Minutes of 1-22-2013

The Excelsior Rotary Foundation Board of Trustees Meeting of January 22, 2013 at Bay View Event Center

The Meeting was Called to Order (1.0) by Chair Don Draayer at 1:10PM at Bay View Event Center on Tuesday, January 22, 2013.  In attendance were trustees Don Draayer (Chair), Dean Friesen (Acting Treasurer), Trustees Dave Peterka, Terry Roeser and Steve Frazier (Secretary).   

Action on Minutes (2.0) was discussed and Dave Peterka moved and was seconded by Terry Roeser to accept the minutes of November 27, 2012 as written and the motion was accepted unanimously.”

The Treasurer’s Report (3.0)   The Treasurer’s Report included an Investment Fund update with Foundation Investment Advisor Ann Wengronowitz (3.1) and financial updates from Acting Treasurer Dean Friesen (3.2).

Ann Wengronowitz (3.1.1-3.1.5 discussed simultaneously) distributed two handouts for the fund update.  The Spectrum Account Recommendation for the Excelsior Rotary Foundation showed the value of the account as of 1/18/2013 to be $81,024 (i.e., Current Market Value of $81,766.24 minus Interest Distribution equals $81,023.88).  The Trustees reviewed the investment program (3.1.1) with current value allocations and recommended portfolio adjustments as follows: 

          Fixed Income of $35,457 (43.8%) in Current Funds to $37,271 (46%) recommended

            Equity Funds of $26,322 (32.5%) in Current Funds to $25,117 (31.0%) recommended

            Tactical Funds of $16, 468 (20.3%) in Current Funds to $16, 205 (20.0%) recommended

            Cash of $2,777 (3.4%) in Current Funds to $2,431 (3.0%) recommended

Ann then distributed and reviewed the Brokerage Account Statement that covers the period from July 1, 2012 to December 31, 2012 Valuation at a Glance (3.1.2):    

An in depth discussion relating to the deduction of Fees (3.1.3-3.1.4) and Capital Gains (3.1.2) was brought-up by Chair Draayer as the method of fee deductions was in slight variance with the Foundations Investment Policy #3 and if or where Capital gains were deducted.  Ann recommended that the fees are generally deducted as shown in the Valuation At A Glance table above.  Acting Treasurer Dean Friesen clarified our policy and concurred with the fees being taken out prior to the distribution and not including the Capital Gains distribution.  Consensus was reached and Secretary Steve Frazier moved and was Seconded by Dave Peterka that the fees for the account shall be deducted from the net amount of the dividends, interest and other incomes prior to the split (50% to be reinvested in the Foundations Investment Fund and 50% available for Grants requests) and not to included include the Capital Gains Distribution. 

In discussion of the motion Acting Treasurer Dean Friesen estimated that the split would be about $515.00 for reinvestment and $515 for monies available for grants in 2013.  At this time Chair Draayer volunteered to update Investment Policy #3 to reflect the changes brought about by the above motion to be discussed and voted upon at the Foundation Meeting on Tuesday, March 26, 2013 at 1:00 at Bay View.  There being no further discussion of the motion Chair Draayer called for a vote and the motion passed unanimously.

Final discussion with Investment Counselor Wengronowitz centered on getting the split net increase earnings into the investment account and a check to be deposited into the Foundation’s General Fund for projects, grants and program requests to the Foundation.  The decreasing bond market also prompted Acting Treasurer Dean Friesen to ask about the duration of the Foundations bond allocations and Ann indicated that they were 3 to 5 years.  Ann also indicated that the overall growth performance of the Foundation earnings on the account were just above 9% and that our current investment plan appears to be working well for the Foundation.  Ann concluded her report by indication that the next distribution report will be out in July.  The Foundation thanked Ann for her exemplary work and learned that Ann will be bringing on a new assistant to replace Emily Nelson.

Although not part of the Meeting Minutes of 1-22-13 here is a post-meeting draft of amendments to incorporate the above motion into amend Policy #3 p. 4 -1.3.5 as drafted by Chair Draayer that will be acted upon at the March 26^th Meeting of the Foundation:

Lee Paris Unrestricted Endowment Fund:  Donated dollars for unrestricted charity purposes are placed into this fund, held in perpetuity, and invested long term through a professional financial advisor.  (The Lee Paris bequest of $75,000 was the first donation to this fund.)

Changes in portfolio value come from two sources: a) capital gains or losses resulting from marketplace investments of portfolio assets and b) earnings paid out as dividends, interest, and other income.

Investment fees will be charged against earnings paid out as dividends, interest, and other income.   They will not be paid out of capital gains/losses. 

Following subtraction of investment fees from dividends, interest, and other income, fifty percent (50%) of what remains from dividend, interest, and other income earnings investment earnings are is to be reinvested within portfolio assets to counter the impact of inflation on the value of the original donation and to grow the asset base and the other fifty percent (50%) of investment earnings are is to be transferred to an Unrestricted Endowment Earnings/Expenditure Endowment Fund for charity giving that will be held in a local bank until proposals are received and approved for expenditure.

The Treasurers Report (3.2) continued with Acting Treasurer Dean Friesen’s updating the Fund Analysis.  Dean’s overview included a review of the historical expenditures of each President starting with Karen Frazier (2007-8) through Tom Anderson’s administration (2010-11).  Then on P.2 line 52 the Litfin’s Administration started with $15,250.00 and with the grants granted today (including the Chimbote Grant) a balance of $906.74 (Line 61) remains in his fund.  The Molly Swenson’s Administration Fund has $17,700 and possibly more if there is a carry-over form the Litfin Fund.

Next and continuing the Treasurer’s Report (3.3) the trustees deliberated and took action on requests from the Rotary Club Board of Directors for Charity Expenditures (3.3):

          Request of $2,000 for the ECFE Grant Project (3.3.1) from the Annual Fund to make a covering on the Play Lot at the ECFE location was supported by a packet of information outlining the expenditures, payee of the funds and total description of the project.  Also noted was the desire to recognize the expenditure on the facility and to have a dedication of the improvement and associated PR to include the Rotary Club of Excelsior as one of the benefactors.  Don Draayer made the motion and was seconded by Steve Frazier to fully fund the grant request of $2,000 for the ECFE Project and the motion carried unanimously. 

          Request of $2,000 for the Chimbote Project (3.3.2) from the Annual Fund was requested by Jerry Brecke.  No documentation for the request was submitted.  The Trustees were aware that the Chimbote Hearing Aid Project was being conducted with Starkey Hearing Labs and that the intent of the project is to train local Chimboteans how to make ear casting for Chimboteans needing hearing devices.  However the request did not delineate who the funds were to be paid to or how the grant was to be used and without a recipient or receipts, allocations for the project would not meet the IRS standard for charitable contributions.  To this end Steve Frazier moved to defer the request and was seconded by Dave Peterka that Chair Draayer draft a letter/email to Jerry Brecke indicating to Jerry Brecke the Foundation favors the grant but needs the necessary documentation to fully process the grant request.  The motion carried unanimously.

          Request of $2,000 for the Camp Tanadoona Project (3.3.3) from the Annual Fund was made by Marnie Wells and she provided the Trustees with full documentation of the Savanna Restoration Project through Camp Tanadoona and the Camp Fire U.S.A organization.  Terry Roeser made the motion and was seconded by Dave Peterka to full fund the $2,000 request for Camp Tanadoona’ s Savanna Improvement Project and the motion carried unanimously.

          Dean Friesen handled the next technical money in and money out request (3.3.4) explaining that a check was received by the Foundation (a nonprofit donation) to be paid to Jerry Brecke for expenses he will occur (such as travel and other expenses) while conducting the training sessions in Chimbote.  Chair Don moved and Steve Frazier seconded the motion to remit a check for $250 to Jerry Brecke from the Foundation for personal expenses related to the Chimbote Charity Project and the motion carried unanimously.

The final piece of the Treasurer’s Report for 2012 (3.5) was handled by Acting Treasurer Dean Friesen and included the update of the FUND ANALYSIS SHEET, including ANNUAL FUND, GENERAL FUND and the updated ENDOWMENT FUND report.  First the Trustees reviewed the General Fund Report (p.5 Lines 70-98) and the question of how to best compensate Trustees for expenses paid in the normal conduction of Foundation business including filing costs to the IRS and Attorney Generals, Secretary of State, postage, printing paper, ink, envelopes and etc. 

Dean Friesen shared that during his many years as Club Treasurer and Foundation Treasurer he did submit annual requests to the Foundation for expenses related Foundation IRS filings and MN Attorney General Filings, but that he did not submit reimbursement requests for other miscellaneous Foundation expenses such as postage, printing paper, ink, and envelopes.  (Beacon Bank absorbed these costs.) Don Draayer added that Foundation Policy #3, l.l.l and 1.1.2  authorizes Trustees to transfer sufficient money from the ANNUAL FUNDS (Presidential Funds of current president) to cover such payments and also to record such payments in the FOUNDATION GENERAL FUND under Foundational Operational Expenses. 

Don Draayer said that when Jim Olds became treasurer, Jim pointed out to him and other trustees that he would be submitting requests for his personal out-of-pocket expenses for Foundation business and that his estimate for 2012-13 was $500.00.  Board members on 11-27-2012 acted to escrow up to $500 for such expenses (i.e., place a hold on $500 from Tim Litfin’s Presidential Fund under ANNUAL FUND) with actual payments being based upon receipts and records provided by Jim Olds and approval by Trustees. 

Interim Treasurer Dean Friesen said Jim Olds has not submitted such accounting as yet, that Jim (in this time of illness) turned over to him a folder of his out-of-pocket treasurer bills (a mixture of Club and Foundation expenses and receipts) that Jim had incurred, that, in Dean’s estimation, most expenses Jim incurred would rightfully fall to the Rotary Club, not the Foundation, and that he (Dean) would attempt to determine what the Foundation portion of Jim’s expenses would be, and that he would present such a bill to Trustees for payment to Jim Olds at the next Board meeting.  He further pointed out that his Interim Treasurer role would absolutely end in March, 2013.

The final portion of the Treasurer’s Report (3.5) was the status of the Endowment Fund (p.5) and that the Lee Paris Undesignated Forever Endowment Fund now has $79,711.93.  The Lee Paris Fund Earnings/Expenditures currently is up to date and has $5,729.25.  A third of the $5,729.23 is also available to the Litfin Presidency ($1,720.49) for grants and projects submitted to the Foundation.  It was moved by Dave Peterka and seconded by Terry Roeser to accept the Treasurer’s Report and the motion passed unanimously.

Old Business (4.0) consisted of a progress report by Secretary Steve Frazier on the Posting of Foundation Minutes and other important Foundation Documents of the Excelsior Rotary Website.  Steve noted that the Foundation Minutes for 2012-13 have been posted on the website Home Page under the Foundation Heading on the top banner and available to anyone that visits the site.   All the other documents that are important permanent records of the Foundation are found in the Club Documents Section of the Website and available only to members using the log-in and password to gain access to the members’ information section of the website.  Chair Draayer asked if the minutes of all the years of the Foundation could be posted and Frazier affirmed that they could.  Don offered to send all the minutes to Steve and that they then are filed by Rotary year designation.  The Trustees also discussed the desirability of having the Foundation’s Policies be recorded as separate policies, which, indeed, they are so that as the policies are amended it would be easier to amend that one policy rather than print out all policies as though they were one unit.  Steve will work with Don to get this done for the March 26^th meeting.

New Business (5.0) consisted of the first reading of two new policies relating to Policy #6 of Conflict of Interest (5.1) and Policy #7 on Record Management, Storage and Accessibility.  Chair Draayer noted that he used the Best Practices Guide for Non-Profits in composing the drafts for the two proposed policies and to do our due diligence to meet IRS scrutiny and transparency to our own members. 

Policy #6: Conflict of Interest/Duality of Interest was reviewed by the Trustees.  In the discussion of the proposed policy the Trustees discussed the various conflicts and acknowledge that some current minor conflicts do exist such as Secretary Steve Frazier serving on the Foundation and on the Club board of Directors which would also be true of the Treasurer that is Treasurer of both bodies.  However Chair Draayer pointed out that the act of having a conflict of interest and disclosing it on Disclosure of Conflict of Interest Form does not automatically constitute a conflict of interest in-and-of itself because the conflict of interest has to be determined by the Foundation Board of Trustees.  Upon completing the discussion and various clarifications Dave Peterka moved and Terry Roeser seconded the motion to accept the Policy #6: Conflict of Interest/Duality of Interest and the vote was unanimous. Chair Draayer requested that each Trustee fill-out and sign the Conflict of Interest Disclosure and send it to him by mail or email.

Policy #7: Records Maintained, Storage, Accessibility, Retention was then taken up by the Trustees.  The Trustees discussed the need for proper maintenance and storage of Foundation Documents.  Secretary Frazier commented on two areas of concern: one being the scope of documentation required to be stored and the other being section 8.0 Compliance that improper compliance could result in civil and criminal sanctions against the Foundation and its employees and possible disciplinary action.  Dave Peterka agreed with Frazier’s concerns and suggested that the proposed Policy #7 be sent to Gary Thompson the Legal Advisor to the Foundation for his review and suggestions.  There was consensus on that suggestion and Chair Draayer volunteered to contact Gary Thompson to get his legal advice and the matter will be brought back at the March 26^th meeting for discussion, amendments and passage.

Two additional topics came up for discussion that was not on the Agenda.  First was a discussion of the Foundation Board Terms and upcoming nomination by the Club President and vote of the membership.  Terms of office are two year and the board is so designed as to stagger terms in A&B seats and C&D Seats and Seat E is the treasurer making up the five- member Board of Trustees.  Seats A&B are Don Draayer and Steve Frazier.  Don said that he is willing to continue on the Foundation Board, if so appointed by Rotary Club action.  The seat now held by Secretary Steve Frazier will be vacated as he will become the President Elect of the Club Board of Directors and does not want to be in conflict with the Conflict of Interest Policy just adopted by the Trustees.  Seats C&D now filled by Terry Roeser and Dave Peterka are in the first year of their terms and will remain on the Foundation for the 2013-14 Rotary year and Seat E is to be filled by the Treasurer.

The final item for discussion was a round table discussion of the dual Treasurer position of the Club and the Foundation brought forth by Secretary Frazier.  Frazier posed the question “Is it better to have a dual treasurer or should each body have their own Treasurer?  The rational for the question was the heavy load that is now on the Treasurer and the difficulty of appointing a new Treasurer.  Acting Treasurer Dean Friesen felt that it could work either way but ideally it would be better to have just one person doing it.  Don said he had toyed with the idea submitting his name as a candidate for Foundation Treasurer, but thinks the best plan is to have one treasurer for both organizations. Terry Roeser and Dave Peterka both felt that it is better to have one person doing it and that the Treasurer position adds unification and continuity between the two separate boards. 

Chairman Draayer thanked everyone for their involvement and excellent discussion at the meeting.  There being no further business Adjournment (6.0) was called for and adjournment occurred by unanimous consensus at 2:34pm.

The next meeting of the Foundation Board of Trustees is Tuesday, March 26, 2013 at 1:00pm at the Bay View Event Center.