Using the process to solve a real problem.
|Background: Three years ago the South Burr Oak Cemetery Association was the beneficiary of some unexpected good fortune. We received an endowment of close to one million dollars. Concurrent with this our Association experienced an influx of talented board members who would prove vital in transitioning from an enterprise with assents of around ten thousand dollars to one of the unprecedented scale mentioned above. Suddenly we were catapulted from a small scale enterprise, that would not attract much IRS attention to an entity that needed the framework of full blown non profit organization with all with the legal and management structure this entailed. What had here-to-for been a fly by wire operation was transformed overnight into an enterprise of much larger scope . Our new board, as mentioned above, proved up to the task and the new members brought with them a broad range of financial background and life experience which included the public sector, science, fund management and high level military expertise. Our president was a retired medical doctor and researcher, our Sextant was a retired IT veteran, our corporate treasurer had a career in funds management and our tactical treasurer had retired from long service in the military. The immediate task at hand seemed self evident. This was to become a full blown non profit with all the bureaucratic structure and red tape this entailed. It took over two years but finally we became certified as a 501c3 non profit Association. It had been a daunting task and required a lot of hard work, attention to detail and focus on administrative procedures that required a huge learning curve and close work with professional advisors. As the process approached completion however, it became evident that our endowment had the potential for developing revenues far in excess of maintaining the cemetery to the high standards intended. Our guiding principle must remain that that upkeep and maintenance would be first and foremost our number one priority. Now it appeared that there would be some excess funds and the board began informally discussing what we might do with them. As this thinking began to mature we were surprised to discover that our status as a 501c3 restricted us from using revenues for any endeavor not directly related to the cemetery. It dawned on the board that perhaps the type of Non Profit we had become was not what we were really looking for. That if we had excess revenues being generated then we should have the latitude to spend them on the local community. This is the first question we need to decide and put to rest. This is where the Association presently finds itself. The first question to decide is do we have the right type of Non Profit and if we don't then where do we go from here? To explore the possibilities we have decided to use a formal problem solving process to insure we gave a proper consideration to all the possibilities. |
Problem Statement: Determine the best way for managing the windfall that has come to our Cemetery Association.
The Association received a bequest of sufficient scope to require a decision on how the monies should be best managed in the long term.
The association is currently being managed by a President, Sextant, and two co treasurers. Three of these are in their mid sixties. The youngest member is not interested in being left alone, in the long term, to manage the association as it is presently configured.
While the Association is currently capable of managing its short term operations, a long term, more simplified fiscal vehicle will be needed in the future to simplify the management process .
Our enterprise is guided by the principle of insuring the maintenance needs of the Cemetery Association.
The decision on which type of vehicle to adopt is a serious choice that merits the undertaking of a formal decision making process. The current board should show for the record that we considered, a broad range of discrete possibilities and did not enter into this decision without careful thought and deliberation.
The present board will not face unexpected attrition in the time period required to implement the chosen vehicle.
There will not be an economic disaster of sufficient scope to collapse the government and economy.
The adopted vehicle will be able to operate with a minimal staff in a worst case scenario.
Courses of Action:
1. Keep present system in place.
2. Adopt a Foundation Model
3. Adopt an Investment Firm Model
4. Manage funds in house by buying conservative financial instruments.
Advantages and Disadvantages
Keep the Present System. Under the present system we have a 501c3 which makes us a non profit . This was set up with the realization that the old system, adequate for managing a net worth of under 20K was not going to suffice for an enterprise worth many times that amount. It seemed self evident at the time that this was the way to proceed, however, with this accomplished there were restrictions imposed on the disbursement of funds. The disadvantages were that this did not provide a long term solution to the attrition dilemma and did not allow for excess funds to be used for community actions.
Adopt a Foundation Model. In this choice we would dissolve our current 501c3 and turn over management of our resources to a Community Foundation. They would invest the assets and in return provide a legal binding contract to subsidize the Association on an annual basis for maintenance. An association member would serve on the board and influence policy on the expenditure of Foundation revenues.
Hire an Investment Firm. In this course of action an investment firm such as Howard Jones would be hired to invest the financial resources of the Association. Profits would be used for maintenance and charity as the Association deemed appropriate.
Manage Funds In House: In this scheme the Cemetery Association would invest in conservative financial instruments such as CDs, Bonds and S&P 500 Companies and maintain a revenue generating portfolio which would be used for both cemetery maintenance and in the support of the community.