Minutes of Special Meeting 10-30-12

The Excelsior Rotary Foundation Board of Trustees Meeting of October 30, 2012 at Bayview Event Center

The Meeting was called to order by Chair Don Draayer at 1:08PM at the Bayview Event Center on Tuesday, October 30, 2012.  In attendance were trustees Don Draayer (Chair), Dave Peterka (Trustee), Terry Roeser(Trustee), Jim Olds (Treasurer), Tim Litfin (Club President), Gary Thompson (Policy and Law Advisor), Dick Glover (STRIVE Coordinator) and Steve Frazier (Secretary). (1.0)

Action on Minutes (2.0) was entertained.  The Minutes of September 25^th were amended by striking “$1,500 from each club” to say “portion of the original payment of $4,000 from each club that is not spent ($1,500).”  The amendment clarifies that $1,500 was returned to each club of the $4,000 that each club had originally funded for the feasibility study for the band shell. The amendment was moved by Dave Peterka and seconded by Jim Olds and passed unanimously. In anticipation of the changes Secretary Frazier distributed new minutes with the amended changes.

The notes from the special meeting of Wednesday, October 16^th which did not have a quorum were reviewed from notes taken by Chair Draayer (2.2).  The meeting had been called to discuss possible endowment language and how to handle the $10,000 donation by Steve Sherwood.  Terry Roeser moved and Jim Olds seconded to accept the Special Meeting notes. The notes were accepted by acclamation with the main thrust of the discussion suggesting that the funds be accepted and placed in a restricted education fund in the General Fund for education related grants. 

Action on the minutes of the Annual Report to the Excelsior Rotary Club on October 23, 2012 were reviewed and accepted by acclamation (2.3).

The Trustees then took up the Purpose(s) of the Special Meeting (3.0)  The Trustees discussed the $10,000 donation of Mr. Steve Sherwood, President of Alerus Mortgages, 11100 Wayzata boulevard, Suite 570, Minnetonka , Minnesota 55305.  Jim Olds moved and was seconded by Terry Roeser to accept the $10,000 donation (3.1).  Motion passed unanimously.

Next the Trustees discussed where to place the Sherwood donation funds as Dick Glover had indicated that the donor would like them to go towards education.  The trustees discussed the intent of the donation and Jim Olds moved and was seconded by Steve Frazier to establish the “Sherwood Restricted Education Fund” within the General Fund category to show a gift of $10,000 (3.2) which would be available for educational requests such as STRIVE Scholarships or other educational requests such as Costa Rica Scholarships. 

Policy and Law Advisor Gary Thompson asked rhetorically if the funds needed to be invested separately and recommended that they not be invested separately but rather they be put in the general fund with dividends going back to the Sherwood Restricted Education Fund.  The trustees clarified that the donation was not to the Endowment Fund but to the General Fund. 

Don Draayer noted that, by current Foundation Policy #3, interest earned by the bank for all Annual Funds and General Funds goes into an “Undesignated Interest Earned Fund” under the General Fund.  However, dividend and interest investment income from each Endowment Fund is divided 50/50, the first part being added to the principal of the endowment to help combat inflation and the other part turned over to a bank savings account for expenditures to achieve the purpose of the Endowment.

A sidebar discussion came-up about STRIVE expenses that are being born by the STRIVE Coordinator but which are eligible for reimbursement from either Annual Funds or General Funds.   Application for reimbursement comes at the initiative of the Strive Coordinator.   Having thoroughly discussed the motion the Trustees voted unanimously on the motion to establish the Sherwood Restricted Education Fund within the General Fund.

The third area of discussion of the special meeting was to take Testimony/Discussion/Action on the Area 12 Consortium Payment (3.3)   Chair Draayer led the Trustees through his background understandings (3.3.1and 3.3.2) of the four club’s (i.e., Excelsior, Mound, Plymouth and Wayzata) agreement in forming the consortium and that no requests for the yearly $2,000 have been requested in the last two years but those funds have been escrowed within the Foundations accounting system.  To clarify the dilemma Chair Draayer introduced the “Modified Fund Analysis Draft #2” that shows where the Area 12 funds were already expended and where the unused escrowed funds now reside in the Modified Fund Analysis sheet.  Specifically they reside on line #46 Haiti – Paid to District 5950 - $2,000; line #56 –Haiti Van Additional Contribution to 5950 of $458.00; line #123 – Rotary Area 12 Pledge of an additional $2,000 not paid yet in the General Fund; lines #158  – Rotary Area 12 Pledges (year 2 of 4 unpaid) ($2,000) and line #159 - Rotary Area 12 Pledges (year 3 of 4 unpaid) ($2,000) .

The trustees discussed several options (3.3.3) of dealing with the unused escrowed funds:  A) Continue to hold the funds in escrow until notified.  B) Send checks and a cover letter to the remaining three clubs to close the accounts.  C) Table any action on the $6,000 but have Tom Anderson “bird-dog” the plans for years 2, 3 & 4.  D) After considerable discussion Steve Frazier moved and Dave Peterka seconded the motion to have Chair Draayer draft a letter to the three current presidents of the consortium and Assistant Governor David Stein outlining the issue and requesting them to take action and that the Excelsior Rotary Foundation will hold the funds in escrow until the end of year four in 2014 and the motion passed unanimously.  Motion carried unanimously.

The fourth item on the action agenda (3.4) was to hear a proposal from President Tim Litfin request to use uncommitted funds during his administration 2012-13 for the purchase of shirts for each club member.  Litfin explained that every member having a garment to wear to club events would improve the identity of the club, foster ethnocentrism and a visible identity to people outside of the club.  Litfin indicated that he also has had a friend create a new logo for the club that modernizes the logo and improves the brand identity of the club.

Each Trustee and Policy/Law Advisor Thompson in-turn expressed their support for fostering club identity but that granting the expenditure of charitable funds from the Foundation would violate the 501(C)(3) status of the Foundation, would not be judged by the IRS as a charitable donation but rather a personal gain for members and historically the club had run into problems using Foundation funds for non-charitable purposes.  Several suggestions were made to fund the proposed project and/or the use of other club funds to accomplish the same end result.  Dave Peterka moved and was seconded by Terry Roeser to decline the request to fund the purchase of shirts for club members. The motion passed unanimously.   Post motion discussion centered on encouraging President Litfin to continue to pursue his club shirt goal and to find financing within the Club’s budget and that the Fund Analysis Sheet needs to reflect the absolute transparency of the Foundation in granting charitable requests.

The end of the agenda included two discussion items: (3.5 –renumbered) Discuss Policy #3 – Expansion of Rules Pertaining to Endowment Funds and (3.6 – renumbered) Draft #1 of “Annual Check List” for Foundation Operations.  The discussion on Policy #3 related to the advisability of creating a Restricted Endowment (forever) Fund and possible language for policy formation.  Trustees discussed the possible levels of threshold donations to establish a restricted forever fund and also of having a named restricted forever fund within the endowment fund category.  Frazier suggested $10,000 for the restricted and $25,000 to qualify for a named restricted endowment fund.  The trustees took the discussion under advisement and will work on language at the November 27^th regular meeting.

The final item of discussion was Draft #1 of “Annual Checklist” for foundation Operations.  Chair Draayer credited Gary Thompson for the idea of having a monthly flow sheet that outline the various actions that the Foundation needs to take during the year.  This is especially desirable to future operations as leadership changes on the Foundation and within the club.  The Trustees commended Chair Draayer for following through on Gary’s idea and decided to bring the checklist up at the November 27^th meeting for final review and action.

Chair Draayer thanked everyone for their participation in the Special Meeting and entertained a motion for adjournment (4.0).  Roeser moved and Olds seconded a motion for Adjournment until November 27, 2012 at 1:00PM at Mount Calvary Lutheran Church after the Kids Against Hunger Service Project.  The motion carried unanimously. 

Respectfully submitted by Steve Frazier, Excelsior Rotary Foundation Secretary