The Power of Endowment

With the help of Teena Belcik, President and CEO of the Boys and Girls Clubs of Oklahoma County, Dan explores the longterm benefits of endowment planning. We're also looking ahead to exciting grant opportunities, our annual check distributions to deserving nonprofits, and to the end of a turbulent fiscal year that has put our investment policies to the test. Learn how our nonprofits have successfully braced themselves against market turmoils and why they can rest assured that the Oklahoma City Community Foundation takes steadfast stewardship of their future. #ThePowerofEndowment

Sign up for our virtual nonprofit training series: occf.org/coetraining
More information about iFund Services for the Elderly grants: occf.org/ifunds/elderly.html
Scholarship applications opening October 1: occf.academicworks.com

Visit occf.org to learn more!

Transcript

Dan Martel: You're listening to Creating Impact Through Giving, a podcast brought to you by the Oklahoma City Community Foundation providing you with the stories, techniques and tools around impactful giving. On this show, we'll talk to donors, professional advisors, nonprofit leaders, and our team of experts to identify charitable strategies that have resulted in some of our most impactful gifts. 

Hello, I'm your host Dan Martel. Welcome back to the pod. We have quite a busy month here at the Community Foundation and here with us today to talk about all the exciting things that have happened are Nancy Anthony, president of the Community Foundation, and Rhonda Godwin, Vice President of Administration, and our expert on all things investment and money. Also stay tuned for our conversation with Tina Belcik, president and CEO of the Oklahoma Boys & Girls Clubs of Oklahoma County, who will talk about the challenges nonprofits are facing at the moment and how to overcome them by considering long-term solutions like creating an endowment fund with the Oklahoma City Community Foundation. But first, let me remind you about some awesome opportunities we have coming up. We're continuing our training session for charitable organizations with the new, monthly ‘Zoom in on Endowment and ‘Zoom in on Planned Giving’ series. So, if you're a nonprofit with an endowment fund at OCCF, you have the chance to learn about different strategies to maximize contributions at absolutely no cost. Don't miss out on our sessions in October. Head to our show notes to RSVP or go to occf.org/coetraining to learn more. Also, if you are a nonprofit that works to serve our senior citizens, in particular, we have a huge grant opportunity coming up for you! Our deadline for these services for the elderly I fund Grant closes on October 12th. If you're considering to apply but don't have a current GiveSmartOKC profile, you should go and update that prior to October 1. Another really exciting thing happening on October 1st, it's the official start of our scholarship season and more than 150 awards will go live on our website, occf.academicworks.com. We’ll have $2.5 million in scholarships available this year, so don't miss out on the extra cash towards your education. Alright, that's it for housekeeping notes. Again if you're curious about any of these opportunities, they will all be linked in the episode description. Now I want to welcome our first guest, Nancy Anthony, hi Nancy. 

Nancy Anthony: Hello!

Dan: You are the president of the Oklahoma City Community Foundation and 2020 has been a heck of a year. 

Nancy: It sure has.

Dan: I want to talk a little bit about the Charitable Organization Endowment program here, and I know you and I talked offline a little while [ago], but I want to talk about the long-term play that an endowment [requires] and how beneficial it can be for a nonprofit. When is the best time for a non-profit to consider an endowment with the OCCF?

Nancy: I think endowment is something that you do for the future. You don’t go and get an endowment right now - you build it for the future. I’ve always said to organizations if you think that your purpose will be exhausted in the next four or five years, and you won't need to exist, then don't worry about an endowment. But if you think you have a long-term future, either you will have an issue that will always be there or if you think you will always be, the services you provided will always be needed, then you probably should think about how those are going to be supported over the long-term and begin to think through how would that happen, and build the support that endowment does. Because an endowment is a long-term venture. It's not something you go out and get today like you do a capital campaign or new building. It probably is something that you work with donors over a period of time to build. So, it has to do with the future and I would have to also say that, for most people in nonprofits right now, they're not going to benefit by the endowment they're building - the people that are coming after them will probably benefit from the endowment. 

Dan: So, one of the things I wanted to talk about this year, too, is, I know that Covid-19 played a funky roll this year with a lot of nonprofits, and the Oklahoma City Community Foundation did something really interesting this year in that, you just dispersed some of the checks to these organizations earlier. Can we talk a little bit about that?

Nancy: Sure, well normally we make the annual distribution from the endowment funds for organizations in the middle of October. Because of the COVID impact on the fundraising ability of so many of our organization, we felt like, from a cash-flow standpoint, they might want those dollars sooner or be able to use them certainly, so we went ahead and made those earlier this year, just in order to accommodate what we felt like the needs of organizations might be. And that seems to have been very well received, obviously getting the money sooner rather than later usually is well-received. And I think especially this year, where a lot of fundraising has kind of been important. 

Dan: What do you think that some of the biggest issues are that nonprofits face when considering whether they want to establish an endowment or not?

Nancy: Oh I think the biggest issue is the ‘present versus the future’ [issue]. Most of the time, we really look at the needs that are out there in the community. We go look at the dollars, what we could do with those dollars right now versus putting them away or putting a portion of them away with the expectation that in the future they might be used or they could be used to support the organization. So, it really is a matter of your concern and people sometimes think, I'm here right now, I'm not going to be here in 10 years, I want to make an impact right now. So, frequently, it really is donors and people that want to leave a legacy that probably have the most impact, because they understand that they won't be here, but if it if they could leave the dollars in a way that they would impact something after they're gone, that that really becomes an important thing for them to do. So, it's just a different perspective, and both are important, but it's just the future versus the present in the end and sometimes it’s a hard case to make.

Dan: No, I understand. Well, I know that there is a platform here called GiveSmartOKC. Can we talk a little bit about that? How does that platform work and how does it benefit the nonprofit?

Nancy: We basically said a few years ago, I said, if you wanted to look for a list of nonprofit organizations, you might go to the phone book. Well, the phone book doesn't really exist anymore, so you had to have some kind of directory. We decided, we have lots of information in our files about the organizations with which we work in the endowment program, why not figure out how to share that with the community, so that, if a donor wanted to know about a specific organization, they might be able to find that out. We found this platform, originally with Guide Star, but it's since transferred to another group called ThrivingCities - a platform where we can put information, very similar for every organization, and donors can go and look at who’s on the board of the organization, what’s the financial condition of the organization and, just as importantly, what kind of programs are they offering, and where do they offer these programs. Because GiveSmart[OKC] actually has a geographic component now, so you can see where the organization is located and their service area. So it's just a way for donors to do a little bit of research in a way that allows them to compare organizations. Lots of times when you go to an organization's own website, it's really designed to either sell you tickets, hope you get, make a charitable contribution, or let you become very engaged in the organization without necessarily understanding maybe some of the things you might want to know if you were a donor and really thinking about a serious gift.

Dan: What would be the advantage of a non-profit basically establishing an endowment to the Oklahoma City Community Foundation versus trying to do something else?

Nancy: We try to say that there are really three reasons for an endowment here. One of which is, it is a fund that a number of donors can contribute to. So, you don't have Mrs. So-And-So setting up a trust at this bank or Mr. So-And-So doing an insurance policy somewhere else. A lot of donors can contribute to the same fun, so you have it in the same place. The second thing is that we have policies for investment and policies for distributions that really are geared for endowment funds. They're not your children’s savings account, they’re not your IRA, they're going to be there for perpetuity. So, you need to have an investment program, as well as a distribution program, that really is specifically for endowment funds. And the third one is a little bit harder, but it's important, and that is we're going to protect it. An endowment fund is supposed to be there in perpetuity, it's not a savings account or a reserve fund. If the bus breaks down or there's a hole in the roof, you don't go into the endowment fund to repair the roof. You really have to protect that. The Community Foundation servers that role for donors who established an endowment fund to make sure those dollars will always be there. Those are the three components of an endowment fund at the Community Foundation. They’re somewhat unique, and I think somewhat more advantageous than just trying to do one on your own with a bank or whatever reason. 

Dan: Thanks for being with us today, Nancy. We appreciate having you on the podcast. 

So, we want to bring in Rhonda Godwin here. Rhonda, you’re one of the vice presidents here at the Oklahoma City Community Foundation. And, I think 2020 is one of those years that people will soon forget. Would you agree with that?

Rhonda Godwin: [Laughs] I don’t think so. I wish we could.

Dan: So, we just closed the 2020 fiscal year. And, considering the fluctuations, how do you think things have been?

Rhonda: It has been a volatile year. We were very fortunate that we ended up positive as of June 30. If you had asked us in March, we would have been really worried that we were going to have a negative performance, but it ended up well. 

Dan: So, I want to ask this: You know, people can invest their money anywhere, quite frankly. And, I want to talk about the OCCF investment policy. What makes the OCCF investment policy more resistant to market fluctuations and why would donors trust their money to OCCF?

Rhonda: Yeah, most donors are very sensitive to fees, for sure. And investment fees have increased significantly in our marketplace over the years. It used to be more like 60 to 80 basis points and now people are charging up to two percent. So that's quite a bit more. Our fees are still around 25 to 30 basis points, so still a very good deal. 

Dan: What are some other guiding principles behind the OCCF investment policy?

Rhonda: The biggest thing about our investment policy is, for our endowment funds is, we have a commitment of a 5% spending policy. We look at their market value averaged over several quarters and then we pay out 5% each year. 5% it's not easy to do in today's market. That's the highlight of our investment policy, everything we do is to try to maintain the principal of each of their accounts and then actually be able to pay them out that 5% a year. We have a very qualified investment committee, people who are active in the investment market, which is very important to our portfolio. We’ve added alternatives over the last few years, which, honestly, this last year was a drag to our portfolio. But over the long term, if you look at it perpetually, it should take us into the next level. So, I think all those things are important in are highlighted in our investment report.

Dan: It is really a long term play.

Rhonda: Correct. It is a perpetual portfolio. We have a long-term time horizon, so like back in March, when you had a lot of people pulling out of the market, because they had fear in the market, well we don’t do that type of thing. Because we’re looking at a very long time horizon, ten years or more. So, we really stick with our investment policy. Each quarter, we look at, who are the winners and we actually sell some of those winning positions and go into the lower positions, and that’s really what you’re supposed to do with investments. But it’s the hard thing to do, no one wants to sell when everything is doing well. And you know, we always do it backwards.

Dan: Which seems to have benefited a lot of the nonprofits in the marketplace. 

Rhonda: Yes, it does. They get our expertise. A lot of the nonprofits don't have this size of portfolio that we do and the expertise on their staff that we do, so they get the benefit of using our expertise, and they still get that 5% payout each year.

Dan: Man, that is great news. So if you are running a nonprofit out there or you’re involved in a nonprofit, and you’re listening to this, it might be a long term play but your investment will certainly benefit you down the road. As anybody can attest, 2020 has been one of those years that people want to soon put behind them, but it seems as though, that those who have invested with the Oklahoma City Community Foundation have not really felt the angst and the pains?

Rhonda: I would agree. Our investment performance for the year was 2.76. Of course, we didn't knock it out of the ballpark with that but we still did well. We were very happy to be in the positive, there were a lot of months we thought it was going to be a negative performance. So, yes, we’re very pleased.

Dan: So, now I want to bring in Teena Belcik, welcome Teena. 

Teena Belcik: Thank you for having me.

Dan: 2020 has been a really interesting year, to say the least, would you agree?

Teena: I would totally agree with that. [Laughs]

Dan: How has the year been for Boys & Girls Clubs Of Oklahoma County so far?

Teena: Well, as you said, it’s been a very interesting year. I can rarely contemplate a time when any organization has had to respond in so many dramatic ways outside their normal line-of-business, just to be able to serve their constituents, and that has been true for us and a lot of other nonprofits in the Oklahoma County area. Of course, immediately back in March, when everyone was sheltering at home, we closed all of our clubs and within just a few days received a request to open up emergency child care to help the children of the people on the front line, whether they were hospital workers or first responders. We had to work with local and state officials to put together safety measures for Covid-19 to be able to operate safely in the building with children. At the same time, we had over 4,500 kids that are Boys & Girls Club members throughout the county, who suddenly we weren't seeing anymore. And we had to find a way to reach out to them, support them, and be able to keep in contact with them to see what their needs were. About 75% of their parents lost their job in the March-April time frame, so we saw a lot of tremendous hunger and tremendous needs, that are not things we’re used to providing for families, but they were critical needs for our families, so we had to step up and help with that. We began distributing after school snacks and evening meals at six locations throughout the county. We began delivering boxes of food to the families in the greatest need, just shelf-stable food so that they had something more than what the kids were able to pick up on a grab-and-go basis. We were again providing weekly packets, weekly activity packets, arts and crafts kits, all kinds of things throughout the county, and doing weekly check-in calls just with the kids and their families to see how they were doing, both physically and emotionally throughout that time and that was kind of just through May. 

Dan: That is an amazing accomplishment. Kudos to you for all that you've been able to do. I want to talk a little bit about the OCCF and that partnership with the Boys & Girls Clubs, too. I know that they've been a big, you know, kind of a guardian angel from time to time. Let's talk a little bit about that.

Teena: Absolutely.

Dan: So, how has the OCCF distribution affected the operations and services of your organization? 

Teena: Just knowing that that revenue stream coming in from the earnings on our endowment is critical, knowing that that revenue source is there. I think every nonprofit is in the fundraising business but in our case probably even more so because we do not receive fee income from any sources. Everything that we need we have to raise and so, knowing that there's an anchor of a certain amount of funds that are coming in year after year from the endowment is huge. 

Dan: If most nonprofits understood that, you know, that it's a long-play situation, it looks like it's paying off for your organization.

Teena: It absolutely is. In fact, we’re such a believer in it. We just completed an $8 million comprehensive campaign and we had a specific line item in our campaign to go towards our endowment, and we were fortunate enough to have a match come in against part of that as well and because of that, we were able to almost double our endowment in the past year. I really believe in investing for the long-term, but of course, we have to do that while taking care of the immediate term, too. Our long-term goal as an organization is to ultimately get our endowment to a point where the earnings annually will provide a double-digit percentage of our needs each year. We've got a ways to go to get to that but I would anticipate that anytime we're doing a major fundraiser, like we just completed, that having a line item for the endowment would be a part of it because that works very well for us.

Dan: What's the relationship been like with OCCF?

Teena: So, I have worked with the Foundation for quite some time and I would just say it's a wonderful relationship that I'm just thankful for that we had this kind of relationship. Certainly from a financial perspective, they are a tremendous partner, but it goes beyond that. There are times when you are facing challenges, like we have faced as a community recently in the pandemic, and even with what we've been facing in regards to racial equality and social justice, where you just want a thought partner. Where you just want to reach out and be able to say, hey I need to think this through with someone. ‘I think there's some things we’d like to do, but it's going to mean a real shift to what we're doing from a fundraising standpoint of what our budget is, and I think this is really the right way to do it, and I think this is going to work and I'd love to just bounce this off of you and see what you think.’ So having the foundation as a thought partner and, in addition, all of the resources they bring in terms of endowment and planned giving and just the educational components they provide has been really great. What I think I would be really remiss if I didn't mention: when the pandemic hit, the very first phone call we received was from Nancy Anthony saying, what does this mean for you all and what do you need. And that's the kind of partnership that is just invaluable. Not only did that happen if the beginning, it happened again in the summer, when we provided a limited summer program and again, due to social distancing, we couldn't have as many kids, but the Foundation stepped up and helped us again, when we had needs, to be able to start those in our community. We had seen such incredible learning loss and social-emotional well-being challenges that we knew we needed to be there for the kids most in need and the foundation helped make that possible.

Dan: Are you familiar with GiveSmartOKC, let's talk a little bit about that, because, you know, you come at this you’re seasoned in the nonprofit world. There's probably a lot of folks out there that are just getting into the nonprofit space, whether they're taking over a smaller nonprofit or they've been around for a long time and it moved into another higher position at a larger nonprofit. I think the big question is if you're really considering starting an endowment with the Oklahoma City Community Foundation, what would you tell a non-profit is considering opening up an endowment, and then what would you tell a non-profit about the platform called GiveSmartOKC.

Teena: I think in terms of the endowment, there is no better place to do it. Really, they take care of everything for us, we always know exactly where we stand, we have tremendous reporting and anytime we have any questions there's someone there to help us with it. We don't necessarily have the bandwidth to be able to do anything like that on our own. So we're very grateful to have that opportunity here. As far as GiveSmart[OKC] goes, I love that program. One of the things that is really important for us as an organization is fiscal responsibility and transparency. And that really allows us to do that with anyone who just wants to learn more about the Boys & Girls Clubs, whether they are a donor. Whether they are a volunteer, whether they are a potential partner in the community - they can learn a little bit about us and from a very credible source, where they know we've been vetted. They can see everything from our financial records to who is the leadership team, to a history of what our organization has done and what we're doing today and having that available all in one place that goes in far more depth than what we’re able to provide maybe on our social media, is really, really helpful. And I will tell you, there are a number of donors that we have every year that said, well I looked you up with you up on GiveSmart[OKC] and I saw this, this and this and that is wonderful for us to be able to have that vehicle for people to look us up without having to pick up the phone and ask us point-blank.

Well, I think that is a testament in itself because, really, what that platform does, it opens up another line of giving for people that are interested in your organization, which is excellent news. 

Teena: It absolutely is and we’re thrilled to have that. 

Dan: We’ve been talking to Teena Belchik, who is the president and CEO of the Boys & Girls Clubs of Oklahoma County, and thank you for being on a podcast today, Teena.

Teena: Thanks so much, I appreciate it!

Dan: We hope that you learned a little bit about what endowments are and how they work with nonprofits and how you can benefit, so if you’re a nonprofit and you’re listening to this broadcast now, we hope you give us a call or look us up at occf.org. And we hope you tune in next time on Creating Impact Through Giving. 

Creating Impact Through Giving is brought to you by the Oklahoma City Community Foundation, a nonprofit that works with donors to create charitable funds that benefit our community both now and in the future.

If you want to be notified about future episodes, don’t forget to subscribe to our email newsletter at occf.org/subscribe. For all episodes and more information, visit occf.org/impact.

Thanks for listening today and I’d like to leave you with this: Everybody wants to create some kind of impact in your community – What would you like to do? Contact the Oklahoma City Community Foundation, and let us help you turn your legacy into a reality today. See you next time.