Cultural Information Meeting Presentation

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 Slide 1- INFORMATIONAL MEETING: Erie County Cultural Funding

January 27, 2016

Slide 2- Contents

  • 2016 Contracts
  • Overview of EACAB Charge/Mission
  • Positive Trends
  • Cautionary Trends
  • Foreshadowing 2017 Cultural Funding
  • Comments/Questions 


Slide 3- 2016 Contracts

  • Will be mailed by end of February 2016 


Slide 4- Overview: EACAB Charge & Mission

Erie Arts & Cultural Advisory Board (EACAB)

  • Does NOT evaluate your art or programs
  • Reviews your ORGANIZATION in:
    • Management/Planning
    • Fiscal Health
    • Community Impact
    • Alignment of programming with mission
    • Governance

Slide 5- Feedback Provided & Encouraged
  • Letters to applicants (personal & individual)
  • Public meeting (overview & examples)
  • Improvements to application (your comments to the County)
  • Communication - seek continuous improvement 

Slide 6- Feedback Letters
  • Letters were sent to organizations who applied for 2016 Erie County Cultural Funding
  • Exemplary Items / Issues & Concerns
    • No Response Required
    • Purpose:
      • Feedback offered to organizations
      • May help improve future applications to any source
      • To provide continuity for future EACAB reviews of applications 

Slide 7- Purpose of Review Process
  • Extra care for public funds
  • Understand return on public investment
  • Investigate Fiscal Stability of applicant
  • Avoid problematic publicity
  • Provide External Governance Audit
  • Ensure serious future planning 

Slide 8- Review Process – Budget Size
  • Organizations are sorted by budget size
  • Strengths & challenges are more comparable in a financial peer group
  • Complexities of multi-million dollar budgets
  • Special issues for large collecting organizations
  • Allows appropriate understanding of the limitations of smallest organizations 


Slide 9- Review Process - Volunteers

  • EACAB is a Volunteer Community Board
  • Support from Environment & Planning staff
  • 4 Committees
  • Committee assigned 14 – 18 applications
  • Chair for each Committee
  • Lead Reviewer & 2 Readers for an application
  • Written report for every application using standardized evaluation form
  • Evaluation Form follows questions on application 

Slide 10- Review Process - Time
  • Approximately 10 hours to completely review & understand 1 application, complete evaluation
  • Volunteers & County staff review many applications per person
  • Committees meet to discuss findings 

Slide 11- Review Process - Talent
  • Volunteer Board with balanced mix of skills:
    • Financial
    • Legal
    • Management
    • Education
    • Media/public relations
    • Arts advocacy
    • Fund raising
    • Data analytics 


Slide 12- Overview: 2016 

  • 68 total applications
  • 2 new applicants
  • 4 not recommended for funding
  • 1 application disqualified:
    • weeks late
    • incomplete information
  • Net total of 63 organizations
  • Total = $5.83 million 


Slide 13- Additions 1

  • Legislature added 9 more organizations to 2016 Budget
  • In category of Public Benefit Funding
  • Grants range from $2,500 - $6,000
  • Not reviewed by EACAB
  • Total = $36,000 

Slide 14- Additions 2
  • Legislature added funds to proposed budget for Art & Culture
  • 8 organizations received increases
  • Total additions = $32,000 

Slide 15- Overview of Applicants
  • Organizational Operating Budget range: $7,000 to $15.6 million
  • Staffing Range:
    • many led by all volunteers
    • Largest with dozens of employees 

Slide 16- Overview, cont’d:
  • Some exciting, young organizations
  • Some refreshed energy from well-established
  • Some truly thoughtful strategic plans
  • Some serious organizational challenges
  • Governance continues to be an under-performing area in the sector
  • Evaluation continues to be misunderstood or not utilized 

Slide 17- Overview: By Budget Size (modest)
  • Budget < $50,000 = 11 organizations
  • Budget < $100,000 = 19 organizations (includes the 11 above)
  • About 1/3 of applicant pool
  • *****************************
  • $100,000 - $200,000 = 8 organizations
  • $200,000 - $500,000 = 13 organizations
  • 40 organizations or 2/3 of applicant pool have operating budgets under $500,000 

Slide 18- Overview: By Budget Size (substantial)
  • $500,000 - $750,000 = 9 organizations
  • $750,000 - $1 million = 4
  • $3.5 million - $7.6 million = 4
  • $11.5 million - $15.6 million = 2
  • ******************************
  • 23 organizational budgets > $500,000
  • Budget > $1 million = 10 organizations 

Slide 19- Which data is useful?
  • In 63 applications:
    • Median = $300,000
    • Mean or average = $1,168,264 (not useful)

Slide 20- Overview -  63 Final Reviews
  • 12 Theaters
  • 8 Orchestras, Bands, Music Groups
  • 9 Museums & Big Collections
  • 9 Smaller Museums & Galleries
  • 5 House Museums
  • 5 Choirs or Choruses
  • 2 Dance Groups
  • 11 Other 

Slide 21- Overview -  63 Final Reviews
  • 2 recommended for decreased funding
  • 8 recommended for an increase
  • 14 recommended for a substantial increase
  • In other words 35% were recommended for an increase 
 

Slide 22- Positive Trends
  • The amount of money going into the sector from various sources is impressive!
    • $5.83 million from Erie County/part of the $60 million total operating revenue of applicants
    • About a 10% investment by Erie County 

Slide 23- Positive Trends
  • Fresh leadership at many organizations
  • Robust programming continues
  • Some exceptional strategic plans
  • National Accreditations earned
  • Good use of working boards and volunteers to advance the mission of smaller organizations

Slide 24- Positive Trends, cont'd.
  • Increased programmatic & operational partnerships
  • Tourism connections & potential
  • Increasing national & international media attention on sector
  • Rich variety of mission & activity
  • Anticipated investments in physical places, care of collections, exhibits, increasing staff, etc.

Slide 25- Cautionary Trends
  • Governance concerns
  • Compliance with NYS Non-profit Revitalization Act
  • Financial concerns
  • Not completing application
  • Sloppiness 

Slide 26- Cautionary Trends: Focus on Governance – Board Evaluations
  • “… describe if and how your governing board performs an annual self-evaluation.”
  • Question above taken directly from application last 2 years. 

Slide 27- Focus on Governance: (old data) Board Self-Evaluation Update
  • January 2014 we reported 20+ organizations did not answer question about board self-evaluation
  • January 2015 – only 1 did not answer
  • Example: Darwin Martin House asked CEPA & Just Buffalo to advise them
  • 26 organizations now describe a process for board self-evaluation
  • More than 30 organizations are still confused

Slide 28- Focus on Governance: Board Self-Evaluation
  • Confusion about Board self-evaluation, program evaluation, and strategic plan evaluation
  • These are separate and distinct areas of evaluation
  • ASI held trainings in 2015
  • ASI will hold more training in 2016

Slide 29- Focus on Governance: (old data) Board Self-Evaluation
  • Excellence 4: response & process described
    • CEPA
    • Explore & More
    • Just Buffalo
    • Squeaky Wheel 

Slide 30- Cautionary Trends: Focus on Governance – Board Evaluations
  • Suggested Sources for Evaluation Tools:
    • Graycliff – McKinsey Model for non-profits
    • Just Buffalo – Board Source “10 Basic Responsibilities for Board Members”
    • BP Chorus & Orchard Park Chorale - Chorus America Model
    • Roycroft – NYCON Model
    • Torn Space – National Center of Nonprofits Model 

Slide 31- Focus on Governance: Board List, Terms & Terms of Officers
  • How many applicants? 63
  • Application requires:
    • “List of all current board members & officers as of June 1, 2015.
    • For each member indicate term, length of service & if board member is independent.”
    • For each officer, indicate length of their term in that position.” 

Slide 32- Focus on Governance: Board List, Terms & Terms of Officers
  • 29 applicants answered the question about the term served by current officers
  • (35 did not answer)

Slide 33- Governance Concern: Board Leadership
  • Questionable independence of governing boards – 15 organizations did not answer
  • See 2014 NYS Non-profit Revitalization Act
  • Bylaws in effect? Is applicant in compliance with their own document?
    • Bylaws not dated or have not been updated
    • Number of trustees
    • Membership corporations - confusion 

Slide 34- Governance Concern: Board Leadership
  • Gender diversity on boards
    • Erie County is 48% Male, 52% Female (2010 US Census)
    • Review uses a broad 60/40 range as benchmark 

Slide 35- Governance Concern: Board Leadership
Gender diversity on boards , cont’d.
  • 929 total trustees in 2015 data (930 in 2014):
    • 2015 = 376 female – 40%
    • 2014 = 405 female – 43.54%
    • Approximate 10% decline is troubling
  • Largest organizations by budget size have least gender balance on governing boards

Slide 36- Gender Balance: Smallest
  • 28 organizations receiving Erie County grants of $1,000 - $10,000
  • 13 outside 40%/60% range
  • 50% need work

Slide 37- Gender Balance: Middle #1
  • 13 organizations receive Erie County grants of $10,000 - $25,000
  • 5 outside 40%/60% range
  • 38% need work

Slide 38- Gender Balance: Middle #2
  • 16 organizations receiving Erie County grants of $30,000 - $95,000
  • 2 outside 40%/60% range
  • 12.5% need work

Slide 39- Gender Balance: Largest
  • 8 organizations receiving Erie County grants of $100,000 - $1.5 million
  • 5 outside 40%/60% range
  • 62% need work

Slide 40- Gender Balance: Largest
  • Female Board Members as part of Total Trustees on Boards of 5 largest organizations (outside the 60/40 range)
    • 5 of 22 (23%)
    • 6 of 25 (24%)
    • 10 of 33 (22%)
    • 8 of 25 (32%)
    • 6 of 17 (35%)

Slide 41- Governance Concern: Board Leadership
  • Board Contributions
    • Topic: Board members as donors
    • Underreported?
    • Not tracked?
    • Organizations do not receive financial support from their leaders/board? 

Slide 42- Cautionary Trend: Changes in staff leadership
  • Massive exodus of nonprofit leaders nationally
  • Local community examples:
    • Sister Denise/D’Youville College
    • Sister Carney/St. Bonaventure
    • Tony Conte/Shea’s
    • Barbara Carr/SPCA
    • Jax DeLuca/Squeaky Wheel 

Slide 43- Do you have a succession plan? Volunteer Leadership – see Chair-elect
Slide43Image

Slide 44- Cautionary Trends: Focus on Finance
  • Increasing estimates of support from NYS – is this realistic?
  • County funding requests above 30% of organization’s most recent expense budget (over reliance on one source of funding)
  • Federal funding for NEA has been at risk – seeing expected grants in applicant budgets is a concern
  • Multi-year operational deficits
  • Forecasting – overly optimistic?
  • Cash flow forecast vs. statement (confusion persists)
  • 990s – compliance problems with 2008 IRS changes 

Slide 45- Cautionary Trends: Focus on Finance
  • Erie County is a significant donor
  • Largest donor for the organization
  • Insignificant or lack of acknowledgement, recognition of Erie County’s support.
    • 2014, 2015 & 2016 application states: 
Slide45Pic-RecognitionforCountyGrants

Slide 46- Recognition of Erie County Grant
  • Required
  • This is the creative & innovation sector
  • No formula for “how” or “what” to do
  • If your organization must be instructed on how to recognize a significant donor – or your most significant - it raises many more questions about how you treat your other supporters & the sustainability of your organization

Slide 47- Cautionary Trends: Incomplete Applications
  • Absence of required, supporting documents
  • 1 year of financial data is not enough
  • 3 years of financials is optimal
  • Ignoring or incomplete essay questions
  • Blanks in the application

Slide 48- Answer the question: Real Examples of missed answers
  • Question: Describe if & how board evaluation is conducted.
    • “we have non-board members as bookkeepers”
    • “board has the ability to perform a SWOT analysis”
    • “reports made at quarterly meetings on progress of preservation, …fund raising, …research, outreach…” 

Slide 49- Missing Answers: blanks for 3 totals - operating revenues, expenses & employees
Slide49Pic-BlanksForTotals-AnswersMissing

Slide 50- Do Answers Make Sense? You can not have term limits & unlimited number of terms
Slide50Pic-DoAnswersMakeSense

Slide 51- Missing Answers: Compensation
  • TOTAL compensation for top 5 staff
  • 21 organizations did not complete 

Slide 52- Missing Answers: Consultants
  • Top 5 consultants
  • 23 organizations did not complete

Slide 53- Missing Answers: Board Member Independence
  • Critical governance question
  • 15 organizations did not complete
  • Boards MUST know definition
  • Remember – legal definition is lowest level; seek best practices
  • Protect your organization’s reputation 

Slide 54- Accumulated Operating Surplus or Deficit ….. What is it?
Slide54Pic-SurplusOrDeficitYesNoAndAmount

Slide 55- 33 Applicants had problems with this question
  • 17 organizations reported accumulated operating deficits
    • Lowest ($1,500)
    • Highest ($2,488,418)
  • 9 did NOT answer the question
  • 7 answers without a number

Slide 56- Sloppiness
  • Include best/current attachments
    • “Susan Smith”, trustee of ABC Arts, was listed as “Susan Graycliff” because she works at Graycliff (adapted to protect the innocent board member)
    • Submitted previous version of by-laws, 10 years old
    • Think ahead, prepare now
    • Update documents routinely
    • Date all governance documents & policies 

Slide 57- Help & Assistance
  • Applicant briefing will be held in May
  • Arts Services Initiative (ASI)
    • Offers training & programs on financial & technical matters, governance, and basic strategic planning
  • Application can not be undertaken at last minute

Slide 58- Cautionary Trends: Focus on Governance
  • What does good governance look like?
  • It is every board member’s job to know

Slide 59- NYS Nonprofit Revitalization Act
  • Effective July 1, 2014
  • 3 Amendments added December 2015

Slide 60- Mandatory Conflict of Interest Policy
  • Required for ALL nonprofits & trusts
  • Disclosure Statements
    • Must cover directors/trustees, officers & key employees
    • Collect Prior to initial election of any director/trustee
    • Complete, sign & date every year
  • Minutes reflect issues of conflict for certain people & their non-participation in discussions & votes 

Slide 61- Mandatory Conflict of Interest Policy
  • 5 steps
    • Policy adopted & dated by board, maintained in board policy manual; reviewed periodically
    • Policy & disclosure form distributed
    • Signed, completed & dated forms collected
    • Collected forms evaluated
    • Process of upholding policy recorded annually 

Slide 62- Red Flags in Applications

Slide 63- Is the Policy enforced? Real example of reported declaration form collection enforcement (not answered on application)
Slide63Pic-IsThePolicyEnforced


Slide 64- Suspicious Date of Policy Adoption (adopted 1 day prior to application deadline)
Slide64Pic-SuspiciousDate

Slide 65- Oh… just copy any policy (applicant used a NYC Local Development Corp’s policy)
Slide65Pic-AnyPolicy

Slide 66- Independent Board Members –   no answer
Slide66Pic-NoAnswer

Slide 67- Independence – link to definition provided on application
Slide67Pic-DefinitionInApplication

Slide 68- Does the information make sense?  If bylaws predate 2014 organization probably NOT in compliance with 2014 NYS law.
Slide68Pic-NotIfOlderThan2014


Slide 69- Nonprofit Revitalization Act, cont’d
  • Mandatory Whistleblower Policy
    • Limitations in law = lowest standard
    • Erie County looks for best practice for organizations of all sizes
 
Slide 70- Nonprofit Revitalization Act, cont’d
  • No employee may serve as Board Chair
  • New definition of independent director & trustee
    • Not an employee in past 3 yrs.
    • Not a relative of a key employee of past 3 yrs.
    • Not received $10,000 or more in direct compensation
    • Not a current employee or having a substantial financial interest
 
Slide 71- Application - Past Process Changes: for 2016 Cultural Funding
  • All electronic application process continued
  • Cultural Data Project – dropped
  • New Budget Pages – labeling problems
  • 2017 Budget Pages – requesting volunteers to help improve the application by March 31st, 2016
 
Slide 72- Labeling: example – tours are a form of admission
Slide72Pic-ClarifyingLabels


Slide 73- 2017 Application

Slide 74- Foreshadowing: Essay Questions
  • Would be very close to prior applications
  • Use questions to your benefit
  • “Describe your biggest challenges and how you plan to address them.”
  • “Please describe if and how your governing board performs an annual self-evaluation.”
 
Slide 75- Foreshadowing: 2017 Cultural Funding
  • Shifts in scope of EACAB
    • In past years, recommended fund/not fund;
    • 2014, 2015 & 2016 process, EACAB has also recommended consistent/increased/investment increase or decreased funding.
    • The administration has favored sharing constructive feedback with applicants.
      • Feedback letters contained comments on exemplary qualities/accomplishments as well as items of concern to help guide future funding applications and reviews
 

Slide 76- Foreshadowing: 2017 Cultural Funding
  • Anticipated release of 2017 Cultural Funding application in early May 2016
  • Orientation will be held to highlight changes & answer questions
 

Slide 77- Foreshadowing: 2017 Cultural Funding
  • 2017 process will again include multiple channels of communication:
    • Email/mail notifications
    • Website announcements
    • Facebook & Twitter blasts
    • ASI notifications
  • Same information is provided to all Erie County legislator
 
Slide 78- Questions & Comments
 






 

 

 

 




Last updated: March 9, 2016 4:37pm