Tag Archives: governance

Nonprofit Radio for February 13, 2023: Inflection Points As Your Nonprofit Grows


Brooke Richie Babbach: Inflection Points As Your Nonprofit Grows

There’s a nonprofit life cycle with recognizable stages. At each point, you need to align your goals, plans and actions with the stage you’re in. Brooke Richie Babbage, CEO at Bending Arc, puts it all together.


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Transcript for 627_tony_martignetti_nonprofit_radio_20230213.mp3
[00:01:37.59] spk_0:
And welcome to tony-martignetti non profit radio big non profit ideas for the other 95%. I’m your aptly named host of your favorite abdominal podcast and oh I’m glad you’re with me, I’d be hit with Pyrex AEA if you made me hot with the idea that you missed this week’s show. Inflection points as your nonprofit grows, there’s a nonprofit lifecycle with recognizable stages. At each point you need to align your goals, plans and actions with the stage, you’re in Brooke richie Babbage Ceo at bending Arc puts it all together, Tony State to nonprofit Radio 50, it’s my pleasure to welcome for her first appearance on non profit radio Brooke Richie Babbage. She is an organizational design and social impact strategy advisor and coach. She hosts the nonprofit mastermind podcast and is the founder and ceo of bending arc through which she supports mission driven leaders across the country in launching and scaling high impact nonprofits over 23 years. She’s been a lawyer, leader and social entrepreneur at social change organizations throughout the US. She and her work are at Brooke richie Babbage dot com Brooke Welcome to nonprofit radio

[00:01:45.26] spk_1:
high tony I’m really excited to be here.

[00:01:48.07] spk_0:
It’s a pleasure to have you. Thank you. Thank you for being excited.

[00:01:51.16] spk_1:

[00:01:52.90] spk_0:
you’re in, you’re coming to us from Brooklyn new york, is that right

[00:01:57.43] spk_1:
Brooklyn Brooklyn new york. It’s where I Live and work with my family

[00:02:00.37] spk_0:
yeah Alright there’s some Tv show I used to uh watch we’re going back like seventies eighties uh oh no wait no no. Earlier than that it’s from the honeymooners, which was the fifties. But

[00:02:12.78] spk_1:
I actually loved that

[00:02:14.58] spk_0:
show. You love the honeymooners? I

[00:02:17.09] spk_1:

[00:02:31.52] spk_0:
I wasn’t watching here in the fifties, not quite that old, but there’s a, there’s a line Ed Norton says Brooklyn U. S. A garden spot of America or no. He says Brooklyn new york garden spot of America coming to you from. He’s somebody asked him where he lives or something and I think he says Brooklyn new york garden spot of America. So alright, you’re in the garden spot. Cool. Uh let’s, I wanna, I wanna get through something, just flush out something in your, the introduction that I read. What does an organizational design and social impact strategy advisor and coach? Do

[00:04:52.56] spk_1:
I love that you asked that question. Thank you. So most simply put I help nonprofit leaders figure out the best way to design their organizations. I think that when we talk about growing a nonprofit or leading a nonprofit, you know, doing nonprofit work, it tends to be really high level and we think, you know, leadership and management and fundraising and all of those are obviously really important. But really what makes the leadership and growth of a nonprofit most effective is when you think about the details of the design, Right? And I love that word, the intentional choices you make about who you hire for, which roles, which programs you offer in which communities, how often you meet with your board, what you do at board meetings? Those are all design decisions you’re sort of constructing or building something as you go. And I think it’s really fun right in the same way that I’m not an artist at all. So for any artist listening, this may not actually be the right sort of analogy, but I think of it like building, you know, a work of art, you sort of take different pieces of inspiration and you construct something from the ground up. I think designing an organization is very similar and I’ve also found that particularly for smaller nonprofits where the executive director or E. D. Like has their fingers on everything notching down and saying to them actually, you don’t have to think these big lofty thoughts about, you know, board growth or board development. Actually that’s just the everyday choices you make about picking up the phone to call your board chair or you know, having breakfast with a board meeting. Those are design choices and it can make them feel a little more in control of what their organization is becoming. So that’s what I do. I help leaders do that.

[00:05:24.57] spk_0:
And and so the organization is gonna develop over time, which goes right into the life cycle we’re gonna talk about. So unlike a sculpture. I mean the sculpture has to be done at some point otherwise. Well, I mean a true artist might say it’s never done, but that artist is gonna be starving for her lifetime because they’re never gonna sell anything because their art is never finished. So, so unlike a piece of art, it can be changed over time

[00:05:30.86] spk_1:
and should be

[00:05:37.11] spk_0:
intentionally designed actions, processes staff overtime.

[00:06:10.96] spk_1:
That’s right. And I think the key is, and the reason that I include organizational design and not just strategy and growth is that it can be easy, particularly as organizations are growing quickly and I work with organizations under $2 million 500,000 to their first million. And that’s a really fascinating time as you know, you and I have talked a little bit about in our first call, but it organizational leaders can look around and feel like their organization is happening to them or around them. Right. How did I wind up with this board? How did I wind up with this particular culture And so reminding them that they actually can make choices. They and their team, they and their board, other stakeholders can make intentional choices, gives them some power back and can feel empowering at a time of organizational growth that can really feel disempowering in a lot of ways.

[00:07:16.85] spk_0:
And you and I are gonna flush out what we talked about in our, in our preparation call today. So I don’t want listeners to feel like there’s something Brooke is holding back on nonprofit radio listeners. Absolutely, there’s nothing, there’s nothing that she and I talked about previously that we’re not gonna talk about today, We’re gonna in fact we’re gonna go into quite a bit more detail. So let’s do that. Um, do we have these recognizable benchmarks in the, in the life cycle? Uh, and I think it just makes sense to go through the six of them. Could you just preview them, you know, high level. So folks know what’s coming and then we’ll then we’ll take a step back and look at look at each one a little more in more detail. But if you just overview.

[00:07:26.72] spk_1:
Absolutely, yeah. So should I start maybe by just saying what I mean by nonprofit life cycles? Like why that’s a framework that’s helpful and then talk about the

[00:07:36.14] spk_0:
Yeah, yeah,

[00:08:30.65] spk_1:
yeah. So basically, you know, as you were saying, organizations continue to grow, they continue to redesign and redesign themselves. And so I talked about, I did not make this concept up when I talk about non profit life cycles. It’s a concept that folks discuss. It’s really about the process by which organizations grow or depending on the organization decline through particular changes in their structure, systems and processes. So it’s a series of phases, recognizable phases along development and I really like I like framework. So I’m a big, I’m a Virgo total framework person. Um, so this is really helpful for my brain to say, okay, in the same way that you think about a child or person developing, We go through these phases. Right? And so you asked what the six R. And the six that I’m focusing on are the growth phase is there also? So for stagnation and decline phases that we won’t talk about today.

[00:08:35.49] spk_0:

[00:08:36.77] spk_1:
we don’t want to talk about

[00:08:37.38] spk_0:
this but

[00:09:55.71] spk_1:
so the six growth phases are similar to write the growth of a person or I use the growth of people as a way to help people remember them. So the first is birth and launch. The second is infancy right after birth and lunch. The next is childhood. The next one is teenage hood or early growth phase and then young adulthood or late growth phase. And in a lot of the literature organizations talk about sort of a growth stage organization or a growing organization and I actually think that early and late growth stage organizations are different and I’m sure we’ll talk about why. So I separate them out into two different stages of development and then you have maturity or the zone of maximization which is you know when organizations find their groove. And one thing that I’ll say is this isn’t necessarily properly linear. So it’s not necessarily that an organization is always and always going to be in this, we found our groove. Everything’s clicking zone of maximization. They may fluctuate. There may be aspects of their organization like their staffing or their board or their fundraising or their program design that is more or less developed. So these aren’t you know, you’re not sort of trying to get to like a sculpture, trying to get to and stay in one of the phases, you really just want to be aware of where you are. So you ask the right questions.

[00:10:07.20] spk_0:
Okay, So you, so you might be maturing in some respects

[00:10:11.50] spk_1:
and not in

[00:10:16.44] spk_0:
Others. one aspect of resource development, fundraising is in childhood, but you know, like staffing and programmatic,

[00:10:23.90] spk_1:

[00:10:37.18] spk_0:
board is clicking so it’s in early growth or teenage puberty, you know, I was hoping, I thought you might call teenage hood puberty, but you didn’t want to do puberty. I

[00:10:37.57] spk_1:
don’t want to wade into that.

[00:10:38.77] spk_0:
No. Yeah,

[00:10:41.85] spk_1:
nobody feels good about

[00:10:43.42] spk_0:
that word. That’s what’s happening. That’s right.

[00:10:48.62] spk_1:
At least some people look back on teenage hood and are like, well there are certain parts of teenage hood that were exciting, you

[00:10:53.75] spk_0:
know, it

[00:10:56.23] spk_1:
sucks for everybody.

[00:11:07.86] spk_0:
Exactly. Alright, so, so birth and launch now, let me, let me uh either you, I don’t see that you put like timeframes like, so it’s not time bound,

[00:11:10.61] spk_1:

[00:11:10.95] spk_0:
mean, I guess

[00:11:14.10] spk_1:

[00:11:14.60] spk_0:
birth and launch for like five years, which to me seems like an awfully long time to be in a birth phase, but your time bounding them, it’s based on where the organization is not

[00:11:26.34] spk_1:
how many years

[00:11:27.56] spk_0:
and months have elapsed.

[00:11:58.60] spk_1:
Absolutely. It’s not time bound and it’s not based on budget is the other thing that I’ll say, um, and I think that’s a really good point that you’re making because if you time bind it, then organizations start saying, okay, we’ve been around for a year and now it’s time to move past launch and we should be in infancy when in fact, I’ve worked with lots of organizations that have the characteristics of an organization in launch phase. Right? They don’t quite move out of that for years. And if they don’t recognize that, then it’s actually something that keeps them stuck. So it’s not time bound. And it’s not about how much money you have.

[00:12:07.74] spk_0:
All right. So let’s talk about the first one in birth. Birth launch. What do we look like? What like what should our goals be? What should you have in mind at this at this stage? Absolutely.

[00:12:51.67] spk_1:
So the first one is birth and launch. And it’s actually the simplest one. It’s the one that people sort of recognize the most. The key characteristic here is that you’ve identified a problem and you’re and you’re developing a solution. So usually these are founders. These are people that have no team, you know, maybe volunteers helping them tends to be sort of solitary work. And the the goal here is to clearly define the problem and your solution right to move out of this phase. What you want to do is make sure that you have a clear enough picture of what your theory of change is, right? You what you’re gonna do in response to this problem. That is how you move out of the launch phase. Okay.

[00:13:13.63] spk_0:
What’s your, your theory of change is what,

[00:13:17.79] spk_1:
So it’s basically the

[00:13:20.14] spk_0:
relationship. Yeah, absolutely.

[00:13:24.40] spk_1:
Know how you’re gonna change the world. So when I say theory of

[00:13:27.50] spk_0:
change, we

[00:13:28.86] spk_1:
talked about the changes like we have a mission and we have strategies. Why do we choose the strategies to address this mission?

[00:13:37.05] spk_0:
Yeah. Um, and so so funding, what, what is that? You know, I’m, yeah, I mean a lot of listeners have been through this stage.

[00:13:48.39] spk_1:

[00:13:54.03] spk_0:
might still some are still in, I’m guessing most are have advanced but respective irrespective of where they’re, where listeners are standing. What is what is funding look like here.

[00:14:26.26] spk_1:
So typically and obviously everything we talked about here, there are no right or wrong. There’s not nothing that’s gonna be true for everybody. But typically funding at this phase is almost entirely the founder and or people in the founders networks like my organization was just my friends. When I started my organization, I basically, you know, I was a poverty lawyer and I decided I was going to start this organization and most of my friends from law school had gone into law firms. And so I threw a big party and I basically said, you guys make more money than I do. Here’s the mission. Here’s a vision, here’s what I’m trying to do. Let’s do it together. Um, and that was, that was how I started, you know, and my parents, so between between those people. Yeah, so that’s usually the funding at this at this stage.

[00:14:48.73] spk_0:
Um, anything else about birth launch,

[00:14:51.50] spk_1:
you know,

[00:14:53.04] spk_0:

[00:15:51.24] spk_1:
guess the one thing I would say about again moving out of birth launch and just back for a second, one of the most, one of the ways to use this whole framework is to try to recognize which phase you’re in, so that you ask the right questions, right? So that you are focused on doing the right thing at the right time. So it can be really exciting to say, you know, oh, this is my stage of development, right? I’m in a birth stage, great. We recognize it. But the way the framework becomes helpful is then to say, okay, therefore what’s the strategic objective of this phase, what does it look like? What do we need to focus on to move to the next phase in a healthy way? So for the startup phase, what it looks like to move to this next phase with the goal of this phase of moving through the next phase is clarity. Have you clearly defined your problem, Have you clearly defined what you are going to do in response to that problem? And once that’s clear, then you start to see organizations move into the more formal start up phase and or infant phase and I’ll also say a lot of organizations never, you know, we talked about sort of time boxing this, There are a lot of organizations that don’t actually move out of the launch phase.

[00:16:14.32] spk_0:
They, so they, what, what keeps them there, They don’t have a sophisticated view of the, of the problem and they’re gonna, they’re gonna

[00:16:36.63] spk_1:
usually one of three things happens. They can’t get that clarity either around the problem or their solution. It’s sort of stays fuzzy and they just can’t launch, they won’t, if you do have that clarity, you’re never going to get funding that isn’t just your friends and family, You’re not going to build a network of support. They can’t move beyond that face because they don’t have the clarity to sort of rally support. A second thing that happens is, and this happened a lot during covid you have people seeing real problems that had always existed. But there was this explosion in new

[00:17:01.99] spk_0:

[00:17:38.03] spk_1:
stage or launching nonprofits and mutual aid groups also. And what can sometimes happen, which I think is fantastic is organizations look and say, oh, we don’t actually need to be a separate nonprofit, right? There is a problem that we’re working towards. We do have an idea for the solution, but we don’t need to build a whole institution here. We’re gonna partner, we’re gonna become a program of another organization. We’re gonna collaborate or form a network. And so that’s another thing that happens. And then third. And I and fairly certain that there are people listening for whom this resonates growing an organization or launching organization can be really hard. It’s a lot of work. And so you just have some people who decide they don’t want to do that, right? That’s they will, they will work to fight the problem that they’ve recognized in some other way as a board member, you know, joining the staff of another nonprofit. So those are the folks that don’t move beyond launch.

[00:17:59.37] spk_0:
Yeah. So you could go from launch to decline.

[00:18:05.50] spk_1:
Exactly, yeah.

[00:18:07.33] spk_0:

[00:18:08.34] spk_1:
failure to launch, just never sort of really launch Absolutely.

[00:18:12.70] spk_0:
Um, you mentioned, you know, long standing problems that were brought to the, to the consciousness through the pandemic. I’m guessing you’re talking about racial disparities, income disparities, the wealth gap,

[00:18:27.29] spk_1:
health disparities in

[00:18:28.86] spk_0:
health education.

[00:18:31.52] spk_1:
These are schisms that have always been there. And so I hesitate to say, oh, people started to see problems, they’ve always been there, but I think they were laid bare in a very unique way.

[00:18:42.76] spk_0:
Yeah. There are certain groups that suffer worse in, in any and then then lots of others. And every time there’s a crisis it’s brought to our consciousness to the consciousness of people who aren’t paying a lot of attention.

[00:18:56.53] spk_1:
I was gonna say two more to the consciousness.

[00:19:03.37] spk_0:
Yeah, yeah. More right now, you mentioned something, this is um, I would take us down a little bit of a side road, but I always, I always come back. I’m usually able to, you mentioned mutual aid groups. I’ve just been reading about those. I did not know that they exist. They that they exist and that they really came uh, they really bounded in popularity and

[00:19:23.53] spk_1:
uh, around

[00:19:43.68] spk_0:
the pandemic where, you know, it was this form of giving and uniting and people helping others that I think, you know, statistics don’t capture in terms of giving, you know, giving numbers, whatever giving us a does, you know, I’m always skeptical of them anyway. But even more so down talk about these, these local grassroots organizations. Then there was a data base of hundreds of them that was mutual

[00:19:48.40] spk_1:
aid here in new york. Mutual aid N.Y.C. was just amazing.

[00:19:51.30] spk_0:
Yeah. Say, say a little more about what sprung up these mutual aid. I’m just, I’m just reading about it this week and now you just said it, I would like to make sure listeners know that these exist.

[00:21:01.18] spk_1:
Yeah, absolutely. So mutually groups loosely defined are sort of networks of people and groups that come together and organize to provide aid to provide support to people into communities where they see the need. And one of the distinctions between, say, a mutual aid group and a non profit is non profits are incorporated right there corporations, they file taxes and all of the things mutual aid groups are not, they are unincorporated, collaborative collectives of self organizing people. And so they, one of the things that I personally found really exciting and intriguing that emerged more so during covid around these mutual aid groups is that there’s always been this sort of idea if you want to do mission based work if you want to support your community, start a nonprofit or join a nonprofit. Right? So we had this sort of for profit government and nonprofit distinction

[00:21:04.18] spk_0:

[00:21:05.28] spk_1:
or pillars or, you

[00:21:06.36] spk_0:

[00:21:59.67] spk_1:
but the reality is that those are sort of false distinctions, Right? And there’s a lot of sort of history. I used to teach the history of nonprofit um, law. So I won’t bore folks with that, but the distinctions aren’t actually necessary. And what I loved about the rise of mutual aid support and and action networks of people, unincorporated networks and collaborations is that people basically said, no, we don’t have to get caught up in the institution building piece. We just want to do the work. We and so we’re going to find other ways. And what’s interesting even now at the tail end of Covid is that you’re starting to see even more of a redefinition of how social impact work is done. Different forms of nonprofits, hybrid nonprofits, mutual aid groups That are finding ways to get funded even though they aren’t 501 C3. So there’s been this really beautiful expansion of social impact work and I, my entree into it was through coming to understand mutual aid groups and mutual aid works here in New York.

[00:22:24.02] spk_0:
I don’t know where I was. I regret that I didn’t know. I mean maybe listeners know and I just, I’m just completely in the dark. I was about this during the pandemic. I mean I would have, I would have given them voice. I would have had, there’s a there’s a woman who compiled a national database or the state by state of the mutual aid groups that you’re talking about the new york new york Association of Mutual aid Societies. I wish I had known about them during the pandemic. I don’t know where the hell I was.

[00:23:32.52] spk_1:
I think a lot of it was the first thing I did. You know, I work with these nonprofits leaders through my programs and everything. And when Covid hit I just started getting emails and phone calls and texts from people in my network. What are we doing? Like how do we address these problems? And I started hosting these weekly strategy and action calls, These national calls on zoom where people executive director to just show up and talk to each other. Um and I was just listening to what was coming up in these calls. And so every week, sometimes multiple times a week there were dozens of executive directors, sometimes the same groups, sometimes not just showing up and saying, here’s what we’re seeing. You know, and a lot of these organizations were partnering with mutual aid groups. So that was how I came to understand the role they played in the ecosystem was just being on these calls every week listening to people and they kept coming up and then I sort of you know did a spiral deep dive research. You know

[00:23:46.13] spk_0:
Now it sounds like they were they sprung up, they were agile, they know the needs of the local community.

[00:23:53.15] spk_1:

[00:23:53.84] spk_0:
they’re defining community whether it’s state or county or even just town. You know, they know the needs, they know the levers of power

[00:24:01.96] spk_1:

[00:24:05.16] spk_0:
the community however that they defined, you know they can they can I mean within a week they could be serving people

[00:24:10.80] spk_1:

[00:24:11.08] spk_0:
their to submit their 10 23 and exactly the I. R. S. With board and you know eight months later, you know we’re halfway through the pandemic. You know within. Yeah it’s very exciting. Thank you thank you for flushing that out. And I don’t

[00:24:25.52] spk_1:
know I

[00:24:28.73] spk_0:
regret that. I didn’t know more. Well

[00:24:29.46] spk_1:
now you do

[00:24:30.74] spk_0:
pandemic. Yeah

[00:24:32.06] spk_1:
and they’re not gone. So actually

[00:24:36.72] spk_0:
you know that’s that’s right, you’re right. They’re not gone. We should be doing a show on mutual aid groups. That

[00:24:41.62] spk_1:
would be awesome.

[00:25:09.52] spk_0:
Yes. Alright, alright. It’s coming infancy. Let’s move on. We have uh at this stage we’re gonna be we’re gonna be 100 years old and we’re gonna be two hours into the show and the show is gonna die. But the show is going to die before the before we reach mature maximization. I no, no, it’s my fault because I digress. But let’s move to infancy. What do we look like here? What are we talking? What are capital look like? What are our goals?

[00:27:30.90] spk_1:
Yeah. So this phase is usually still mostly the founder and organizations that shift into the start up phase have some kind of legal status at this point. So they may be a 501C3. There are a lot of the corpse, right hybrids. But they have a structure that houses the work. And so this initial distinction between the founder and the work of the founder and the institution that needs to be built. It starts in the start up phase and I think that’s really important to highlight because as organizations grow and develop that distinction between the founder or the leader and the institution becomes more important. And so it really starts here, right? Funding isn’t for just the salary of the founder, the funding is, there’s overhead there maybe rent, right, there may be other team members, there maybe stipends for program participants etcetera. So the goal of and I always distinguish their sort of five considerations in each stage, like what’s the goal of this phase of development, What do we need to focus on? How are we designed? And then you you mentioned capital. Right, where’s the money coming from? What does funding look like, what our strategic objectives and what does our team look like? These are sort of the five dimensions of questions or considerations to ask yourself at each phase. And so for this phase, the goal is really proof of concept, right? How can we take this theory of change these strategies or the programs or the activities, the work that we’re doing and demonstrate to people other than our closest connections that there’s a there there, Right, that these strategies are actually going to help move us in the direction of the mission. That’s what I call proof of concept. And so there’s, you mentioned being agile and nimble, there’s a lot of program design experimentation. The design tends to be very organic and responsive. You have maybe a small team of people sort of out in their community or in the world doing work and iterating very quickly. So it’s, it’s a phase that’s marked by a lot of energy. Things are changing very quickly. Also really limited funding. So startup funding can be really tough. I happened to start my organization in new york where I actually think accessing startup funding was a little easier than some other communities. A lot of the organizations in my accelerator program are not in new york and the start up phase can be hard to get funded because most funders look for proof of concept, they want to see that, you know, what you’re doing is actually working. So the goal of this phase is really proof of concept in large part so you can get funding and stakeholders etcetera.

[00:27:58.00] spk_0:
I’m seeing big leadership challenges.

[00:28:00.43] spk_1:
Uh we’re only

[00:28:01.68] spk_0:
we’re only in the second

[00:28:02.43] spk_1:
stage, you

[00:28:13.00] spk_0:
know proof of concept, big changes, hiring staff rent, you know there’s as we progress there’s enormous challenges to leadership. Is

[00:28:16.13] spk_1:

[00:28:27.59] spk_0:
person. Do you see that much? I mean is one person capable of taking an organization as as ceo founder remaining ceo through maturity is that I

[00:28:56.18] spk_1:
have to tell you, we could do a whole other podcast conversation on that question there. Do I personally think one person should do it all? No I don’t. And this is coming from somebody who started and founded multiple organizations, all of which had one E. D. Or one Ceo. And that was me. I think that this institution building piece is massive and I think that the idea of one person holding the responsibility for the hiring, the strategic vision, the resource development, the co governance with the word it’s a lot. And the biggest challenge that the leaders that I work with have is the sense of overwhelm the sense of constantly juggling so many balls. It’s it’s a

[00:29:16.13] spk_0:

[00:30:04.07] spk_1:
Yeah and I think you’re right to highlight it starts here right once there is an institution, right? Once there’s this formal legal structure there is there’s an organism that must be supported and built and you know held by someone, there’s a really interesting movement towards different models of leadership of shared leadership that was not Common when I was coming up, you know, 20 some odd years ago you had an executive director and they were at the top and they were in charge and I think there’s been a really great conversations happening more and more and I think more funding for and support for models of shared leadership. Co leadership. One of the organizations that I worked with had this really interesting for person leadership team. So there was no one executive director, they each sort of had their sphere of influence and they made to sit. Now there’s management and leadership challenges inherent in that also. But people are really experimenting with this. How do we hold this work?

[00:32:30.71] spk_0:
It’s time for Tony’s take two Non profit Radio 50, That is the coupon code that will get you 50% off planned. Giving accelerator. The course starts early March, we will be done together by Memorial Day, so it’s a three month course, You’ll spend an hour a week with me and your peers in the zoom meetings and they are meetings not webinars so everybody can talk to everybody else and you can interrupt me without having to put a question in the chat. It doesn’t work like that, just speak up and everybody helps each other. That the pure support is incredible. Um, it’s all about launching plan to giving at your nonprofit, that’s what we’re working on together. Making planned giving for you easy, accessible and affordable for small and midsize nonprofits. If this at all sounds interesting to you. You can check out the accelerator at planned giving accelerator dot com. You’ll see that the general public is getting 40% off the full tuition. You use non profit radio 50. No spaces maybe that’s obvious. I don’t know. No for a coupon it’s probably not obvious. non profit radio 50 with no spaces will get you 50% off the full tuition through february good through this month. So there you go. You’re entitled, it’s all at planned giving accelerator dot com. That is Tony’s take two. We’ve got boo koo but loads more time for inflection points as your nonprofit grows with Brooke richie Babbage. Let’s advance the childhood.

[00:34:58.48] spk_1:
So childhood is where just like a child? This is where the organization begins to walk and talk on its own. So there’s more meaning wholly separate from the founder or it should. Right. So this is an indication, have you moved into the child? Have you moved out of the startup phase? There’s more stability organizations are still figuring out what it means to be an institution and to separate the work from the founder, but this is where you might start to actually see a small staff. Right. That not just volunteers. Often there are some combination of independent contractors, maybe some part time people one, maybe two full time people. A lot of times. This is where the founder will start to pay themselves. It’s really interesting to me how many founders make it all the way through and you’re not? Yeah, you’re nodding all the way through the start phase and choose to divert funding to other things. But right around now you start to actually have salary lines, you know, in your budget, you’re also gonna have more regular fundraising. So the childhood phase often marks the beginning of meaningful external fundraising, meaning it can support salaries, there’s some separate program funding. And because your fundraising is, your resources are going up, your expenses are also going up. So you have more robust programming, you’re investing more in institution, you’ll start to see overhead, etcetera. And transitioning out of this phase, when we talked about sort of, what’s the strategic question to ask? To move beyond transitioning out of this phase really requires a focus or emphasis on intentionality. So, the hallmark of the childhood phase is, you know, you have this small child who can stand on their own two ft. They’re like, you know, wobbling a little bit, but they’re standing there, small team, a little bit of fundraising. The pieces are there. And so to transition to this next phase, you have to start to say which of these pieces? And this is the organ organizational design piece, which of these pillars that we started to, you know, our anchors, we started to put down are working which ones are the right ones do we have the right team? What should our work look like over the next year? This is when you’ll start to see organizations actually have a long term strategic plan, a three or five year plan as opposed to just sort of each year we’re doing this, you’ll have a strategic fundraising plan that’s not just throwing spaghetti against the wall. It’s oh, but wait, do we want to have one event or two campaigns? Right. They start to be more intentional about leaning into what’s working?

[00:35:11.80] spk_0:
How about the board? Where where’s the board at? In in childhood? To me that sounds, that sounds like the toddler toddler phase you said beginning to walk in childhood. So where,

[00:35:22.61] spk_1:

[00:35:30.65] spk_0:
where’s the board at? Maybe I’m, maybe I shouldn’t call the toddler state. I’m not trying to rename your, I mean, I’ll

[00:35:32.96] spk_1:
tell you, we, my youngest son just turned five and we still call him the baby. So you know, it’s all, you know, it’s all words, but

[00:35:40.43] spk_0:

[00:35:41.12] spk_1:
all relative.

[00:35:42.25] spk_0:

[00:36:06.97] spk_1:
So your board is still, it’s not a true what we call governance board. This is still gonna be a hands on working board. And most often what you see in this phase is most of the sort of authority and decision making will still actually sit with the executive director. You still have executive directors running or co running board meetings, rallying board members as troops. Even though boards are moving out of the start up phase, which is highly hands on. You’re still going to have a board that most often looks to the executive director for direction and doesn’t necessarily see themselves as holding any sort of co governance authority or autonomy.

[00:36:26.24] spk_0:
All right, there might be more hands on still in fall in small ways like the board will take on this event or something like that

[00:36:35.47] spk_1:

[00:36:35.91] spk_0:
help with the mailing. You know, it’s, it’s be more ministerial uh functional than than strategic and

[00:36:44.61] spk_1:
at strategic and forward looking. Absolutely,

[00:36:47.52] spk_0:

[00:37:01.04] spk_1:
right. And I think one of the ways that that often shows up is, you know, a startup board often are like staff, right? They do all of the things in a childhood board, they’re not staff anymore, but they’re still more responsive than they are proactive. They will show up when called as opposed to saying, hey, as board members, we will proactively take on this role, this responsibility that tends to come later.

[00:37:17.38] spk_0:
Now we’re moving into the puberty, puberty phase,

[00:37:21.49] spk_1:
you are going to insist on calling a puberty,

[00:37:24.24] spk_0:
I’m not insisting teenage hood, teenage hood, its early

[00:37:27.78] spk_1:

[00:37:29.02] spk_0:
the hormones are raging,

[00:37:30.93] spk_1:

[00:37:32.23] spk_0:
what’s happening to us now? Yeah,

[00:38:09.49] spk_1:
so the growth stage organizations are often lumped together, right? We talked about sort of growing organizations, but like I said, I think they’re actually two phases and when you actually pay attention to those five sort of questions that I talked about, you know, what are the goals, what is fundraising look like, et cetera. You start to see early growth phase teenagers where the organization is stable and walking. There’s some intentionality and they’re really focused on scale, right? You mentioned hormones, they are sort of full steam ahead. You know, I was just joking with my husband about being a teenager and learning to drive and getting my first car and I just, I would drive a half a block to the store, right? There’s just like this energy, there’s constant forward movement,

[00:38:22.22] spk_0:
which has changed a lot by the way.

[00:38:24.67] spk_1:
Oh yeah, I’m

[00:38:25.91] spk_0:
hearing about teenage kids who don’t really don’t care about their driver’s license anymore.

[00:38:29.26] spk_1:
Oh no, I was, that was like the biggest,

[00:38:35.59] spk_0:
no, no for me too, I couldn’t wait to get my, my learner’s permit driver’s license, but today’s today’s teenagers. It’s not, it’s not that big a deal and I’m not talking about urban, I’m talking about stories from friends, I don’t have Children. So I don’t, I don’t know from this is the guy with no kids pontificating about Children, so take it for what it’s worth, which is probably nothing. But what I hear from my friends who do have Children is the driver’s license, like the permitting and licensing, it’s not that big a deal anymore

[00:39:02.42] spk_1:
fascinating. I can’t can’t tap into that because that was such a big deal for me and all of my friends

[00:39:10.33] spk_0:
are not there yet,

[00:39:11.27] spk_1:
not even close, I have an eight year old and a five year old

[00:39:14.22] spk_0:
and the new york

[00:39:15.05] spk_1:
kids so that there’s also just a different relationship to driving I think in new york

[00:39:21.14] spk_0:
city like new york. Yeah, I

[00:39:22.23] spk_1:
was a midwestern kid. So everybody, you know

[00:39:24.77] spk_0:
suburban suburban Jersey, I mean that was that was the freedom, that was

[00:39:30.00] spk_1:

[00:39:50.18] spk_0:
first time I could go out without a chaperone or something or the first time I was allowed to babysit, you know it was huge. It was huge. I couldn’t wait right on the birthday independence. Alright, I don’t think it’s that way and from what I hear it’s not that way anymore. Alright anyway, I’m sorry. Aggressed into the driving but your, let’s take it, let’s take it from the traditional way that you are starting your, you got your learner’s permit,

[00:41:36.43] spk_1:
that’s right. And so you’re like really excited to move forward. So the early growth phase is just growth, its scale and it’s a real fraught time. So this is often and I know I said there is no sort of budget assigned but a lot of the organizations that I work with like I said are you know late six figures and are in this, we want to grow, there is a need in our community, there is a need around our issue and we aren’t meeting it fast enough, we want to hire more people, we need to grow our board, we need to do more and this intentionality that they built during the childhood phase, the systems that they started to build their like we want to stress test them, right? So we are adding more programs. We are adding more people to our programs. We are growing, there’s more robust fundraising. So we’re bringing in more money and this juggling act can get really chaotic during this early growth phase because the addition of new team members, you know, one of the biggest conversations that I have with folks is they’ll come into my accelerator program. They’re saying I have the money to grow, right? So we raised this money to expand in this way. Who do I hire to do? What? I’ve never had to think about a staffing structure. I’ve never had to think about salaries in any way that was equitable. I just sort of paid people what we had and now I actually have to have some kind of you know, policy around it. I’ve never, my board has never had to review an audit and now they do, right. So this phase is marked by tremendous growth and increase, increased impact, increased staff and an attempt. You talked about leadership challenges an attempt by

[00:41:46.57] spk_0:
Leaders and bring this organization further or you’re not the right one.

[00:42:53.27] spk_1:
That’s right. And so one of the really important strategic growth focuses here, right to nail this phase and be ready for the next one is really actually around leadership, right? If in childhood it was around systems and stability intentionality here, it’s very often that the executive director has to begin to change their style of leadership, their definition of leadership and their own skill level, whereas before being an effective leader and again I’m generalizing here, but in the childhood phase it’s we’re hands on, I meet with my team all the time, we have a small but mighty group, we make our decisions together, sort of all hands on deck. That’s a really different leadership style and set of skills than more differentiated staff where maybe you have a leadership team and people that report to them, not directly to you, where you have board members that are now starting to join that are calling you and saying, hey

[00:43:01.72] spk_0:

[00:43:08.96] spk_1:
happening with the audit, what’s happening with the strategic plan where you start to have these other this other way that you need to show up as a leader and that is often a big challenge. That we talked about. This inflection point, that’s one of these, you know, I have a training that is what got you here, won’t get you there. This early growth phase is where I came up. Like why I say that

[00:43:32.05] spk_0:
what what what got you here won’t get you there. It sounds like the passion is not gonna be sufficient anymore,

[00:43:36.74] spk_1:
nope, not at all.

[00:43:37.75] spk_0:
Passion might have gotten you through childhood, but it’s not going to get you through teenage hood and into young adulthood.

[00:44:55.31] spk_1:
That’s right, it’s not going to get you into young adulthood and I like that we were talking about driving because this idea of, you know, you could crash, but you could go so quickly and not actually master, not master build your skills around things like you know, paying attention to financials, this is a big one that comes up during this phase, that up until now the nature of funding was sufficient that you know, I have E. D. S that are just like I look at our bank account once or twice a week and I have a good sense of our money, so that’s not actually financial management and that’s okay if you have $200,000 and one staff person and it’s all programming, but once you have different, funders multiple salary, lines some overhead. maybe some restricted funds, you actually have to pay attention to your financial infrastructure. Just as an example, that’s a different skill set, that’s a different allocation of your time in the week and making that shift, if you don’t, just like a teenager can run themselves into the ground, the organization can run itself into the ground. And so you definitely see organizations at this phase, not, not make it out of the early growth phase, they just get stuck in this sort of overwhelming chaos.

[00:45:04.05] spk_0:
It’s perfect, let’s move on.

[00:46:17.70] spk_1:
Yeah, so if they write, if they make it through the early growth phase, into the late growth phase, what’s happened is they have gotten comfortable with scale the organization. So the key characteristics here the organization is growing. It has figured out how to calibrate staffing or capacity with funding the right the right size to their programs. They feel like they’re growing in a way that that can be held and sustained. And now the question for late growth stages, how do we make sure that this growth that we’re experiencing is still anchored in our values and mission. So sometimes in order to grow, you have organizations that take on funding and they look up and they’re like, huh? So we have all this funding for this program that looks great. I can’t remember why we started that program. Right. Or we have 13 programs and everything feel scattered and I don’t really know that they’re all rooted and like why we started to do this to begin with. And so the goal here is learn to stay stable amidst growth. Right? How do we make sure that we’re anchored in our

[00:46:21.22] spk_0:
growth in

[00:46:39.54] spk_1:
the mission and the values? Absolutely, Absolutely. And so for the executive director, the leader, the strategic focus here is to fully transition into this mature organization. Right, full adulthood. How do I work on the organization? Not just in the organization? How do I get out of the weeds? How do I actually delegate to and rely on a leadership team or whatever the structure is, How do I rely on the systems we’ve set up so that my role is bringing in new resources, forming new partnerships. It’s visioning, its generative, it’s strategic.

[00:47:04.68] spk_0:
What does the board look like here in growth?

[00:48:04.78] spk_1:
So ideally at this point, the board functions more as thought partners, ambassadors and cheerleaders, they are being leveraged as resources out in the world. Right? So if you contrast this with the start up phase or the or the childhood phase where the board was still looking really inward, right hands on working board, what you start to see here in a healthy growing mature governance board or governance body, there are a lot of organizations now that are moving away from a traditional governance board and they have a governance team or a governance body. But the group of people that play that role is they are ambassadors, they are taking what they’re getting from inside the organization, the mission, the work, the passion and understanding of what the organization does and they’re going out into the world as cheerleaders as strategic advisors and bringing resources back into the organization. So there’s a shift to facing outwards and ideally you have board members that are proactive in that facing outwards, you know, they’re leveraging their resources, their networks etcetera. So you start to see that shift right around here

[00:48:15.58] spk_0:
explain the distinction you made between a governing board and a governance

[00:48:19.94] spk_1:

[00:48:21.47] spk_0:
It’s not really

[00:49:43.42] spk_1:
Yeah, it’s not a hard distinction. It’s their similarly to some of the conversations that folks are having around leadership, shared leadership, different models of co leadership. I’m seeing a lot of similar conversations around non traditional governance and so whereas in a traditional structure, you have, you know, these organizations and it has a board of governance board, board of directors, there are a lot of organizations that are rethinking what that body is called and how it works and what its relationship is to the organization. So one example is an organization that I’m working with now is thinking about, they’ve had a traditional board for about 11 years and they are thinking of actually separating fundraising and resource generation from community accountability and active governance. So reviewing the financials, making sure the audits, okay, there’s some core governance responsibilities that the board has, but one of the concerns they felt they were seeing or they have is that they’re bored. Their traditional board felt really separate from the community that they serve and are working in. So there was this like hierarchy that had been created and so they’re playing around with a governance team, which is going to be a larger, less structured, so no officers, no committees, no standing committees,

[00:49:50.69] spk_0:

[00:50:02.86] spk_1:
collective of people who play different roles. Primary among which is creating a feedback loop of accountability to the community that the organization serves. So they’re just, they’re not calling it a board. I am very early in my learning about this, but I do think they’re really, really cool conversations, there’s an organization change elemental that on their blog they actually underwent a complete overhaul of their governance board. They now have a governance team and they mapped the process on their blog. It’s a really great read, I highly recommend it.

[00:50:27.61] spk_0:
And what’s that organization again, it’s

[00:50:30.06] spk_1:
called? Change, elemental change,

[00:50:32.40] spk_0:

[00:50:36.48] spk_1:
Yeah, so that’s, that’s like growth phase, maturity,

[00:50:40.32] spk_0:

[00:53:04.53] spk_1:
is a stable organization, It has good systems, it has good bones, its mission aligned. Right? So this routing in the values and mission is solid and it’s having a good impact. I think the best way to think about this sort of mature zone of maximization is we’ve hit our stride, we have the right people in the right roles, we have the right systems, people understand their jobs, our boards functioning obviously right, the nuts and bolts are gonna be messier but largely speaking when you look around and the right pieces are working the right way. You’ve hit the zone of maximization and you made a point earlier that there may be aspects of your organization that hit maturity while others don’t, you may look and say our board is nailing it, they are thought partners, they are active, they are engaged, they are ambassadors, we, this is really great but the team, the staff, I’m still, I feel like we don’t have, you know role clarity, we’re not really nailing it there, that’s okay. Right, so there’s a sort of maturity in one area and perhaps teenage hood or still growth phase in another. And being able to recognize that means that as a leader as a team, you can pinpoint where to focus your not sort of looking globally and saying, oh our organization still needs to go, No, actually it’s the team that you want to focus on or it’s the fundraising that you need to focus on. So that’s this phase, it’s um, it’s really stable. And what’s exciting about this phase is that the goal becomes deepening of impact, that the institution is solid. And so now you’re thinking, how do we do better? Right. How do we meet the needs of more or in a deeper way. This is when you start to see organizational leaders think about things like thought leadership, right? Which is like jargon a way of saying how do we build, take this point of view or expertise that we have as an organization doing good work and help other people see this point of view, understand like how do we leverage our expertise for the benefit of other people who care about this work? So that’s essentially thought leadership, you’ll see executive directors more external to the organization, out building partnerships etcetera. And so they can do that at this phase because the institution is stable because they have a team holding top as, as a friend of mine calls it, right, doing solid, strategic and vision work, they have the systems etcetera. So they can be out in the world especially bringing more people in to an institution that is really good and

[00:53:19.42] spk_0:
also sharing with

[00:53:20.87] spk_1:
with exactly

[00:53:21.91] spk_0:
the world with their learnings have been

[00:53:29.51] spk_1:
what we’re learning. Exactly. It’s a really exciting, exciting time. Yeah, yeah, so that’s that’s sort of that final stage stage.

[00:53:44.30] spk_0:
So now your work becomes a lot clearer I think because you you can work with organizations and leadership to, you know, not necessarily like pinpoint your at this stage, your board is over here and your funding is up there, but leaders that want to advance or feel stuck,

[00:53:57.40] spk_1:

[00:53:57.66] spk_0:
know, you can you can help them look strategically introspectively.

[00:54:02.08] spk_1:

[00:54:03.01] spk_0:
where where the institution is and where it wants to be and

[00:54:07.92] spk_1:

[00:54:09.01] spk_0:
bridge that

[00:56:33.86] spk_1:
gap. Absolutely. I think one of the words that I hear most frequently from organizational leaders. So I work with leaders of two programs, one focuses on launching, launching an early and and birth and childhood and the other, most of my work is with the early and late growth stage organizations. So organizations that are trying intentionally to scale and usually from six figures to early seven figures and the word overwhelm comes up in every conversation. It’s just overwhelming. There’s, I don’t know how to prioritize, I don’t know what to do. First of all of the things that I have to do. And so most of what I do is as a thought partner and also not emotionally connected. So it’s easier for me to see the chessboard is help them figure out the right thing to focus on at the right time. Right? What is your stage of development? What should your goal be? And what is the, the strategic objective that you want to to achieve so that you’re ready to move on to the next phase? And I always say to people, it doesn’t make sense to be focusing on the strategic objectives of being a teenage organization if you are a child, right? Or you know, or if you’re an infant like that, that it’s gonna frustrate you, it’s going to be overwhelming if you have a hands on board made up entirely or almost entirely of your friends and family and you are trying to get them to be a proactive, highly skilled governance board that leap skips a bunch of phases. And so a lot of the challenges that the leaders that I work with are navigating is that they look around at other organizations again at their budget size or maybe that organization is also seven years old and they try to reverse engineer or sort of pace themselves against these other organizations. And when we start to work together, one of the things that happens most commonly at the beginning is they realize, oh, we’re not there yet, Right? So I, I shouldn’t be trying to raise $1 million dollars from individual donors yet. I don’t have any major donors there’s some phases that you’re missing. And so that clarity can sometimes help bring on some calm, right? You don’t have to worry about the million dollar major donor yet. You’re not there. How about we build your major donor base? How about we clarify who your donors are and develop a system for getting in front of them and then that will move you to the next phase, in the next phase, etcetera. So that’s most of what I, that’s the organizational design that I help with.

[00:57:03.31] spk_0:
Your work reminds me of something that a friend of mine who’s a consultant often says his Lawrence Lawrence Bignone, I wish he pronounced his name, but he doesn’t pronounces it tony that we should, we should all sort of personally and professionally be aspiring to a better set of problems.

[00:57:25.24] spk_1:
Oh, I love that.

[00:57:26.68] spk_0:
Yeah, yeah. So you know, we’re always gonna have headaches and problems, but they become, they become more sophisticated, more refined,

[00:57:36.10] spk_1:
right? He

[00:57:45.08] spk_0:
says, you know, a better set of problems to solve. I like that too. Uh, seems to capture the, these, these different stages.

[00:57:46.86] spk_1:

[00:57:48.71] spk_0:

[00:57:50.57] spk_1:
And I think we don’t beat ourselves up as leaders. If, you know, if we define being a successful leader as solving all the problems, we’re not having any problems. Well then that job’s gonna suck because

[00:58:05.82] spk_0:
it’s never, but

[00:58:06.55] spk_1:
instead I really like this, right? If if the goal is what’s the next best set of problems that I’m aiming for, um, it gives us honestly permission to fail forward, which I think is really important.

[00:58:22.19] spk_0:
All right Brooke, I, I feel like uh,

[00:58:24.61] spk_1:
I feel like we covered it all. This was great.

[00:58:29.54] spk_0:
Well, okay. Um, yeah, now you know, not to be frustrated with where you

[00:58:32.12] spk_1:

[00:58:33.42] spk_0:
but to be introspective about where, where the problems are and what it takes to get you.

[01:00:13.76] spk_1:
Absolutely. I um, I posted on linkedin last week that if I had a tag line, it would be growth with intention and I think that both in life and definitely as a nonprofit leader, this idea that growth can be fraught. It is fraught. There are always challenges their growth edges. There’s relearning, there’s unlearning, there’s a lot that goes into growth itself and I think a lot of the overwhelmed the burnout, the fear, the insecurity and uncertainty, all of the things that nonprofit leaders all experience. And I’ve been there. So I know those can be reduced if we just lean into intentionality. Right? If we, if we say, hey, what’s happening, what do we like that we’re doing? What don’t we like that we’re doing? What questions should we be asking, right? That that intentionality can help us drown out the noise, right? The things we don’t actually need to be focusing on the things that we, we don’t need to be comparing ourselves to. So I think that that can be really helpful and that’s I think why I like doing organizational design and strategy work because I find that that comes fairly easily to me the sort of seeing the, the order, the through line and when I’m able to help other leaders gain some of that clarity, there’s there’s really a calm right? There’s a there’s like a deep breath that people are able to take and I remember some of the toughest days as an executive director and having people help me with that so that I could take a deep breath was really transformative. So that’s what I try to do for folks

[01:00:29.74] spk_0:
growth with intentionality.

[01:00:31.37] spk_1:

[01:00:32.28] spk_0:
Brooke richie Babbage, you’ll find Brooke and her work at Brooke richie Babbage dot com Brooke thank you so much. Really insightful, valuable thank you.

[01:00:43.03] spk_1:
This was a great conversation, thank you for having me, tony

[01:01:29.46] spk_0:
my pleasure, I’m glad you loved it next week. Leadership development with two folks from the bridge span group seems to parallel very, very well with what Brooke and I just talked about leadership development. If you missed any part of this week’s show, I beseech you find it at tony-martignetti dot com. Our creative producer is Claire Meyerhoff shows social media is by Susan Chavez Mark Silverman is our web guy and this music is by scott stein of Brooklyn, Thank you for that information Scotty B with me next week for nonprofit radio big nonprofit ideas for the other 95%,, Go out and be great.

Nonprofit Radio for August 15, 2022: Board Members Are People Too


Judy Levine: Board Members Are People Too

One size fits all rules may not make sense for your board, especially if you’re embracing diversity and equity in board membership. Our guest, Judy Levine, is a longtime board coach, trainer and consultant, and she leads Cause Effective.


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[00:01:23.53] spk_0:
Hello and welcome to Tony-Martignetti non profit radio big non profit ideas for the other 95%. I’m your aptly named host of your favorite abdominal podcast and oh I’m glad you’re with me, I’d be forced to endure the pain of pseudo calista toma if I had to hear that you missed this week’s show board members are people to one size fits all rules may not make sense for your board, especially if you’re embracing diversity and equity in board membership. Our guest judy Levine is a longtime board coach, trainer and consultant and she leads cause effective Antonis take two endowment excitement. We’re sponsored by turn to communications pr and content for nonprofits. Your story is their mission turn hyphen two dot c o. And by fourth dimension technologies i Tion for in a box. The affordable tech solution for nonprofits. tony-dot-M.A.-slash-Pursuant D just like three D but they go one dimension deeper here is board members are people too.

[00:01:29.04] spk_1:
It’s a pleasure

[00:02:05.22] spk_0:
to welcome to non profit radio judy Levin She has been executive director of cause effective since 2006 and she has over 30 years experience as a nonprofit management advisor At cause effective since 1993. And as an independent consultant. She has trained and consulted with well over 1000 nonprofits on issues in fund diversification, donor engagement and board and organizational development. Cause effective is at cause effective and at cause effective dot org judy Welcome to nonprofit

[00:02:06.47] spk_1:

[00:02:09.02] spk_0:
pleasure to have you, I’ve had your colleagues through the years Greg Cohen and Susan comfort who I know Susan is completely retired now and Greg is mostly retired now, but now we’re uh they’ve been sort of stepping stones to the top now. We have the executive director.

[00:02:27.11] spk_1:

[00:02:28.12] spk_0:

[00:02:30.21] spk_1:

[00:02:37.36] spk_0:
good. Okay. Um my my apologies. Susan comfort is someone else. Susan, Gabriel is who used to be

[00:02:43.00] spk_1:

[00:02:43.99] spk_0:
at cost

[00:02:45.01] spk_1:

[00:03:06.63] spk_0:
Gabriel and and Greg Cohen. So um you’re concerned about equity on boards. Uh, but at the same time, you know, we’re trying to maintain standards but we want we want a diverse board standards don’t always apply to all the all the different cultures. We’re inviting in, help me set this up.

[00:04:46.22] spk_1:
Well there’s always a fear of the difference, the different and uh there’s also a fear of um acting inappropriately around the different and those two fears um sometimes stop a board from real honest, um an accurate reflection on what’s at the table and what’s the most appropriate way to support the organization’s mission. Um And especially, you know, ever since the racial reckoning of 2020 and the understanding on nonprofits parts that they needed to reckon with their own D. E. I. B. Diversity, equity, inclusion and belonging. Um my sense is that that that happened that that reckoning has happened on a staff level at a different different pace than it’s happened on the board level and some of that has to do with fundraising and people’s fear that if they rock the boat, they will not have the fundraising return that they have now. Um, And I’m here to say two things. One is that there is plenty of, uh, salaried capacity in this country for people of color, although not as much, not as much wealth accumulation, certainly generational wealth accumulation. And that’s a very real factor. Um, so to think that you need to diversify your board that you need to reach into the client base, which may be true, but is not the only way to diversify your board from the, uh, the group. It has always been

[00:05:05.08] spk_0:
okay. That’s, that’s number

[00:05:39.72] spk_1:
one. The other is that, Yes, you may have to rethink the one size fits all package and that’s been a mantra in our boards is that everybody has to hold the same standard and we know that everybody is the stain standard and we don’t want double standards or triple standards. Um, I’m here to really help people rethink the idea of universal standards versus standards. That makes sense for where that person is coming from and what they can, what they can actually bring to the table if they do their best.

[00:06:17.02] spk_0:
Okay, let’s take the first of those because there’s, there’s an, there’s an assumption there that people of color are not gonna be able to meet our fundraising expectation. So we’re gonna have to, we’re gonna have to reduce our board giving to invite folks of color in. But that, that, that’s just unfair and unfair and racist you’re not, if you’re not finding these folks, then you’re not looking hard enough for people who do have the means, uh, to, to meet your, to meet your, your board expectation, your, your board fundraising expectations

[00:07:26.98] spk_1:
and, or you’re not looking, um, with the right messengers and, or you’re not understanding why your cause is going to be of deep personal interest just to a person of color. Um, all of those factors have to be there. Um, you can’t, you don’t ask anybody on the board, You don’t ask somebody on the board of an animal shelter. If they have no connection to animals, they don’t care about animals, you gotta look. Uh, so in the same way you have to understand, let’s put it this way. There are, there are legacy charities, um, the Urban League, um, you know, very, that, that there are huge fundraising machines that are people of color lead. Um, there’s a sense of the ownership that this is ours. Yeah, may not be in your board as currently constituted. That needs to be opened up.

[00:07:32.26] spk_0:
Yeah, that’s a, that’s a holding onto that’s holding onto power and structures and not allowing someone who looks different comes from a different background into our, our playground

[00:08:34.14] spk_1:
well, and it’s more than not allowing. It’s actually, um, it’s more than just a not doing, it’s something that you have to actually do do, um, is to understand, um, how who makes decisions. Is there an in group and out group? Is there a biding one’s time uh ethos um which doesn’t work well when you invite people of color on and then they have to buy their time and they’re the only ones that are biding their time. And yes, it might be historical that everybody else bathe their time years back, but people gonna lose, lose, you know, they lose patience. So it means that you have to do much more rapid um leadership development, onboarding and power sharing. Then your board may be used to.

[00:08:43.52] spk_0:
All right. I don’t want to derail what what what we were intending to talk about, but I just

[00:08:46.12] spk_1:
I think it’s,

[00:08:47.72] spk_0:
I mean, I think it’s important to point out the implicit bias that goes along with this, assuming that you’re gonna have to lower your standards basically. Just assuming you got to lower your standards if you have people of color in. I

[00:09:00.60] spk_1:
think it’s all of

[00:09:02.51] spk_0:
gross and erroneous.

[00:09:06.87] spk_1:
And board members, all board members need to be owners, not

[00:09:12.44] spk_0:
guests. Right. And yes, and not treated like guests. Alright. Alright. So one of the things you said is that um one size fits all

[00:09:21.36] spk_1:

[00:09:36.76] spk_0:
not, is not gonna be the right model necessarily. So what what’s what’s an alternative? So if we’ve got a, we’ve got a $15,000 annual give get bored requirement uh and and two thirds of it has to be from your personal, your your personal assets. So $10,000 from you and if you want to either give or get the other 5000, you have an option there, but you have to give at least $10,000 a

[00:11:27.90] spk_1:
year. One of the things that I talked about that took me, you know, frankly, you know, a while to understand is the role of generational wealth transfer in people’s capacity to have disposable income. So that um, you know, uh, often times white people come from there. They’re not coming from money money, but they’re coming from a position of um comfort. Um, and so they’re not necessarily carrying family members. They’re not, they’re not pulling their family out of poverty along with them. Oftentimes, certainly black people who are in a may make the same salary, but they are carrying people in their family. And so you can’t say, oh, this person makes X salary and that person makes X salary, therefore they have the same capacity. You only find this out by talking to and listening to someone and I universal give assumes universal capacity. And yes, we said, okay, this gives the floor and everybody should go over the floor. We all know that people rise to the floor. So the question is, is there a way to help this person get and to change that relationship and or is there what are we, what are what we are after on the board? Someone who is using their connections for the, to the extent for the organization’s behalf And what comes in is relative to those connections and that capacity,

[00:12:58.91] spk_0:
it’s time for a break. Turn to communications media relationships, you know, how important relationships are in all aspects of your work and, and personal side to the past couple weeks, I’ve been talking about fundraising, but relationships are everywhere that applies to the media as well. You want to get heard in the media, you want to be that thought leader that you know yet you are that that you know, that other folks ought to know you as it’s gonna happen through media relationships so that when you are calling the journalists are so much more responsive to picking up the phone that supplies to journalists, podcasters, bloggers, conference leaders, wherever you need to be known. Right turn to can help you build those relationships so that you get heard in the media outlets. When you need to be, they’ll help you with the relationships they know what to do. Turn to communications, your story is their mission turn hyphen two dot c o. Now, back to board members are people too. Alright. So we need to, we need to get to know our board members. Uh, and you know, I understand your point. You know, some folks may very well be supporting helping other family members, not necessarily out of poverty, but I mean could be, but not necessarily out of poverty, but they’re they’re they’re helping other family members that aren’t doing as well as they

[00:13:16.31] spk_1:
are. And

[00:13:39.08] spk_0:
a lot of that can a lot of that can very well come from the lack of inter generational wealth through the generations at that. Uh, folks of color got screwed out of, essentially. Um Alright, so, alright, and I still want to go back to the fact that, you know that I don’t want to operate under the assumption that you have to lower standards just to invite folks of color fundraising fundraising standards. I don’t want to I don’t want to operate on the assumption that you have to lower standards.

[00:14:00.20] spk_1:

[00:14:00.94] spk_0:
trying to defeat that assumption.

[00:14:02.80] spk_1:

[00:14:26.69] spk_0:
Okay. Um All right. So what about the uh, what about the pushback? Well, before we get to the pushback that you might hear from your white board members about we’ve been doing this for so long and it’s been fine for us. So why can’t it be okay for them before we get to that? What might what might some of this look like? What what kinds of what kinds of uh activities can can folks do if they if they can’t make the not able to meet the requirements. Are you, are you suggesting rewriting? Do we rewrite the

[00:14:37.01] spk_1:

[00:14:37.21] spk_0:
expectations for all board members

[00:14:39.05] spk_1:
or suggesting using that as a starting point? Not an ending

[00:14:42.32] spk_0:

[00:15:08.52] spk_1:
That’s a starting point with each board member, um, about their, how it relates to them, to their assets, to their relationships to their circumstances. Um, and where, which areas they can go above and beyond in and which areas they need to pull back from and everybody’s gonna have a different answer to that, those equations. The fact is that they are, you know, I’ve been on board with very mixed income levels and the people who had the higher incomes understood that in order to have a board with mixed demographics, they had to do more weight bullying in the fun

[00:15:23.13] spk_0:

[00:15:29.39] spk_1:
that, that was part of the value system was that it was not, if they wanted everybody equal, they would have everybody just like them. If the value system was to have different voices at the table, then the value system had to be that some people did more direct fundraising and direct giving and some people did more outreach and some people did more political converse, you know, conversations, etcetera.

[00:15:48.53] spk_0:

[00:15:50.64] spk_1:

[00:15:50.79] spk_0:
want to make sure we want to be having these conversations with uh, these individual conversations with potential board members right before we’re in the recruitment process, before we invite someone to be on a board or before we accept someone to be on the board, we want to be investigating these things

[00:16:10.94] spk_1:

[00:16:12.03] spk_0:
that they know what to expect, so that they know what the expectations are and we know what we can

[00:16:47.56] spk_1:
expect. I, I, you know, having done a lot of board recruitment with nonprofits through the years, I would say two things, I think you have a before as your recruiting, you say, here’s the kinds of things that board members are expected to do. Um, and um, you know, how do these rest with you? Um, and you’ll find out some of them are scary. Some of them are, you know, oh, I couldn’t do that. Some of them are like, oh, this, I could definitely do that. I don’t know that. I would pin someone down to an exact um, prescription. You’re trying to get their temperature,

[00:16:49.39] spk_0:
but you

[00:17:17.83] spk_1:
know, it’s a courtship process. And so people go above and beyond what they thought they could do when they’re really excited by the mission and they’re given the tools they didn’t know they needed. So uh, in the courtship process, I would put this menu out and say, you know, how does this look to you, How could you see yourself in this? Um, but I wouldn’t take that as the last word because board service should be, people should be going into places that are not comfortable for them.

[00:17:21.63] spk_0:

[00:17:43.27] spk_1:
that’s partly the role of the board chair is to, is to live that by example is not just to be good at what they do, but to live by example. I tried this and this was, you know, I thought I was gonna throw up, but actually I didn’t throw up. I did really well at it. And then I tried that and I did throw up. So I, you know, somebody else will do that one from now on. Um, and so I want to be honest with people, but I don’t want to pin them down to something that are not being ready ready to be pinned to.

[00:17:51.29] spk_0:
But you make a good point about board bird service being a challenge. You do want, you do want folks, you’re you’re you’re leveraging the fact that they love your mission, your work, your values. They stand beside you with that in those ways. Um, You want them to to be challenged. You want board service to be meaningful? Yes.

[00:18:19.09] spk_1:
And you you want them to learn something from it because that’s part of what they get out of. It is not just a happy club, but that they’re gaining a different kind of sense of themselves of what they’re capable of,

[00:18:24.49] spk_0:
interesting, different sense of themselves, what they’re capable of. Yes, challenge. That’s the challenge. That’s the challenge. Go beyond comfort zone. Try this and see whether you throw up or

[00:18:35.40] spk_1:
not. Right? Kind of. But I mean, you need to try it with a lot of support and with the tools,

[00:18:42.18] spk_0:

[00:18:42.95] spk_1:
throw somebody into the lion’s den.

[00:18:46.17] spk_0:
All right. What about the uh the pushback from white board members that, you know, we’ve we’ve been. This has always worked well for us. We’ve always had this very rigid uh uniform, giving everybody’s given the same through these years? What why why do we have to now? What’s the advantage? Why, why should we change now?

[00:19:09.91] spk_1:
Okay, so I need to be polite here. Um, you

[00:19:13.62] spk_0:
can be firm, you can be firm and realistic, you have to be

[00:19:16.04] spk_1:
polite counseling of white folks and I think it’s part of our job as white folks to help other white folks to a different place.

[00:19:22.57] spk_0:
Alright, so don’t be, don’t be soft on nonprofit radio listeners. I’ll admonish you don’t do

[00:20:31.72] spk_1:
That. Um, it’s 2022. We know stuff now is white folks that we didn’t, that we were able to be blind to for hundreds of years. Yes, and we don’t anymore. So there’s a moral obligation to act differently. Our non profit is is here for the public good. And it it we believe that to do that, we need to reflect the full spectrum of voices that is that public and or should be concerned with our mission. That means that we need to have a table that is really welcoming to all those voices that they’re not just here, but they’re actually, we’re gonna share the ownership of this mission. And that does mean that we need to pull apart the stuff that we’re comfortable with and that’s unspoken because it’s gonna be a mystery to somebody who doesn’t come from our background and it was already part of this

[00:20:40.51] spk_0:
and what’s the advantage to the organization, Let’s make it explicit, uh, to doing this?

[00:21:26.65] spk_1:
We are living our values in our governance and if we’re not that’s pretty um compromised. Um so one is congruence without organizational values and what we’re here to try and carry out. Um the second is sort of more robust conversation and decision making because there are different points of view at the table because it’s not people with it’s not an entire crew with the same assumptions and frankly you’ll have more interesting conversations. That will be a more interesting club to be part of. That’s not why to do it. But it’s a side product.

[00:22:41.83] spk_0:
It’s time for a break, fourth dimension technologies. They’ve got the free offer going. It’s exclusively for non profit radio listeners. It’s complimentary. That’s why it’s free 24 7 monitoring of your I. T. Assets And they will do this for three months. They’ll look over your servers, your network and your cloud performance, they’ll monitor your backup performance all 24/7. If there are any issues they will let you know right away. Plus at the end you get a comprehensive report And they’re also going to include a few surprise offers as well. They’re gonna take good care of you. It’s all complimentary, it’s for three months. It’s for the 1st 10 listeners. It’s on the listener landing page Just like three D. But they go one dimension deeper grab the offer, let’s return to board members are people too. All right so that sort of answers uh dumbing down.

[00:22:44.15] spk_1:

[00:22:50.48] spk_0:
know, we’re not we’re not we’re broadening broadening and there are advantages. What would you say to folks that are the advantages to them personally learning, learning, learning about, learning from folks with different backgrounds.

[00:23:47.71] spk_1:
There is an incredible gift to be had to be able to listen. I’ll say this personally as a white person working in a diverse environment. Um, it is humbling and awe inspiring to be in a place where you can really hear from people who didn’t, who are just like you and have them change your mind and open your mind. That’s what you gain by being in a diverse environment. And not only will you make better decisions for your nonprofit, but you will learn more and be a kinder person who in and of itself understands the way you interact with the rest of the world in a different way

[00:24:35.83] spk_0:
folks. If you want to see a diverse team, then uh, pause the podcast and go to cause effective dot org. Go to their team, this team or staff page and look at the look at the pictures of the staff at cause effective dot org and then of course, come right back and press play again. Don’t don’t don’t don’t start browsing, you know, don’t go to amazon dot com to just look at cause effective dot org and you’ll see, uh, an enormously diverse team there? Um, All right. So, you know, that

[00:24:37.08] spk_1:

[00:24:38.22] spk_0:
anything more you want to say about why this is worth it for the organization or for the people.

[00:25:32.29] spk_1:
Um, we live in a diverse world. I mean, you know, no matter where you are, um, we, we live in a world in a country certainly and in a world with lots of different kinds of people from lots of different kinds of backgrounds and doing a lot of different things to the table and that are really interesting to interact with. Um what better way to interact with them than in the support of a cause you love. So there’s, you know, you’re all putting your, you know, shoulder to the wheel together. Um, it it gives you your life spice to be doing this in a way that’s not homogeneous and your organization itself will be stronger.

[00:25:47.52] spk_0:
Yeah. In the ways you just, you talked about a few minutes ago. Yeah. You have some ideas about how to do this. Uh, it’s sort of efficiently shave, shave some some time off.

[00:25:53.59] spk_1:
Well, one of the things that, you

[00:25:55.75] spk_0:
know, we

[00:26:58.51] spk_1:
all know that executive directors well run boards, executive directors are behind them at kind of every step of the way. Um, but in boards that really take off, there’s board to board conversation that the executive director kind of monitors, but it’s not board of every conversation. And so, and when that happens, it’s because there are, there’s not just a board cheerleader, but there are many leaders. So there are leaders of governance where there might be a leader of on boarding or there might be a leader of uh you know, there’s different ways to chunk it up so that there’s leadership which leadership leads to ownership. Um and so part of your job as the board liaison, whether is to understand what that web of relationships could is and could be and then to do in essence what we call, you know, HR staff development, but with board members, so you’re asking them to take on certain things and then your job is being a coach, not being a doer.

[00:27:04.42] spk_0:
We’re talking about the ceo executive director now.

[00:27:09.62] spk_1:
Yes, yeah and and development director also

[00:27:12.35] spk_0:
Development and and working closely with the board chair. I mean, it’s gonna help enormously to have a culturally sensitive board

[00:28:29.33] spk_1:
chair. Um I send board members, especially white board members to trainings and not just what is D. I. But to reel immersive, you know, one or two day trainings about the how this culture rests has rested on um racial injustice. Um I say if you’re gonna be part of this organization, you need to have this basic understanding. Um and we need you to do this two day training and here’s, you know, how to pay for it. Um because there’s a basic understanding of that that really shifts in those kinds of very immersive trainings. I’m not talking about a two hour what HR does at a large corporation. Um And you know, we just said these are our values and you have to really get it if you’re gonna be part of this team, I would certainly do that with board leadership, that this is a journey and this is part of the and we want the board to be part of this journey, and we need the board leadership to start it out. And if the board chair won’t do that, you do a succession plan, it’s not like you kick them out right away, but ultimately, your board’s not gonna progress until you have somebody at the head of it for whom this is the air they breathe.

[00:28:42.34] spk_0:

[00:29:10.30] spk_1:
Now, you can have a chair and a president, you can have an honorary chair and an honor. You know, there are all kinds of ways to move people to the side that don’t, you know, kick them off this planet. But ultimately, you need to have someone who does, who breathes this stuff and who you don’t have to explain why this matters. And then it’s deeper than going to a training to understand what that implicit bias exists,

[00:29:19.69] spk_0:
Right? one of those two hour trainings, okay, say a little more about joyful board service, what we, what we can aspire to.

[00:29:41.65] spk_1:
I, you know, I get this so often were board members, the board that we’re working on, their their niggling, They’re going after, you know, do I have, you know, is it 2000 or 3000? What do I have to do? That’s the question as to what as, you know, it’s like I’d like to get away with as little as I can. Um and and it’s an imposition on me

[00:29:49.85] spk_0:

[00:30:47.66] spk_1:
opposed to I will do everything. I can, I may not be successful at everything, but I’m gonna give it a shot because this mission matters so much, and if I can help it, God willing, I’m going to and there’s when people are at the table with that attitude, there can be a joy at both delivering yourself and seeing other people deliver and celebrating that. Um and you can build that in, you can build in celebrations. You can build in, you know, balloons for somebody when they hit a certain mark. Um you have to build in, not just um the actual dollars, but you can build in, they made thank you calls and they never talked to anybody before. You know, there’s all kinds of ways to build in a sense that I can do be part of the fundraising process, which then builds more courage for the next step. But it doesn’t happen unless you think about it,

[00:30:53.61] spk_0:
celebrating small successes. That’s that’s a terrific idea.

[00:30:59.73] spk_1:
Yeah. And you want to build in this this sense for every board member so that they are looking for ways to celebrate each other.

[00:31:06.28] spk_0:

[00:31:10.79] spk_1:
So it doesn’t just come from you the the ceo it doesn’t just come from the board chair, but that they’re trying to help each other up that ladder.

[00:33:20.95] spk_0:
It’s time for Tony’s take two. I’ll be on a panel called endowment excitement, fundraising and management. I’m fundraising. Uh, two smart women are the management and that’s, that’s the key about about panels. You want to be the sole person on your topic that way you’re at no risk. You can’t ever be called out for something stupid that you say because, uh, other people, the other panelists don’t know. Right? So, I mean, I don’t know endowment management. I mean, I know a little bit about spending rates and uh, three year moving average, you know, etcetera. Prudent investor rule. But, but I know very little compared to them about endowment management. And they probably know even little less about planned giving than I know about endowment management. So, everybody stays in their lane. You don’t have to worry that if you’re ever invited to be on a panel, be the sole expert in your area. All right. So, um, uh, that was a bit of a digression. But so the panel is endowment excitement, fundraising and management. It’s on august 25th at noon Eastern time, graciously hosted by N X unite. So I’m grateful to them. Thank you to register, you go to n X unite dot com. It’s like november X ray unite dot com and click on webinars and panels, there’s your registration. That is tony stick to, we’ve got boo koo, but loads more time for board members are people too with judy Levine you like to see board members socializing outside? I mean I, I can presume your answer, but I want you to say socializing outside outside the form of the board meetings.

[00:33:48.16] spk_1:
I do, but I also am realistic. Um, I don’t think it’s necessary for them to be personal friends. In fact, I’ve been on board with people who are personal friends and it’s tough because then they kind of talk about things outside and they’re like becomes factions and you certainly don’t want relatives on the same board that I’ll tell you right now. Um, not just married, but brother and sister were playing the, you know, the childhoods, you

[00:33:55.48] spk_0:
know, I can see in your face and it sounds like you’ve been there.

[00:33:58.97] spk_1:
Yes. Um,

[00:34:00.97] spk_0:

[00:34:01.69] spk_1:
don’t know. I think that people have to like each other.

[00:34:04.74] spk_0:

[00:34:05.77] spk_1:
And I think you need to have some social places, you know, it’s been hard, don’t,

[00:34:09.85] spk_0:
they need to get to know each other outside the

[00:34:15.36] spk_1:
board. Um, but that’s different than, um, but

[00:34:16.70] spk_0:
outside their board service. I mean, maybe not, maybe not necessarily

[00:34:23.34] spk_1:
to me that’s part of their board service. Um, that part of the board service is understand, you know, it’s team building

[00:34:28.51] spk_0:
and the organization can facilitate that. Right? I mean can we have, can we host drinks or dinner after a meeting.

[00:35:52.47] spk_1:
Yeah. Um, it’s, that’s one of the things that’s been much harder in zoom. Um, my board, you know, cost effective itself as a nonprofit and they had a board dinner once a year, but they sat at my house and one year I had the flu and they had at my house anyway. I just went to bed and they stayed up till like midnight and cleaned up after themselves and left, um, that we this, so we have a game night now once, once a year on zoom because it’s once a year, everybody comes and they do all kinds of like 32 truths and a lie and all kinds of stuff, but it’s not quite the same. Um, we did have an outdoor picnic this summer and about half the board came. Um, it’s hard, you know, that’s the hard thing is now getting people out of their shell because we’re all used to now doing everything by zoom or going to work and coming home and you know, scurrying home. What zoom has that? I haven’t quite figured out is that time before meetings. That time in the middle of meetings. You know, those are the times of the after meetings, Those kinds of times when people would talk to each other about their kids, building that in. Um, what we’ve done, some of it is in the, you have to do it in the middle of the meeting because people run out at the end of the meeting and they won’t come early, no matter. They say two board members will come

[00:36:00.09] spk_0:

[00:36:36.70] spk_1:
But if you break into smaller groups in the middle of the meeting, even if it’s only diets or triads and give them something to discuss. Um, you know, one of my provocative questions is how does your birth order affect um, the way you take on leadership, which gets into all kinds of personal background, it assumes strength and it gets people talking to each other. So having a section like that in the middle of each board meeting can help people to start to bond and then obviously changing, you know, changing the groups

[00:36:40.26] spk_0:

[00:36:49.81] spk_1:
making that group a hint. Make those small groupings deliberate. Don’t just leave it to the zoom universe to deliver. You

[00:37:15.11] spk_0:
can either make them random or you can assign people to be with other with other people. And the assigning is is much better. Yeah, I’ve done that in some of my trainings. Um, alright, what else, what else you want to touch on around this, this equity and equity and boards and, and inviting folks in and joyful board

[00:39:14.65] spk_1:
service self interest, which I think it has to do with understanding the, the meaning of your cause to people who are not directly affected by it. So, you know, when we’re teaching fundraising will say, um, okay, you don’t fundraise just for the people who have direct interest to your cause because that’s your clients and if you could raise your money from them, that would be earned income and you wouldn’t be a nonprofit, but you can’t raise money from people who have no connection to your cause because it doesn’t make sense to them. Why are they gonna lie on it? And that’s the same thing with board members. You can’t ask board members to fundraise if you don’t feel connection to cause and or to audiences that don’t feel connection, but you have to find the enlightened self interest, which is myself as a member of the city, this neighborhood, this grouping that I care about Children having a head start. That’s why you’ll often find like a mom’s group in Westchester suburb of new york that’s fairly wealthy. Most of it um, will take on fundraising for a program in the inner city because they understand the meaning of this work for Children, even though it’s not their Children. And the reason I’m bringing this up is because that’s where the ownership comes in the sense that it’s on to, it’s up to me to make a difference for this. And that this matters to me, even though it’s not my personal experience. And I think that’s group conversations conversation in the courtship process and then it’s group conversations at the board level to keep that fresh. And it has to be deliberate because it’s the board service devolved into finance monitoring.

[00:39:20.93] spk_0:
Oh yeah, if it’s right. If it’s allowed to

[00:39:24.91] spk_1:
discussions about why the mission matters

[00:39:28.50] spk_0:

[00:40:02.43] spk_1:
does the mission matter beyond just the direct recipients are very inspiring and they give your board members personal uh you know, nurturing and the tools to go out to their context with different kinds of language. And you will often find, you know, I’m looking for areas in which different people can be experts, not just the people who have a lot of board experience or who are, you know, longtime experienced fundraisers, but that people with different points of view can have the position of being an expert.

[00:40:10.97] spk_0:

[00:40:12.96] spk_1:
And this is where you will find points of view that your classic cabal has not thought of

[00:40:26.45] spk_0:
conversations. Yes, I love how you pause and and think through and then make your next point. I’ve just been talking to you for 40 minutes, whatever. 35 minutes I’ve learned. All right, give her a couple of, give her a couple beats because she’s got she may very well have more to say. I love your the way you reflect. IIi don’t have that gift. I tend to be more more impulsive and I spew everything out in one shot.

[00:40:53.64] spk_1:
Well, that’s why you’re on the radio and I’m

[00:40:55.08] spk_0:

[00:42:16.41] spk_1:
normally um you know, I wanna having served on the board, not that many because I take it really seriously. Yeah. Um And then being a an executive director myself and um being a consultant support gives me humility about about the possibility of board service. Um And I feel like uh people who are only on staff have expectations uh and anger when board members don’t meet their expectations, whereas I’m trying to say it’s human nature to triage the kind of people who will agree to be on the board are often fully committed, I don’t wanna say overcommitted because you commit to what you commit to and it makes sense for them to do what they have to do and not more, because there’s always something else calling on their time, let alone, you know, the idea that they might want to play golf or read a book if you do that. If you understand it, that that’s rational, human behavior, then you don’t get as angry at people, you manage them,

[00:42:17.96] spk_0:
that everyone’s gonna triage that they’re gonna they’re gonna assess their

[00:42:21.34] spk_1:
priorities and

[00:42:22.84] spk_0:
they’re gonna they’re gonna act accordingly

[00:42:33.84] spk_1:
and it’s up to you to have a dialogue about that. It’s not that you you know, there’s something wrong with letting people slide or something, but it’s um it’s understanding and helping them understand how to fit in with all the different priorities of their life,

[00:42:40.74] spk_0:
right? And where does this mission fit in? And you’re among your priorities?

[00:43:11.76] spk_1:
You know, it’s why i um when when I when groups do uh board member um contracts or whatever they call them. Um I suggest that there actually be calendars in there so that you, somebody can say to you, I can’t do that in june because my twins are graduating high school, in which case we’re saying, you know what, we’re gonna take you off of that and we’re gonna take you off of May so that you can have a very because they’re not gonna do it anyway.

[00:43:14.85] spk_0:

[00:43:15.70] spk_1:
And then they just

[00:43:18.05] spk_0:

[00:43:22.19] spk_1:
they don’t respond to emails, so having respect for all the different polls rationally on board members time and life and energy and then helping them understand how to fit this in in a way that makes sense.

[00:43:51.30] spk_0:
Alright, let’s give you, I want to give you a chance to talk about cause effective because it is a non profit. It’s a it’s a consultancy for nonprofits, their advisors, consultants. What what uh what’s the breath of the work and how how do you work with with your client nonprofits?

[00:43:57.71] spk_1:
Well, you know, I’d say we are 40 this year, we are about to celebrate our 40th anniversary.

[00:44:02.85] spk_0:
Congratulations. For decades.

[00:47:33.85] spk_1:
Um And I’d say that the common theme throughout has been changing how organizations are resourced, um changing the balance of money and therefore power in the sector. Um and it’s both increasing it and increasing it so that it’s not just that the most well resourced nonprofits get more resources, but that it’s non profits that are located in disenfranchised communities and the people who work there and um uh and volunteer there are able to raise the money, they need to further those causes. Um and to govern themselves because to me, governance is integral. E apart, it’s more than just raising money, but if you don’t have a governance structure that works, you’re not gonna have a fundraising structure that works on the voluntary level. Um, and that’s where you get to organizations where the staff fund raises. But the board doesn’t have volunteers don’t. Um, so we have, we work, we do a lot of cohort work where we’re looking at development Directors of Color and help, um, working with them over a six month period of time, um, in a particular program that we have to help them really address, um, the barriers to their being successful and not only to talk about it, but to actually address it. Um, we, so we do a lot of individual coping with, with, with executive directors, who may be having come up through fundraising and, but, you know, you need to do it if they did. It is not part of the fundraising structure. The organization is only gonna get so far, um, and board members, a lot of board consulting, especially now with boards that, no, they need to diversify and don’t really like, they know they need the composition, but they don’t, they don’t necessarily know that they need to act differently to have different people in different seats. Um, we do everything from, you know, eight hour retreats on zoom, maybe six hours, uh, two year long coaching engagements to what we call deep transformation, which is a lot of times people come to us and say, well, my board won’t fundraise and we get in there, we start talking to board members and we find out there’s all kinds of reasons, it’s not just that they don’t know how to ask for money, but it’s that there’s not financial transparency, there’s not a real partnership between staff and board. Um, there’s not a peer to peer accountability on the board. Um, there’s a inner group of three board members who do everything and everybody else slides. Um, you know, there’s all kinds of reasons that we will help, we will actually go in and help address. We say that that’s a symptom, my board won’t fundraise and there are, you know, many, many causes of that and we will, we, one of the things we’re known for is that we will go and address the cause. We’re not just gonna do the tactics. Um, we also do a lot of fundraising consulting for groups that have had a lot of government support or a lot of foundation support and know they need to diversify and they don’t necessarily have, you know, a Lincoln center board, um, but it is very possible that people around the country or the world will care about what they do and we’ll back it up and want to make it happen if they, you know, for one thing they say is that our fundraising, the one thing that’s, that’s some limited time. There’s only 24 hours and maybe one second or maybe now two seconds in the day. And so you need to make choices that are smart with how you spend your fundraising time. Money is not the limiting factor, but time is and so will help groups really understand what are the likely avenues and how to structure the resources they have to reach those

[00:47:43.87] spk_0:
Days get longer. What’s one or 2 seconds

[00:47:51.27] spk_1:
actually they did make a ruling and there’s like they added a second or something. Oh,

[00:47:51.54] spk_0:
I didn’t hear about that. I’ve been squandering my two seconds a day. How long have we had this? How long have we had these longer

[00:47:57.57] spk_1:
days. Six

[00:47:59.88] spk_0:

[00:48:00.43] spk_1:
Yeah. I don’t know how many seconds that is. I can’t do the math that fast. No,

[00:48:20.41] spk_0:
But six months is 100 80 days. Times two seconds, 360 seconds. It’s a good six minutes I’ve, I’ve squandered. Alright. I’m gonna try to get it back right now by cutting you off. No. All right. Thank you for explaining. And thanks for a frank conversation. We don’t, you know, for our for nonprofit radio white listeners. We’re not, we’re not, we’re not going easy. You have to have you have to have honest conversations. So thank you.

[00:48:58.91] spk_1:
Yeah, I, I think this has been some of the, you know, I’ve been in this field for 30 years and this has been some of the most rewarding and deep work. Um it’s not surface, it really addresses, you know, I had to go back to everything I assumed from my childhood on and understand that there’s there are different realities and that um it’s not that I can go back and change it but I can change my behavior going forward so that I further a different kind of future.

[00:49:31.46] spk_0:
Mm She’s judy Levin, she’s the executive director of Cause effective. You should have already been at their website because you would have seen their diverse team when we uh when I suggested take a pause and then you came back but if you haven’t been there or if you don’t remember where it is, it’s at cause effective dot org. And they’re also at cause effective and judy Levin, thank you very much. Thanks for sharing.

[00:49:33.80] spk_1:
Thank you. It’s great to have this kind of conversation

[00:50:47.97] spk_0:
next week Back to our 22 NTC coverage, accounting for nonprofit leaders. If you missed any part of this week’s show, I Beseech you find it at Tony-Martignetti.com. We’re sponsored by turn to communications pr and content for nonprofits. Your story is their mission turn hyphen two dot c o and by fourth dimension technologies i tion for in a box, the affordable tech solution for nonprofits but they also got the special offer going on the free offer grab it. It’s all at the listener landing page, tony-dot-M.A.-slash-Pursuant but they go on to mention deeper. Our creative producer is Clam Meyerhoff shows, social media is by Susan Chavez. Marc Silverman is our web guy and this music is by scott Stein. Thank you for that. Affirmation scotty, You’re with me next week for nonprofit radio Big non profit ideas for the other 95% go out and be great.

Nonprofit Radio for March 4, 2011: Minimizing Money Management Mayhem

Big Nonprofit Ideas for the Other 95%

You can subscribe on iTunes and listen anytime, anyplace on the device of your choice.

Tony Martignetti Nonprofit Radio for March 4, 2011:

Kathy Boyle, President, Chapin Hill Advisors is this week’s guest.

We’ll talk about Minimizing Money Management Mayhem: What UPMIFA means for your CEO, CFO and board.

Kathy distills the requirements of UPMIFA for nonprofits in New York–and other states–where the Uniform Prudent Management of Institutional Funds Act has become law.

  • What is “prudent”?
  • What needs to be in your investment policy statement?

We’ll leave you with tips for compliance and action items.

Update: April 13, 2011 – The New York State Attorney General now has a guide to New York’s Prudent Management of Institutional Funds Act (NYPMIFA).  NY nonprofits will find this guide by the AG helpful.

Top Trends. Sound Advice. Lively Conversation.

You’re on the air and on target as I delve into the big issues facing your nonprofit—and your career.

If you have big dreams but an average budget, tune in to Tony Martignetti Nonprofit Radio.

I interview the best in the business on every topic from board relations, fundraising, social media and compliance, to technology, accounting, volunteer management, finance, marketing and beyond. Always with you in mind.

When and where: Talking Alternative Radio, Fridays, 1-2PM Eastern

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Here is the link to the podcast: 031: Minimizing Money Management Mayhem
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Welcome to the show on the aptly named host of tony martignetti non-profit radio big non-profit ideas for the other ninety five percent, one will give a little shout, teo larry bloom, who has the show right before this one, the divorce, our with larry bloom if you haven’t listened to the divorce our and if you have that situation in your own life or in a friend’s life for someone else’s life, who you know ah, larry does very heartfelt and sincere, almost cathartic radio. But today was more straightforward, he’s talking about ah change in laws in new york state around divorce and his practices in new york city and new jersey. That’s larry bloom, the divorce our who comes before me here on this show last week, it was we’re looking hr consultant karen bradunas helped the museum of chinese in america think and work strategically around their job. Opening for a curatorial director and second segment last week was fabulous. Facebook, our regular tech contributor scott koegler who’s, the editor of non-profit technology news revealed seven things you must do with your facebook page this week we’re minimizing money management mayhem what upmifa means for your ceo, cfo and board. Kathy boyle, president of shaping hill advisers, distills the requirements of the uniform, prudent management of institutional funds act in new york and just about every other state where upmifa has been approved. What is prudent management? We’re going to talk about what’s, prudent, what needs to be in your investment policy statement, and we’ll leave you with tips for compliance and action items around this important law on tony’s. Take two at thirty two minutes after the hour, we’re going to talk about the fact that mohr non-profits are going to be filing the irs long form long nine ninety this year because of changes in the requirements for who files that that’s at roughly halfway through on tony’s, take two, but for the hour, it is cathy boil, and we are minimizing money management mayhem. Starting after this break, you’re listening to the talking alternate network, get in. Nothing. Duitz is your marriage in trouble? Are you considering divorce? Hello, i’m lawrence bloom, a family law attorney in new york and new jersey. No one is happier than the day their divorce is final. My firm can help you. We take the nasty out of the divorce process and make people happy. Police call a set to one, two, nine six four three five zero two for a free consultation. That’s lawrence h bloom two, one two, nine, six, four, three five zero two. We make people happy. Falik are you suffering from aches and pains? Has traditional medicine let you down? Are you tired of taking toxic medications, then come to the double diamond wellness center and learn how our natural methods can help you to hell? Call us now at to one to seven to one eight, one eight three that’s to one to seven to one eight one eight three or find us on the web at www dot double diamond wellness dot com. We look forward to serving you. 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 dahna welcome back to tony martignetti non-profit radio big non-profit ideas for the other ninety five percent. I’m joined in the studio now by kathy boyle. Kathy is the president of chapin hill advisors. She is a frequent contributor to bloomberg and fox tv, and her expertise is in non-profit investment practices. Kathy, welcome to the show. Great to be here, tony, why don’t you tell this a little about shaping hill advisors first? Well, shape until his investment advisory firm we basically covered three different areas, high net worth individuals, families and a natural extension of that is the foundations of families run and not for-profit organizations to which they contribute and we helped them with both their planning needs, consulting needs and managing their money, and we’re here to talk about upmifa, which is all on the non-profit side of your of your three problem practice the uniform, prudent management of institutional funds act recently passed in new york, it applies in about well, as of june of last year, it was in forty seven of the fifty states, right? I think it was i saw florida, mississippi in pennsylvania haven’t passed it, but new york most recently and that’s why we’re talking about it today, so but it does apply in forty seven of the fifty states generally, kath, what is upmifa? Well, basically it’s it’s an over lying law to cover the prudent, this strategies and the standards that you should be following if you’re running enough for-profit organization or foundation endowment, and it specifically is about endowment endowment management, right? Yes, absolutely, absolutely. And you know what people? What people don’t realize is that there have been so many not-for-profits organizations funded in the last several years, they’ve grown dramatically, it’s largely because we have the baby boomers, we outlawed them coming into wealth, whether they work for corporate companies and took a left and decided do their own thing, or they’re entrepreneurs and sold a business, they want to help the world, but they want to do it their way. So there’s a plethora of these organizations and has been very loosey goosey, they’re able to do sort of there under the radar, and a lot of them are doing things incorrectly, they’re not falling the rules, there really hasn’t been any bite there’s been these laws and these things have been out there for a while, but there hasn’t really been any big fines. What types of organizations does upmifa apply to? Well, naturally applies to a lot of endowments. So you may have a school endowment let’s say you went to cornell and they have an endowment to help pay for their future things. Keep the school fundez so the public charities five oh one c three public charities, absolute endowments, absolutely any money, any pool of money like that that’s covered under either chaillou trust or five twenty three is covered under this law. And what about private foundations? Private foundations also fall under this. You always have this prudent standard. This is not your money, it’s, not your piggy bank. Once you set it up and you get the tax deduction, which is where the private comes in now you have those rules to follow that way. And then if you have the foundation, the endowment, you have to make sure you’re following him as well, and the enforcement around this and we’re going obviously talk about a detail about the requirements, but enforcement, where do we typically see that in in all the states that have that have enacted upmifa well, you know, unfortunately really haven’t seen again, a lot of bite you haven’t seen a lot of them coming down hard on anybody. There’s been no big cases, there was a very big case with robin hood, which is a great foundation, and they had what we call self dealing with a lot of the board members were getting paid through the organization if they were on the board, you’re supposed tohave, you know, arm’s length agreement here on dh yet there was no fine, there was no penalty, you know? And so a lot of people feel like, oh, well, if they didn’t get slapped, then i’m okay, or some people don’t even realize they don’t even it’s not even bold up to the top, i can tell you i can meet with so many organization that don’t even know that they’re supposed to have a written spending policy that they’re supposed to have an investment policy statement. The size of the endowment doesn’t matter all right now it does so this could apply to ten or fifteen thousand dollar endowments as well as many, many multi million dollar endowment, right and that’s that’s again something else to people don’t realize that thinking, oh, this is new it’s small. I just started it a lot of times people think it’s an extension of themselves, they think it’s an extension of them, they’ve done like the filing and they think they’re done they’re non-profit is an extension of themselves exact, and they’re so wrapped up in it may be there work-life and personal life are intertwined, but the financial side can’t be right. Exactly. And also you have to have this distance. You have to follow the rules, it’s, just like when you set up a corporation, maybe nobody tells you that if you file a sub chapter s you have to now file it with the state in order to be recognised, otherwise you’ll fall back and be recognized as a c. So it’s these kinds of things, a lot people there’s no little manual that says, this is how you go one, two, three, four and you said that there hasn’t been a great deal of enforcement, but i think we would see enforcement if what i think when it does come, i mean, there aren’t forty seven states enacting this for nothing except i think, from the state attorney’s general, aren’t they generally the ones? Yes, the state attorney general is the one that would visit your offices and then perhaps put a fine out there, and i think the possibility can arise if a couple of ways i’m thinking of donors being unsatisfactory with the way they’re endowed fund has been managed, disgruntled, anybody donor-centric who worked their employees. Ah, former boardmember you really have a lot of risks just like when you’re running company, somebody fire somebody and you don’t take the right steps, they could sue you. So you have to remember this kind of thing is the same thing. You have to make sure that you’re watching out for all of your areas and also remember tony, all these states and local cities and towns are in deficit look at new york state, ten billion dollars, i’m sorry, but i think this is going to be easy money because they haven’t been find we’re looking for other ways you could only tax the consumer in the property holder so much and these guys have not been taxed. So in my opinion, i think going down the road, this is gonna be an easy place for states to raise revenue. You raise an excellent point to about disgruntled employees. Another one i think about is disgruntled heirs of donors who look at what they’re like, the legacy that their parents or maybe grand parents left. And they’re not satisfied with the management of it. With kathy boils she’s, president of shaping hill advisers, were talking about the uniform, prudent management of institutional funds act, and we’re going to take a break, stay with us. Talking alternative radio twenty four hours a day. Are you feeling overwhelmed in the current chaos of our changing times? A deeper understanding of authentic astrology can uncover solutions in every area of life. After all, metaphysics is just quantum physics politically expressed. I am montgomery taylor, and i offer lectures, seminars and private consultations. For more information, contact me at monte m o nt y at r l j media. Dot com are you stuck in your business or career trying to take your business to the next level, and it keeps hitting a wall? This is sam liebowitz, the conscious consultant. I will help you get to the root cause of your abundance issues and help move you forward in your life. Call me now and let’s. Create the future you dream of. Two, one, two, seven, two, one, eight, one, eight, three, that’s to one to seven to one, eight one eight three. The conscious consultant helping conscious people. Be better business people. Buy-in i really need to take better care of myself if only i had someone to help me with my lifestyle. I feel like giving up dahna is this you mind over matter, health and fitness can help. If you’re expecting an epiphany, chances are it’s not happening. Mind over matter, health and fitness could help you get back on track or start a new life and fitness. Join Joshua margolis, fitness expert at 2 one two, eight sixty five nine to nine xero, or visit w w w died mind over matter. N y c dot com upleaf you’re listening to the talking alternative network. Dahna welcome back to the show. I’m tony martignetti and i’m with kathy boil, the president of chapel hill advisors, which you will find at shaping hill advisor’s dot com doing that right is a cheap way also in shape and held outcome kapin hill, dotcom thank you, bond. We’re talking about the uniform prudent management of institutional funds act. It applies in forty seven of the fifty states. Kathy let’s on, before we get back to the questions, i’m sorry, i wantto remind people that we are live and can take your calls at eight seven, seven for eight xero for one, two, zero, eight, seven, seven for eight xero for one to zero if you have questions about upmifa cath let’s, go through the the overview detail overview of what the requirements of upmifa r and then we’ll look at each one individually and flush them out. All right, well, let’s, just talk about a couple of bullet points. One of the things that this new upmifa does is that it allows spending from what’s called an underwater endowment. So that means if a phoner dahna gave you a million dollars and the market went down and it’s now worth eight hundred thousand dollars before this, you wouldn’t be able to take any money out of that. So if you were relying on let’s, say four percent, so four percent of one million dollars is forty thousand dollars. So if that was going out to make grants or to help run your operating fund, then you can no longer use that money because it’s dropped eight hundred thousand. So now they allow this, but it must be permitted by the donor. So you have to go back to the person who gave you that million dollars and say, is it okay with you? Tony it’s down eight hundred thousand dollars would like to continue spend out of this. Are you okay with that? All right. And you referred to four percent for us? Just a little bit that’s. You’re referring to the spending rate just at a non-profit. What? Intel? Yes, for there. And that other? They’re spending endowment spending rate at a non-profit. What goes into determining what that spend rate should be year after year? Well, that’s, a good question. The board has teo address this. And now it’s required to be in writing. You need to have a spending policy. How much is pertinent? First of all, the market, what can the market bear? Are we looking for? Total return? So we’re gonna have fizer and collected dividend or bristol myers and collect our five percent and hope that we make two or three percent in in capital gains. So we have a seven percent return, and then we’ll pull five percent out of that. So depending on how much risk you want to take and what kind of allocation you have in your endowment’s investments, then you determine your spending policy. So i think we can easily achieve four percent without dipping into our principal that’s how you come up with your spending policy, okay? And now there are formulas that will look at the last three year average called moving average of what the endowment was earning each of those three years and and we’ll base the current year’s spending rate on the the average of those previous three years, i’ve seen more sophisticated formulas, right? There’s, lots of formulas, but the bottom line comes to are you going tobe? Invest this entire thing in bonds and just take the interest only or you’re going to invest it in a partial stock and bond portfolio and assume that you have a rolling rate of return, which is where the three year average would come in on you know, if rates go down and you’re completely in bonds now you’re at the risk of the interest rate environment, so you’re spending policy has to have a little flexibility for getting four percent your bonds today, you can’t keep it right a four percent, because what if next year you rolling into three percent bonds so your average is going down? So it’s really a calculation? You have to look at how sophisticated your board is, how what your formula is going to be on your investment policy on your investment allocation, and then go back and use a formula determined on the other side. So moving away from the financial factors that go into determining the spending rate from year to year, this is in part funding programs, so the other side of the balance is how much do we need to sustain our programs in addition to fund-raising revenue, maybe fees for services that we have with government government agreements or maybe fromthe service? Recipients themselves, whatever all the different sources of income are, we have to make sure that we can fund it years program, right? You have to really look at typically a family will get together and say, well, we want to help schools, you know, very typical concerns for families, our education, healthcare helping the underprivileged. So if you want to solve all three of those in your local community, how much do you need to give to the you know, police, you know, to do the junior league or the you know, the uniforms or help the school’s buy books for the kids? Whatever you’re doing, you got to figure out what the need is and do you have enough money to support that need and what happens? What if you want to support five things begin to have enough money to do two things? So what do you do? Do you increase your spending policy and give yourself a little more flexibility and say, well, temporarily, we’re willing to steal a little bit more, so we’ll take a five percent or six percent out, even though we might not be earning that. But again, this has to be written. You have to carefully think through this. Okay, so a written policy around investment and spending rate. What else is a major point of upmifa? Well, there’s. Another one they have to really keep in mind. It presumes that anything over seven percent is inappropriate. Okay, again, talking with spending rate, the spending race of spending rate over seven is assumed, presumed to be impertinent. Imprudent. Right now it can be rebutted. But do you want to go down that path so it’s? Better to adjust your spending limit to something under seven percent. So keep that in mind. Okay. Do you know if different states have set different thresholds for that imprudence determination? Do you know that’s? A good question. I don’t. Ok. But in new york, it’s seven percent in new york. It’s percent. I’m gonna assume that in the states it’s, it’s. All very close to that. I mean, it is a uniform act, eh? So i’m gonna assume that. Okay? What else? Highlights? One of the thing i think is important is you are here today. The market dropped quite a bit. No ate. A lot of organizations have not made all the money back. They’re trying to win the market’s been on a tear for eight months, so nine months, almost. But we’re in a period where we could experience more volatility. So well, you have to do is if you need to spend the underwater endowments, you’ve still that made it back. You need to actually go out and have written consent from the donors who gave you that money? Yes. Okay. And again, underwater you mentioned it being less the value is less than the original gift. Yes. Now suppose that gift is many years old. Wood wood under water then mean it’s lower than what it’s been in just the recent past. Or would you still look back, say, ten or twelve years to the original gift? That’s, another trick question really award. It depends on your spending policy again because they were spending policy allowed you to spend a certain amount of principle than you have principle erosion. And so you would want to look that at what you considered your average. If you assume that you are on ly taking income out now, you really need to go back to the original and have the original amount of rachel. Okay, so, that’s an interesting point. Ah, spending policy can allow dipping into the principal of the gift. We’re not spending nearly income. Well, but again, you have to have the written permission from the donor. Because, again, it’s underwater. Ideally, you want to leave the principal intact? It depends on whether this a perpetual and you want to keep this intact and be ableto have the income on lee. Ok, ok. Um, not you again, you know, flushing out to some of the some of the details you mentioned. This is assuming that this is a perpetual endowment. Why don’t you distinguish that from maybe other types of end down? Well, there’s, other kinds of endowments that go for certain number of years and they spend down. So the bill gates foundation is a big proponent of this that they’re going to go and just dump all this money into a cause and solve it in a certain period of time. And that’s an area of contention. A lot of people feel that well, the problems of aids and hepatitis and things like that will not just be solved just by dumping huge billions of dollars. But that’s how? The organisation is funded and that’s. How it’s a spend down policy. So it has a finite time it’s going to be done by twenty, twenty, or twenty, fifteen or whatever. The mandate is all right. So just making the point that all endowments are not perpetual and they’re not created equal, right? Okay, i’m with kathy boyle, she’s, the president of shaping hill advisers were talking about the uniforms. Prudent management of institutional funds act. What does the policy seo the sari? What does the law say about delegating the decision making around investment management? That’s another good point? You actually have to have a committee. You need to have somebody who’s making the decision. Whether is the board of directors, a subcommittee, the executive director with the help of an advisor consultant. But you have tohave it stated, and who is responsible for this? Who is that? There has to be an active committee of some sort to be one person, but somebody has speed in charge of this, all right? Right? And you said, i mean, in a small a small institution that could be the executive director, larger one could be the investment committee or finance committee of a very large board of trustees, right? And, you know, again, tony, this is an area so many people. Look, i understand i run a business there’s eight million things to do every single day you always run out of time. My joke is ten more hours, and i’ll be fine. I’ll catch up. So when you’re the executive director or it’s your foundation that you created, so you’re running it and you’re running. A business or whatever you’re doing with your family life, you know, there’s a million things to do you trying to grant your china fund-raising tryingto make sure that everything is running correctly, you’ve got employees to manage. Perhaps you’ve got eight million things to do every day, so i find that this falls to the bottom of the of the of the totem pole, as compliance often does. One part of my practice is charity registration compliance that non-profits b in compliance with state laws in all the states where there soliciting and there’s been some enforcement, but compared to the one point, two million public charities, a drop in the bucket in terms of enforcement. So again, like like a upmifa compliance issues seem to fall to the bottom until there’s a headline, right? And then, you know, there’s, a perp walk in the case of more likely be a perp walk in the case of financial impropriety. Right? Then there is charity registration, but until you have that, it just doesn’t get the board’s attention, right? Right, right. And, you know, again, there’s so many things that you need to be compliant with. So it’s very difficult. And a lot of times your boards are not compensated, they meet quarterly. They may care passionately about the cause of the organization, but they have limits on their own time as well. And so they’re not going to get into the nitty gritty generally. And so if somebody on the board is not going to get into the nitty gritty of falls back on the executive director’s or the founders plate toward the end, we leave people with some action items and some specific best efforts that they can make tio put themselves at least close to compliance. I know you have some good ideas around that it’s the uniform, prudent management of institutional funds act. What does the act say about prudence? What is prudent? Well, prudence really means quite a bit in this take, because people just think that if they put money into a cd, they’re fine, and i can tell you again how many organizations i run into where they’re in cash there in money market or they’re in cds and they say, well, at least it’s safe. Well, prudent also, you have responsibility to diversify, so you have to have a written policy investment. Policy statement of what is called ni ps and you have to take a lot of things into account, like the economic conditions. So if we think interest rates are going up from here, which that’s my view, you know, maybe short term, they’ll will continue go down, but longer term rates have to go up, so it would be imprudent of you to take your entire foundation and put it one hundred percent in twenty year government bonds. You’re not diversified your you’re open to investment risk, so you have responsibility to diversify, and that generally means among a different asset classes. Now you’re going to have a very small allocation and stock, but being one hundred percent cds is important because you’re not protecting your principle for a longer period of time for inflation. A rhodes, you’re spending patterns is quite a bit more than safe. Yes, i’m saying in six words what you elaborated in particularly, but it means a lot more than safe what else i know they’re a lot of elements, teo prudence beyond diversification what else write? Well, you have to actually this is fairly new. You have to take into account inflation or deflation in the past, we wouldn’t have worried about that, but that could be a real concern, especially given that we have oil at one hundred dollars barrel right now, so that could create quite a bit of inflation food, inflation, heat inflation which can effect again some of your causes. So if you’re granting money to a school or you’re trying to help her lower income area, they’re hyre costs caused inflation there, so you have to take inflation into account terms your own portfolio as well. Okay, let’s, let’s dive a little deeper. And because i want to understand this, you make sure that people who are not as investment savvy is ur understand that as well. What? What types of investments are inflation protective? Just just generally expect inflation be rising. What what types of assets would people be investing in? Well, generally, stocks are considered an inflation hedge because if the environment goes up cos remember stocks or just cos and if company conditions the thrive, the stock goes up theoretically so stocks give you inflation protection now, it’s over a longer time period because they can be very volatile. Another thing to consider is now you can buy all kinds of commodities you can buy them through exchange traded funds. Etfs is what we call them, so you can buy exposure to cotton and wheat and bread and oil so you can buy these exchange traded funds and there’s some professionally manage commodity funds so you can put a commodity. Gold is a great inflation hedge, but your investment policy statement needs to state that you do have the ability to look at hard assets and commodities very important can’t have the investment. And again, i would just met with someone. I asked him if his i p s had an allocation had the permitted ability to go into hard assets. He said no. When i got the statement, they had five percent allocation of hard assets. So again, you want to be in compliance with this couple of the things you want to look at. It is you want to look at the tax consequences of the investment, whether or not there is any unrelated business taxable income we call u b t i and you also want to look at the other resources of the organization. So let’s say the market takes another. Header, and it goes down thirty percent over the next year and a half, and you still have recovered from the last one. You’re now down to five hundred thousand dollars from your original million, which went down to seven hundred, back-up two, nine hundred. Now you’re down to five hundred, i can’t spend it the same rate. So what do you dio? Do you have other resources? Can you pull in other money? Is there short term money that he can use so you can leave your longer term money to grow back? This’s tony martignetti non-profit radio. We’re talking about the uniform, prudent management of institutional funds act. After this break, i’m going to have to give cathy a short stint in jargon jail for u b t i unrelated business, taxable income, but she’s going to flush it out and and she’ll get parole after this break. You’re listening to the talking alternative network. Oh, this is tony martignetti aptly named host of tony martignetti non-profit radio big non-profit ideas for the other ninety five percent technology fund-raising compliance social media, small and medium non-profits have needs in all these areas. My guests are expert in all these areas and mohr tony martignetti non-profit radio fridays, one to two eastern on talking alternative broadcasting do you want to enhance your company’s web presence with an eye catching and unique website design? Would you like to incorporate professional video marketing mobile marketing into your organization marketing campaign mission one on one media offers a unique marketing experience that will set you apart from your competitors, magnify your brand exposure and in cancer current marketing efforts. Their services include video production and editing, web design, graphic design photography, social media management and now introducing mobile marketing. Their motto is we do whatever it takes to make our clients happy contact them today. Admission one one media dot com 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 metoo welcome back, it’s. Time for tony’s. Take two at thirty two minutes after the hour. Roughly i want to just make you aware that the thresholds the revenue thresholds for what non-profits have to file long irs form nine. Ninety, which is a pretty burdensome for me, have changed this year. The thresholds have come down. So that means that there are b’more organizations that are suffering. Should i say the non-profit of the the long form nine ninety filing this year? And i blogged about that? My bloc is that m p g a d v dot com. Just generally the thresholds in terms of financial gross receipts has came down in two thousand eleven. Last year it was half a million dollars in gross receipts, or total assets of one and a quarter million. This year, those limits air down to just two hundred thousand dollars in gross receipts, or total assets of half a million. And if you hit that threshold which more non-profits will because it’s lower you had then have to file the long form nine ninety and there are other forms to there’s the there’s always the the nine ninety postcard, which is quite simple and there’s a nine ninety easy and i lay out all those requirements for for which form you have to file on the on the in the post on my block, it mpg a dv dot com in the name of that post is more non-profits filing long irs form this year back with kathy boyle, we’re talking about the uniform prudent management of institutional funds act kathy’s, the president of shaping hill advisors, a frequent contributor as well to bloomberg and fox tv and she’s with us demonstrating her expertise in non-profit investment practices before the break, we were defining prudence. What does it say about boardmember tze on board members conduct around prudence? Well, boardmember sze have responsibility to act with prudence is what we call it, so i find what i see sometimes is, especially since we’re in new york city, we see a lot of organizations with a lot of wall street experience on aboard. What happens is all the guys have very strong opinions or women, and nobody does anything so that’s it’s not prudent if your money sitting in cash because you’re bored can’t come to an agreement, you’re not fulfilling the letter. Of the law, so considerable board requirements and oversight. We’re going to talk about overseeing investments shortly. I did promise before the break that i would give you a reprieve. Parole from jargon jail. So you unrelated business, taxable income there you’re talking basically about income that’s not related to the charitable mission, right? Right. And you want to be careful of that, you know, with kinds of investments that you make and how much is that income going, too? Hit your bottom line and how is it going to affect it? Do you really want to take a look at that? And sometimes that gets very technical? It does, and there are a lot of code sections related to unrelated business income. There are a lot of cases and private letter ruling from the irs and those cases that i’m referring to roll in tax court all trying to figure out, you know, what is unrelated business taxable income? Because what it means is that your tax exempt non-profit now ends up having to pay tax on the income that is unrelated to your charitable mission and that’s the last thing you want when you set this whole thing. Up to be tax free and be able to do something good for people. The other thing after member with board members, their personal financial liability, it’s called fiduciary responsibility. Okay, and people wave over this the first question get oh, well, we have dino. Dino is directors and officers insurance, and it protects the board against, you know, a mistake essentially. So if somebody makes a mistake or somebody under your watch makes a mistake so let’s, say the foundation. You did all the rules, you followed the prudent investor rule. You have an i p s but you got bernie madoff for a piece of your you did your due diligence. You pass it off to consultant, you still ended up in made off, and somebody wanted to sue you because of that that would tend to be protected as long as you took all the steps under the dino, so you would have some kind of protection. Personally. However, if you’ve not taken the rights steps and you haven’t followed the rules, you’re not protected. A new dino and that’s jeff, remember so you could be personally sued. Tony, personally, if you’re on a board and you’re not falling these rules. So that’s critical plus that’s just a thin reed toe. Hang on. We have insurance to cover ourselves if we’re not doing things right right way have insurance to cover it. But it’s kind of like leaving the water on in the in the in the washing machine for the washing. Machine’s not working, you know. Well, i have flood insurance. You know where i have water insurance. So i’ll fix the basement later. Why in god’s name would you want to do that? And shouldn’t we just be operating non-profits the right way? Yes, but the right way gets again. You know, i understand how it works, you know, i sit on several boards and the mission and the operating all takes precedence, and so you want to do good and you’ve got your gala coming up and you’re running around like a chicken without your head trying to get donors and get the gala attended to and raise some money and make sure it’s profitable and so and board members only me quarter to quarter, and they’re like chasing cats, trying to get them around the board and get them on a call together. And doctor thought that thought so. I understand it’s a challenge is always a challenge, but the’s things air critical and you really have to do him. The investment policy statement the i p s your calling the act is pretty explicit about what needs to be in an investment policy statement. First of all, the thing needs to be in writing, which we find a lot of non-profits haven’t even done right, right, exactly, exactly. And you want to state your objective? What are you trying to dio it could be is you can’t really be a one pager, but it can be very short, so you really have to go through the steps of creating it. There’s lots of things online, you can take things online or if you’re a bigger organization, might want hyre consultant help you write one if you do have ah finance committee and you’re bored, that would be a very good place to start as well, right, exactly. That’s an excellent place to start. And you want to have knowledgeable people on that, so okay, before we get to the high ps yes, knowledgeable people on your board finance committee does that necessarily. Mean, i i have a boardmember who works for bank of america. Right? So they must be knowledgeable, right? Right. And that’s ah, that’s. Another miss number. You know, it’s kind of lee analogy i use is when i have a recent widow and she plays bridge with a bunch of her girlfriends and somebody’s son works on wall street and she goes, oh, i’m going to go find out what harry thinks i should do with my money. Harry is a traitor. Maybe he trades derivatives. Maybe he trades one kind of stock. Is harry well equipped to tell gladys what to do with her entire portfolio? Know. And so you have two leaves. The same sort of analogy. When you’re choosing your board members or choosing your investment committee members, how much depth do they have? Do they really understand all the asset classes? Have they put portfolios together? Are they on lee looking up the tax id? A lot of people think bankers, cpas, they’re also related to money, often cps air on lee looking at the tax side of it, and they tend to be super conservative. So is that a good match? Is that one? Person and then you offset them with maybe an entrepreneur who manages their own portfolio. So you really have to think about in assam real card questions? The person who works for bank of america could very well be in marketing, communications or hr and you know, you’re making the point of reemphasized okay, so back to the investment policy statement this i p s what? What needs to be in there? Well, you need to have an overview of what, what your mission is, what you’re planning on doing. You have to have a purpose, you have to have a time frame, you have to have risked tolerance. So how much downside are you willing to sustain and during what period of time? And this is critical in this environment that we’re in? Starting in two thousand? In my opinion, we started what’s called a secular bear market and from two thousand two thousand to the s and p loss, forty nine percent of its value. So if you had thirty, forty or fifty percent air portfolio exposed during those three years, you continued to see it fall. If your investment policy statement didn’t give you the flexibility to have that much volatility. You may be out of compliance. So you want to make sure that if you using a fifty fifty portfolio or sixty, forty, whatever your mixes and stocks and bonds that you take them amount of volatility that the market has had over the last x number of years and be sure that that’s in there and this the secular bear market, what does that mean exactly? Well, secular is a very long trend. Their cycles and their secular trends. So secular trend and from nineteen sixty centering on the edge of george in jail. Sorry, nineteen eighty right in front of the jail and about to pull you out. Okay, i’m pulling. I’m pulling quick. Come out out of the gauge for nineteen sixty six to nineteen eighty two the dow jones returned one point four percent. That entire period of time is called a secular bear market from nineteen, eighty two to nine to two thousand ten toe eighteen years straight up, it averaged seventeen point four percent. That was a secular bull market. Now, within either one of those, you had crashes like in nineteen eighty seven, where the dow jones dropped precipitously. During the sixty six to eighty two period you had periods when you lost fifty percent your money and if you were smart enough or lucky enough to get in at that point could’ve made eighty percent of the next couple of years. We’ve just come off a period zoho period, it was one point, seven percent, one point for it right before and so in what, in my opinion, we started another secular bear and we’re only partway through. So we’ve just had two years from march of o nine we’re coming up on the anniversary here in the next couple of days where the market has gone up almost one hundred percent, depending on what index use snp went all the way down to six fifty it’s around thirteen twenty five give or take so it’s almost doubled exactly the rustle of the wilshire five thousand, which is the great big index five thousand stocks that’s already doubled now. Before that, we lost forty percent from the top of o seven down to march phone nine so a year and a half that was the cycles that was a cyclical baer followed by a cyclical bull. Basically, you’re about break even if you’ve been invest over ten years in the s and p, you have a small return. So when you go back to that example, you have to consider this. What if we are in the middle of a secular bear market and we have another bear cycle coming? Is your i p s set up to allow for that kind of downside volatility? Do you have all your money? Invest in the market, which we run into over and over again, and people say, well, i don’t want to make xero in my checking account. Well, it’s, imprudent to have all of your money invested the market you need tohave, sameer cashflow available. We’re going to take a break and when we return, of course, cathy boyle staying with us, talking about the uniform, prudent management of institutional funds, act, stay with us, talking alternative radio, twenty four hours a day. Oppcoll oppcoll are you stuck in your business or career trying to take your business to the next level, and it keeps hitting a wall? This is sam liebowitz, the conscious consultant. I will help you get to the root cause of your abundance issues and help move you forward in your life. Call me now and let’s. Create the future you dream of. Two, one, two, seven, two, one, eight, one, eight, three, that’s to one to seven to one, eight one eight three. The conscious consultant helping conscious people. Be better business people. Dahna i really need to take better care of myself. If only i had someone to help me with my lifestyle. I feel like giving up. Is this you mind over matter, health and fitness can help. If you’re expecting an epiphany, chances are it’s not happening. Mind over matter, health and fitness can help you get back on track or start a new life and fitness. Join Joshua margolis, fitness expert at 2 one two, eight sixty five nine to nine xero. Or visit w w w died mind over matter. N y c dot com duitz do you want to enhance your company’s web presence with an eye catching and unique website design? Would you like to incorporate professional video marketing mobile marketing into your organization’s marketing campaign? Mission one on one media offers a unique marketing experience that will set you apart from your competitors. Magnify your brand exposure and in cancer, current marketing efforts. Their services include video production and editing, web design, graphic design photography, social media management and now introducing mobile marketing. Their motto is. We do whatever it takes to make our clients happy. Contact them today. Admission one one media dot com. Talking dot com. Welcome back to the show. I’m tony martignetti we’re talking about upmifa the uniform, prudent management of institutional funds act with kathy boyle. Kathy, i just wantto emphasize one thing in the investment policy statement which we alluded to earlier, and that is the requirement of supervision and monitoring. What? What is it, what’s the act say about that? Well, basically, it means that you must have some way to supervised what’s happening with your money, so if you’re allocating it to bank of america or consultant, who then puts it out with various managers, somebody has to look at those statement somebody has to say, how are we doing? And remember, there needs to be a benchmark tony what i tell people when i place plain english to regular individual people, the index is people dow jones. We hear about all the times thirty stocks the s and p is a more appropriate benchmark for your equities and maybe a russell two thousand if you have a lot of small caps, so the benchmark is like the speed limit sign. If you’re driving on a little rural road up where i live in westchester county and you’re going thirty five miles an hour, you could be going ten miles over ten miles under, but unless you see a speed limit sign that says twenty five miles an hour you don’t know and so that’s what you need to do. And so, if your portfolio is sixty percent bonds and thirty percent stocks in ten percent cash, you need to have a benchmark each quarter that you look at, and it should be a blend of the bonds for sixty percent and index an index of either the snp or the russell or some index you’ll agree on and then money market so that you know how you’re doing and you know how your manager’s air doing? You also need to know i’ve seen a board where they had a value manager, and they won one missouri proud of herself for realizing that the value manager net of fi didn’t produce anything. And i looked and i said, well, do you know the russell value index actually produced eleven percent? So never mind that he didn’t make any money for you net of your fee, but he underperformed his sector by eleven percent, ten percent so that’s critical and again that goes back to who you choose to be on your your committee or on your board and how savvy they’re going to be very wealthy people often have advisers like me to do all this for them, and they may have someone underneath him. They’re not going to get into the nitty gritty again, so even very successful people often don’t even they don’t pay attention does not make them savvy about the market just because they have a lot of money invested or i shouldn’t just say about the market about that’s, general, exactly, and the native gritty again of what you need to do. So you know, the statements come out once a quarter. Well, how are they doing? What kind of return of we’ve gotten? Whether you can do this on an annual basis as well, quarter to quarter makes a little easier make angels if something’s going bad, and in the remaining time we have cathy, we want to leave people with some tips for getting into compliance, at least using best efforts to do that on a couple of action items for for different players in the non-profit so what do your ideas for? Getting into compliance now that the law is effective. Well, i think the first place to start is if you have an endowment, you have to have this written spending policy and that’s pretty easy to come up with. I mean, you can look back on history of the organization’s, been around for any length of time, look back to what you’ve done and craft something and make sure you’re in compliance therewith, the donor’s writing letters out to the donors having conversations if the foundation endowment is underwater, make sure you’ve written permission so that they’re too easy things to dio the bigger picture. All organizations need investment policy statement, and the way the attorneys have been guiding us is that if you make best efforts to at least you’ve taken the steps, so your i p s isn’t perfect. It’s not one that i would want to charge you for, but at least you have something in writing and you’ve made some effort to put it together. You’re less likely to get fined, penalised, tilly’s, short term that’s the way we’re looking at it now, they may give you some more time and come back and say, we want something better? Whatever, we don’t really know what’s going to happen because we haven’t really seen a whole lot of finds in this area, but the investment policy statements, the biggest place to start and getting something in place now you khun hyre consultant to do it, you can ask couple boardmember sze yu can put together investment committee and have them do it for you, but delegated if you’re really underwater and you’re running the organization, we’re running as fast you can. You feel like one of those little durables on that little cage then delegated out? Also, if you do have a financial advisor or even just if if you have just a banking relationship, those could be places to look for help. You might have the banking relationship, but they that bank may be able to help you with your gps or thie other documentation. Very often, many of us have things online. We have something it’s very simple that i wouldn’t charge people for, but we can we could easily give that out if we were retained as a consultant for something else. So, you know, very often that’s a good place to look if you also i served on several boards, so i could be very valuable to them in giving this kind of advice and interviewing the managers and interviewing the consultant. So if you have somebody on your board who is a financial adviser, we’re going to be we shouldn’t be managing the money if we sit on the board so we can play a very valued conflict of interest absolutely was wondering why she says that, but we can easily play that role on a professional basis. I’m delighted to do that. That’s what i do for a living it’s very easy for me to do for organization i care about, and you make a very good point about best effort if you can’t. And i’d say the same thing about charity registration, you’re not going to get into compliance in just a few months, but start making the effort so that if there’s a question, you can show something? Yes, exactly. We’re working on it exactly. Okay, so let’s assign some some action items, too different players in the non-profit i think the right place to start is with the board. What? So for the tips to get started what? Do you think the board should be doing first? Well, i think if you don’t have an i p s, then you need to pick a deadline critical, we’ve said the i p s probably six, three times to be exact, that investment policy statement and then these other things on the spending list the asset allocation and if the things that you’re going to in terms of investing your money, you also want to sign that to either if you’re going to let’s say you don’t have investing committee and you want to have one put a deadline in place, maybe it’s june, maybe it’s july don’t let it go on forever because i find again with not-for-profits since they moved very slowly, since the board meets once a quarter everybody’s busy and there’s always something that’s urgent things get tabled. Make sure that this is assigned a priority. Maybe it’s the sea for the first quarter becomes a beef. The second quarter becomes an a plus for third quarter, so it gets done. How about for the cfo or the executive director? If there, if there isn’t a cfo, well, unfortunately they’re the ultimate responsibility, you know, they’re running the organization. So if thie executive director is in charge and there isn’t really someone else to assign this to, then the e d needs to put this on her or his plate okay. And again create a deadline. And if there is development staff, what should? What should those fundraisers to be doing? Well, the development staff can play a very good role. They can reach out to the donors. They can put some of the spending paul seat about that of the underwater in the underwater. Those question exactly. And they can help make the spending policy because there they are. They’re raising the money they know what’s coming in or not coming in. They know how hard it is to raise money so they can go back to the spending policy and help develop that we have to leave it there. My guest has been cathy boyle, president of shaping hill advisers. She’s, a frequent contributor to bloomberg and fox tv. Kathy, thank you very much for joining me on the show. Great to be here, tony. Thank you. And now you put off your horse? Yes. You put off your horses for several hours today. To come to tokyo thank you. Gonna be riding out that ring at four. Thirty next week, we’re going sashadichter in the studio. Sasha is in charge of business development for accufund fund a very savvy, unusual non-profit that invests what they call patient capital in enterprises that combat poverty. Sasha is also a popular blogger and speaker. We’re going to hear how accufund funds work and his personal body of work i can help you or not profit and your career hope you’ll listen next week. You can keep up with what’s coming up? Sign up for our insider email alerts on the facebook page while you’re there, please click like like us. Be a fan of the page that’s at facebook, dot com and tony martignetti non-profit radio you can subscribe to this show on itunes. You don’t have to listen friday one to two we hope you do, but if you can’t itunes, go to non-profit radio dot net that will take you to our itunes page, where you can subscribe download. Listen any time, anywhere on the device of your choice that’s at non-profit radio dot net, the creative producer of tony martignetti non-profit radio is claire meyerhoff, our line producer and the owner of talking alternative broadcasting. His sam liebowitz. Our social media is by regina walton of organic social media, and our theme music was composed by booker t and the mgs were grateful to them for that. This is tony martignetti non-profit radio. I hope you’ll be with me next friday, one p, m eastern here on talking alternative broadcasting always found at talking alternative dot com. Durney i didn’t think that shooting good ending things. You’re listening to the talking, alternate network, waiting to get into anything. Thank you, cubine. Are you suffering from aches and pains? 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What Does Your Charity’s Conscience Say?

19th century charity board in the north aisle of St. Mary (copyright Richard Croft and licensed for reuse under this Creative Commons Licence)
National Public Radio reporting confirms what I have believed for years: IRS does not have sufficient resources devoted to policing the nation’s charities. That means the community must keep itself clean.

In NPR’s coverage, I’m focusing on the blog page where the story is posted. Not the four minute story, but the blog post and its shorter audio interview. A former director of the Service’s Tax Exempt/Government Entities team explains nonprofit examinations and audits aren’t a priority because considerably more money can be recovered from taxpayers and businesses.

That makes all of us in the nonprofit community responsible for operating properly. The buzzwords like accountability, transparency and compliance are well known, nearly cliché, and most of us recognize donors increasingly demand clean operations. That in itself should provide sufficient motivation.

Fear also motivates. If you don’t fear an IRS review because you’re resting on favorable odds, recognize that other interests within government are looking over your shoulder. From your state attorney general and secretary of state to the Federal Trade Commission and Congress, there are ample institutions helping to make sure you do the right thing.

Do you honestly not know what’s right? Do you fear the things you don’t know or understand? Your employees probably know the way. (That’s what I’ve seen for 13 years.) Are you listening to them? (In my 13 years, probably not.) If you prefer, there are thousands of consultants, in all stripes, to help your charity find its course.

Ultimately, it’s a matter of conscience–your charity’s conscience. What does it tell you about the right way to conduct business, to keep its reputation, donors, employees and board out of trouble?

That message is stronger than any IRS can put out.

Seven Highlights from the Fourth International Conference of Charity Regulators

Donation box

The International Conference of Charity Regulators met for three days in May of this year. Represented were Australia, Canada, New Zealand, Northern Ireland, Republic of Ireland, Scotland, and the U.S. hosts. The festivities were in Washington, D.C.

This seven-page summary has been circulating. I decided to pick out a few highlights for your consideration.

  • Canada used to have a rule that charities disburse 80% of their contributions, presumably annually. There is still a requirement to spend 3.5% of “investments.” Anyone able to tell us more about this? (page 2)
  • IRS can now make additional disclosures to states. That intrigues me. What have they been sharing with the states and what’s been added? (page 3)
  • Australia has no annual filing requirement. Nothing akin to IRS Form 990. You’ve got to be that smart to have country and continent status. (page 4)
  • “IRS believes that transparency, good governance and tax compliance go hand in hand.” That’s not a new statement. It is the rationale for the expansion of Form 990 two years ago. (page 4)
  • Processing of applications to IRS for tax-exempt status takes 112 days this year. Their way of discouraging formation of new charities? (page 5) (Aside from this conference, I had seen IRS talking about an online version of Form 1023, the application for tax-exempt status. I don’t know where that initiative stands.)
  • The Canadian Charities Directorate is the only office with a significant initiative to educate the public. Its counterparts are focused on training charities and their leaders. (page 5)
  • Internationally, regulators believe government oversight of charities will increase, particularly in transparency, compliance and use of resources. (page 7) Were you looking for a reason to retire early?