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Tuesday, July 07, 2015

A totally boring post about non-profit governance

A totally boring post about non-profit governance

Long-time City Club members will know the Forum Foundation, but many of you may never have heard of it. It was established in 1943, when a group of Club members recognized how difficult it was for the Club to survive the Great Depression and responded with a round of fundraising that they turned into a modest endowment. Over the years, the foundation's assets have grown bit by bit, as groups of members and others have made contributions to the foundation to endow particular annual and bi-annual forums. For instance, every year, there is the Hope and Stanley Adelstein Forum on the Environment, funded by a gift from Hope and Stanley and celebrating their commitment to the environment. Today, the Foundation's assets stand at approximately $1.8 million, and returns on investments of that money continue to provide operating support to the Club. 

So, why do I bring this all up? Well, in the interest of transparency and broader engagement in the inner workings of our enterprise, we want to let you know about a governance change that's going to take effect this month. 

First, a little history. Since 1943, these two corporations--The City Club of Cleveland and the Forum Foundation--have been operating on parallel tracks. For many years, the foundation functioned as the charitable arm of the City Club. Donations that came in would come in through the Forum Foundation and they would be directed toward particular charitable purposes in the Club's operations. For over 80 years, the City Club operated as a social club, but in 1996, the City Club acquired its own non-profit status, which allowed it to accept charitable contributions. Ultimately, that proved to be a great innovation for the club, allowing us to expand our mission to serve the community far beyond our membership.

With two non-profits, donors have had choices--they could help underwrite the City Club's annual operating expenses or they could make a longer term investment in the City Club's future by contributing to the endowment held by the Forum Foundation. 

Back at the end of 2013, we invited members of both boards to begin examining new ways they might work together. We asked them to look at every possibility, from merging to putting the assets under the management of the Cleveland Foundation, to leaving the existing structures in place. After more than a year of work (much of which was aided by the work of some great students and faculty at CSU Marshall College of Law), they landed in a very useful place.

This month, we make a few exciting changes to bring the Forum Foundation up to date and to create a closer working relationship between the Foundation and the City Club. For the non-profit governance geeks in the reading audience,  the board of the Forum Foundation will become a Type I 509(a) Supporting Organization. What that means in practice is that it will have a smaller, more nimble board devoted solely to managing the investments of the Forum Foundation to serve the interests of the City Club. The new structure does a few key things: 
*Protects the Foundation from having to pay taxes on investment income;
*Allows the Foundation board to better coordinate any activity with the City Club
*Reduces overhead expenses
*Positions the City Club for advancement and growth

In this new structure, there will be overlap on the two boards. Three of the five members will be appointed by the City Club, and meetings will typically happen together. 

So, I know, totally nerdy and boring, but ultimately, this is a very a useful evolution. 

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