BACK OFFICE DEEP DIVE DAY O VERVIEW Todays Goals Understand the - - PowerPoint PPT Presentation

GIFT/Indiana Philanthropy Alliance

BACK OFFICE DEEP DIVE DAY

OVERVIEW

Today’s Goals

• Understand

the business challenges

• f

community foundations

• Share

research about how

• thers

are addressing these challenges

• You

will guide next steps in this work

BACKGROUND

Sus ustai tainabili nability ty 1.0

• Understanding

fund management costs

• Fund

management changes – fund sizes, minimums, fees

• Indiana

CFs have had tremendous success in this work

• 69%

sustainability  90% sustainability

CURRENT STATE OF AFFAIRS

Every

miles!!

OPPORTUNITIES FOR EFFICIENCY

Simplest Most Complex

Examples Examples Examples Examples Examples Examples

• Fund management
• Payroll
• Professional employ.
• Accounting
• Scholarship staff
• Restructuring of staff
• Fund Audit
• IT functions
• rganization (PEO)
• Acknowledgements
• Grant staff
• Affiliation
• Paperless Office
• Investment
• Outside chief invest.
• Grant processing
• Marketing staff
• Online Scholarship

Management

• fficer (OCIO)
• Data Entry

Applications

• Website
• Marketing
• Property management
• Planned Giving info
• CGA Administration

Legal/ Structural Changes Outsourcing - Level 1 Process Improvement Outsourcing - Level 2 Outsourcing - Level 3 Shared Staff

BACK OFFICE VS. FORWARD FACING

BACK OFFICE VS. FORWARD FACING

• Some

functions can

• nly

be done by you in your community

• Some

functions can happen anywhere – across the street, across the state, across the country

• Do

What You Do Best

BACK OFFICE VS. FORWARD FACING

Functional Area Back Office Elements

(can be done anywhere)

Forward Facing Elements

(can only be done in your community)

Development

Gift entry, acknowledgement letters, donor information management, prospect research Donor stewardship, meetings, events, professional advisor meetings

Planned Giving

CGA and trust administration, Legacy Society tracking Professional advisor events, Legacy Society events

Grants and Scholarships

Application development, online software management, recordkeeping, , material preparation for review committees, grant entry Grant strategy development (criteria, priorities)applicant/grantee interaction, phone calls, site visits, review committee meetings, minutes, engagement with students/parents/high schools/colleges

CURRENT STATE OF AFFAIRS

• Pain

points remain

• CPI

+ 5%

PAIN POINTS

Opportunities for Efficiencies

# of

Process Shared

PAIN POINTS

Votes

Improvement Outsourcing Staff

Database management (mailing list, profile entry, etc.) 50 X X Insurance management and employee benefits management 40 X Fund statement process 35 X X System for tracking of interaction with donors 34 X Scholarship process 32 X Generating reports 32 X X Month-end/quarterly/annual general ledger closing processes (allocation of investment returns, admin fees, journal entries, etc.) 28 X X IT equipment/networking 28 X X

IDEALWARE SURVEY

• 40

community foundations responded to IdealWare technology survey

• Ten

community foundations were interviewed

• Findings:
• There’s
• pportunity

to share back

• ffice

administration tasks as well as some accounting functions.

• Most

interviewees were

• utsourcing

their IT functions

• There

may be an

• pportunity

to create a series

• f

customized dashboards that each foundation can plug its

• wn

data into.

TECHNOLOGY COSTS

• Estimated

software costs including database,

• nline

grant & scholarship programs, virus and general software

• $958,000
• Estimated

hardware costs including laptops, servers and towers

• $511,000
• Research

being done

• n
• ther

vendor

• pportunities
• TechSoup

now has program for hardware as well as software

INDIANA PANEL

OUTSOURCING

TIM MURPHY, PRINCIPAL CLIFTONLARSONALLEN

PROFESSIONAL EMPLOYMENT ORGANIZATION (PEO)

MARIE FELVER VICE PRESIDENT OF FINANCE AND OPERATIONS HANCOCK COUNTY COMMUNITY FOUNDATION

OUTSIDE CHIEF FINANCIAL OFFICER

KEIRA AMSTUTZ TIM MURPHY PRESIDENT & CEO PRINCIPAL INDIANA HUMANITIES CLIFTONLARSONALLEN

OUTSOURCED ACCOUNTING

LARRY PEJEAU DAN DAVIS PRESIDENT & CEO PRESIDENT & CEO BROWN COUNTY COMMUNITY FOUNDATION COMMUNITY FOUNDATION

OF JACKSON COUNTY

NATIONAL PANEL

THE HUB

DEB MILLICAN FORMER OFFICER MANAGER COMMUNITY FOUNDATION OF

THE UPPER PENINSULA

HUB CLIENT DOCUMENTS LIST

• Gifts

fts

• Fill-in

Donor Forms

• Name
• f

Individual

• r

Organization

• Copy
• f

deposit slip

• r

include total in email

• Send

to CFUP Office

• Checks

hecks

• Fill-in

Vendor Request Form

• Send

to CFUP Office

• Gran

ants ts

• Fill-in

Grant Form

• New

Funds ds

• Fill-in

New Fund Form

Community Foundation Grant/Vendor Request Form

Vendor Check Grant Check Payee Purpose of Check/Grant Name Oper. Expense Account Fund ID Date Paid Check Amount Check Number Notes

THE HUB

MELISSA BLISS FOUNDATION ADMINISTRATOR THREE RIVERS AREA COMMUNITY FOUNDATION

BROMELKAMP FIMS CFUP HUB (Blackbaud)

Server Hosted $ 36,200.00

• ne time fee

$ 48,003.00

• ne time fee

$ 1,250.00

• ne time fee

Annual Fee $ - $ 9,601.00 $ 6,000.00 Support $ 4,610.00 included Cloud $ 18,100.00

• ne time fee

$ 11,500.00 annual fee N/A Annual Fee $ 3,740.00 included Support $304/mo unlimited included Implementation Costs included $ 10,000.00 $ 750.00 **$20/hr, not to exceed $750 for implementation

HUB SOFTWARE COMPARISON

CFCI & GREATER HORIZONS

MARK ROBERTS PRESIDENT AND CEO COMMUNITY FOUNDATION OF CENTRAL ILLINOIS

Over the Next Few Minutes…

• Brief

introduction to CFCI

• What

is Greater Horizons?

• Why

did CFCI become a client

• f

Greater Horizons?

• What

services do they provide? (and a specific example)

• Our

experience with Greater Horizons to date…pros and cons

• Our

recent (and

• ngoing)

due diligence activities

• Not

a sales pitch…

OVER THE NEXT FEW MINUTES…

Over the Next Few Minutes…

• Founded

in 1986, CFCI has total assets

• f

$29 million in

• ver

300 funds

• Staff
• f

four that = 3.5 FTE

• A

separate 501(c)(3)

• rganization,

the Depository, was founded in 1992 and holds total assets

• f

$3 million in 160 accounts…”Charitable Checking Account”

• In

2013 the CFCI Board

• f

Directors approved entering into an agreement with Greater Horizons, an entity

• f

the Greater Kansas City Community Foundation (GKCCF), to provide back-office accounting and grantmaking services to CFCI

• Signed

a Memorandum

• f

Agreement and Agency Fund agreement that was effective as

• f

November 1,

• 2013. A

revised agreement was signed in May 2016.

A BRIEF INTRODUCTION TO CFCI

Over the Next Few Minutes…

• Created

in 2004 as a part

• f

GKCCF, Greater Horizons is a provider

• f

charitable giving services to individuals, families, companies and community foundations

• GKCCF

has combined assets

• f

more than $2.5 billion

• Greater

Horizons has approximately 35 community foundation clients ranging in total asset size from $1 million to

• ver

$150

• million. Over

$500 million in total assets.

• Annually

processes more gift and grant transactions than any

• ther

community foundation in the country

• Hold

themselves to the highest reporting standards, including the completion

• f

a SOC 1 Report (SAS 70 Audit), which is unique in the industry

WHAT IS GREATER HORIZONS?

Over the Next Few Minutes…

• Operational

challenges inherited in 2008: monthly financials, quarterly fund statements, categorization

• f

fund types, calculation

• f

$ available to grant, and more

• Significant

administrative workload generated by Depository: average

• ver

2,400 grants +

• ver

200 stock gifts annually

• Plenty

to keep CEO up at night: small staff, lack

• f

capacity, FIMS training, meteor theory, etc.

• Reasonably

priced solution…roughly similar to a full-time position…buys LOTS

• f

capacity

WHY DID CFCI BECOME A CLIENT OF GREATER HORIZONS?

Over the Next Few Minutes… SERVICES THAT GREATER HORIZONS CURRENTLY PROVIDE TO CFCI

• Reconcile

bank statement

• Process

and print checks (grant & vendor)

• Gift

acknowledgement letters

• Monthly

management reports

• Calculate

average stock selling price for gift amount

• Verify

501c3 status through upgraded version

• f

Guidestar

• Legal

Advice

• Quarterly

Fund Statements

• Grant

Payments

• IRS

1099s

• Audit

work papers

• Open

new funds

• Spending

calculations

• Journal

entries

Over the Next Few Minutes…

FUNCTIONS THAT GREATER HORIZONS OFFERS THAT CFCI HAS NOT/DOES NOT UTILIZE:

• Acceptance
• f

complex assets

• Flexible

Investment Options:

• participate

in existing investment pools (with

• ption

to customize)

• allow

clients’ advisors to manage assets (Financial Advisor Program)

• Offer

24/7 access to each fund to client’s through

• nline

fund management system

• And

more…

Over the Next Few Minutes…

AN EXAMPLE: STEPS TO PROCESS A DEPOSITORY GRANT

• Fund

holders may request grants via phone, email, mail, and fax.

• Grant

requests must include the following: fund holder’s name, fund ID, grantee name, grantee profile ID number, amount

• f

grant, and date.

• If

the grantee is not local

• r

in FIMS database, the grantee’s address is needed.

• NOTE:

CFCI works in a mirror version

• f

FIMS, with GL and

• ther

modules locked down

• Fund

balance is verified to ensure the balance is sufficient to make the grant.

Over the Next Few Minutes…

STEPS TO PROCESS A GRANT, CONT.

• Fund

ID, grantee ID, grantee name, amount, special instructions (memo), and date are entered

• n

Greater Horizons grant scholarship upload template.

• The

grant request is saved by date in CFCI Shared Files.

• The

grant request is emailed to Greater Horizons Accounting email.

• Greater

Horizons inputs all grants into FIMS.

• Greater

Horizons processes and sends grant checks to CFCI via FedEx.

• Grant

checks are matched to grant requests to ensure fund holder, grantee, and amount

• f

grant match.

• Grant

checks are mailed to the

• grantee. (Local

look and feel)

CFCI’S EXPERIENCE WITH GREATER HORIZONS TO DATE: PROS AND CONS

Over the Next Few Minutes…

PROS…

• The

relationship with Greater Horizons has proven to be extremely beneficial from an

• perational

standpoint…much tighter control and

• ther

processes, info that is accurate, timely, FIMS database better

• rganized,

etc.

• For

2016,

• ur

”cleanest audit ever”, and is likely to result in the removal

• f

segregation

• f

duties note

• Able

to focus strategically

Over the Next Few Minutes…

…AND CONS

• In late 2014, CFCI’s independent auditors noted that

“CFCI transferred, under an agency fund agreement, certain assets to Greater Horizons, which are titled in Greater Horizons name. Further, there is no collateral

• r other security agreement with Greater Horizons and

the current organizational policies do not address concentration of credit risk.”

• As written, this caused some…consternation.

OUR RECENT (AND ONGOING) DUE DILIGENCE ACTIVITIES

Over the Next Few Minutes…

DUE DILIGENCE ACTIVITIES

• Analysis
• f

the relationship from a cost and service-level perspective

• Search

for

• ther

existing suitable back-office providers

• Phone

conversations with

• ther

Greater Horizons client CEO’s…”why are you worrying about this?”

• Meeting

with GKCCF President / CEO and Senior VP

• f

Foundation Relations and Operations, as well as members

• f

the CFCI Board

• f

Directors, Audit & Finance and Investment committees.

• A

few notes follow…

Over the Next Few Minutes…

GREATER HORIZONS COMMENTS FROM MARCH 2015 MEETING

Q: Why

does CFCI have to transfer assets to GH?

A: Because

GH is part

• f

GKCCF, a community

• foundation. They

are not an accounting, law firm

• r

third party service provider. They work with

• ther

community foundations much like an agency fund.

Q:

Of the

• ther

GH clients, has this issue come up before regarding assets?

A:

Yes, the question comes

• up. It

is a matter

• f

deciding where the risk lies…ask “are we

• kay

to do the internal controls

• r

are we better

• ff

using GH internal controls?”

• GH

has $10 million umbrella liability coverage and $1 million fraud coverage

Over the Next Few Minutes…

MARCH 2015 MEETING COMMENTS, CONT.

• Cyber

Security:

• Three

full time technology security technicians at GH

• They

use McGladrey 24/7 monitoring and conduct rigorous internal training

• Technology

and paper check systems are in place:

• Money

is not wired without a phone

• call. Multiple

steps are taken to ensure security.

• Bank
• f

America does not cash any check unless GH sends them the list

• f

checks that have been cut.

• There

are two signatures and three reviews

• n

each

• check. Checks

are sent back to the

• rganization

which is the fourth layer

• f

protection.

Over the Next Few Minutes…

DUE DILIGENCE ACTIVITIES, CONT.

• CFCI

has developed new internal processes to aid in monitoring financial transactions by Greater Horizons as they administer

• ur

accounts.

• Research
• n

the availability

• f

insurance policies to help mitigate risk

• f

asset loss, including

• btaining

a Crime / Fraud policy.

• Obtaining

a written

• pinion

from an attorney focusing

• n

exposure to risk, which resulted in a comprehensive list

• f

recommendations.

Over the Next Few Minutes…

THE RECOMMENDATIONS…

• Annually

request and file the certificate

• f

insurance from GH

• Purchase

a fraud insurance policy to

• ffset

possible asset loss

• Each

year the CFCI Board review the financial audit

• f

GKCCF and GH and any and all SOC 1 Reports (SAS 70 Audit). Make this available to CFCI auditors.

• Weekly

and monthly review by CFCI staff

• f

CFCI assets; monthly review

• f

account transactions by the Audit & Finance committee; and quarterly analysis by the investment committee

• f

investment returns and asset allocation

• Annual

review

• f

the MOA and Agency Fund agreement between CFCI and GH

• Maintain

detailed board minutes and

• ther

documentation reflecting the review noted above

Over the Next Few Minutes…

CONCLUSIONS

• CFCI

board members unanimously approved the recommendations

• Judged

risk to assets to be very low

• Agency

fund relationship essentially the same as we have with

• ther

clients

• Insurance

policy helps to mitigate exposure to loss

• Likelihood
• f

recoverability

• f

assets would be high

• Will

carefully monitor going forward, but “we are done worrying about this”