church this much this is your fetus is the proposal versus taking the time to talk to them and asking questions and see

[00:23:04.96] spk_1:
OK, some engagement, like applying standard a common sense. You

[00:23:33.10] spk_2:
know, if you’re trying to hire a contractor for your home on dhe here, she’s not getting back to you, you know, at the at getting the business stage. That’s a bad sign, you know, or if they don’t seem to be listening to you about what it is you want to do. You know, you’re asking for their ideas and they don’t come back with ideas. They just come back with a fee you know the same. Same as same as hiring a vendor for your your audits facility. No, I haven’t sense, for God’s sake.

[00:24:09.96] spk_3:
The other thing I would look at as have they addressed all your points in the F B. Have they read the appear? Are you getting like a blanket proposal? I think that’s really important to you. And the hurting I would look at would be like, How is the presentation off the proposal like Is that looking sloppy? Are their errors like the spacing looks, beard or just aesthetics off the off? The proposal and errors in it like spelling errors, grammar errors like this? It’s free off errors. I think it’s important. Yeah, spokes. That looks like it’s somebody reviewing them before you send it to you.

[00:24:19.00] spk_1:
Um, what about a presentation? Is that is that typical

[00:24:21.84] spk_2:
toe have? Ah, maybe you narrow it down from 4 to 2 and you want them both to make a presentation to the board. Is that is that an unreasonable? That’s not

[00:25:16.25] spk_3:
unreasonable, And but that does not happen too often than the smaller organizations. Probably your listener base probably doesn’t happen. The presentations doesn’t happen that way. what does happen, though They, uh, there’s like a conference call the Save it with the treasure or the audit committee chair at the accountant or someone just follows up. Let’s say they I don’t. You get three and you eliminate Bond. Now you have the two, and you just have a called them or a meeting with them, but it doesn’t typically become like a formal presentation. But that does happen, though that’s not unusual to ask. Or definitely, I would encourage. That depends on how much time you want to spend, too.

[00:25:21.49] spk_2:
Okay, and then whether you want to get your board involved,

[00:25:24.17] spk_3:
I mean, it’s really hard to get people together. And Monroe

[00:25:28.00] spk_2:
suffered rumors to that effect about how difficult that can be. Um,

[00:25:33.64] spk_1:
you refer to something

[00:25:34.59] spk_2:
called AA Peer Review report on non ordered firms. What is that?

[00:26:23.45] spk_3:
Basically ah, every C p. A firm that does attestation engagements like audits reveals they need to go through a peer review every three years. Peer review is another C p. A firm basically comes in, doesn’t audit off your order to brag or like attestation practice, so it’s not only artistic look at reviews, they look at complications. They look at audits and just to see your following to professional standards and look at the quality off the work. And if you’re not doing good for Earth than you get findings just like you give findings. Oh, non profit organization in your artists. Yeah, the peer review C p a. Firm does the same thing for you. There’s, like levels or findings and such. But typically, I would look for I would definitely request that period the report. Even if there’s findings, you need to know what they are and have the firm responded to them.

[00:26:37.17] spk_2:
Okay, so it’s not something that’s public, but you can ask for it from the firm’s you’re considering.

[00:26:41.85] spk_3:
I I believe it’s public, too. You can go to the I. C. P s website and look for it. I’m pretty sure the American Institute of Certified Public Contents Yep. And find

[00:26:52.87] spk_2:
all the peer review reports for all

[00:26:54.24] spk_3:
the servi. They should be all day. Okay, Okay. But I would just ask for it in the part off the f B and they should put in the proposal.

[00:27:05.99] spk_2:
Okay, We have just about a minute left. Okay, So how about getting started. What? You’re like a number one or two. Top advice for for getting this new relationship off the ground,

[00:27:49.51] spk_3:
I would say, Set the expectations specialty timelines and make sure everyone is on the same page. So I think the dissatisfactions happens when there’s an expectation gap this one person is thinking it’s gonna have on this bay and the other one just don’t assume, just confirm and just have a meeting with thought it firm and come up. It agreed upon timeline. I think it’s really important, and it will work sport they like. If the organization still not provide the information, the auditors cannot do the work. So what we do in every audit, the established time lines, we start with men, they need order to be done by. And then we sent them the list and they can tell us when they can be ready. And then we’ll find time between when they can hear them and they need it done. I kind of like established dead pay,

[00:28:04.93] spk_2:
working backwards from when they

[00:28:06.08] spk_3:
need exact Exactly. So it just always keep the end in mind. Okay,

[00:28:15.78] spk_2:
let’s wrap it up there. Thank you. Very much you do. Partner wegner-C.P.As. The firm is wegner-C.P.As dot

[00:28:17.12] spk_1:
com and at wegner-C.P.As Thanks for coming back to the show and studio. Pleasure.

[00:28:23.62] spk_2:
Having a big thank you You okay? Cracking like a 14 year old, uh,

[00:28:29.10] spk_1:
need to take a break. Wegner. No cook about software. So

[00:28:30.99] spk_2:
what’s all the kinds of Whitney wegner wegner on the head?

[00:28:33.47] spk_1:
Cook a Mountain software is this one quote. We’ve been very happy

[00:28:36.64] spk_2:
with Cougar Mountain. It’s rare to encounter a problem with the software, but they’re always there to help. Walk me through it and

[00:28:42.74] spk_1:
quote that Sally Hancock in Altuna, Pennsylvania. Cougar Mountain

[00:28:46.63] spk_2:
has a free 60 day trial, which you’ll find on the listener landing page at tony-dot-M.A.-slash-Pursuant.

[00:29:17.39] spk_1:
Martin. Let’s do our live love. Ah, and it goes out. Thio Tip of Florida Washington D. C oh, cool Washington Not too often to Washington. Tucson, Arizona, Brooklyn, New York, New York, New York, Ontario, Calif. Ontario, Canada. Um, Seattle, Washington. Awesome. Upper West Norcross, Georgia South east of it Going abroad Moscow, Russia Thank you for being with us. Live love out to Moscow, Seoul, South Korea On your jasio consomme. Nita Live love out there. Tehran, Iran Also, Tehran’s been with us a couple times getting turning it, Theo loyal,

[00:29:41.74] spk_2:
live listeners. So the live love goes out and the pleasantries go out to the podcast audience. That’s our over 13,000 listeners on your

[00:29:45.55] spk_1:
own device, your own timetable, whatever fits into your life. I’m

[00:29:45.79] spk_2:
glad that it does. Thank you very much. Pleasantries to our podcast listeners.

[00:29:53.49] spk_1:
Time for tony Steak, too. Planned giving relationship stories

[00:29:55.60] spk_2:
is the current video that you will find a tony-martignetti dot com because when I did

[00:30:14.64] spk_1:
plan giving relationships, I left. The story’s out. Relationships are with people, and I left the people out of the first video. I talked about how the relationship gets started, the value of long term relationships to your organization and to you personally. And then I left out all the examples, so that’s that’s not I mean, it’s good as far as it goes, but it’s like half the story. If you can talk about relationships, how about some examples? So

[00:30:56.15] spk_2:
in plan giving relationships to the stories I give you some stories of, um, Eleanor and, uh, Evelyn and Barbara and James the before I tell stories about and, uh, you know I’m sure there have been hundreds. Well, there’s definitely 100. But, you know, some people are more memorable, memorable than others. And those are the four that came to mind first. So some touching stories in that video, which you’ll find at tony-martignetti dot com

[00:31:07.05] spk_1:
Now what a pleasure to welcome to the studio. Jean Takagi. He’s here in the studio in New York City. He’s the managing attorney of Neo, the non profit and Exempt Organizations Law group in San Francisco. He edits

[00:31:15.33] spk_2:
the wildly popular non profit law blogged dot

[00:31:24.34] spk_1:
com. He’s the American Bar Association’s 2016 outstanding non profit lawyer. He’s at G Tack. He’s Jean Jean, the law machine. Welcome to the studio, Gene. Too cocky. This is awesome. Done. It absolutely is. It’s 10 years since your first appearance on the show,

[00:31:35.23] spk_2:
and you’ve been a contributor for, like, nine and

[00:31:41.43] spk_1:
1/2 years or something. And here you are in the studio. I love it. Absolutely love it. Thanks so much. I’m so glad it worked out.

[00:31:43.37] spk_4:
I’m so happy to be here. It’s actually my first time in any studios, so it’s Ah, it’s a pleasure,

[00:31:49.80] spk_1:
Your life to your life up to this moment has brought you here. It’s all culminated here. This is the pinnacle. It’s all downhill from here.

[00:31:56.06] spk_4:
Mom can be proud.

[00:31:58.08] spk_1:
Sorry. Going down from here. Now, Um, this is

[00:32:00.83] spk_2:
wonderful. Really Is very, very good to see you. Um,

[00:32:04.67] spk_1:
So, um, this is a This is a little tough, touchy topic. We, uh you and I had a touchy topic

[00:32:10.01] spk_2:
when we talked about diversity equity and inclusion. Um,

[00:32:19.21] spk_1:
this one is, Ah, equitable compensation. Uh, you know, you you frame it for us. You please do. I think we

[00:32:39.13] spk_4:
could look at it in so many different dimensions. Tony mean one is is Do we pay? Everybody is Lois. Salary is absolutely possible, so we can try to serve as many people as possible. And that’s one level one level is we have this huge pay gap between men and women. What are we doing about that? There’s also gaps based on race on and other protected class issues as well. And sometimes it’s not just the legal problem.

[00:32:49.42] spk_2:
It’s not just the protected classes,

[00:32:57.34] spk_4:
right? It legally protected. Yeah, it’s just why are we paying this person differently from this person and is that institutionalized. Is that just personal discretion? Who are the decision makers there? Is there so many levels to this? But I agree can be a very controversial area,

[00:33:30.36] spk_2:
controversial and insightful. These are hard questions, you know? What should the gap be between the highest paid person in the organization and the lowest paid person organization? What should that ratio look like? And how do we justify it? Um and yeah, I I just I think I mentioned it, but I want to make drive home the point that we’re not just talking about classes that are legally protected.

[00:33:32.58] spk_4:
Yeah, I think we go go beyond that. And I think what you said about the highest paid to the lowest paid gap is really interesting. I think for CEOs it’s close to 285 to 1.

[00:33:44.60] spk_1:
Is that average non profits

[00:33:48.15] spk_4:
for for profit companies, non profit? It’s probably better. I don’t know if there’s been a study done on that, Um, but California is considering, Ah bill. Now that says, if your gap is more than 300 to 1, highest paid the lowest paid, typically the CEO versus sort of the average line worker We’re gonna increase your tax anywhere from like 2 to 6% on that. So it’s interesting to see now that the lock take over and say, We don’t like these pay imbalances and this is what we’re going to do about it,

[00:34:23.72] spk_1:
Yeah. How did Attorney practicing in California, How do you feel

[00:34:24.23] spk_2:
about the level of regulation in California? Do

[00:34:30.80] spk_1:
you feel it? You feel it’s burdensome? Or do you? I’m sure it’s. I’m sure you feel it’s right headed, but do you feel it’s excessive sometimes, or or not?

[00:34:37.30] spk_2:
Just like it’s the role of state government Thio make things fair and equitable for everybody.

[00:34:44.29] spk_4:
It’s a tricky question. I

[00:34:45.56] spk_1:
think some of

[00:35:30.68] spk_4:
the intent is is right. So the intent of the A G on the attorney general, typically the charity regulator in California, is to protect donors protect charitable dollars to ensure that they’re not being misused. But the problem can be is when some decisions are made about how regulations should be shaped or what type of bills the E A. G should sponsor or find a sponsor for, um, are they taking a few isolated, high profile problems in creating a solution for that and then that is, in effect creating a huge burden for everybody else who’s never done anything wrong. And what are the pros and cons when you look at its sector wide? And I think they don’t have the expertise or the people power to be able to make those decisions on their own Now, to their credit, they’ve been good about reaching out. We’ve actually sort of consulted with the A G from time to time in working discussion groups about how laws might impact the broader sector. But oftentimes, big corporations are in there here more often than the small Guy

[00:36:07.66] spk_2:
G is reaching out to you right now. They have lobbyists and professionals. Alright, alright, just I’ve wondered about that because it’s an activist state and a lot of states follow the California leader. At least look to see what California’s doing in lots of different lots of different areas. Environment, non profits of its wide

[00:36:10.71] spk_4:
Yeah, well should should add, though, that the non profit activists have actually been very good about this as well. In part, it partly why, when you eat was talking about the audit threshold in New York being 750,000. I think in California’s two million, because the non profit said That’s too low. It’s gonna be too expensive to have audits at that level. So we actually we’re more lenient on that front on the audit.

[00:36:36.18] spk_1:
Okay? All right. So, yeah, it’s not always stringent.

[00:36:46.03] spk_2:
CE stringency greater stringency. But it’s, you know, sort of recognized as, ah, highly legislated ST Ah, highly regulated state.

[00:36:49.07] spk_4:
I think that’s fair to say, and it makes it all the more important for nonprofits to actually speak up. Make sure that their legislators on dear regulatory bodies know what they want. Really important.

[00:37:03.12] spk_1:
So we’re talking about the

[00:37:29.82] spk_2:
compensation way, said it briefly, But again, it merits a little more attention. We’re talking about going beyond what the laws call for me. We have the Americans with disability act. We have the Civil Rights Act of 1964. We have other law bodies of law that govern compensation. But we’re looking as this more at is ah, as a just an equitable ethical moral issue.

[00:37:30.52] spk_1:
Yeah, and even if

[00:37:31.31] spk_4:
it doesn’t violate the law because I’m a lawyer, I always have to say

[00:37:34.44] spk_1:
Well, the law plays

[00:37:35.38] spk_4:
a part because even if you win a lawsuit when there’s an employee claim, just a have a lawsuit against you is incredibly demoralizing. It looks bad to your stakeholders, internal and external. So even if you’re lawfully doing everything right, if you’re ethically having some challenges or your stakeholders stopped believing in, you don’t believe that you’re you’re living into your values. You’ve got much, much bigger problems and just legal ones.

[00:38:03.01] spk_1:
Yeah, you’re trying to do social change,

[00:38:04.55] spk_2:
work social good. But your own organization is unfairly compensated that the salaries are out of whack in your own organization. But you’re trying to improve conditions for the porters or

[00:38:17.14] spk_1:
even if not, if it saves the environment. You’re trying

[00:38:19.23] spk_2:
to do social change, work and improve the state of the world. But your own organization is not a model for that.

[00:38:40.26] spk_4:
That and you can imagine. This gets really controversial when we talk about minimum wage and say, Well, we’re a social service organization that serves low income communities. We’ve got to pay minimum wage for workers. But in a city like New York City or San Francisco, that means they can’t even afford to live in the city right Now I’ve got to commute from the suburbs. And is that really equitable to your staff? Is that what you want to display to everybody else supporting you?

[00:38:50.72] spk_1:
You have this poverty myth, right? There are a lot of

[00:39:16.52] spk_2:
assumptions underlying what we get, where what we’re talking about the inequity on and one of them and then they get deeper. But one of them is this poverty myth that we’re doing social change, work and improving the world. And so, you know, that should be gratifying enough to you. So you get a 40% lower salary than someone doing comparable work. I don’t know another organization or because we feel we feel way can’t afford to pay you more or you get you get a discount from the for profit sector because you’re doing social good work. And that should be gratifying to you. And that has value. So we pay you less.

[00:39:31.73] spk_4:
And it’s really sad to say that actually, some employers, some non profit employers, see that as a legitimate screen that we are going to pay lower than we even can in order to find the most altruistic people possible. I don’t like that kind of idea, but you’ve heard

[00:39:47.22] spk_1:
that articulated.

[00:39:55.47] spk_2:
Yes. Okay, So to find the most altruistic people we’re gonna we’re gonna pay the least. So we’re gonna

[00:40:03.71] spk_1:
get what you pay for, you know? And And what kind of what kind of commitment or you’re getting out of workers who know that there being paid a bottom feeder salary?

[00:40:06.41] spk_4:
Yeah, again, something I strongly disagree with. But that thinking is still still out there.

[00:40:20.07] spk_2:
Okay, I wouldn’t have thought that it would be articulated, but you’ve heard it. A CZ. A theory of recruitment.

[00:40:21.88] spk_4:
Yeah, you’ll hear it in research studies done where they do surveys of organizations, and they explain their compensation systems and you’ll see what some of the rational czar and it pops up.

[00:40:35.01] spk_2:
Okay. All right. We got a couple minutes before break.

[00:40:36.25] spk_1:
Let’s talk about some

[00:40:36.82] spk_2:
of these other cultural assumptions that are underlying cause

[00:40:39.40] spk_1:
this is

[00:41:11.45] spk_2:
where it gets, you know, kind of ah gets unfair. Um, the professional degrees, um, immediately convey or no are automatically convey a value to the organization. So somebody who’s an MBA or an attorney or a c p a. No. Irrespective of whether the professional designation enhances the value. Literally, really. But just way value that over way immediately imply a value to that, even if the job doesn’t require that kind of skill or that kind of professional education.

[00:41:19.15] spk_4:
Yeah, and not to knock professional education.

[00:41:22.54] spk_1:
I got one. You’ve got one? Yeah,

[00:41:24.66] spk_4:
it’s great. But, um, life experience can sometimes be much more valuable or experienced in the job sort of characteristics and duties itself could be more more valuable than professional response are some sorry professional experience in an unrelated field. But so many organizations use education is kind of a factor of where they’re going to set their pay, and they set educational standards that they want when it doesn’t seem applicable to what the job requires. And we see organizations in the four profit world actually leave that thinking, especially in the tech industry, right? They don’t care if you have a graduate degree from Stanford, if you’ve got a bunch of coding experience that’s directly relevant to what they’re creating at the moment. So I think more non profit have got to get away from that thinking that somehow an educational degree in whatever is necessarily going to be something that makes the person more valuable to them,

[00:42:54.49] spk_2:
then the network life experience. Correct. Okay. Okay, um, the, uh the belief that, um, productivity or output is more important than, um the relationship building and how you’re making people feel in the organization and and outside the organization to know, producing paper reports and Versace the ah, the feelings toward the organization that you’re you’re engendering through your work.

[00:43:06.08] spk_4:
Yeah, I think that’s also another danger. Where there’s in the thinking of professionalizing the sector, we’re all about metrics, right? We need to get metrics that we have to get back to our funders to show that we’re creating value. So all of a sudden the employees are incentivized to create better metrics on that may be at the expense of developing longer term relationships. I will actually move the mission forward Maur in the long run than it will in the short run. So we get caught up in the whole same problem that Fortune five hundred’s get caught up in satisfying shareholder spirit. Immediate short term returns, not thinking aboutthe long game. So I think that that is an issue

[00:43:40.56] spk_2:
being too short term thinking for the next board meeting what what our numbers look like for this quarter versus long term value.

[00:43:46.95] spk_4:
Right? Long term value. Also, employee retention being part of that long term value and the value that that having employees stay with you and doing their work, feeling that that sense of pride in what they’re doing, an accomplishment could be so much more valuable than serving an extra 5% meals. In Week three,

[00:44:24.77] spk_2:
we just replayed Adrian, sergeant on relationship fundraising for just last week for a valve on the Valentine’s Day show February 14th and he talked a lot. Now this is just devote to fundraising and where you and I are talking broader. But as it relates to fund raising too many organizations ignoring the lifetime value of a donor, how do you make your donors feel over the long term versus did you get? Did you get a 20% increase in their annual gift this year?

[00:44:36.39] spk_4:
Yeah, and so what do you mean organizational level? And what are you telling your employees? If you say no, you should try to get as much as he can. Now, don’t worry about the long term value of the donor relationships that don’t spend extra time with them. You can hit more people. That’s the wrong message.

[00:44:50.56] spk_2:
Get the car last break. Ever wonder why some nonprofits are always mentioned in the news? It’s because they work to build

[00:45:02.52] spk_1:
relationship. We’re talking about relationships again. I mean, it’s it’s pervasive relationships, Just like last week again, they worked to build relationships with journalists who mattered

[00:45:21.29] spk_2:
to them so that when you pick up when you make a call or you send an email, the journalist replies, That’s because of a relationship. A preexisting relationship. Turn two can help you do that. Their former journalists, including at the Chronicle of Philanthropy. They will help you build meaningful media relationships that can lead to great coverage there. Turn hyphen to dot CEO. We’ve got

[00:45:29.38] spk_1:
butt loads more

[00:45:29.86] spk_2:
time for equitable compensation with Jean Takagi in the

[00:45:36.93] spk_1:
studio. Um, where do you want

[00:45:37.58] spk_2:
to go from here? Uh,

[00:45:44.76] spk_1:
any any other cultural assumptions that annoy the hell out of you? Well,

[00:47:18.32] spk_4:
I I think generally speaking, we think we may be as employers giving people benefits when we say, Hey, we’re gonna give you a plus, you know, added match matching contribution to your +401 K plan, for example. But we may not take into account. A lot of our employees have their own financial issues and may not be able to contribute to +41 K plans, so they don’t get that benefit of all of the match, right? So again, equitable considerations would say, Well, maybe we should open up this benefit so that everybody can access to it has access to it. So maybe it gets put into a flexible spending accounts so they can take care of their elder parents, and not just to their 401 K. Or maybe we give them the cash so they couldn’t pay off a student loan. So things like benefits have a place in this. The other cultural assumptions. To make it, we have to figure out more. And I think maybe the biggest issue for the pay gap on the gender basis, maybe letting people figure out where and when they can work and don’t live on to the assumptions that you have to provide face time. It has to be in the office always because so many people who are the primary child givers who are in the workforce that’s where the pay gap gets hit really, really hard. And that’s where women, who once they once they have child Children and decide that they’re going to be the primary caregiver, which is most of the time relative to the man. You know, that’s That’s where they never recover

[00:47:28.33] spk_2:
their career. Yeah, it’s a downward trajectory for their career. For what, 18 years or something? Conceivably. Okay,

[00:47:28.90] spk_1:
another thes. They’re all

[00:47:30.66] spk_2:
good issues for a conversation in the

[00:47:32.72] spk_1:
office conversation with board. Another one is

[00:47:37.57] spk_2:
the the how percentage increases in in salary perpetuate the gap because you’re giving everybody a percentage of the high or low that they’ve

[00:47:48.78] spk_1:
already got. You’re not. You’re not. You’re not, uh, quill a breaking that a word equalizing, not equalizing. You’re just continuing

[00:47:56.74] spk_2:
the the disparity through percentage, you know, annual percentage increases.

[00:48:30.73] spk_4:
Yeah, and I think a payout. It is probably something that every organization should do and actually just ask themselves. How did we determine what the pay rates are for each of these positions? Ah, and is it equitable? Not just top to bottom, but across, you know. Are we paying one person for the same position so much more than another position, another person, even though the other person might actually be doing better work just because they had more of an educational background. So all of those things need to be looked at? Questioned, I think, tracked. So you’re if you’re gonna make these decisions in the future that are more equitable, you have to be able to explain what factors you’re looking at in order to change somebody’s compensation. And why that and how that’s applied is it applied evenly and doesn’t explain why there’s a disparity now in pay between two different people or three different people who occupy the same position.

[00:48:56.37] spk_2:
Um, you can create in your organization a pay equity team.

[00:49:04.22] spk_4:
Yeah, that’s yeah, I’m on the board of an organization called Compass Point in San Francisco.

[00:49:07.61] spk_2:
In a point to that article shortly

[00:49:54.01] spk_4:
Terrific and, yeah, having an removing the decision making from just one executive director, but who might set the caps just to make sure that there’s no overcompensation involved in that the budget is being complied with. But having an equity panel within the organization made up of peers, um, looking at self evaluations and trying to determine what the compensation rates should be within again. A permitted range. Think that’s a really great form of distributed leadership where you’re giving more power to your team, um, and letting them decide what the compensation rates can be now. There were definitely some cons to that issue as well. With more responsibility, there’s gonna be more criticism. But we found out that that it can work really, really well. And people sometimes are actually more conservative about what they want to give than the executive director. And then just having a conversation about that, um, can can be very helpful. But it’s ah, it’s a really interesting a strategy to employ for some nonprofits who have reached that level of, ah, evolution, if you will, in inequity considerations.

[00:50:24.40] spk_2:
Compass point, um, walks through. I think it’s the interim executive director wrote The Post’s Walks through there. I guess it was a three year process. Was it a three year process there of evaluating and adjusting pay throughout the organization, I think, was a two or three year process. It’s

[00:51:15.93] spk_4:
actually been ongoing since 2016 which is really when it started, and it’s still it’s still an ongoing and sometimes a painful process of making things more equitable as you raised the issues and surface them there. You know there’s some pains. You find out some inequities of the past and you try to correct them. And some people are happy about that. Some people aren’t on and you know, the intersectionality of different ah issues if you well, it’s not just gender. It’s not just ages, not just race. There’s so many issues to think about in determining whether compensation is unfair or fair. Andi can be interpreted in different ways, so it is a challenge. But having a team there to help decide this instead of one person makes

[00:52:26.44] spk_2:
a huge difference, also empowering as well. And you know it defeats this myth that we can’t talk about pay at work because everybody’s pay is now known to the to the, uh, to the Pay Equity committee, the team that you’ve just created. So we are talking about it. I want to point people to the this article. It’s it’s actually two different block posts at Compass Point dot or GE on their blogged. It’s called reimagining compensation. It’s time to stop building inequities in the past from the past port. Wanting to Andre is very open about the difficulties that they went through and some people got very large increases. And she alludes to even there, being some decreases over time in salary like stage decreases, Thio make things fair and equitable. It’s quite a process we talked about. Yeah, and I

[00:52:49.76] spk_4:
think you know that’s a team decision. People have to look at this from a state law perspective as well. And so you have to be careful. Not Thio, through mandatory action, decreased one person’s salary to raise another. You have to be careful about that. So we had the luxury of having some change capital because the foundation was really supportive of what we did. And so here’s a big shout out to foundations for for unrestricted support, it really can do great things for for creating equity within an organization.

[00:53:03.75] spk_1:
Um, let’s talk some

[00:53:04.64] spk_2:
about, uh, well, the board. The board has a role here, too.

[00:53:22.97] spk_4:
Yeah, I think I’m still even when we talk about distributed leadership, which I mentioned before, the board still sets the tone at the top. Um, and I think it’s really incumbent upon the board to actually set the values of the organization. So it makes sense that not only are organizations acting to further the mission, but they’ve got to do it in a way that furthers their values as well.

[00:53:38.25] spk_2:
A cz part of their oversight on

[00:53:43.34] spk_1:
and really they’re there. Yeah, their responsibility to

[00:53:44.69] spk_2:
the organization. I’m taking it out of the fiduciary capacity and just making it, Ah, moral obligation that they have to the organization.

[00:54:09.96] spk_4:
Yeah. It’s not just about looking at the financials and saying, Can we survive another year? It’s It’s about creating the relationships, as you said, to make this the sustainable organization that lives its values and furthers its mission for a number of years so it can really actually drive through what they’re trying to do.

[00:54:11.29] spk_2:
Okay, we have about another minute or so before we gotta wrap. So, what would you like to whatever not talked about that? You want to say what?

[00:54:20.07] spk_4:
Um well, they’re a couple things, so I’m gonna leave the parking tax issue aside, then.

[00:54:26.26] spk_1:
Oh, I forgot. The host is so lackluster. This show it’s unbelievable. I don’t know why people listen. The hostess so crummy. Um, yeah, the all right next time we’ll get that next time. This is just about him. Report. God the hostess

[00:55:26.85] spk_4:
So crummy. Um, so I guess along the lines here some tips, maybe of creating more of an equity based compensation system within an organization. And I think, first audit, audit the organization. Try to figure out why you’re paying a tw what level? I have a board level awareness of what’s going on. I’m create a pay equity panel numb within your staff levels. Um, and take a look at where the disparities happen. Most often are the book benefits that I told you about, like the 401 K, but also in bonuses on dhe. We find that our studies have found that that bonus is often goto white men at the much different level than persons of color, especially women who are persons of color.

[00:55:34.29] spk_2:
All right, Thank you, Jean. Thank you very much. Opening up this topics. He’s managing attorney of neo, the non profit exempt organizations Law group. You’ll find him at G Tack and today you’ll find him in the studio in New York City. So glad to have your gene. What a pleasure.

[00:55:44.66] spk_4:
Thanks so much tony and great

[00:55:50.82] spk_1:
to see you, Sam. Yes. Next week. Get to the next

[00:55:52.47] spk_2:
level with Sherry Kwame Taylor. If you missed any part of today’s show, I beseech you, find it on tony-martignetti dot com

[00:57:01.32] spk_1:
were sponsored by wegner-C.P.As guiding you beyond the numbers. Wegner-C.P.As dot com by Coca Math and Software Denali Fund Is there complete accounting solution made for nonprofits tony-dot-M.A.-slash-Pursuant Mountain for a free 60 day trial and by turn, to communications, PR and content for nonprofits, your story is their mission. Turn hyphen to dot CEO. Ah, creative producers Claire Meyerhoff Sam Liebowitz is the line producer. Shows Social Media is by Susan Chavez. Mark Silverman is our Web guy, and this music is by Scott Stein Do with me next week for non profit radio big non profit ideas for the other 95% Go out and be great talking alternative radio 24 hours a day.

Nonprofit Radio for February 15, 2019: DEI & Governance

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Gene Takagi

Gene Takagi: DEI & Governance
Diversity, equity and inclusion run deeper than having folks of color on your board. Are you managing treatment, access and opportunity for non-white males? Gene Takagi and I talk through the issues, goals and methods. He’s our legal contributor and principal at NEO, the Nonprofit & Exempt Organizations law group.




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Hello and welcome to Tony Martignetti non-profit radio Big non-profit ideas for the other ninety five percent on your aptly named host. Oh, I’m glad you’re with me. I’d be hit with like Oper diagnosis if you made me breathe in the idea that you missed today’s show. D I and governance, diversity, equity and inclusion run deeper than having folks of color on your board. Are you managing treatment, access and opportunity for non white males? Jean Takagi and I talk through the issues, goals and methods. He’s our legal contributor and principal at Neo Non-profit and Exempt Organizations Law Group on Tony Steak, too planned giving one piece at a time. We’re sponsored by pursuing full service fund-raising data driven and technology enabled Tony dahna slash pursuant but Wagner CPS guiding you Beyond the numbers. Wagner cps dot com Bye. Tell US Attorney credit card processing into your passive revenue stream. Tony dahna slash Tony Tell us and by text to give mole donations made easy text. NPR to four four four nine nine nine Always a genuine pleasure to welcome Jean Takagi back to the show. He’s managing attorney of Neo, the Non-profit and exempt Organizations Law group in San Francisco. He edits the wildly popular non-profit law blogged dot com and he’s the American Bar Association’s twenty sixteen, outstanding non-profit lawyer. He’s at G Tak. You know, it means Gene. Gene, the law machine. Welcome back, Jean Takagi. Thanks, Tony. How are you? It’s a pleasure to have you. I’m well, thank you. Happy New Year. Happy New Year to you as well. Thank you. I think maybe this is just the first shot misses. And you’ve been on before? Yeah. You have been on to the new year. No, I haven’t. I think this might be the first one was the first buyer, and this is February fifteen thousand. Alright, well, so we wish you a happy New year anyway, on DH and I I hear you wishing it back. So thank you very much. It’s never too late. Never too late to say pleasant things to each other. Um all right. So diversity, diversity, equity and include vision. I feel like we should first identify our terms. That is that is that everybody knows that diversity, equity and inclusion are not the same thing. This is not like, what’s the law, you know, aiding and abetting. You know the law, he says. The synonyms mean the exact same thing. Break and enter or, you know, a dahna bet this’s not this is not that this is not that. So what? What? How would you define diversity? Arika? Well, I think you know, it’s a great point that that it’s not a belt and suspenders approach these three different terms, meaning three different things. So diversity, I think, is the range in way people different people differ, and it’s used often in reference to race, ethnicity, gender, age, national origin is big, and the news now religion, disability, sexual identity and orientation, socioeconomic status, marital status, language, physical appearance and just a number of other characteristics. So it’s just reflects the way that we’re all different from one another. Equity is the quality of being there, I think, with respect her rights and treatment, and access and opportunity and advancement for all people. It’s kind of the constitutional principles that we think of equal protections of the law and all of us having the right toe. Life, liberty and justice and persons and organizations that work towards a more equitable society focus on understanding the root causes of the inequities, and they’re looking to identify and eliminate barriers and, of course, increase justice and fairness, both on a micro level on on a macro level and that final term Tony inclusion is really the state of creating or maintaining environments in which any individual or group Khun B and feel welcomed, respected, supported and valley to fully participate, embracing differences among different people. So diversity gets us one part of the way. But without inclusion, diversity may mean very little. Yeah, on organization could be diverse. But that doesn’t mean that it’s inclusive because divers is just a photograph of ah, multi racial, multi ethnic, multi gender aboard. But that doesn’t mean that that that that board is inclusive on DH, creating the right kinds of environments like you’re talking about. Yeah, absolutely right. So if we you know, we might approach that that topic and in a bit. But if we just bring in people of marginalized communities like certain minority groups or certain gender groups or all of the other categories we talked about and they’re just tokens but not given any authority, and they just make for the good picture that you were talking about. Well, that’s not inclusive. Or and that’s not equitable at all. That’s just having diversity for diversity. Stake? Yeah. Yeah, for a good photograph and a like a check box or something. All right. So is this. Ah, well, this is an area that non-profits are, uh, working on. I mean, it’s an area that our whole countries working on. It’s it’s in our culture with black lives, matter and metoo and, uh, marriage, marital equality. So it’s this is not certainly certainly not unique to non-profits, but but our our national consciousness has been raised. Um, how do you feel? Or how are non-profits faring? I mean, and what do you see among the groups that you work with? Two? Sure. I mean, it’s a great point, Tony, that this is in our national conscience. And, uh, there are a lot of tension and controversies where these what I will think our our moral issues are at play, and we’re looking at legal solutions on sometimes opposites sides of what some people will consider moral and Justin, others might say, are not a matter of morality but my position. And I think the position of most of the organizations we’ve worked within. And I’ll note that we do work in San Francisco, and we work with them non-profits in New York as well. And those air, certainly, um, uh, centers that that might be seen as more liberal than other areas. But, uh, there are, I think, these basic beliefs that, you know, some people are born with certain advantages or disadvantages, no choice of their own. Some people are born with certain characteristics or abilities, and some are not have no choice of their own. And many of us believe that we should work TTO help assure that all people have equal rights, equal protection, equal opportunities. And that’s sort of the moral case for saying, you know, diversity, equity and inclusion in our non-profits really matters because if we’re not leading in these areas is a nonprofit sector there’s there’s a question about that’s not a core value, really, is what the work we’re doing just focused on benefiting certain groups and maintaining status quo and improving the status quote for certain people with power and privilege. So that’s that’s kind of where I stand on that. Yeah, um, we may as well just call this right out. I mean, I feel an obligation to do that, You know, when we say certain people, some people no fault of their own, whenever you know, born with privilege and power and status. I think talking well, We’re talking about white males. There’s a There’s a white male supremacy culture in the country. And, um, that’s what creates structures that are oppressive, you know, day to day to people who don’t enjoy that power and have that that perceived status and and you know it. It creates a lack of opportunity and oppression and, ah, difficulty and just like day to day struggle, that it’s hard. It’s hard to. It’s hard for others for me to appreciate. I try, but it’s hard to understand the full the full impact of it. And I appreciate that, Tony. It’s I mean, it’s a different I mean obviously a complex and difficult to discuss subject. It makes us all uncomfortable, which is part of the reason we need to have these discussions on the board level and on a broader organizational level. Let me sort of make one sort of caveat to all of this. In America, with white male culture can be seen is, you know, the dominant color alter with the power and privilege very fairly in various duitz. Observe that, and that’s obviously a very informed opinion that you have with others and I’ll even say it’s not an opinion. It really is a fact. But marginalization goes beyond race to, you know, and and gender. It goes to sexual identity and orientation. Religion, nationality, wealth. Wealth is a big one. I think age now disabilities, um and I don’t necessarily, you know, have the capacity to understand all of those aspects, and nobody really has the capacity to ask, Understand the aspects of marginalization for all the different groups that we may have. And we do categorize people on a number of different levels and have to recognize that these are off often overlapping and interdependent zsystems um, that that involved discrimination and disadvantage, and some people refer to this is intersectionality. But it is something that we’re all dealing with this country and the one that you raise. Maybe it’s the one that’s primarily on her, uh, our attention right now. And that’s kind of the white male dominated, uh, power and privileged class of individuals and how our institutions have developed over our history with that perspective on informed by that group on how difficult it is to change on recognize the problems that we have if we just continue to go down that path and try to make little incremental changes to the system to make it a little bit fair rather than to think about rethinking some of these and re imagining how how more equitable systems could take their place. But the white male power structure, though I that’s the that’s the root of all of it. It it seems, you know, the more I read and think that’s that’s the foundation of it. Of all the all the inequities, I myself apologize. We’ve got to take a break, but we’re coming right back to this gene. Stay right there. But I have to take care of our sponsors, too, Pursuing their newest free book, The Art of First Impressions. It’s all acquisition. To attract, acquire new donors, you have to make a smashing first impression. They re book has the six guiding principles of ineffective acquisition strategy. How to identify your unique value, plus creative tips. You’ll find it on the listener landing page at Tony dahna slash Pursuant Capital P for please. Now let’s go back, Tio, My conversation with Gene and D. I and governance. All right, So Jean, you know, and so I think that’s the route is the white male supremacy, Um, and you know, And so you and I have to have a safe, you know, safe space for conversation. And it so happens there thirteen thousand people who are going to listen to this. But, you know, you and I, we know each other. So we I for the first time in, like, eight and a half years, I’m feeling a little awkward, but, um, I think if I say that, then that helps me. Teo, we’ll give it voice and just recognize it and say that’s that’s how I’m feeling. But we have to, you know, we’re two people who have known each other for for those eight and a half years, we’ve had lots of conversations where? Thirteen thousand people? Well, years ago, it was only fifteen hundred. But now it’s thirteen thousand. Have listened, and we’ve always been fine. So you know, you’re in a safe space. I’m in a safe space way. Have we have good heads when we have good judgment and, you know, just we have to just, ah, acknowledge there’s a little There was a little attention. At least I was feeling it you know, and just have toe. Okay. You know, these are just the’s air manageable topics. Fair enough. That sounds okay. Absolutely. Tony. And I’m appreciate you having you know, this conversation. It’s obviously one again that’s super sensitive, and I’m sort of, um, the beneficiary of certain powers and privileges myself, so I can appreciate. While I’m of Asian American descent and I have dealt with certain inequities because of that, I can certainly appreciate the many powers and privileges of I’ve had because of my background, including being a male and including living in AA community, where Asian American males are not that uncommon. So it’s a difficult discussion tohave, and everybody’s gonna have a different perspective on this, but I think again, making sure that people do have this discussion at every table. So at the board table, at the dinner table with your family, I think these are important discussions and, um way only benefit by talking about this. Even if there are disagreements. And even if there are attentions and a certain level of uncomfortable feeling that I get generated by them on get’s, you know, we challenge ourselves. I mean, you know, you have your own business. You’ve you’ve broken out. You’ve you’ve challenged yourself in lots of ways. I have my own business. I have a show that, you know, half years ago didn’t exist, you know, So we’re open to challenge, and so we shouldn’t fear another challenge. We’re just taking on another challenge. I gets a sensitive topic, but that doesn’t mean it’s insurmountable by any by any stretch we’re both accustomed to challenge. So we’re challenging ourselves. I mean, you spent twenty minutes on Twitter, hominy, hominy, uh, you know, postings the seasons, challenge yourself and break outside. And those who don’t think differently think, think like everybody else. And where would we be if we all were of that sort? You know, I mean, you see that stuff on Twitter and Facebook all the time, And so now we’re, you know, I mean, you and I live it, Ah, lot, because we have our own businesses. But now we’re doing it in a a different way. A different arena, but still the same thing. It’s the same concept. It’s a it’s a challenge. And it’s ah, it’s overcome oppcoll I agree? Absolutely. Absolutely. If you don’t have the difficult discussions, then you’re probably not advancing a zoo, group or organization. Very well, right? And if you don’t challenge yourself, you’re not. You’re not advancing and growing as a person. That’s because that’s what I was getting to absolutely agree. So All right, so what if you’re on a board and you feel you’ve, you feel like, uh, the board does not reflect or the leadership of the organization. Let’s even bring in the CEO of senior leadership. But you’re a boardmember because we’re talking about defying governance. Um, and you don’t feel like the that that leadership, as I defined it, represents the the people that you’re serving doesn’t represent the communities that you’re serving. What do you think you should do? Hyre It’s a fantastic question, and I think that’s the one that everybody is asking right now, Tony. And partly because we keep getting these results, uh, that show that the nonprofit sector has really not been leading by example in terms of diversity on its board of directors or diversity in its leadership. I think the first thing we need to do is acknowledge that is that we’ve been doing pretty much a terrible job is a nonprofit sector in terms of getting diversity on our boards and diversity in an inclusive way, of course, so I wanted to raise. There was a survey by board source in two thousand seventeen called Leading with intent, and it found that ninety percent of CEOs and board chairs were white. Eighty four percent of board members were white, and twenty seven percent of non-profit boards were entirely wait. And these are bear improvements over a similar survey that they conducted more than twenty years ago. So, yeah, ah ah, highly disproportionate group and we were talking about power and privilege. Um, a really disproportionate number of Non-profit non-profit leaders in governance and CEO rolls are white. And when we talk about this in terms of larger organizations on and sort of the hyre paying CEO position, the gender differences come out as well, where a lot of white males again are dominating on those boards. And in those CEO position, Um, somewhat reflective of, you know, for-profit Fortune five hundred company CEOs and boards where there’s been actual movement, Teo increase att least on a gender basis. Some diversity on their boards. But Non-profits so far have been just doing the terrible drops, I think. Acknowledging that and saying whatever we’ve been doing so far, his not been very good. I think that’s the first place to start. Okay, So you could say, you know, our board is not unique. Our leadership. Sorry of the way. Our seven. Our leadership is not unique. You know, here’s the statistics. The trend is awful. The numbers compared to the twenty years ago, it’s either flat or just our bare improvement there or it’s a walk back. So we’re not unique, but we But we can be leaders on DH. It doesn’t make me comfortable, Teo to be on a to be a part of this organization, that it doesn’t reflect the people we’re serving. Um, first thing I suppose you are a boardmember. Er I don’t Should you? What would you What would you suggest in terms of bringing it up? Would you bring it up in a board meeting now? Probably not mean, you should. You want to have ah, a couple of back channel discussions first, right before you before you make this a, uh ah, ah, anew. What’s it called on agendas? You do boardmember is all the time A new Your business new business before you bring it up is there are lots of hard work that hard work for me to find. If you have a five minute discussion at the end of the board meeting about this topic, it’s not really gonna go. Yeah, you’re very far not introduce it as an issue and put it really on the back burner, if that’s how you’re going to raise it. So I agree some back channel discussions among some of the board leadership and bringing in the CEO to say, You know, this has been a problem in the sector. Let’s take a look at our own board and lets see, do we have this issue as well? And there’s a little bit of, you know, something that’s been called in the racial context. White fragility about being very defensive about about this and think, you know, Yeah, the sector is awful at diversity and equity on board. But you know what? Our boards really different. Even though you know, our composition might exactly make up our community. We’ve got a few people you know who are persons of color, or we’ve got a few people who were women or however you wantto look a diverse. But do they have to testify that you’re being very defensive? Very defenses? I think, having open discussions about, well, what would this organization’s board look like? Ideally, in an ideal world, what would this board be composed of? What different perspectives can we bring in? And why would we want diversity on our board, Our specific board? We know it’s a problem across the sector. We know that maybe on an organizational level, we haven’t always done the best job. But we feel like we have our hearts in the right place. Well, what would this ideally look like? And I think maybe that’s the starting point of discussion to say, Why do we want diversity? What tack of diversity do we want? And ideally, what would that bring out our organization? Why would that make us on it further our mission in a more effective and efficient way. Why would that make our organization be more sustainable over the long run? And maybe after that sort of sort of going for the positive first, maybe after that going? Well, what happens if we don’t do anything about it? Are we going to still be relevant? Are we still going to be around in ten or twenty years? Are we going to still be able to serve our populations as well? If we don’t do anything about these things. So I think those are the questions you ask. Maybe start with the positive and then go to the alternatives. What if we don’t do anything? I’m feeling like Tio. If the board is goingto have, uh, focus on this and have meetings around this and that a professional facilitator could be really valuable because, you know, because of the things that that I talked about and you you seem to feel too, you know, ten minutes ago, and that’s just two of us who know each other very well. You know, but I can imagine a board of eight or ten people, and the defensiveness starts coming up. I could see where a professional facilitator could be really valuable. Absolutely, Tony. And one who has experience dealing with DEA issues. Right, Because they they are particularly sensitive. Just a strategic management consultant who doesn’t deal with this and who might be a member of a powered and privileged class might not have the same perspectives and sensitivities to be ableto bring in the discussion than the understandings of the board members. Teo, be able to move this discussion forward in a way that will actually promote inclusiveness and equity in the organization. Just when would you just said d? I was just thinking this is a really It’s a good thing they don’t call it, uh, equity inclusion and diversity. That would be I’d improvised explosive device. And this this stuff can be really explosive. So if you’re not so I think I just if you’re not careful, you could you could you? If you’re not careful, you could die from the i e d of D I Yeah, that’s absolutely all sorts of possible acronyms. And I hear E. D. I is a frequent acronym on this issue as well. But, yeah, put the put the letters together in the wrong order, and those are the bad things that can happen. You could die from the from the explosiveness of deeds of I of d I. So All right, So what are some of the positives? And, you know, we were going to take inventory. The positives. Then we’re going to take inventory of the negatives to the fear the change. Some people gonna lose their board slot over years. This is obviously not gonna happen in six months. It’s not even happening. One board cycle. But if it’s going to if the organization will be committed to it, you know, there’s going to be costs and benefits. But so what? What? What? Can we identify some of the benefits of having a board that does represent Ah, leadership? Sorry, I keep saying board, but leadership that does reflect the community that we’re serving. What We know someone we know, some advantages. I mean, I because I could spitball a couple, but what do you What do you think? Well, I I think maybe the common sense advantage that we can all probably think about say, that makes sense is that when you got diverse perspectives and diverse backgrounds, it’s going to result in. Mohr informed better decision making because it’s not a bunch of people with the same experiences on the same backgrounds in the same kind of understandings of certain things. You’ve got more, more different thoughts, a different thought. Leadership in there and diverse leadership attracts broader community support. It also leads to greater equities because you’re now thinking about well how to our programs or how our services effect not only just sort of people in general, but segments of our communities. How are we doing with our African American communities or with our Latin next communities or with our Asian American communities with our LGBT communities? And you know those air things that we can all sort of bring in more diverse boards in an inclusive, diversity. Inclusive manner, of course, brings more different perspectives. Beings Mohr leadership that’s informed by different ideas and different backgrounds on DH that really helps out on, you know, also different networks. You’re opening up the opportunities for for for networking and who could be brought to the organization by having a more representative, diverse and inclusive board just absolutely latto napor networks and I think thunders now are starting to become very interested in this area’s well. So in terms of attracting the funders, if you rely, at least in part, on having grants coming from foundations, um, there’s trying to become more and more interested in this space. And part of the reason why is because there has been a lot of backlash against Thunder’s not taking into account DEA in the past, on their being called out and there have been different books. I’m not sure if you’ve been sort of talking with people about these areas, but on and had your argast has been, he wrote Winners Take all, which was on The New York Times top one hundred books list and that talks about sort of power and privilege and philanthropy and how, it seems, you know, serves to perpetuate inequities. Well, foundations are sensitive to that, and I know there are some foundations like the Ford Foundation, that are actually really moving, um, to address some of the inequities that have been caused by by foundations. There’s rob racial Stanford, who just wrote just e-giving who talks about tax policy and how wealth and philanthropic giving like that by maybe like somebody like Jeff Bezos who pledged two billion dollars to charity is really something that deserves not our gratitude but our scrutiny because of his ability to shape policy. You hung that money, influence things going forward and again in a way that a white male sees importance but not addressing it with a broader community. So I think the philanthropic sector is more interested in funding in these areas now, as they’ve been called out on it. Uh, and so if you’re a charity just dependent upon it, it’s gonna really be important out to your funders, many of them and increasingly, mohr that you’ve got a diverse board that has taken into account different populations that it may serve. Are we gonna take a break? Someone we did have on this show just just a few weeks of December. Edgar Villanueva, Uh, the author of the book de Colonizing Wealth and his thesis that use money as as healing For all the past inequities over centuries, Edgar is excellent. Also. Jean, When we come back, let’s let’s talk some about some of the downsides, the fears that we’re going to have to categorise and and list and deal with also among the leadership for this change. Andi, let’s talk some about token ization, too. Weinger CPAs anew Archive Webinar foryou. Accounting update. What has changed that Wagner knows intimately. If you can get intimate with accounting, you shouldn’t get into it with accountants. But but that’s hard. We’re talking about the topics that they know intimately, and you just need to know them a little bit so you don’t need to be intimate with them like the accounting update. New requirements for financial statements. You find this at regular cps dot com. Click Resource is then Webinars. Now time for Tony Steak, too. Take your plan. Giving one piece at a time. I was watching a tree get cut down in my father’s yard like Abraham like, uh, and I was thinking about planned giving. I did not think about honesty. I was thinking about No, wait, That was, Who was the tree? That was George Washington, not Abraham Lincoln, right? Cutting this tree down. That was George Washington. Um, but I wasn’t thinking about either of those Anyway, I was thinking about plans e-giving there’s a guy up in in the bucket and he throws a rope around a branch so that it doesn’t fall uncontrolled after he cuts it. And that’s just like you need to have a couple things in place. Simple things. Just simple rope, that’s all. Nothing elaborate but simple rope thrown over another branch. You need to have a couple things in place before you start your plan giving like, you want to know who your prospects are going to be. We’re gonna be promoting this, too. You wanna have some? Ah, simple plan for going ahead. And then you can go ahead and start your promotion. The cutting. And that would be, of course. You start with bequest. Just take it one piece at a time. Just the way I watched this guy cut this tree down One branch of the time it took ah, full eight hour day and including all the clean up. So you take it one step at a time. And, of course, I’ve got clips of ah, thiss tree surgery, all as part of my video at tony martignetti dot com. Now let’s go back, Teo. Gene on DH talk about D I. Diversity, equity and inclusion and governance. So, Jean, some of the some of the negatives that we’re going to have to deal with, um what what do you fear of change? I mean, I’ll throw a fear of change. Like I said earlier, some boardmember is going to lose their seats. I don’t know that hands are going to be going up and saying, OK, I’ll surrender my seat, even though I’ve got I’ve got two terms left because our by-laws called for three times. But I’ll give up my last two terms for there to be a person of color in my seat. I don’t think that’s gonna happen. So what are what are some of the negatives were going to deal with? Sure. So, you know, in addition to the one that you mentioned about, well, you know, does that mean I have to go was a boardmember because I’m a white male and be replaced by somebody else? That’s not necessarily the case, but that is certainly one of the fears that comes up more. General fear is maybe that Hey, we’ve got some great board members here, but they happen to be white. Does that mean we have to let them go? So that’s one of this year’s They’re stuck on a government structure that says, okay, maybe we were goingto have at nine boardmember Zohra ratio of four to ten, and you have ten board members and nine happened to be white. And you think they’re all great people? You don’t want to lose any of them, so the side as well, we can’t make our board more diverse without losing good people. And that’s a difficult discussion. Tohave One solution maybe increased the size of your board. You go. It’s not It’s not an either or, you know, good, bad. Kind of No, that’s a center in institutional structure. Way. Have to sacrifice some loose, um, good white people so we can get people of color on know just what you suggested. How about we just expand the size of the board? Yeah, but in some cases, it might be good for some people to step aside. And I say that with respect to age as well, because, well, we haven’t talked about it very much. Ah, Non-profit boards tend to be kind of older to Tony as you may know, uh, and young people, particularly millennials. Andi, even some Jen acts are just not getting onto boards. And they’re losing interest because nobody’s recruiting them. So people stepping aside to let in younger generations new thoughts, new ideas, new backgrounds and bring them onto the board, I think is just incredibly important as well. Yeah. You know something? I’m I’m thinking, um, you know, any of these solutions or methods? I really I don’t want to call a solution a method of process that we’re talking about. Jean, you know, may or may not work for aboard, but I guess what my goal for this show is just to encourage the conversations. You need to figure out what’s gonna work best for your organization. Um, you you know? So yeah, you need to You need to tailor these ideas of just But but think about it, you know, be introspective. And if there’s if there’s some If there’s angst, you know, talk about it and give it voice and think about a way a way forward of making the situation better. I could not agree any more with you, Tonia. Absolutely right. I did want to address some of the other challenges, a swell that you raised about having these discussions. Because while it’s great to say, you should have these difficult discussions, there are these barriers to them. And so I think it’s okay to acknowledge that there barriers, including this fear of losing good board members or maybe getting kicked off the board yourself. But, you know, in addition to that, you know, people are thinking about well, in our mission really isn’t about diversity on, and it isn’t about racial equity. Our mission is about something else. It’s to increase, huh? Education in the sciences or it’s tio promote the art or to do something something else doesn’t Apparently, att leased the surface level have, ah, racial lens on it. So people think, Well, it’s working, invest and to do this right, Tony, you talked about bringing it consultant. The board has got to be prepared to invest money and time. You’ve got to do it on the budgeting process and you’ve got to say, diversity, equity inclusion. This is one of our core values, and we are going to invest as if it is a core values, and that is another barrier it’s going to cost money, it’s going to take time. It’s going to take time out of your board meetings because this is a difficult discussion that you’re not goingto have in fifteen minutes. Uh, it’s going to take time, and it’s going to be probably something that goes on forever. So these aren’t short term solutions that solved a particular initiative. These are ongoing discussions that aboard needs tto have to mean make sure that it continues to promote and observe its core values. And I would say that board members, individually you talked about the board of the whole thing, that this is the rule to have these discussions Well, I’m going to argue that a boardmember individually has a fiduciary duty. If D. IE is a core value of the organization to bring it up, Teo, talk with first, you know, private conversations with individual more members. But make sure that that goes to the full board, because if acting in the best interests of the organization is your fiduciary duty, which it is, and G I is a core, value the organization while doing things that further your mission and are consistent with your core values. That is your legal duty. And while you might not get into any legal liability situation for not observing him, it’s still your legal duty to do it. So I would say it’s really imperative upon individual board members who have identified D. I as in core Valley of their organization to make sure that it gets stated that way. And that discussion goes to the board and that investments are made on decisions are made, which will cost something. So to make investment means you’ve got to take money and time out of something else and put it towards this. It’s now time to start doing that for a great many organizations, take money from something else, or find right, raise more money. Correct. There may be sources of money that, uh, that will support this kind of work. Um, I don’t know, but but it’s again it’s not an either or thank you, that’s that’s excellent the way you explained Gene the individual responsibility, because if yeah, because if we all just looked to the if we all just looked to the collective and the collective never raises it, I mean, the collective is just a the collective just a bunch of people. And so if the collective never acts, then that none of the people are. If none of the people are acting, then the collective will never act. That’s why I’m trying to say it sticks me in the circle. Curious way of getting to things. But so, you know, if if every individual’s waiting for every other one, it’s never gonna happen. Um, okay. Uh, all right. When we come back, I got taking a break. When we come back, let’s talk some about organization, Gene. Tell us can use more money. You need a new revenue source. You get a long stream of passive revenue When cos you refer process their credit card transactions through Tello’s. It’s that simple. You give fifty percent of each individual fee and those things add up. That’s the long stream. Month after month after month. Watch the video. Then send your potential companies to watch the video. You’ll find the video at Tony that m a slash Tony Tello’s Let’s do the live listener love. Um it’s ah goes out wherever you might be from Guten Dog which would be Germany to Ni hao, which would be China two Konnichi wa which would be Korea. Um konnichi wa is what konnichi wa is Japan. I’m sorry on genes on Kenichi while Japan, of course. Because Korea is Anya Haserot. That’s right. Yes. Uh, So the live love goes out and that’s for the listeners abroad. But the live love goes to the domestic listeners. Nonetheless, sometimes I do abroad first. Sometimes I do domestic first. So this time I’m doing their broad first But the domestic listeners throughout their fifty states because it’s not only the continental United States we’ll bring in Alaska and Hawaii also, of course, the live love goes out there. So wherever you are listening, live love out to you and the podcast pleasantries, too are vast podcast audience. I’m grateful that you are with us been subscribing the numbers keep rising pleasantries to our pod cast audience. Okay, Jeanne, Um so organization. What? What does that look like? When people of color, uh, or other, uh, other classes are brought in as tokens. What? What does that look like? What that looks like Tony is it’s awful. Well, let’s use the person of color a CZ example. You have, ah, vast majority of the the current board composition being white, and that board decides what we need. Toe add a person of color onto our board. Um, so they bring in one person of color, maybe an African American individual. They bring them on the board, and then they take the picture that we talked about at the beginning of this show. It makes for a better picture than it wass before. Um, but that individual boardmember is really not given any additional power or duties. They’re not asked for their different perspectives that they bring onto the board. There’s no plan to incorporate that person’s background in knowledge to influence what mate be done with the organization’s planning efforts or its future board governance structures. So that person is just brought in there for the good looking photo that shows a more diverse board than it wass on DH by excluding such person from from riel positions of influence and power. Yeah, that’s really just making them a token. And that’s what we’re talking. There’s the key. Yeah, they have. No, they have no power in the organization. There’s no plan for rewarding sharing the power. Um, yeah, the power center isn’t changing. And if it’s one person that that’s probably that to me, that would be a red flag has to be a pretty small board for one person, too, to make a difference and to be incorporated into power structures adequately, Um, and you know the kind of something you know, sometimes you’ll see the diversity committee, right? And so the so the people of color, the lgbtq, you folks, whatever three older folks they’re put on the diversity committee, and that’s it. She really just be called the Divers committee. We have a committee that’s diverse, That’s it. That’s what they do. That’s their structure. That’s their charge to be diverse. Okay, we have a diverse committee, you know, Um, you know, it’s it’s it’s insulting on its It’s also counterproductive because people know when they’re tokens when when they’re not given the levers of power or access to them. People know that, you know, they feel it, and it’s just going toe. It’s gonna create resentment and animosity. It’s It’s counterproductive to have ah, a diverse committee. I agree. Chun hee. So in there, lots of stories where persons of color who get invited onto boards find themselves being the only, UH, person of color on that board and being appointed to a diversity committee. Um, and that gets to be a routine. They join other boards with similar sort of bored compositions, and again, they’re asked to be part of a diversity committee. And, well, if that diversity committees actually given enough power and influence to effect change so that diversity, in an inclusive way is really strengthened in the organization and its governance. Well, that’s one thing. But if that diversity committee, year after year, is just for the photo op, uh, and just for the Grant proposal that says we have one, well, that’s really classic token ization. And and that’s something that is counterproductive in the incredibly you’d be better off not having that individual joined the board. That will be a terrible board experience for that person as well. Let’s talk about how this is a e-giving deviating from what I was thinking, but it is important. How do you share the levers of power? A. CZ. So if the leadership is, is all white what? What do they do? What do they need to do? Latto give real power, too. The their newly new people of color, etcetera. They’re newly diverse board members. What does that look like? Sharing the levers of power. What? You know, I need you to talk a little bit so I can think about it cause I just thought of it myself. How do you do that? How do you start to share power? Great question. And that would be kind of one of those generative questions that board should have. Ah, long discussion about once identified D. E A. Is something they want to prioritise and adopted the core values, and I think they’re a few ways to do it. The first way is to decide well, the first thing to do is recognize every boardmember actually has no interference. Individual power. Every boardmember individually has no power unless it’s delegated to them individually. While they have no power. Collectively, as the board, they’re the ultimate power of the board of the organization. So collectively they have power individually, they have no power. So bringing on one person, colored just to be an individual boardmember not delegating any authority to that individual is classic. Token is but you have officers. So you have a chairman of the board. You may have a vice chair, you may have a CEO. You may have a development director, some of these air staff positions in all volunteer organizations that may all be volunteer positions. And there may be mixes, obviously, but their officers who do have individual authority and that where you have to think about is, is our diversity in an inclusive manner being affected through our officer positions there. Maybe committee positions that have power as well. Where they’re delegated with the authority to do things on behalf of the board and executive committee would be, you know, a typical committee that’s often asked to sort of take over Mohr of the day to day oversight. Then the full board would be and is a person of color, or whatever marginalized group that you’re trying to increase. The first report is that person, or are those people representative on those committees that have important power? And then, beyond that, maybe the other way to think about it is influence. So while I said each individual boardmember has no power different board members have considerable influence. And if you have a board meeting that’s, you know two hours long if you’ve got a board of, like, fifteen people, there’s only so much that each person Khun say and allow everybody to participate right, And that’s often controlled by the chair of the board, sometimes by the executives who run the board meetings, which isn’t always a great way to do it. But somebody is facilitating and latto presiding over the board and the board meetings. And to do that in a way that recognizes that persons from marginalized groups the person that you asked to be on the board, to represent some of those ideas and perspectives and thoughts, well, that might be unfair to say, you know, you’re brought on to represent every person who’s you know in that group. Yeah, that’s on. So just yeah, just to bring those people just to get at least their individual perspectives coming from that background or characterization, that can be important. But if the board members just don’t acknowledge that, you know, and just give them five minutes to speak at a you know to our board meeting because everybody else needs there five minutes. That’s not going to do much to effect change, either, You know, So so. But promotion, um, get mentoring access to the leadership Onda leadership that that hears them. I’d also welcoming challenges to the leadership, you know, not mutiny. But there’s a lot between silence and mutiny. There’s a broad spectrum there, and so welcoming challenges to the authority and even even in public. If you know if something comes up in public and it seems wrong that the challenge to that shouldn’t be defensiveness, marginalization and rebuking, it should be acknowledgment. I’m trying to listen and learn. You know? What is that? What’s the What’s the What’s the source of the conflict that’s been pointed out? Mean those air? Those are things that that I was thinking of. Two as a cz ways of sharing power and e-giving e-giving voice. I got to take our last break. Gene Hoexter give. Can you use more money? Need a new revenue source? Here’s a second way mobile giving. You can learn about it with text to gives five part email mini course. Fiv e mails won the day and you will know no more about text e-giving mobile giving than you did six days earlier. I did it, and I learned it’s easy to get started. It’s cheaper. It’s easy for your donors. It’s cheap for you to get started. There’s just a couple of lessons that come out of this many course to get the email many course Text NPR to four, four, four, nine, nine nine. And thankfully, we’ve got several more minutes, but probably not enough, uh, for D I and governance. Anything else you want to add? Jean, too. I threw something out that I took a break, because that was that was that unfair exercise of power? I’m sorry, E. I got it. I got to take care of the sponsors. I didn’t mean to do it that way. So anything you want, toe, respond to what I just said. I’m going to echo actually what you said because avoiding conflict going for consensus based decision making on boards, I think is really, um, enhances the white supremacy culture or a majority or power privileged supremacy culture. So I think embracing some sort of conflict is important. Having a long term focus and not just a short return focus is really important not to looking to just better perfect the status quo when you recognize that the status quo was largely designed by one group for their own benefit is also another important factor. Now I’ll just leave you with a few. Resource is so bored. Source has got some excellent subject matters, particularly those written by Veneta Walker, who used to be their vice president and now engaged in consulting. And I’m going to have a chance to talk with Brunetta about four diversity on a webinar coming up in March. So just plug that a little bit and say, look for her readings because she’s a really leader in this space and you can learn a lot. Okay? And now you’re going to be on this Webinar in March, which I’m sure you’re going to promote at the non-profit. Law blogged dot com, right? Absolutely. Okay, so people need to be subscribing to that. You’ve heard my admonition hundreds of times, subscribed to non-profit law blob dot com and you’ll you’ll find out info about Jean and on the Web in our with Veneta, we still have some time left. Jean What? What do you want to talk about? Well, I’m going to say a few more things than what one is that I was going to mention Edgar Villanueva’s Well, because his book, It’s remarkable de colonizing wealth, and I really appreciated your show with that girl. That was such an interesting show. He’s excellent. He’s excellent. Yeah, the next thing is, maybe once you figured out what you want to do in terms of Why are you bringing diversity on? And how is it going to help your organization pursue or an advance its mission in a better way. That’s the time to start to now, reach out to communities of color on DH. You’re gonna have to go through different ways because the traditional way of bringing in boards for most non-profits that have self perpetuating board, we just ask our friends or we asked our contacts and very much, you know, and I think there’s an evolutionary biology principle of affiliating with, you know, people who are of our similar characteristics, all to do with the selfish gene and and all of that and so that that’s our comfort zone. That’s what we may be predisposed to because it had sametz solutionary advantage in the past just sort of congregate with one another that we’re very much alike. But we’ve got a break out of that. And if you want diversity, you got to reach out and go beyond that. Acknowledge that you may have those those predispositions, but you’ve got to reach out. Consider Boardmember Ching Services, identity based professional affinity groups, colleges, community leaders reach out and be uncomfortable. As you said, Tony, be uncomfortable, get to know new people and get your organization to know new people and new groups and figure out how to do it right. If you’re really open and honest about it, these people are going to want to help us. Well, yeah. Go into the communities that you are under represented by that you’re under representing, uh, set up some meetings. Um, you know, maybe it’s Maybe it’s among your benefit community, The people you’re helping talk to them or uh, but as you said, Gene, you know, goingto community’s going to networks that you haven’t been in. People take a meeting, they’ll take a meeting. And if your genuine and sincere they’re going to hear that, they’re going to hear that and they’re going, They’re going to want to help you. All right, Gene hears. I don’t know if we covered this adequately again. My goal was just to get people consciousness raised and get them thinking about and talking about these things. But I want I want each of us to listen back to this, and you and I’ll decide together whether we should say some more on this or we feel like we’ve we’ve done enough. Not that now that we’ve covered the whole topic. But have we, uh, Have we met the goal? Okay, but then you know what? I set the goal. So I’m open to a different goal to see, see that white powers creeping in and set the goal. And then I’m saying that we’re going to judge it by the goal that I said, So it’s bad. So you and I will collaborate together, and we’ll decide if we’re going together. If we’re going to do this topic some more sound good. I love to do with you and love to actually talk about how you can implement some of these ideas in by-laws and governing documents from illegal angle. There’s your record to it. Okay, It’s up to you if it’s upto us together, if we want to do some more. All right. So he’s Jean Takagi non-profit law block dot com. You got to subscribe to that and follow him. He’s at G tak Gene. Thank you so much for real. Genuine and could have been even tougher. But but it wasn’t as tough as it could have been. So I thank you for that conversation. Thanks so much. Really Appreciate it. Tony. Have a great day. Thanks, Gene, next week. I don’t know if you missed any part of today’s show. I beseech you. Find it on tony martignetti dot com were sponsored by pursuing online tools for small and midsize non-profits data driven and technology enabled. Tony dahna slash Pursuing Capital P by Wagner. CPS Guiding you Beyond the numbers regular cps dot com by tell us credit card payment processing your passive revenue stream, Tony dahna slash Tony Tello’s and by text to give mobile donations made easy text. NPR to four four four nine nine nine are creative producers Claire Meyerhoff. Family Blitzes. The Line producer shows Social Media Is by Susan Chavez Mark Silverman is our Web guy, and this music is by Scott Stein of Brooklyn with me next week for Non-profit radio Big non-profit ideas for the other ninety five percent go out and be great you’re listening to the talking alternate network e-giving. E-giving. You’re listening to the talking alternative network. Are you stuck in a rut? Negative thoughts, feelings and conversations got you down. Hi, I’m nor in Sumpter potentially ater. Tune in every Tuesday at nine to ten p. M. Eastern time and listen for new ideas on my show Yawned Potential Live life Your way on talk radio dot n Y c. Hey, all you crazy listeners looking to boost your business? Why not advertise on talking alternative with very reasonable rates? Interested simply email at info at talking alternative dot com dafs. Do you like comic books and movies? Howbout TV and pop culture. Then you’ve come to the right place. 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