Minnesota Literacy Council Board Packet September...

September21, 2015 Board Packet 1

Minnesota Literacy Council

Board Packet

September 21, 2015

Contents Agenda ..................................................................................................................................................................... 2

Board Meeting Minutes ........................................................................................................................................... 3

Executive Director Report ........................................................................................................................................ 6

Minutes: Finance and Audit Committee .................................................................................................................. 7

Minutes: Development Committee ......................................................................................................................... 8

3-Year Fundraising Plan Progress Report To The Development Committee ..................................................... 10

September 21, 2015 Board Packet 2

Minnesota Literacy Council Board Meeting 5:00 to 6:30

September 21, 2015

Agenda

5:00 Brought to order Rudy

New Member (Olivia)

Approval of minutes

5:10 Executive Director Report Eric

5:45 Committee Updates Chairs

Finance o 2014-15 Audit

HR

Development o Development report

6:10 New Business Rudy

6:25 Old Business Rudy

6:30 Close Meeting Rudy



Board Meeting Minutes

June 29, 2015

Present: Rudy Brynolfson, Chap Milis, A.C. Flynn, Laura Cohen, John Sanyamahwe, Jewelie Grape, Jackie Prince, Norberto Moran, Jim Afdahl, Theresa Weimerskirch Absent: Carla Engstrom, Sean Sweat, Verneita Madden Staff: Eric Nesheim, Debbie Cushman, Cathy Grady, Susan Godon, Paul Kirst Meeting was called to order at 5:07. Review of minutes from May 18 meeting. A motion to approve the minutes was approved unanimously (moved by Jim Afdahl, seconded by Chap Milis). Executive Director Report (Please see more information in the board packet). Debbie walked the group through the new strategic plan document. Some discussion and many compliments. Motion to approve the strategic plan was approved unanimously, with acknowledgement that staff may make some additional minor edits (moved by Rudy Brynolfson and seconded by Jackie Prince). Legislative session: wasn’t the quiet session we expected. Move to eliminate developmental ed at the college level was met with anger on the part of community college teachers. It appears they saw ABE as a threat. There was also a move to pay ABE teachers on the K-12 union salary schedule, which was defeated. This would be hard on ABE programs because the funding formula isn’t sufficient to fund teachers on this pay schedule and programs are not currently equipped to receive thousands of additional students. AC asked if we need any help with advocacy/lobbying on any of these issues next session. Eric said many of the Twin Cities reps are already on our side, but he’ll let the board know if there’s anything they can help with – if you have connections related to any of these issues, please let Eric know, though. Hennepin County issues: the learning center at Sumner Library is experiencing difficulties with Hennepin County facilities requirements and staff at high levels in the library system. Working to resolve and/or find a new location. Personnel shifts/staffing structure – two new directors: Rob Podlasek will be Training Director and Ellen Bergstrom will be National Service Director. Finance Committee (Please refer to board packet for detailed notes from the Finance Committee and to review the FY16 budget). Rudy referred to minutes and budget package. Budget is pretty similar to last year – it’s conservative and balanced. Rudy said he and the committee are comfortable with the new budget. Paul added some info about some underlying trends – working towards bringing in more fee-based revenue to balance out funding streams. He said it’s a conservative budget. Referred to page 9 of the budget (revenue “guesstimates”), the areas that are a little less for sure, these lines are more conservative than they were before. Very stable in terms of staffing. Health insurance costs expected to rise about 6%.

Statement of Financial Position


Theresa asked a few questions: page 7 breakdown of expenses. How do we think about how much we spend in each category? Paul answered that this is very much revenue driven (we start with expected revenues). What is the goal for the balance? In the past we worked towards a “zero balance” but now try to have a little cushion (around 0.5% or so). If you deficit spend (according to Charities Review Council) in one year, you need to have two surplus years within any three-year period. How sure are we about the government sources of funding being secure over the years? Reserve of 3 months of operating expenses now and that doesn’t look bad to funders – once you get up to a year of reserve then foundations and donors may start thinking you don’t really need the money. Jackie asked about the endowment –Eric clarified that once you put money in the endowment you don’t own it anymore (it’s off the books) and you just collect the earnings or a portion of the earnings each year. What is the distribution of the document – use of the word “guesstimates” could be alarming to some. This doesn’t go out farther than board and directors. Review of the proposed FY16 agency budget. After some discussion, there was a motion to approve the FY15 budget. Motion to approve the 2015-2016 fiscal year agency budget was passed unanimously (moved by Rudy Brynolfson, seconded by A.C. Flynn). HR Committee No meeting held since last board meeting – next HR meeting will be in September or October. Theresa and Chap on the HR committee – Jackie also volunteered for this committee. Development Committee No meeting since the last board meeting. Susan and Laura talked in between the two meetings, and Susan said we’ve been doing well. Another $15K gift from an anonymous donor came in. Laura updated the group on the book launch – author was a great guy and Eric won the raffle (he will get to have a cameo appearance in the next book. Eric said he may try to get Minnesota Literacy Council mentioned instead). Indeed Brewing event coming up. New Business Board self-evaluation report is in the board packet. Jewelie pointed out that “board relations” is always rated lower than she would like and if member have any ideas for improving this area and getting to know each other better, please let her know. Chap likes the idea of going out to Café Biaggio after the meetings. Only 69% of board responded. Jewelie reiterated request to have staff provide program reports at board meetings occasionally. New national service constituent board member candidate: Olivia Quintanilla (for a two-year term). Olivia is a former AmeriCorps VISTA member with the literacy council and served for 2 years at Minneapolis Public Schools (please refer to full bio in board packet). Term starts January 1 but board attendance begins at the next meeting.



Motion to elect Olivia Quintanilla to the board as a constituent member passed unanimously (moved by Chap Milis, seconded by Jackie Prince). Laura asked about board member onboarding – having more seasoned members welcome the new members, take them out to lunch, etc. Eric is also happy to have lunch or coffee with anyone who wants to know more about the organization. Feel free to contact him. Old Business None. Meeting adjourned at 6:30 Next meeting: Monday, September 21, 5 p.m. There will be social time at Café Biaggio (near the office)

immediately following the meeting.




Executive Director Report September 21, 2015

Audit: We recently finished our audit for this year. You have a copy in the portal. It was clean and had no findings. Thank you to Paul, Vicki and Debbie for their great work in putting it all together. Our procedure is that the Finance committee visit with the auditor, approves that audit to pass it along to the board. The board gets a chance to review it and than vote. There will be ample time for questions.

Development Report: Susan has been working on a new report that outlines many details about our development area. She will be presenting the report at the board meeting and will be updating it regularly.

Program Updates: We will be presenting program updates at each board meeting starting in November. For each discussion, we will bring in staff members working in that area to update the board on activities and answer questions.

Partnership Updates: I just thought I would take a quick moment to point out some of the various partnerships that we have been fostering. Our tentacles go out in a lot of different directions which is what makes us unique. We have been working closely with:

DEED (department of employment and economic development) and a number of things including the implementation of the new WIOA legislation

Library systems across MN and the Midwest on capacity building and digital literacy

The Corporation for National and Community Service on VISTA/Americorps projects and the 50th anniversary of VISTA

USCIS (Homeland Security) and our partner the Immigrant Law Center on our ongoing Citizenship projects

This is just a few of our partnerships. In each ED report I’ll talk about a few more. National Exposure: As part of our strategic development area we have been working hard on getting national exposure. We have become a prominent player at COABE which is the national organization for Adult Basic Education. We also play a large role with ProLiteracy, also a national ABE organization. We will participate in all three of the main panel discussions at the nation conference in October (Policy, Digital Literacy and College and Career readiness).

Eric Nesheim Executive Director


Minutes: Financial and Audit Committee

In Attendance: Board: Rudy Brynolfson, AC Flynn, Jim Afdahl Staff: Eric Nesheim, Paul Kirst, Debbie Cushman Auditors: Tom Hodnefield, Cathy Lydon Absent: Norberto Moran, Jewelie Grape, Susan Spray

Meeting Date: 9/15/2015 Date Minutes Written: 9/15/2015

Meeting Time: 4:30-5:30 p.m. Minutes Written By: Rudy Brynolfson

1. FY 2015 audit reports. Cathy Lydon and Tom Hodnefield of Redpath presented the recently completed audit reports for FY 2015. The financial audit has a “clean” (unmodified) opinion and follows the previously released internal financial statements with minor changes and presentation differences. Overall net assets increased by $237,448, with most of the increase in the temporarily restricted area, reflecting carried over grant income and increased long term pledges. The unrestricted operating surplus was $87,643. Cash increased to $1,122,406, equivalent to about three months’ expenses. Program costs made up 82 percent of total expenses, with administration and fundraising totaling 18 percent, well within the reasonable range.

Fixed assets before depreciation were unchanged based on the offsetting impacts of writing off the old software license and capitalizing a new two-year license. On a related subject, Eric noted that the Literacy Council may charge higher fees to users to build up the estimated $200,000 needed to revamp the North Star Digital Literacy Assessment and asked how this would show up on future financials. The auditors confirmed that donor-restricted grants for this purpose would remain temporarily restricted until used, but that fee income would necessarily show up as unrestricted, causing unrestricted net assets to increase during the advance collection period and decrease during the post-purchase amortization period.

The management letter accompanying the audit contained no negative findings.

The federal single audit found no deficiencies in internal control over financial reporting or compliance with the federal award requirements. Overall, the Literacy Council had federal expenditures of $938,510 during the fiscal year, mainly for the VISTA program ($567,374). Because of an audit finding two years ago, the Literacy Council was not considered a low-risk auditee this year, but low-risk status will be restored next year, now that there have been two years with no findings.

Committee members joined the auditors in praising Paul and staff for their excellent work on the audit.

The audit reports are recommended to the full Board for approval.

2. 2015-16 meeting schedule. Debbie handed out a schedule of committee meeting dates and topics for the year. The committee will meet at 4:30 on the Tuesday before each Board meeting.

3. Committee membership. It was agreed that the current size and strength of the committee are good and no changes in membership are needed at this time. However, Rudy stated that he wished to hand over the position of Finance Chair to another committee member in January.

4. Next meeting. The next committee meeting will be on Tuesday, November 10, at 4:30 p.m. and will include presentation of the IRS form 990 now being prepared based on the financial audit.


Minutes: Development Committee

In Attendance: Board members: Laura Cohen, Carla Engstrom, Jewelie Grape. Staff: Eric Nesheim, Susan Godon.

Absent: Board: Sean Sweat

Meeting Date: August 24, 2015 Date Minutes Written: September 16, 2015

Meeting Time: 4:30-5:30 pm Minutes Written By: Susan Godon

1. Progress Report on 3-Year Plan In 2012, the Development Committee contributed to the creation of a 3-year development plan for fiscal

years 2013-2016. We wrapped up the second year of this plan on June 30, 2015. Susan shared highlights

of the year also outlined in the attached progress report (many of these highlights are in red font in the

report). Of note:

Individual giving, which is a priority area for the development team, continues to rise (832 donors gave $276,522 last year).

Our donor retention far exceeds the industry median (59% vs. 43%).

Nearly 75% of our new donors come to us through the luncheon or a training workshop.

In five years, our $1,000+ donors have gone from 16 to 56.

There is more room for staff and board to cultivate and steward our larger donors (175 donors contributed 83% of our donations).

Sponsorships, table host recruitment, higher attendance and an effective multi-year ask were the primary factors contributing to luncheon success in 2015.

We appear to be on track with our 3-year plan’s financial goals, but budgeted conservatively because we

will not have the challenge grant working as strongly in our favor and there are a few large gifts that are

uncertain to repeat. Our plan’s goal was to reach $715,000 (combined individual giving, grants and

events); we budgeted for $657,353, a modest increase over last year’s actual results of $625,633.

2. Workplan Objectives The strategies the development team will focus on in the current fiscal year include:

Implement new donor engagement activities.

Increase contact with national foundations.

Continued improvement in impact reporting and other communications with donors.

Foster a culture of engagement and philanthropy among staff, board and others.

Internally: Plan for the transition of donor data to Salesforce

3. Committee Member Roles for This Fiscal Year; Need for Additional Members Every committee member had a leading role in one of the following activities: donor thank you calls (Carla), table host team leader (Sean), board engagement (Jewelie) and committee leadership and exploring larger donor and planned/endowment giving (Laura). The committee members agreed it would be beneficial to recruit additional members. Gail Weber, a luncheon guest of Laura’s, has expressed interest. Laura will also check to see if any current board


members are still looking for committee opportunities. LinkedIn was also recommended as a possible source of somewhat targeted recruitment.

4. Important Dates

Wednesday, April 19 – Tentative date for the 2016 Power of Learning Luncheon

Last Monday of the months opposite the board meetings – Dates for the Development Committee to meet in the current fiscal year and proposed topics.

o August – Annual results report and work plan goals o October – Luncheon goal-setting o December/January – Mid-year report, thank you calls, possible professional development

for the committee o February – Begin work on next 3-year development plan o April – 3rd quarter report and luncheon results o June – Review development budget, finalize 3-year and annual plan


3-Year Fundraising Plan Progress Report To The Development Committee In 2012, the Minnesota Literacy Council’s Development Committee contributed to the creation of a 3-year

development plan for fiscal years 2013-2016. The literacy council’s development department is responsible for

individual contributions, corporate and foundation grants and special event revenue. The plan had five goals:

(1) increase individual giving to $325,000, (2) increase grants to $375,000, (3) increase raffle revenue to

$15,000, (4) improve communications activities and (5) foster a culture of philanthropy among staff, board,

other volunteers, students and national service members. This report to the Development Committee

provides a progress report for the fiscal year ending June 30, 2015.

Goal 1: Increase individual giving from $224,000 to $325,000 by June 30, 2016.

Annual giving trends

The literacy council has deliberately made individual giving a priority, knowing that 80% of all charitable giving

nationwide is given by individuals (Giving USA, 2015). That focus has continued to pay off – individual giving

reached $276,522 in our fiscal year 2015 (FY15).

The drop in FY14 can be attributed primarily to three donations from FY13 that didn’t repeat: (1) a $20,000

challenge gift, (2) a one-time gift for GED curriculum writing; and (3) the timing of a major annual gift that

came twice in FY13 and only once in FY14 (the combined total of these was $44,000).

Donor segments by frequency: new, repeat and recovered donors

In FY15, we increased numbers of new, repeat and recovered donors. Improving donor retention has been a

deliberate strategy in our department workplan, and thanks to that attention, we are above the industry

median for donor retention (59% vs. 43%). The importance of retaining donors is clear when you look at the

value of repeat donors compared to new donors. In 2015, the average gift size for repeat donors was $451,

while a first-time donor’s gift averaged $114.


Two events impacted donor recovery efforts. In 2013, the literacy council celebrated its 40th anniversary, which

resulted in a higher-than-usual response rate. In 2015, we had the fundraising challenge grant that matched

recovered donors’ gifts. These results cannot be expected to repeat in a normal year.

Reason for giving

For first-time donors in 2015, nearly three-quarters gave because they were first introduced to the

organization through an event or training workshop, which emphasizes the importance of these gateways as

the first point of contact with our organization.

Gift levels and Power of Learning Luncheon

We launched a multi-year Literacy Heroes giving program at our first annual Power of Learning Luncheon in

fiscal year 2010. This giving program, starting at the $1,000 per year level, successfully sparked giving in the

$1,000+ category, boosting the number from 16 to 29 donors. The Literacy Heroes program continues to add a

few new donors each year and is a big part of the $1,000+ donor growth (there are now 56 donors giving

$1,000+).


After poor results at the fall 2013 event (see graph below), we took a step back to decide whether to continue

the luncheon. We surveyed past guests for feedback (where we learned that spring was preferred to the fall)

and honed in on what drove or impeded success. Four main factors seem to impact luncheon results: (1)

sponsorships, (2) recruitment of the right hosts, (3) attendance figures and (4) an effective multi-year giving

request. (Note: the years below refer to the calendar year of the events.) By concentrating on these four

factors, we rebounded in 2015.

Staff and board were active participants in soliciting sponsorships to a far greater extent than in previous

years. Brainstorming sessions generated 120 leads and resulted in 14 sponsorships totaling $16,800. Nine of

the successful requests were made by staff and five were from board (and former board) members.


Deliberate recruitment of table hosts, especially non-staff hosts, is important to the luncheon’s success. The

number of staff hosts has ranged between six to 11 (11 in the first year and six in the last). The number of

board hosts has fluctuated between seven and 11. The biggest difference has been the growth in non-staff,

non-board hosts; we had just six in 2009, but 26 in 2015. In 2015, we were definitely more effective inviting

volunteers to host. The “ask” was made by the person who knows them best, such as a teacher or coordinator,

and not a general appeal from an unknown volunteer or development team member.

Finally, the Minnesota Literacy Council’s donor pyramid is similar to many nonprofit organizations in that

roughly 20% of donors contribute 80% of the dollars. This ratio has remained fairly constant in the past three

years. This information is significant to note because of the importance of allocating time to steward donors at

the top of the pyramid. Literacy council staff can do more in this area and there could be a role for

development committee members to assist as well.


Challenge Grant Results

In the fiscal year ending June 30, 2015, the Minnesota Literacy Council promoted a $50,000 challenge grant to

inspire new and increased gifts, thanks to two $20,000 grants (from the F.R. Bigelow Foundation and The Saint

Paul Foundation) and a $10,000 matching pool from present and past board members. The Minnesota Literacy

Council’s overarching goal with the fundraising challenge grant was to substantially broaden and deepen our

individual donor base. By May 31, we achieved the match by securing $63,160 in match-eligible contributions.

Activities

We created unique branding for the match campaign.

We promoted the challenge grant in volunteer tutor trainings, which reach 2,000+ people annually.

Staff created a wall display for the agency’s training room to show progress made toward the $50,000 goal and inspire tutor trainees to participate in the match campaign.

We advertised the challenge grant on Give to the Max Day and through social media channels.

We marketed the challenge grant in our fall appeal mailing and created customized matching grant messages for various groups (prospective first-time donors, lapsed donors and returning donors).

We used the challenge grant to match new donations at our spring fundraising luncheon.

We rebooted our e-newsletters and brought back a print newsletter focused on impact and success stories.

We engaged all staff in philanthropic pursuits. Staff members were invited to share names of contacts for the fall appeal mailing and many also invited guests to the spring fundraising luncheon.


Outcomes

FIRST-TIME DONORS

Results:

307 donors gave for the first time in fiscal year 2015, compared to 209 the previous year – a 47% increase.

Our 307 new donors gave $34,971 in fiscal year 2015, compared to $23,458 from the 209 new donors the previous year – a 49% increase.

RECOVERED DONORS

Results:

129 donors with a last gift made in June 2013 or before renewed their giving. For fiscal year 2014, 80 lapsed donors were recovered.

Our 129 recovered donors gave $62,900 in fiscal year 2015, compared to $11,520 from lapsed donors the previous year. While $40,000 of the $62,900 is the result of a single gift, contributions from lapsed donors still nearly doubled the total from 2014.

UPGRADED DONORS


Results:

Of our 396 repeat donors in FY15, 165 (42%) were “upgrades” who increased their giving over the

previous year. In FY14, 146 of 381 repeat donors (38%) were upgrades.

Retained donors who increased their giving in 2015 contributed $111,818, while retained donors in

2014 contributed $77,660.

This project confirmed what the research shows: challenge grants are effective. The research also suggests the

increased number of donors and growth in giving will continue beyond the initial year of the challenge grant.

We will continue to improve our donor retention efforts and hope to retain these supporters into the future.

Goal 2: Increase corporate and foundation grants from $287,000 to $375,000 by 6/30/2016

Grant seeking is becoming increasingly competitive (more nonprofits, greater focus on outcomes), while grant

makers are narrowing their interests and types of giving (more to projects and less to general support). With

grants being variable (single-year or multi-year, fiscal year or other grant period), the trend line for grant

revenue at the literacy council understandably has peaks and valleys.

The Otto Bremer Foundation has been an important grantor in Minnesota Literacy Council’s recent history,

providing between $110,000-185,000 in four of the past five years. While our relationship with the Foundation

is strong, this significant source of support cannot be expected to continue indefinitely.

Goal 3: Increase raffle revenue from $9,750 to $15,000 by 6/30/2016

After tweaking our raffle prizes and strategies in fiscal year 2014 and again netting less than the previous year,

we concluded that staff and board were experiencing raffle fatigue and that the time and effort could be

better spent on other activities. (Note on the graph below: Our tickets sold for $10 each in all years except

2011 when we tested a $5 ticket price. That year, we sold more tickets than in any other year, but raised the

least revenue.)


Goal 4: Improve communications activities

In FY14, a communications consultant helped us refine our key messages. Over the past few years, we have

been improving our social media activity and analytics analysis (the directors now get monthly reports). We

have also capitalized on news stories such as a HuffPost Live story on the new GED and an opinion piece

written by Open Door volunteer ESL teacher John Dunham titled, “What would Muslims like you to know?” We

brought back a monthly e-newsletter and have mailed out impact reports to all donors, with the intention of

especially reaching those donors for whom we have no email addresses.

Goal 5: Foster a culture of engagement and philanthropy among staff, volunteers, students and national

service members

In FY15, staff and board were effectively mobilized seeking luncheon sponsors and effective table hosts. Board

and staff giving are strong, at 71% and 89% participation, respectively. We will build on this momentum in

FY16.

Results for Fiscal Year 2015, Projection and Strategies for 2016

Overall fundraising results, including individual giving, grants and events, have increased by 22% over the past

two years (including pledge payments paid in the year and restricted gifts) and by 73% since 2008. Investment

in development activities has increased as well, although at a slower rate.


With one year remaining in this development plan, we appear to be on track to achieve the original $715,000

projection. However, our growth in FY15 was impacted significantly by the $50,000 challenge pool and a gift of

$40,000 from a family foundation that we are uncertain will repeat, so we projected modest growth in the

FY16 that is lower than the plan’s original projection and just slightly above FY15’s actual results. Without

more confidence in greater growth, and within the context of the overall agency budget, we were unable to

make a strong case for an increased investment in development activities.

Nonetheless, the development team is motivated to build on the success of the past year. We plan to focus on

strategies, such as:

IMPACT REPORTS:

o A custom message to donors thanking them for their participation in the match campaign and highlighting how their doubled dollars created greater impact.

o Regular updates that inform donors of how their gifts were used.

MONTHLY GIVING: A special campaign targeting repeat donors to transition them to automated monthly gifts, which will help us sustain high retention rates.

ONGOING COMMUNICATION: Monthly e-newsletters for donors and expanding our storytelling to new social media platforms (LinkedIn, Twitter and Instagram).

MAJOR DONOR CULTIVATION: In-person and personalized contacts to better engage our larger donors.

STEWARDSHIP EVENTS: Opportunities for donors to learn about our work and get to know our students, volunteers and staff.

THANK-YOU CAMPAIGNS: Thank-you phone calls and/or handwritten notes to all first-time donors and other select donors.

FOUNDATION RELATIONSHIP BUILDING: Outreach to larger national foundations with aligned interests to garner support for our work that could impact stakeholders both in Minnesota and beyond.

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