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BOARD OF ADVISORSMeeting Minutes – May 30, 2018Advisory Board MembersPresent:Patricia Galteri, ChairpersonPatricia Marcin, Vice ChairRobert Barnett Janet Barone John DeCelle (telephone)Greg Demetriou Roslyn GoldmacherIra Halperin Sandra KrasnoffJim MeyerEdward PalleschiClaudia Pilato Marc WongAbsent:Natalie AbatemarcoNancy EngelhardtPhyllis Hill SlaterStaffDavid Okorn, Executive DirectorJeannie DeMaio, Grants Administrator & Office ManagerSol Marie Jones, Senior Program Officer Marie Smith, Donor Relations & Communications DirectorTonya Thomas, Associate Program OfficerGuest: Lorie Slutsky, President, New York Community Trust (NYCT)WELCOMEPatricia Galteri called the meeting to order at 8:40 a.m. APPROVAL OF MARCH MINUTESThe minutes of the March 28, 2018 meeting were approved and accepted as written.PRESENTIONLorie Slutsky was welcomed to our meeting. She spoke about the history of donor-advised funds, the competitive business environment for donor-advised funds, and an increasing existential threat to the future of these funds.The first community foundation was established in Cleveland in 1914 by a group of banks. This history is of importance because community foundations were originally set up by banks in communities. The banks ended up managing many small charitable trusts. As the banks didn’t have the expertise or time to disburse the funds to beneficiaries, they collectively created the community foundation. Until the 1950’s, the only way a community foundation was created was in trust form. When the NYCT was created in 1924, it was formed as an unincorporated association of charitable trusts. The structure is very difficult to understand and to do business within. (The Long Island Community Foundation is the charitable beneficiary of the trusts that are created.) After the Tax Reform Act of 1969, community foundations started being created in corporate form, not using banks as their partners. The NYCT created Community Funds, Inc. (CFI) which sits next to the Trust form and operated in dual form. For many years, the Trust form was where the largest contributions went. Community Funds took smaller funds and odd assets and became the vehicle of choice for donor-advised funds. The first donor-advised fund was created at the NYCT in 1931 but they didn’t become popular until after 1969 Tax Reform Act, which made the burdens on private foundations much more difficult. Donor-advised funds were considered “the poor man’s version of a private foundation.” LICF is a division of CFI, and therefore is unburdened by trust issues. For years, the NYCT was significantly larger than CFI. Presently the NYCT has assets of approximately $2.9 billion, and CFI is much larger. In 1992, Fidelity received an IRS ruling making them a public charity, creating Fidelity Charitable Gifts Fund. VanGuard, Schwab, Morgan and many other financial institutions quickly followed suit. Today, Fidelity is the largest public charity in the county. The main difference between 1914 and now is that the banks no longer have the connection to the community they once did. The commercial entities have created some adversaries: the Legislature, who doesn’t view them as true charitable organizations, the IRS, and the Treasury. There also is a perception that the donor-advised fund is a barrier to fund-seeking charities because donor-advised funds (particularly in commercial entities) give an immediate charitable deduction and have no obligation to pay out. (Note: The NYCT payout is 15%, three times larger than a private foundation). Fidelity has 40,000 gift accounts; and as such, how well can they possibly know their customers. NYCT processes 12,000 donor requests each year, ranging from $250 to $12 million. We spend a lot of time carefully reviewing the charities and still have experienced some issues - if someone wants to abuse donor-advised funds, they may find a way. In 2006 with the passage of the Pension Protection Act, a number of restrictions were put in place on donor-advised funds. Today’s players are less focused on the charity and charitable rules and more focused on client/financial relations maintenance. For example, Silicone Valley Community Foundation spread over the entire nation and grew to $13 billion in three years. They accepted any asset and had a lack of control over donors, basically allowing donors to do whatever they wanted. They are currently under fire.There’s a huge push to commoditize donor-advised funds. Donors may be driven to commercial gift funds because of convenience, price, marketing, name recognition, etc. which will challenge the newer model of community foundations. The NYCT reviewed the current model and decided to focus on donors we have, and we continue to be appealing to donors when it comes to place – knowing that we care about the community and represent the better part of charitable giving. Our issues will ultimately be about fees and rules about portability. There are many issues around donor-advised funds and how they will operate in the future. There are two proposals currently on the table regarding payout: apply the private foundation payout rules of 5%, and donor-advised funds should never be allowed to last in perpetuity.Lorie then answered a few questions from some of the advisors, and the agenda was continued.PROGRAM STAFF UPDATESFifty-nine (59) grant proposals totaling $1.3 million in requests were received for this grant cycle. Of that total, the LICF received 51 proposals requesting $1.1 million, and the LIUU received eight (8) proposals requesting $200,000. The Catchafire, Inc. proposal was presented for renewal under Technical Assistance. Catchafire is a national network of professional volunteers that offers assistance to nonprofit organizations. Subscribers post their desired projects and are matched with potential volunteers. Last year, LICF offered Catchafire subscriptions to 75 select grantees. We had very positive results, with more than half participating and completing multiple projects such as website design, marketing materials, board development and strategic planning. Their introductory fee was $17,500 for the one-year program. The renewal fee is $25,000 and will cover 75 organizations. A motion was made to fund this program, and it was approved unanimously. Sol gave a brief update on the 2020 Census. Tonya spoke about the Long Island Credit Profile report to be released by the Federal Reserve Bank of New York in the next few days. There is a meeting scheduled to discuss what the data means to Long Island, as well as how stakeholders can use the data to fight for equity on Long Island.DEVELOPMENT, MARKETING & COMMUNICATION UPDATESGreg offered to host a social media training at his facility to teach advisors about Facebook, Twitter, Instagram, etc.Marie is editing the list of private foundations and will distribute to board members for review.Marie and Dave have several lunch-and-learn presentations scheduled for June.Marie will follow up with Zwanger-Pesiri, who she met with at the LI Business Expo. They expressed interested in opening a corporate fund.Three new advertising brochures were distributed in the meeting packets. EGC is working on the prints ads.NYCT’s newly-designed website was presented. LICF will be working with them to update our site. Much of the language and coding is available to be copied over and personalized and will save us both time and money. NYCT (Dave Marcus) provided support with our last newsletter, and it was very well received.The NYCT Annual Report were also included in the meeting packets. LICF has been meaningfully integrated and highlighted.The meeting was adjourned at 10:25 a.m. ................
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