443: Giving Tuesday 2019 Part I & Candid – Tony Martignetti Nonprofit Radio

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This week: 

Giving Tuesday 2019 Part 1
It’s time to start your prep for this rapidly growing giving day, this year on December 3rd. Asha Curran, CEO of Giving Tuesday, gets you started.

Candid
GuideStar and The Foundation Center have merged to form Candid. Their respective former CEOs are with me to explain what it means for your nonprofit. They’re Jacob Harold and Brad Smith, Candid’s CEO.

There’s more at tonymartignetti.com 

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Hello and welcome to Tony martignetti non-profit Radio. Big non-profit ideas for the other 95%. I’m your aptly named host. Oh, very nice to be back in the studio live after several weeks pre recorded and I’m glad you’re with me. I’d suffer the embarrassment of Mega Lo Kyra if you handed me the idea that you missed today’s show. E-giving. Tuesday 2019 Part one It’s time to start your prep for this rapidly growing e-giving day this year on December 3rd, Asha Curren, CEO of giving Tuesday, gets you started, and Candid Guide Star and the Foundation Center have merged to form Candid their respective former CEO’s air with me to explain what it means for your non-profit. They’re Jacob Harold and Brad Smith candids. New president on Tony’s take to summertime is planning time. We’re sponsored by pursuant full service fund-raising Data driven and Technology enabled. 20 dahna slash pursuing by Wagner CPS Guiding you beyond the numbers whether cps dot com and by text to give mobile donations made easy text NPR to 444999 It’s a pleasure to welcome Asher current back to the show with a new title she is CEO of giving Tuesday the global generosity movement that we’re going to learn a lot about. She’s also chief innovation officer at the 92nd Street Y, but not for long. She’s a fellow at Stanford University’s Digital Civil Society lab. She’s at Radio Free Asha and giving Tuesday Is that giving Tuesday dot or GE? I should current Hello and welcome back, Tony. Nice to be here. Thanks for having me. It’s my pleasure. Thank you. Um So tell me about your this new, exciting title that you’ve got CEO of of ah e-giving Tuesday. I didn’t know like that. Sounds to me like CEO of Of metoo are I don’t know, how does that work or CEO of Christmas? It is pretty funny. Well, so e-giving Tuesday’s the movement and on DH movements have lots and lots of leaders and all those leaders Coke create e-giving Tuesday e-giving Tuesday is also how the leadership and has a new organization. And as you know, we have seen incubated at the 92nd Street y forgiving Tuesday’s the 1st 7 and 1/2 years and so we’re going to be transitioning to become independent, which is really exciting It doesn’t make a huge amount of difference to your average e-giving tease, a participant or or a fan or super ambassador. But it makes a big difference to us because it’s really interesting. Actually, they consider that for everything giving Tuesday has has done and for how much it’s grown in the past eight years. E-giving Tuesday has never actually had a single full time employees, myself included, and that just became an unsustainable situation. So the 90 Seconds she wide Belfer center, which I direct the full time leadership and giving Tuesday, needs full time leadership. And and so I’m going to be transitioning out to work full time on giving Tuesday and really double down on arika. Wonderful, you’re our first guest on about giving Tuesday was Henry Henry. Tim’s the CEO of the many secretary. Why, after the first after the very 1st 1 Andi have sampled it from time to time after that, So So this is a paid position, all right, Where does the where does the money come to pay to pay you? Is that is that from the Why? No way. Stop, That’s that part’s not really changing. We fundrasing freezing Tuesday we had fund-raising for years has been very generously supported by the Bill and Melinda Gates Foundation, so they will continue to support us and we will continue to raise additional funds as well to support all the different parts of the movement that that we want to support and cultivate, including our leadership team. Yeah, and what are the other leadership positions? I don’t I don’t think people know this And plus, it’s all brand new so but I don’t think I know that it’s not new. It’s actually it’s not brand new over there. Over the years, we have built up e-giving Tuesday team court what we call our core team because it’s really important to distinguish the are core team from the leaders that exist all over this country and all over the world who are leading like entire giving Tuesday country movement Right there. We don’t consider them part of our quarantine, but there’s certainly part of our broader community and our broader network. We all work extremely closely together, but our team of 10 is my self, A data lead. We have a strategy lead way, have a fund-raising and data support. We have a global community manager. We have a social media manager. So yes, there are definitely people that are devoting lots and lots of time, making sure that we amplify all the good work that giving Tuesday is doing all over the world. You know, sometimes we have, you know, certain strategic objective that come from us. But often what happens e-giving Tuesday is that we see something, something meaningful, something inspiring, something that we think a lot of tension organically emerging from the movement. And then we, as a team talk about how we can best support that. So there have been lots of different examples our community campaigns, for example, which are entire state or small cities or big town whatever that come together to create a e-giving Tuesday campaign that pulls together all of the different segments and sectors of that community and really reflects that communities, identity and population and a sense of civic pride so that we had no expectation that that who happened, We just had no idea when we first launched e-giving Tuesday and that first, you know, years that Henry and I were working on it. That’s not something we expected to see. It happened. And so our job as a team was to make it at six. Cecil, as we possibly could offer all of the additional support convening power, all of that to what was emerging organically. Another example is our country’s leaders. We had no idea getting Tuesday. We cross borders now, As you know, we we predicated it on Black Friday and Cyber Monday on Thanksgiving, for that matter. But I mean, that’s all pretty us focused. But almost immediately giving Tuesday started to cross Borders, and now we’ve We’ve passed 60 countries, so we spend a lot of time in this sort of Pierre learning ecosystem that those country leaders have come to comprise. Okay, I see so right, not new, but I still, I think, widely unknown. I think people think it’s all undistributed, and, um, I don’t think that’s commonly know that there’s this leadership team of 10. That’s really no, I think you’re absolutely right and partial Tony, that’s kind of fine design, like we’re not, You know, we’re not enough self promotion, you know, exactly minutes, and I think it’s really interesting. You know, a movement can be leaderless right and that there’s nothing wrong with that. It’s just a different model on DH. Movement can be leader full, and we like to think of it in that way that we’re not the only leaders of the movement. But we are way are certainly hear ourselves as its backbone. Yeah, it’s all. It’s all very new power to give old Marge Teo Henry’s book and he’s been on talking about. He was on talking about it when it came out. Yeah, it’s all very new power. So are the Are the 10 people going to be full time e-giving Tuesday employees or just US CEO? No. So what? We’re going to be full time team final e-giving on Tuesday, the full time attention it really needs and hopefully, you know, fingers crossed. Many will raise enough money. Teo even hyre. Beyond that, I don’t think we need to ever become a you know, a a massive team. I don’t think we ever need hundreds of people, but I do think that as we expand to all of these different countries as we get more deeply into data work, we certainly want to be as well staffed as we possibly can be to try to achieve everything that we’ve achieved. But we’re very nontraditional when it comes to fund-raising as well, because we feel like we could do good with whatever we raised, right? So if we raise $100 will do $1000 worth of good with it. If we raise $1,000,000 etcetera Will Will will always parlay that into into exponential growth, as we have so far. All right, Well, congratulations on this new transition. Yeah, that’s happening in just a couple weeks, right? Is it July 1st? Is that one? It is, indeed. It’s happening on a lifer, so it’s really it’s really coming up, and I’m very excited about it. Awesome. Uh, we all are. All right. We gotta take our first break standby for me, Asha Pursuing two. They’ve got a podcast. Ah, and it is Go beyond. It’s hosted by their vice president, Taylor Shanklin, who is a friend of non-profit radio, of course, and has been a guest. Recent episodes of Go Beyond our Self Care for Leaders and for Digital Trends. For 2019 you’ll find their podcast go beyond at pursuant dot com slash resource is now. Let’s go back to giving Tuesday 2019 part one. All right, so that’s, er good news. Fabulous news. Congratulations again. So let’s, uh this is going to be the first of two times that Will, we’ll have you as, ah have the pleasure of you as a guest and now honored to have you as a full time CEO. Uhm, that’s kind of like that’s kind. Like any sample ward, our social media contributors. She started when she was marketing manager or whatever. What marketing lead for? Not for non-profit Technology Network. And then when she became CEO, she I’m glad stayed on as our social media on DH Tech contributor. So you’ll sew in your new position as a full time CEO of e-giving Tuesday. Well, we’ll look forward to having you back, and I’m glad you’re here today. So this whole announcement, Graham. I’m looking forward to you. Thank you. All right, um, so let’s get people motivated. Who have heard of giving Tuesday? Still, there’s still some reluctance, but I see I hear that waning. It’s not like in year one or two where, you know there was there. Was there a lot of naysayers that I think, at least in the press that I read. I think that’s declined. They’re still occasional, but you know, that’s fine. I mean, they’re entitled to their opinions. But for those who need some motivation for being involved with e-giving Tuesday on December 3rd of this year, what can you provide? How it’s growing, how easy it is to participate, etcetera. Oh, boy, we’re to start. You’re gonna have to shut me up, Tony. Okay, we’ll start with Okay, Let’s start with a couple of common misconceptions. Maybe works. So one thing that I hear expressed a concern is that e-giving Tuesday’s encouraging people to move money around on different days rather than being additive. Uh, we’ve done extensive data analysis on this and you know conclusively that giving Tuesday is indeed providing a net list and giving. So, you know, I think the concern that you’re simply moving the donor from December 31st to December December 3rd is pretty misplaced. I think instead, it’s best to think of giving Tuesday as as an opportunity to be more experimental as an opportunity to be more collaborative, not to use the buzzword, but as an opportunity to beam or innovative. I think that these are all muscles that be non-profit community really, really needs to flex its an opportunity to become more more digitally literate on fluent and and again, I think that that’s the muscles that the non-profit world needs. TTO play. So we see a lot of money being raised. Obviously, on the first e-giving Tuesday, we were able to count $10,000,000 being raised online, and they were able to count because, as we all know, data and the sexual notoriously poor and were able to count simply on aggregate total of the different transactional platforms to give us numbers and we add them all together. So that was 10,000,000 in 2012 and it was north of 400,000,000 this past e-giving Tuesday. And that’s that’s $400,000,000 that is made up of gifts, on average size just over $100. So we’re not talking big philanthropy here. We’re talking the grassroots e-giving. Our data also indicates, but be, uh, about 1/4 of giving Tuesday. Donors are new and about 75% are consistent, so it’s an opportunity both to rally your supporters that you have already and also to engage new ones so that sense of experimentation is often around. How could we speak to people in a new way that really gets them engaged with our cause or our issue? It means playing with a lot of traditional assumptions. And what I see a lot of is sort of operating, making decisions based on quote unquote best practices. That might have been true 10 years ago, even five years ago. That simply aren’t true now. And so I think it’s a really good opportunity. Just start from the ground floor, right? If you if you didn’t thank you. If you thought you didn’t know anything about donorsearch gauge Mint or stewardship, what would be the things that you would try? WAY have over 80% of our participating non-profits report to us that they use the day to try something new. To me, that’s a big metric of success. Even if they don’t make their goals because trying something new, that sense of experimentation bye collaboration. I mean reaching out to other organizations to look at them as mission aligned collaborators rather than competitors, as we so often do. We see a lot of that around giving Tuesday, and it really requires taking a step out of your comfort zone. But the lessons learned from things like that and the new muscles being strengthened, our things that benefit and organization all year round. Once you once you learn new lessons, you can’t unlearn them. So we don’t think of giving Tuesdays. Just how much money can you raise on this one day? But really, how can you think differently about engaging people around your mission, right? Not just around your bottom line, but really reasoned that you are the reason that you exist. The thing that you were here, the tackle okay. And the sector has been talking a lot about for years about collaboration. I I’ve heard it Mawr in grants, funding applications, clap teamwork, collaboration with other non-profits. But you’re talking about it in the digital space. So it’s it’s it’s billing over From from what I thought was the genesis of it, which was foundations wanting to Seymour collaboration. Yeah, I mean, when I when I talk about the kind of collaboration I see on giving Tuesday as far more than digitally, you know, we see groups of arts and culture organizations, groups of immigrants, rights organizations, groups, of women’s health organizations are looking out for each other to try to really Coke create not just a fundraising campaign, but really a storytelling campaign and awareness raising campaign. So it becomes less about how much can we raise versus them? Where’s our logo gonna go? How much credit are we going to get? And much more about we all exist to tackle this same mission. How creative can we get in telling a story about why this cause is so important? So I draw a real distinction between transactional collaboration, which is much more along the lines of I’ll scratch your Back, you scratch mine and transformational collaboration, which really involved taking the strength of different organizations and, frankly, different people. Right, because all of this stuff is actually driven by human thought organizations and bringing them together to create something entirely new. So I’m very in favor of that latter part of that lot of definition of collaboration, which also carries, Let’s face it, more risk right in giving up some control over exactly what you’re going to do in the first roll over some of your data, things like that on DH. I’m very much of the mind, that kind of risk tolerance, something that we that we very much wanna build If I’m in an organization and I want to raise this with my vice president or my CEO, how do I start to get buy-in? I’m going to find something that e-giving tuesday dot or gets going to help me get some organizational buy-in or get some talking points that I consulted. Thing. Raise the conversation. I think you know, doing this accessible giving Tuesday campaign. First of all, it doesn’t have to be its resource intensive. So that’s one way to get buy-in, right. Any any good leader should be encouraging their employees and not just only their senior employees, but all of their employees to really think creatively and to try new things and have some tolerance for failure. So I think trying something new on giving Tuesday can can be a pretty light lift financially, and that’s one way Teo that’s one way to sell it. Pointing to the data is another way, right? This is This is something that’s raising people a lot of money that’s forcing people to think different organizationally. That’s become so much greater than just a fund-raising Day that you know the reasons to try it are ample, and the reasons not to are few. It’s not going to do If it doesn’t work, it doesn’t work. We’re not about every single person participating e-giving Tuesday. But I think if you do go on giving Tuesday website way, always say there’s no such thing as stealing and giving Tuesday. There’s only joyful replication, so we way absolutely encouraged people go online. Read the hundreds of case studies that you’ll find their fund-raising case studies non sun grazing case studies, collaborative case studies, community foundation case studies and go on and on and on corporate, You know, houses of worship and find something that works for someone else and try it so it should be an opportunity to innovate. It shouldn’t be crusher to innovate, right? People should feel a sense of, ah, a sense of adventure when they embark on getting to a campaign. And I think one of the reasons that giving Tuesday is so sticky for people I mean real people, regular people, not sector people is because it has a very celebratory overtone right e-giving Tuesday is not about morning. All of the weighty issues that we all have to deal with it out, celebrated in our ability to make an impact on them. And so if you see all the photos we have the privilege of seeing from all over the world, we’ll see over and over again. Is Thies peace with pictures of people together and looking really happy? So there’s something about this sort of communal right giving as a human community that is very sticky to people. And I think that organizations do the best when they leverage that fact. Can you share a story? I know I’m putting on the spot. One of the one of the collaborative stories. Maybe it’s ah, couple of medium size non-profits. Anything come to mind that you can share so we could take this out of the abstract? Sure, although I hate to do it just there are so many. But I will take a couple of examples and before you do that, I will also say along the lines of selling it internally. Okay. Another misconception about giving Tuesday is that big organizations like multi national you know, huge budget non-profits do better than small and medium sized non-profits, and that is emphatically not the case. In fact, small and medium sized non-profits tend to do better, then huge non-profits, and I’m I’m quite sure that the reason for that is first of all, those. Those small non-profits can often tell Justus compelling a story, but also they often have the ability to be more agile. They left weighted down by bureaucracy, so they’re often idea they’re often able to just sort of put an idea out there, give it a try without having to run it through multiple layers of approval. Rating is important. That’s important for people to know. So one example that comes to mind is there’s a small community foundations in a town called Bethel, Alaska, which has, if I’m not mistaken, 12 area non-profits. Now this town is is the administrative hub for a series of native Alaskan villages that surrounded It has won four way stop, and a few years ago, on employee at that community foundation, not even the most senior employees decided to do a collaborative effort that brought together all of vessels non-profit. And so they did a volunteer campaign where people stood outside of that four way stop all day in a sub xero temperatures, and they gathered donations from passing motorists talking about their area, non-profits and all of the good they do. And then they divided that money equally between those non-profits. So that was an entirely new model and also just amazing story of leadership. That young woman is entrepreneurial and she is creative, and she was able to, you know, put this game changing idea out there. And so the fact that that could be implemented in a town like vessel and also in let’s say, the entire state of Illinois or New York or Arkansas is exactly what we had in mind when we created giving Tuesday as an idea that could really be adapted to anyone or any town or anything or any cause. One collaborative story that I really loved. Tony. There was a group of women’s health organizations in Wisconsin that had always been competing against each other for donors. Ellers we see so often that’s pretty much the default in the sector. And instead of doing that, they decided Teo again do this collaborative campaign. It was not about their their individual P and l’s. That was not about their individual brands But that was about the mission that they were trying to serve collaboratively rights and sew up. That seems so obvious, but I think often mission can become subsumed to brand. So these these organizations were all trying to help women in various ways. They got a local tavern to devote space to them tohave an awareness raising party, basically and fundraiser. And then they had that they got a ton of people came and they again distributed the funds equally. We also see models where organizations will come together, do a collaborative storytelling campaign, and then fundez goto directly to the whatever organization people want to donate too. So it doesn’t have to be that sort of equal divvying up of the pot. It doesn’t have to be anything right. It could be whatever a group of organizations decides hyre to co create together on DH more entrepreneurial better. In my opinion, this is a thank you. These this excellent storytelling in news for our listeners because they’re in small and midsize non-profits and your your larger behemoth organizations are are going to be to your point. First of all, it’s going to be difficult. And then in the end. It’s probably gonna not be so successful anyway, even if they’re even if you can overcome hurdles in willingness to collaborate. But but the small organizations, they have that agility. You’re right. They’re not so deep. And they can. They can knock on the door of another local organization or one you know, many states away, but you know, digitally, they can come together. Um, that so very good news for our listeners. Yeah, you’re exactly right. And then a big priority for us here. Tony is going to be too, too very intentionally Try to create more of those kinds of coalitions, even at a global level. Like so, even seeing organizations that are devoted to social justice of various types coming together to form interconnected network. Because we’ve seen how incredibly useful and productive and inspiring that is among the networks that have already been created with e-giving Tuesday if you can imagine an idea being born in Taiwan and then being implemented in Tanzania within the same two weeks, fan, if we created more of those kinds of network, imagine how radically change and improve the sector. How do you encourage that that international part elaborations about your first question, you know, why does e-giving. Tuesday Nida Core leadership team? I think part of what we what we exist to do is to set a culture and a set of behavioral norms and expectations within the broader giving Tuesday community on a big part of those norms and expectations are that we are as generous within as we are without. So the philanthropic community is often far less still in profit, inside itself, right inside, inside the bubble and with with each other with our what should be our colleagues. Then we are out into the world. And so our network of global leaders, for example, are connected every day, every single day of the year, not just about giving Tuesday. They consider it an obligation to share good ideas and things that have worked with the others in that community, and they find joy and reward in seeing those ideas picked up by others. So there’s no sense of I’m going to do something that works, and then I’m going to afford that ideas so that it only works for me. There’s a sense of I want to see this popping up everywhere because it’s because it’s done so well, we just have a couple minutes left. What are you alluded to? Outdated best practices. Could you, uh, identify a couple of those? Take a couple of those off that you think we’re holding on to need mistakenly. Yeah, sure. And, you know, I’m sure people will be very annoyed with me, but, uh, so one would be the conflict of donor fatigue. I think what I’ve seen, you know, from my observation and from the analysis that we’ve done of the data that we have available to us, donor-centric has become more of an excuse then a fact within the sector. Right? So you don’t see the corporate world worrying that it’s selling too hard. You don’t see the corporate thing that they’re making. They’re asking people to buy and buy again and by again, Right. But you do see that same worry in the sector that we’re over asking that people give. But then they get tired of giving quite on the contrary, our our observation and our own analysis find much more than generous. People are generous. They give over and over again. And they gave in multiple ways. And so you know when you look at giving Tuesday 2017 right? What you saw was ah, fall. That was a series of basically terrible things happening. There was a Hurricane Maria. There was Hurricane Harvey, that was, you know, any number of a natural disasters and people were giving after each one of those. And then they gave again in record amounts on giving Tuesday. So we do see some disturbing trends of e-giving going down. But we do see also these really hopeful trends of generous people giving and giving in multiple ways. The second outdated idea I think that I would raise is this idea that people give either in one way or another. So the way that that worry is currently manifesting in the sector is Oh, my gosh, people are giving so much to their neighbours kapin surgery on an individual cat with a crowd funding site that they’re not going to give anymore to non-profits. That seems to be a kind of logical reasoning, but we don’t see it and we don’t find it in our own numbers. On the contrary, what we’ve found is that he who gives the surgery are more likely to get non-profits because they are generous people and generous people give and they give in multiple ways. So I think, you know, back to your reference to new power everything has changed about the way that people engaged about the way that people communicate and about the way that people care about causes. And we need to pay such close attention to those huge ground 12 and tidal shifts so that we know what’s actually happening and react accordingly rather than do things based on the way people communicated and connected and engage her causes back in the day. All right? Or should we have to leave it there? That’s perfect. Thank you so much. Uh, so welcome. Thank you. Pleasure and perfect timing. Asha. Caryn. See, People think this all happens, but this is all planned out. This show was produced, for God’s sake Current. She’s CEO e-giving Tuesday doing that full time. Starting July 1st, you’ll find her at Radio Free Russia and you’ll find giving Tuesday and all the resources and the tool kit everything she’s talking about at e-giving tuesday dot or GE And I love seeing female CEOs. So congratulations again. And Asha, Thank you. Very much look forward to having you back in October. Thanks, Tony. And I do buy. Wonderful. We need to take a break. Wagner, CPS. They’re accountants, for God’s sake. You know what they do? Do you need one? Do you need help with your 9 90? Do you need a review of your books? And maybe it’s not a full audit? Um, you know who to talk to. It’s you goto wagner cps dot com to start, and then you talk to the partner. You eat each tomb who’s been a guest of times two or three on DH. He will tell you honestly whether brechner is appropriate for what your accounting needs are. So it started at Wagner cpas dot com. Now time for Tony’s take to summertime is planned. Giving planning time. I think this is an ideal time to give thought to either moving your game up in plan giving or um, for lots of small and midsize shops. It might be starting your plans giving program, which I’m always evangelizing and advocating for summertime is good time for planning. You can get your CEO tto take your proposal on the beach with her or read it on the plane. It’s a little slower time. I mean, it’s not dead. That was, I think that’s sort of outdated, you know, summertime dead time, but you have a little slower time. You can give thought to what you want to do, what you want to pitch to get your plan giving program started. And, of course, I advocate always starting with simple charitable bequests. The marketing and promotion of GIF ts by will so use summer time so you can rule out in the fall. Or maybe it’s a January rollout. But use this time to, ah, to advantage for planned e-giving planning and is more about that in my video, which is at tony martignetti dot com. And that is Tony’s Take you. Now let’s talk about Candid Sam. We have a guest. They are Jacob Harold. He’s executive vice president of Candid, the Data Platform for Civil society. He was president and CEO of guide Star. Jacob has worked at the Hewlett Foundation, the Bridge Span Group, the Packard Foundation, Rainforest Action Network and Greenpeace Yusa. He’s at Jacob. See, Harold, I hope we find out with C. C. Is for and candid is that candid dot or GE and www dot candid dot or GE and also a way of Brad Smith. He’s the president of Candid. He was president of the Foundation Center. He’s been at the Oak Foundation in Geneva and the Ford Foundation. He’s on the board of the Tinker Foundation and the advisory board of the United Nations Trust Fund for Human Security. Gentlemen, welcome to non-profit radio. Welcome back to both of you. Got to be here. Yeah. Great feedback. Thank you. Thank you. Brad. Uh, Harold Jay Jacobs. I’m sorry, Jacob. What’s the What’s the C for in your middle name? What’s your middle name? The C is for Christopher, my eldest uncle. Okay, Jacob. Christopher. Harold. But he’s just at Jacob. See Harold. Ah. All right. Um, I feel like we should start with Brad, the president of Candid. This all this all emerged in February of this year. Uh, what’s going on? A candid bread. Well, first of all, yes, it emerged as a 1st February 1st, but it’s been a decade in the making. The original conversations about this actually started in shortly after the recession in two thousand 9 2000 Can, uh, we started a series of deliberate conversations between the CEOs of both organizations at that time was Bob latto Huff from Guide Star, and we began to see a week collaborate together, commissioned a study into 2012 in-kind consultants to make the case for to bring the two organizations together at that time. The advice. That’s not so fast, but here’s what you can do to collaborate. We did that. We learned a lot about each other, establish a lot of trust among our teams and brought back to consultants in 2017 to take another look. This time they said, full speed ahead. Go for it. So 2018 we we barton long process involving both boards, uh, to do the pre work toe. Actually bring the two organizations together and we inked the deal on January 31st and launch Candid January February 1st on What? Why the name Candid? Yeah, that’s a lot of people ask that question. Which is good, right? I mean, that’s what the name should D’oh! Okay, we didn’t want to call the organization buy-in Foundation Center because, well, that would not be that wouldn’t that wouldn’t have been fair to guide Star That would not have been fairly crowdster. So exactly one. What the foundation center did already wasn’t really captured adequately by the name. GuideStar, in a sense, might not have been fair to foundation center, but would really drove. It wasn’t external professional branding process, that consultant. They did a survey of the staff and surveys stakeholders and the South overwhelmingly decided We need a new name going to leave the past behind and be an organization for the future. And we began to look around at all the names out there in philanthropy, and they’re all the centre for this center. For that, they’re all effective. They’re all sort of similar, and they started to throw at us one word names and the one they threw out there, which he sort of corrects our heads and candid. I was the one that ended up sticking for a lot of reasons. One, because it’s a really word that one was made in. The last words I write to it actually evokes the history of both organizations and our approach to information, which is to be candid about the real information about the sector to really show the sector as it is. So the people in the sector can can do good and make the world a good as it could be. Um, see, So Jacob what? What is the the advantage for non-profits? Our audience is small and midsize shops. How will they benefit from the new from candid? Well, you know, for the first year, you know, from the perspective of a small to midsize non-profit, not a latto current change. Both of the parent organizations programs are continuing, and we’re trying to strengthen them. But over the long term, we think that together we’re going to be able to serve the field as a hole in I’m totally new ways, and I’ll mention a couple. One is to provide a multidemensional view of the work of trying to create social good. What’s happened in the past. We’ve had these fragmented databases grant information over here, information about non-profits over their information about social indicators in 1/3 place, and we believe with databases and resource is and networks of the two parent organizations, GuideStar in Foundation Center. That candid can offer that full of you. Um and that’s gonna be important for small non-profits that don’t have the resource is to constantly hyre consultants to God and do a ton of research or don’t necessarily have the network’s toe have connections, too. The biggest foundations or, you know, the partners that might allow them to do more together. Um, and we also think that the set of resource is that the two organizations provided, um, can be presented in a way that’s just easier for non-profits access organized in a way that that really brings to the top. What’s most important? That’s one thing. The next thing is that by bringing the two organizations networks together, we think we can begin to weave together many of the different fragmented activities around the field. And for a small to medium sized non-profit, the most concrete example is filling out a proposal for foundation funding. But right now, if you were applying to 10 foundations, you’re probably filling out 10 proposals that are all different from each other but are actually asking a lot of the same questions on. And there’s a ton of waste in that process. And not only is their waist i’ma non-profit side, it makes it harder for foundation’s tto. Learn and compare with their peers. And when you look at the networks that Guide Star brings with some of the major technology platforms Google, Facebook, Amazon or major national donor advised funds. Fidelity, Vanguard, Schwab. And then you look at the network that foundation center has with local partners all around the country and indeed, all around the world, hundreds of them where their actual training’s actual relationships. You have a combination of bricks and clicks of a cyber network and human network that we think it’s really powerful. And so we believe that together we’re going to be positioned to begin to establish some common systems of how information flows around the social sector, not making judgments about one organization versus another, but just creating some efficiency in how people learn and how they share their story as an organization. Will we be seeing new new new tools and databases and similar to the Teo well, the foundation directory or the 9 90 offerings that Guide Star has? Will What what’s What’s plan? So right now we’re going through a process of trying to really understand each other’s tools in a much deeper way. Um, we certainly both parent organizations knew the other organizations core tools. We didn’t know him from the inside. So we’re going through that process right now. All of that functionality needs to continue because the ability to find a foundation or I learned about a non-profits programmatic objectives is going to continue R sort of medium term opportunities begin to weave them together so that we can, in one interface, begin to see how these different types of information interact. Um, there are some brand new products that we’re looking at. I’ll give one example is give lists, which are lists of non-profits recommended by experts or that reflect the portfolio of giving of a given foundation. There a number of other ways to generate them. Um, and that’s a tool that we’re that we’re working on right now. But the truth is, right then we have a lot of separate tools. What’s most important is to create a user experience that’s easy for people, and that helps them do their jobs better. So that may mean overtime, just like in the this combination of two organizations that we built that we blend together some of those tools, but keep the core functionality just make it easier to use. Tony, I think it’s, you know, it’s important. Both organizations have you No one through the the Syrians of you, you tell them I work in foundations dunaj, murcott, GuideStar. And usually they know you were sort of one thing. Like I’d say, Oh, yeah, I get nine nineties there or, uh, foundations that are in your foundation director online. Individually, we do so much more than that. So it’s taking all that so Muchmore putting it together, focusing and making much more tighter building synergies between the existing products and services, then building some new ones on top of that. But most important is making it really easy and clear for the user howto access. Exactly what that non-profit Exactly what that foundation social entrepreneur individual donor needs to do what they want to do in the world. Yeah, Andi, I’m glad you mentioned individual donor. This is Guide Star has been a wonderful, important resource. I think 10,000,000 users last year, Jacob. So this is all coming together for individual donors, too. So it’s so it’s ah, holistic in that in that respect that it’s it’s all elements of the community as well as people who are supporting it. A cz well as institutions that are supporting it. Yeah, way talk. You know, we sort of all state non-profit sexually say philantech sector. I think we’re all struggling for exactly what you call the sector. I mean, sometimes I hear it candid. We’ve been, you know, talking about the social sector. Because in today’s world, you have non-profit. You have individual givers. You have social entrepreneurs. You have be corpse. You have corporate social mance ability. You have a mission or impact investing. You have a lot of different kinds of organizations and individuals. They’re using a lot of different mechanism to create good in the world. And that is something that we feel as a combined organization. We can capture and synthesize and put out a really powerful way. All right, we’re going to take We’re gonna take our last break standby text to give. They’re five part email. Many course dispels myths around mobile giving. Earlier, Asher was dispelling myths around fund-raising. These do not mobile. Giving these these gifts do not have to be small gift. They could be in the hundreds. They don’t need to go through the donors phone company. That’s one way of doing it, but you don’t have to do it that way. And phone companies typically put a cap on these gifts. That’s why the misconception that they have to be small double digit gifts to get the email. Many course from text to give you text. NPR November Papa Romeo to 444999 I want to do the live listener love and and there is a lot of it. We’ve just going to go down the list of alternating between abroad and domestic. Young San Young, San Korea, Korea On your haserot comes a ham Nida Live listener loved their Henderson, Nevada, Tampa, Florida New Bern, North Carolina. Special, of course. Teo New Bern. Close to where I live, Washington, DC Reid City, Michigan. San Francisco, California. Brighton, Massachusetts. And Hanoi, Vietnam. Sand Salvador, El Salvador. I think that’s new. San Salvador. Welcome. Live love to you, Palestine. We can’t see specific region. We just know there’s a listener in Palestine, New York, New York. We have multiple and Brooklyn New York. Where’s Bronx? Queens? Staten Island. They’re not checking in today. Uh, but that’s all right. We’ve got Manhattan and Brooklyn live love to each of our ah, live love goes out to each of our live listeners. And, of course, the podcast Pleasantries toe are over 13,000 listeners in small and midsize non-profits, where they’re an executive director, fundraiser boardmember consultant to non-profits. That’s sort of the declining proportion that you each bear to our audience. The pleasantries air with you. I’m glad that you’re listening on the on the time shift in the podcast when it fits into your schedule. So glad that you’re with us. Pleasantries to our podcast listeners. We have, Ah, we have but loads more time, actually. For for Candid with Jacob Christopher, Harold on Brad Smith, Bradley Case Smith Don’t be formal. Let’s see well, some of the materials from Promise that Candid will further increase transparency and collaboration. Nasha and I were just talking about collaboration around giving Tuesday. Brad, how is this? How is candid going toe foster collaboration among entities within within our community? Well, you know, if you start to think about it, the two most important things to know if you’re going to collaborate our first of all sort of the lay of the land who is doing what? Where let’s say you’re under certain charter schools, you’re interested in animal rescue. You’re sitting human rights, whatever you need to know, and for a specific geography where you wantto work, who’s already working there and where the resources are flowing. And then the second thing you want to know is, Well, what to those that are already working on this issue? Know about it. If you don’t know those two things, you’re you’re likely to put your money where you can see they’re not needed or it won’t be effective. And if you don’t really know what people have already learned, you’re basically gonna be recreating the wheel. So with the vast resource is that both organizations bring to the table of candid, we’re going to be able to actually for geography issues and causes. So you, who’s doing the work on the ground? The different flows of money that air coming metoo support that work where there’s probably more money than I should be going where there’s not enough money and when there’s no money at all, and also by by capturing the outcomes and output to these organizations through our profile program, the research and evaluations and case studies who are issue lab resource. We’re also going to be able to tell you what’s working and what’s not. So you could really hit the ground running and figure out who the best partners are for you work. You know, the lack of collaboration in our sector in our sector is what keeps it from being more than the sum of its parts of the world. Needed to be more than the sum of its parts. You can pull all this all this together breath. We can pull it together. We’re already putting together quite a bit of it, obviously. You know, for some, geography is more difficult than the other. And we have global ambitions. We already have a lot of global relationship, do a lot of global work. Obviously, no one’s ever going to be comprehensive for the entire world. We have a really good shot at being pretty close to a conference on a lot of this information in the US. Okay. Okay. Uh, and of course takes time to develop this with the expertise and the data. The data gathering are, um oh, and and I apologize. Uh, your Bradford Smith, not Bradley got that wrong for that that happens all the time, But most people just call me Brad. I know. Well, that’s what I’m doing. But you could’ve corrected me. I would have been offended. Redford Cat. Okay, um, now I see lots of offices. Um, are those the old those of the foundation Centre offices in New York? Williamsburg, Virginia, Washington, DC, San Francisco, etcetera. Those those foundation centre offices? No, they’re actually have both offices. We had overlap in way have overlap in Washington, D C. And in the Bay Area. And we’re consolidating those into single offices in both places. And the other locations are either foundation center locations or, in the case of Williamsburg, where guys start has the bulk of its tech and customer support step. Okay. Okay. Um, Jacob, I wouldn’t ask you last time you were on several years ago, it was talking about the the overhead myth letter that you and I, Ken Berger and Art Taylor had signed as a CEO’s of ah, Charity Navigator and the Better Business Bureau. Wise giving alliance. Do you feel like way overcome that now? Are we gotten past the the anxiety that was Experian that donors were experiencing about overhead and the overweighted focus that some donors were putting on overhead. Are we past that now? I wish I could say we were, um so I don’t think so. I do think, though, in the last few years we’ve made some real progress. At least the nature of the conversation I hear within the sector has completely transformed the assumptions that non-profit leaders are making the way that some of the data platforms talk about and share information. Even the way the journalists address these issues, I think has shifted. But I think we have a long way to go to really have that message get into the minds of donors we keep in mind just in the U. S. We’re talking about 100,000,000 people. Um and we have decades of having reinforced this this false idea that the administrative cost ratio was a proxy for the quality of Ah non-profit. So I’m hopeful, but I also recognize it’s gonna take a while and a few other things that are going to be necessary if we’re going to get to that future where donors are really paying attention to results in potential and not an inappropriate accounting ratio And the most important thing is for non-profits to proactively offer an alternative to say I don’t want to be held accountable by this accounting ratio. I want to be held accountable according to results against my mission. And I define that as X, y and Z, and I really does put the onus on non-profits to articulate whatever numbers they think makes sense for their strategy in their mission. Um, and this is something that I think that candid will be especially well positioned to facilitate. We’ve already had 71,000 non-profits achieved transparency seal on Guide Star, which is now part of the Candid Portfolio, with many, many thousands of those providing specific quantitative, programmatic metrics that we can focus on instead of looking at, um at the administrative cost ratio and then, increasingly, some of our platform partners. He’s, you know, big technology companies in Silicon Valley and elsewhere are really thinking about how they might be able to help distribute that information as well. So I see a path to a future where the overhead myth is truly dead. But I think we still have a ways to go. All right, Jacob. Any any bitterness that that Brad is the CEO on your the executive vice president. Any lingering bitterness there? I mean, of course. Of course not. You know, Brad and I have known each other for a decade on, and we we have a pretty good sense of our strengths and weaknesses. And, you know, I think we both think that the two of us can each play important leads in this new organization, but that you need to have a division of labor on DSO. Brad is the chief executive. He’s leading the organization, and my primary task is to really think through the long term vision and strategy for candidate. We’re calling it candid 2030. Um, we’re really trying to think about big technology trends, big social trends and how those match up with our current capabilities, what we need to build, what we could accomplish over the next decade. So a lot of my attention is on that. But on that long term, um, and that’s really only possible, because I can count on Brad as he, you know, make sure that candid as an institution is coming together and, you know, becoming the institution. It we think it could be. All right, Brad, we still have a couple minutes left together. What else you want us to know about? Candid. That I haven’t asked you. Well, first of all, just, you know, a few things we learned from this. I mean, I think there’s a lot of interest in organizations in the nonprofit sector emerging, combining, working together. There’s a sense sometimes that there’s too much duplication. What organization doesn’t know what the other one’s doing and a lot of people are sort of seeing this is is really kind of an inspirational story because first of all, the idea came from us. I was a thunder for years. Jake, You know, I worked at a Ford Foundation Jacob murcott Hewlett Foundation and we, we, you know, probably presided over our share of shotgun weddings right where we basically used grants to tell non-profits they needed to work together or submerged. And those seldom really are successful. I think one of the keys to success of this is inspiration really came from the two organizations. The second thing is the thinking of Jacob mentioned taking up have known each other in a lot of different roles. They could was my program officer right When I was foundation center, he came and he did his first White Glove inspection tour, a cz, the program officer from the Hewlett Foundation to see if we’re worthy of continued support. Now we’re working together in this relationship, but that really establishes a foundation. The third thing is, the we learned to work together is organizations are tech. Teams are marketing our sales different kinds of teams through specific confidence building projects. Before we decided latto actually combine the two and then the last is the role of incredibly strong, dedicated board that you asked the question about you know who the CEO is. All those things were negotiated early on by the board, Um, and they had to master an enormous amount of information about the both organizations in order to go through those negotiations and did a fantastic job. So there’s a whole back story to this. What I think has a lot to learn from in terms of how these things work in the future for the sector. I like the idea that you’re you’re walking the walk in terms of merger and collaboration, Jacob, we have we have about two minutes left. Anything you know, you’d like to like to add? You sure? You know, I think it’d be good to just talk about division of Labor for the field as a whole. Um, and you know that a meeting a few days ago with a number of partner organizations, and we’re we’re talking about the need to figure out where and when do we defer to each other? Um, and that there are lots of topics where candidates Not the expert, um, say board governance of non-profits. And we want to defer to our partners at board source on that, um, we may have something Teo bring, but we we recognize that they’re playing a role, and we want to support that. And similarly, we hope that the field will look at us and say when it comes to questions of organizing data, which often can be really boring. But it turns out a really important. We hope that the field will embrace, um, things like data standards that we propose and know that if we are suggesting that these air the 10 questions we need to ask about a particular topic that we put a lot of thought into figuring that out and that we hope others will adopt that language. And the flip side of that is that that puts the onus on candid to really be accountable to the field and to really listen to the field and to ensure that the voices of those who are impacted by our decisions are heard and those voices are folded into the decisions we’re making. So we really do hope that the field will help us succeed, Um, by adopting some of the standards and tools that we’re putting forward. Um, and we also hope that the field expresses what it needs so that we can listen to make sure that we make the best choices possible. Alright, Tony, your international listeners heard there’s quite a few out there We are. We’ll have more and more information of that kind would be talking about tonight, um, from around the world, Southeast Asia, South Asia, Africa, Europe, Latin America. We have strong partnerships. We’re going to develop more, and it’s an important part of the future because, you know, this is a a increasingly globalized world we live in and are the information we provide. You have to take account of that. All right, that’s Bradford Case Smith. He’s the president of Candid. Andi with him. Jake of Christopher Harold, executive vice president of Candid. You find Jacob at Jacob. See Harold and Candid is at candid dot or GE and www dot candid dot org’s Gentlemen. Thank you very much. Thank you. Thank you. Alright, pleasure. Good luck and good luck. Okay. Next week, we’re gonna have more smart tech gift guests from 19 and t. C. If you missed any part of today’s show, I beseech you find it on tony martignetti dot com. Responsive by pursuing online tools for small and midsize non-profits, Data driven and technology enabled Tony dahna slash Pursuant by Wagner SEPA is guiding you beyond the numbers wagner, cps dot com and by text to give mobile donations made easy text npr to 444 999 Our creative producer is Claire Meyerhoff. Sam Label, which is a line producer, shows social media is by Susan Chavez. Mark Silverman is our web guy. And this cool music is by Scott Stein You with me next week for non-profit radio big non-profit ideas for the other 95% go out and be great oppcoll. You’re listening to the Talking alternative network. Good. You are listening to the Talking Alternative Network. Are you stuck in a rut? Negative thoughts, feelings and conversations got you down. Hi, I’m nor in sometime potentially ater. Tune in every Tuesday at 9 to 10 p.m. Eastern time and listen for new ideas on my show yawned potential Live life your way on talk radio dot N Y c Hey, all you crazy listeners looking to boost your business. Why not advertise on talking alternative with very reasonable rates? Interested? Simply email at info at talking alternative dot com dafs Thie Best designs for your life Start at home. I’m David here. Gartner interior designer and host of At Home Listen, Live Tuesday nights at 8 p.m. Eastern Time As we talk to the very best professionals about interior design and the design, that’s all around us. Right here on talk radio dot N. Y c. You’re listening to Talking Alternative Network at www dot talking altum dot com now broadcasting 24 hours a day. No. Yeah. Are you a conscious co creator? Are you on a quest to raise your vibration? and your consciousness. Um, Sam Liebowitz, your conscious consultant. And on my show, that conscious consultant, our awakening humanity. We will touch upon all these topics and more. Listen, live at our new time on Thursdays at 12 noon Eastern time. That’s the conscious consultant. Our Awakening humanity. Thursday’s 12 noon on talk radio dot You’re listening to the Talking alternative network duitz.

394: Avoid Website Ageism & Grants For Newbies – Tony Martignetti Nonprofit Radio

tony_martignetti_300x300-itunes_image2Tony’s guests this week:

Jessica Meister, web user experience specialist for Oral Health America; Matt Dragon, director of engineering at Charity Navigator; and Justin Greeves, senior VP of research at Porter Novelli. 

Also, Janice Chan, technical training specialist for development and alumni relations at Johns Hopkins Institutions & Danielle Faulkner, donor engagement coordinator for Baltimore Community Foundation.

There’s more at tonymartignetti.com

364: Labor Law & In-Kind Gifts – Tony Martignetti Nonprofit Radio

tony_martignetti_300x300-itunes_image2Tony’s guests this week:

Thomas Wassel, attorney & partner at Cullen and Dykman law firm.

Also, Maria Semple, our prospect research contributor and The Prospect Finder. 

There’s more at tonymartignetti.com

321: 2017 Legal Tips & This Year’s Board Retreat – Tony Martignetti Nonprofit Radio

tony_martignetti_300x300-itunes_image2Tony’s guests this week:

Erin Bradrick, senior counsel at the Nonprofit & Exempt Organizations law group (NEO).

Also, Greg Cohen, senior associate at Cause Effective.

There’s more at tonymartignetti.com

296: Purpose Driven Branding & GuideStar Platinum – Tony Martignetti Nonprofit Radio

tony_martignetti_300x300-itunes_image2Tony’s guests this week:

Laura Ferry, founder and president, Good Company. 

Also, Eva Nico, lead on nonprofit strategy & evaluation at GuideStar. 

There’s more at tonymartignetti.com

252: Labor Law & IRS Helps Your Marketing – Tony Martignetti Nonprofit Radio

tony_martignetti_300x300-itunes_image2Tony’s guests this week:

Thomas Wassel, partner at Cullen and Dykman.

Also, Yigit Uctum, CPA, senior manager at Wegner CPAs.

There’s more at tonymartignetti.com

208: Your Online Approach Plan & IRS Helps You Market – Tony Martignetti Nonprofit Radio

tony_martignetti_300x300-itunes_image2Tony’s guests this week:

Tulani Elisa is social media manager for Threespot, and Amanda Heidtke is director of digital strategy for Hodges Consulting, where Dottie Hodges is president.

Also, Yigit Uctum, CPA, senior manager at Wegner CPAs.

Read and watch more on Tony’s blog: http://tonymartignetti.com

134: IRS Sale In Aisle 403(b) & Compensation Clarity – Tony Martignetti Nonprofit Radio

Tony’s guests this week:

Evan Giller, partner at Giller & Calhoun

Gene Takagi & Emily Chan of the Nonprofit & Exempt Organizations Law Group

Read and watch more on Tony’s blog: http://tonymartignetti.com

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Hello and welcome to tony martignetti non-profit radio big non-profit ideas for the other ninety five percent you know me, i’m your aptly named host it’s friday, march twenty second i very much hope that you were with me last week don’t let me hear that you missed gary vaynerchuk. Gary shared insights and inspiration from his body of work and his book the thank you economy and amy sample ward and i talked about kindness, criticism and on honest online conversations this week i rs sale in aisle four o three b evan giller, founding member of the law firm of giller and calhoun, explains the i r s is fifty percent off the penalty sale for four o three b retirement plans that are not in compliance. Many plans are not up to code, and this is the year to fix those problems. We’ll talk about the common mistakes and what to do. Also compensation clarity a regular legal contributors jean takagi and emily chan of the non-profit and exempt organizations law group answer these questions how do you determine what’s reasonable compensation for executives? What happens if comp is excessive? What’s the automatic penalty that kicks in if you don’t disclose benefits plus, we’re going to do aboard role play, and we’ll see who chairs that meeting. This is from the non-profit radio vintage collection last october was a very good month between the guest today on tony’s take to my podcast for the chronicle of philanthropy that i do monthly fund-raising fundamentals, some details about that, my pleasure now to welcome evan giller he’s, a founding member of the law firm of giller and calhoun he’s worked on employee benefit plan issues, including retirement and executive compensation plans for over twenty years. He has extensive experience in plan, design and compliance and is a contributing author to the four o three b answer book. I’m very glad that his expertise bring us two brings him to the studio. Evan giller, welcome well, thankyou, tony, and very happy to be here. Pleasure. We’re all our lawyers, all lawyers and compliance issues today, but i’m going to keep you all of you on the straight, narrow, um, let’s start very basic so that we know that everybody i can figure out where they have a four o three b or they don’t. What is a four o three? B plan k so four o three b plan is a retirement plan that is only available to tax exempt organizations, not for-profit organizations or teo governmental organizations that are that are educational organizations like k through twelve public schools and state local universities and colleges. Okay, so the the reason that four o three b is in the code is because those types of organizations were deemed to need a very simple, fairly cheap way of providing retirement benefits to their employees. Now a tax exempt a charity could have, and we’re our audiences. The five oh one. See threes, no small and midsize charities. They could have some other kind of retirement plan for their employees. That that’s. Exactly correct. Until recently. Well, when i said recently, probably about the last twenty years, these types of organizations could not have a four. Oh, one k, but that’s not true anymore. They can have a four. Oh, one k as well or what’s known as a qualified for a one a plan. And i will keep the jargon to a minimum. A surgeon general has i know. Okay, is the rule but the ah that’s. A plan that although it’s under different section of the code looks kind of the same. It allows the employer to put in money on behalf of the employees accumulate amount that they could get when they when they were tired. Okay, so we have the former one case before oh, for a one. A cz. But we’re talking today about the four. Oh, three bees. Okay, what is the problem with some? I think maybe lots ofthe four o three b retirement plans. Right. So if i can i give you a little history here, please. On dh. We could go back far into the depths of the sun. Not too far from the nine hundred right? Stick by nineteen. Yes. Yes. But these plans were set up originally because it was perceived that college college professors could not retired because they don’t have enough teo enough money to retire on. And so these plans were set up, much like individual plans. Sort of like ira’s today. Individual annuity contracts were issued to the participants in the plans to the college professors. Ultimately, they were expanded to cover all five. Twenty three’s and these, you know, governmental educational organizations. And they were very lightly regulated for many years. And i should say that there are really two important regulators were talking about. As you said, we’re talking about the irs. We’re also talking about the department of labor and department labor also regulates these plans. And in the last since since nineteen, eighty six and on both of these organizations have decided that the four three v world was too big, too much like the wild west, but too big and needed to be increasingly regulated. Okay, so the plans became popular so popular that regulators got concerned about them. That’s, right? They became large, you know, with large for large tax exempt have giant plans on dso. The regulators did get concerned about them and wanted to make sure that they were being operated properly. Okay, because the ultimate concern is that we want to have money for the retirees that are participating in these plans. Exactly. And the other concern is that the three irises also two rules thes rules. Are they so the quid pro quo for the tax benefit that you get out of these plants? And the irs wanted to make sure that these rules were being followed. Properly. Okay, so rules are not being followed, and we have ah, we’ll get to this. But we have ah, we have a period where you can save some money on penalties for not following the rules. But what? What’s? The main problem is the, er, the plan’s. Right? So, okay, that’s, you and i introduce it, but you talk us through it. So the overarching issue here is that until two thousand nine, under the under the irs is rules. These plans weren’t required to have a document, a written plan that they had to follow, and a lot of these plans had they didn’t not have anything. But they had very sketchy documents because actually on the department of labor side, you were supposed to have a document as well. But nobody was looking too closely at it. And this is a document that it describes how your plan is goingto operate, right? So the document is you very often very detailed and it’s exactly how the planets to us to operate and also contains all the iris requirements. So in two thousand nine, thie iris the i recited set a deadline that by two thousand, by january first, two thousand nine every four three b plan with very narrow exceptions had to have this written document. This is the increased regulation that you were talking about it we’ll start to see. Okay, right. You had that january deadline, right? January two thousand nine deadline, right? And actually, in december of two thousand eight, justice everyone was scrambling to complete this deadline. The iris actually given extension to the entity. That’s. Nice. So it was a busy time for you when you got then you got eleven months. Reprieve. It was a fantastically exciting moment. Yeah, okay. Yeah, well, you were able to enjoy your holiday. It was in two thousand eight, although it wasn’t looking like you were going to exactly. Okay, so did they wait until december thirty first? They know one thousand deo, but was close. It was it was in the first week in december. It wass e-giving months. They like to suspense. Yeah. Yeah. So the but that deadline the end of two thousand nine came and went and held. And so all four o three b plants again. There are some very narrow exceptions. Had to have this written document adopted a formally by the organization by december thirty first, two thousand nine if you didn’t do that, you’re out of compliance. Your plan theoretically, the plan could be deemed to be failed failed very bad result. A failed plan means that all the money in it all of the contracts in that plan will be taxable. The contracts are all the all your employees that’s, right? Ok, that’s, right? So the so the danger of being out of compliance is what what’s what’s your employees going to suffer, they’re going to have a very bad tax consequence, and they go and they’re going to look to you as the employer, and they’re going to say, why did this happen? So the irs doesn’t like to invoke this nuclear penalty on plans very much disqualifying the disqualifying, pluck us, right? And so for a number of years, they have worked on a program that allows plans, and not just for three plants, but all kinds of retirement plans to correct errors so they don’t get disqualified. All right, so you were supposed to have been been had your plan document by december of two thousand nine, but since then they’ve been working. Tio get people into compliance because they know there are a lot that that didn’t make that deadline. That’s, right? Ok. And so they have said that the to the extent that you have failed to adopt, if you that you failed to adopt your plan on time by that deadline now att the end of last year they came out with a program the irs did. That said you khun submit ah, a plan document to the irs. Now pay a penalty and you will be absolved of having failed to meet the original deadline. Yes, you’re absolved. You brought into the fold. You’ll come to the flock, we will absolve you, but you have to pay a penalty. You are deemed to have to be in compliance. We have to pay a penalty. Okay. Okay. And that gets us to the fifty percent off no sale. So in two thousand and thirteen, if you have that one mistake and you could have other mistakes. But if you that one mistake that you veiled the plan document failed to adopt the plan document of time and you go in through this program, the irs is cutting the penalties in half for the course of the year. There’s. Your fifty percent off sale. It’s a sale. Okay, wei have just about a minute or so before before we take a little break. What? What needs to be? Well, first of all, you have to have your document, and then it has to be the documents to be correct. Is that right? Well, the actually when you go through this program, the irs is not going to give you an opinion as to whether the documents correct that’s. Another disney that’s. Another the process that we can talk about. You hear the irs just wants to see you have your organization has formally adopted the document. Okay, okay, all right. Why don’t we take that break? And when we come back, evan giller stays with me. He’s, a founding member of the law firm of giller and calhoun. We’re talking about the irs sale in aisle four o three b. Stay with us. Talking alternative radio twenty four hours a day. Are you confused about which died it’s, right for you? Are you tired of being tired? How about improving your energy strength and appearance home? 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The website is improving communications, dot com, that’s, improving communications, dot com, improve your professional environment, be more effective, be happier, and make more money improving communications. That’s, the hey, all you crazy listeners looking to boost your business? Why not advertise on talking alternative with very reasonable rates? Interested simply email at info at talking alternative dot com durney welcome back, i wish i could send live listener love, but we are pre recorded its a few weeks before march twenty seconds. I can’t send live listener love, but you know that we do love our live listeners. Evan, you and i are talking about i’m goingto introduce something to save you from jargon jail because you probably wouldn’t set it this way. I like to i like, i like this the v c p for e p c r s is now we’re talking about the v c p for epi crs way r and i’m glad i didn’t say that you wouldn’t have because your prison well, i mean, sorry, practicing attorney or not, you know, jargon jail is open for you and would have had quite an impact when the board of bar examiner’s or the new york state bar association found out about your felony jargon jail. So i’m doing it v c p for epc rs what does that mean? Okay, so those air to acronyms that that describe the this correction program that we’re talking about s o a p c r s is the is the acronym for the overarching program the employees plan compliance resolution system. Thank you. S oh, every wrote that down, but known affectionately as cpc arrest everybody. And v c p is the one of the components of it voluntary correction program and that’s important that that one, though, is important too. Spend a little time what those words mean because it means that you’re turning yourself into the irs. You have found an error, and you’re turning yourself into the irs to correct that error for a reduced amount of a fee. But it’ll be lower than if they caught you. Right? Fifty percent lower, you know, know that something else is fifty percent. Is the sale on the v c p fee for this year? For that? For that non non compliance ever that we talked about? Okay, but in general document, right, but forgetting about this year forgetting with percent off if the irs catches you in violation, it’s going to cost you more than if you turn yourself in now. Really? That’s the basic theory. Okay. Yeah. Okay. Um all right. So we know that the dangers if you’re if you haven’t adopted your plan document and there and i realize there are other things that could be wrong with your four three beer. We’re gonna have time to talk about those two. You have top five, evans top five, but so far now we’re just talking about not having adopted your plan document by the two thousand nine deadline. Um, your employees will face taxation. You’ll be embarrassed. Your planned disqualified there’s penalties for that? Of course, if the irs finds it. Okay, so what do we do now? If we we haven’t adopted our plan document. How do we enter this thiss rehabilitation program? So the irs has come out with a kit, actually, a compliance kit on blast. Three weeks or so. That takes you through all of the steps that you need to follow in order to get into this program and submit and get. Okay. And this is your doing. This is an outpatient, right? You’re not inpatient rehabilitation, right? That it’s? Yeah, that you basically are it’s all by the male, you know, you send in a document, sent it. But there are a bunch of forms that you that you need to fill out on dh sometimes, you know, you might find that you there kind. Of complicated there, an irs speak and you may want a little help but basically it’s a set of forms that you sent in with your document on proof that your plan has been adopted. Okay, now, what needs to be in this document, this plant? What is in what the parts yet so for three b document has to contain, at the very least, all of the requirements in that code section for four o three b flat. So what does that include that includes limitations on contributions that the irs provide requires? In other words, the irs says you can’t put in a zillion dollars for some rich. I mean, you the employee the employer can play okay. Limits on contributions. Ok? And those of of your listeners who are friendly with four three plans no, actually, one of the one of the most valuable and appealing aspects of it. His salary reduction contributions by employees where you put in money on a salary on it before tax basis into the plan. Just like four. Oh, one k plan and their limits on that as well. And those very strict limits on how much, how much input in direct, which in two thousand thirteen and seventeen thousand five hundred dollars okay, there are requirements that everybody in the organization has an opportunity to make those contributions on it before tax basis it’s called, and i know i’m sorry, i may be skinning a songs you define your jargon, i maybe yes, i’m you’re just skirting just but you won’t, right? You won’t be entered. So it’s called the universal availability rule, which means that, as sort of a zit says sounds that everybody in the organization with again narrow exceptions has to be allowed to make these contributions on it before tax basis. You can’t, they can choose. So this is who you invite to participate in your for three d plan, right? And you have to let them know that they’ve got that opportunity. You can’t keep it a secret on, believe it or not, i’ve seen some cases where they just the employer hasn’t told employees that they’re able to do that. Okay, so there’s that there’s their requirements for taking money out of the plan. They’re called minimum distribution requirements. When you get to be aged seventy and a half, you have to take out. A certain amount, because the iris really doesn’t want you dying with that money to pass it on to the next generation, same age at which you have to start your mandatory required distribution for ira that’s. Exactly right, it’s the same rule. Okay, it seems okay, there are there are other types of what it called nondiscrimination rules. You can’t give a lot of money to the top management a t the on give a lot less money to the rank and file give way give i’m sorry. I mean, make contributions to the plan at a higher level to the top management versus the rank and file. Okay, so they’re not discrimination. Discrimination on exactly can’t discriminate in favor of highly compensated people. Okay, so because this sounds like a very interesting. Now you draft these documents i’m way d’oh, d’oh! It’s good that there are people who enjoy the details of this it’s interesting to me, but i don’t have to write them so but what has to be in there is interesting. What? What? What are the little pieces? Should be so one of the things and this sort of bleeds over into you know things. That can go wrong. I mean, one of the ways these one of the things that you want to put in this document is let let’s say your plan says, were we the employees? They actually the employer i was going to make contributions on behalf of employees of five percent of compensation? That’s a typical plan or ten percent of compensation? You need to define compensation very, very carefully, it’s an area where there are a lot of errors, so some some places don’t want to include let’s say, bonuses some employers don’t want include bonuses some don’t want include overtime in the school world. They don’t want to pay perhaps coaches who get extra money for for coaching. So there is a very easy it’s, very easy to make an error in the way you write out your compensation definition, and then your plan is wrong you’re you’re making contributions on the wrong definition of company, okay? And as you said earlier, the irs is not passing on the correctness or the adequacy of your plan document under this under this correction plan under this period that we have, they’re just making sure that you have a plan. Adopted that’s, right? That under this very narrow piece that we’re talking about now, if you find other errors, let’s say you have the wrong definition of compensation, for instance, and you’ve discovered this. You can go in now, you can go in too. V c p okay, and you can say, hey, we found a mistake. We want to correct it in the correction programme for voluntary correction program under e p c r s and we we don’t, you know, we know we’ve made a mistake, we want to fix it and we’re going to fix it, and then you pay a fee on dh you tell the iris this is how we’re going to fix it now maybe you fix it by giving some people some additional money because you’re definitely comp it definition of compensation said that that you actually should have put in more money, for your definition was too low. There’s added compensation, which means added contribution by the employer correct, right? But now the fee that you paid this is not eligible for the fifty percent off correct only for adopting your plan that’s, right by well, failing to adopt the plan and correcting it. Failing to adopted on time, which was december thirty first, two thousand. Thie only place where you got that little sale. Okay, right? Let’s. See, how long does this does? V c p for the for the plan. Adoption correction. How long does that last? Is it just this year, or do we know? Well, dcp will be indefinite. Okay, cp, that fifty percent is just this year, but they but the process of going into v c p that’s an indefinite program that will be open for a long time. And and actually, there are other programs that the irs they’re going to know that it has said that they’re going to introduce that will work with the cp that will affect forthe brovey plans that this basically this area is evolving. Okay, okay. What is this? You get fifty percent off the penalty. What is the penalty based on how much is it? The penalty is based on the size of the number of employees that you have in the plan. So there’s a there’s a schedule? Um, and it starts at the very low end. It’s? About seven hundred fifty dollars, for really small plans. The penalty penalty. That’s the file gods called the filing fee. They could go into v c p but the penalty and it goes all. The way up to about twenty five thousand dollars if you’ve got a giant plan of ten thousand employees or more. Okay, so it’s based on the number of employees in your plan, is how much you’ll pay for filing fee euphemistically a filing fee, but you’ll get half off that if you’re if you’re adopting your plan newly in two thousand thirteen. Thirty right? If he’s missed the deadline and and this and you do that this year, okay? And that’s, your only issue, you know, if you’re going in with two issues, you know or three issues he found what? Look, i made a couple of other mistakes then that’s fulfill rate, but oh, you can’t piggyback you can’t pick you. You can slide in getting the plan adoption and then add a couple and quietly you’ve got a lot of other errors in quietly, you know? You know, tony have to wake up pretty early in morning to fool the irs. What? You okay? So suppose you adopt your plan, get the fifty percent off on that. And then later on, two months later or two weeks later, then you found other errors in your plan. You could do that, but actually it’s no point, because because the way the cp works and this is a good thing, you don’t pay anymore. If you’ve got one error with exception of this half off thing, you don’t pay anymore if you’ve got one hour or twelve hours, so you may as well just get him all fixed. Oh, so you’ll still get the fifty percent off on the plan. Adoption? Well, the penalty, but you’ll pay full freight on the other. Well, except that what will come out to is what if let’s say, if you go in, you failed to adopt and you’ve got two of the mistakes you’re just trying to game the system. You are, you are. But i guess they think the irs is a step ahead, right? It’s kind of embarrassing teo to sort of sum it up. The only way you get the fifty percent office is if you go in without one mistake that you failed to adopt the plan on time. That one mistake, that one was that the only way you get fifty percent off he’s going with two mistakes, you don’t have to pay the right, but what? Happens if you come in later with the second most? Well, then you’re paying one and a half times, right? You paying the fifty percent and then you’re paying a full fee. So why would you do that? You follow him saying so in other words, the if you if you buy for kate at the way you’re suggesting, then you’re paying fifty percent now and then you’re paying one hundred percent later. If you do both together now, you’re only paying on the feast get the penalty schedule is the same for the different. Oh, i thought maybe they were different now exgagement for different types of errors. No. Same. Okay, so okay. They thought of that. Okay. Um evan gillers, a founding member of the law firm of giller. G i l l e r and calhoun c l h o u n you’ll find them at giller calhoun dot com. Sounds like you should be out in the wild west. I don’t know oklahoma or wyoming. Just that. Calhoun. Well, you know, calhoun happens to be based in denver, so you’re not that far off. Really? Yeah. So this is you have two offices in new york. And denver okay, let’s spend time talking about some of the other errors that that maybe in your plan, you have top five and i think we’ve alluded to some of them, but we’ll make them make them explicit. What are let’s, let’s? Just get started. What what’s? The most common error that you see in in four three b plan. So you know, the most common error that we see again without without getting too deep into the weeds on that? Don’t worry, i’ll stop. You will stop, right? Okay, i’ll get lost, and then i won’t let you lose others. I said earlier that there are two regulators. One is the irs. One is the department of labor and department of labor. Is those those people who are at all involved retirement plans? We’ll know the dreaded a risa word. Arisa is the statute that governs were governed in play that you are, say, e r i s retirement income security act. Very excellent. Okay, okay, so the actual the most common error that we find actually isn’t a risa era and not an internal revenue code error and it’s worth mentioning because it’s a common error and it’s a serious error, okay? And that is when if you have a plan that allows employees to put money in on us on an elective deferral of salary reduction basis before tax basis like we were talking about before you have an obligation to send that money to the insurance company or the mutual fund for using mutual funds very quickly. You can’t sit on that money and let it sit in your bank account and say, you know, i’ll get to it in a couple of weeks. Really, even a couple weeks is not is too long. Yes, a couple of weeks, it will almost always be too long. Yeah, and in this day and age of automatic peril zsystems the department of labor thinks that two weeks is almost you could almost never justify. Okay, so what happens is that people get a little careless sometimes, and maybe the payroll person goes on vacation or they’re just the processes aren’t aren’t in place and the money sits there, and the and the department of labor thinks that’s a bad violation. They want that money going in quickly, because when the money doesn’t go on quickly, it doesn’t. It doesn’t experience investment return it’s sitting in your bank account in your theoretically getting interest on it, a zen employer. So the deal doesn’t like that. You need to be very vigilant about getting that money to your insurance company of mutual fund. What if we’re talking about the united states department of labor? We are right where we are. What if just, you know, like you mentioned your payroll person goes on vacation one time you were you were slow because the payroll person was on vacation and when he or she came back, they’d caught the mistake. But it’s been it’s been the two week vacation because they went, you know, they went exotic, maybe south asia or something took two full weeks vacation. Now they’re back. They realize the mistake, it’s only one time is this. Is this a big deal? Well, you know, you actually it’s a great question for a couple of levels. One is we really didn’t. We didn’t talk about this. I mean, there is a we talked a lot about filing with the irs and the fee and through the vc paid. In fact, when you have small violations on the ira side there’s something called self correction where you don’t have to file violations that fit within their their self correction program. Okay, khun, just be fixed without filing and the it means you don’t have to go and you don’t need to their approval. You don’t need to pay them anything. You just fix him and and i and that’s to a certain extent true with the department of labor to in that case, i would not call it a big deal. But i would say that if you found it, you should fix sit fix. It basically means giving the interest that the participants lost in the period of time that the person was on vacation. That two weeks it’s gonna be a tiny amount of money to weeks of interest on one one contribution you gotta give. Give e-giving. Okay, let’s, let’s hit another couple. We have just a couple minutes left zoho common errors. So another error is on dh. This also goes to what needs to be in the plan. There are these limits that the irs imposes upon these plans about how much money could go in in a year you’re mentioned earlier and they’re they’re two separate limits. They kind of work together, but there’s one limit that’s the total amount that can go in as an employer contribution and an employee contribution and there’s a separate limit that could go in as an employee contribution that’s the seventeen thousand five hundred we talked about the total limit is fifty one thousand dollars oversignt pretty little bit per year. Okay, and i’m guessing that the error is miscalculation. Correct the errors, miscalculation and and then there’s also a ah limit on the amount of money of salary that you can take into account in doing the calculations. So in other words, you say ten percent of compensation you can’t consider any amount of compensation above two hundred fifty five thousand dollars, so i’m making five hundred thousand dollars kazama. You know, i’m the executive director most of that much. Almost half of that can’t be included in my contribution. Okay, we have time for just one more top five. So so another another issue is this minimum distribution issue. You know, actually, i’m gonna go really one where i’m going gonna actually go to another one, which i think is probably more important. Which is loans and hardships. Many of these plans allow participants take loans, and they you can take a loan out of your own account and you have to pay it back. General, have to pay it back over five years a little longer if it’s to buy house or a hardship distribution, which is, if you have something really bad happened to you within the rules of the irs. What the irs considers to be really bad, including medical expenses within a sir. Certain limits. If you have a casualty loss, if hurricane sandy was a good example, if you get the house bilich list and what’s the what’s, the trouble with these hardships, they’re not. So the rules for the loans and the hardships are actually quite complicated, and they are often not applied correctly. Okay, we can we can correct these, though. All through v c p the voluntary correction programme. Correct. Okay. All right. Evan giller, founding member of the law firm giller and calhoun at giller. Calhoun dot com. Evan, thank you very much for explaining this. And being a guest. It was my pleasure. Pleasure to have you. Thank you. Right now we go. Away. And when we come back, tony’s, take two, and then compensation clarity with jean takagi and emily chan will stay with me. They couldn’t do anything, including getting ding, ding, ding ding. You’re listening to the talking alternative network waiting to get in. Are you suffering from aches and pains? Has traditional medicine let you down? Are you tired of taking toxic medications, then come to the double diamond wellness center and learn how our natural methods can help you to hell? Call us now at to one to seven to one eight, one eight three that’s to one to seven to one eight one eight three or find us on the web at www dot double diamond wellness dot com. We look forward to serving you. Hi, i’m ostomel role, and i’m sloan wainwright, where the host of the new thursday morning show the music power hour. Eleven a m. We’re gonna have fun. Shine the light on all aspects of music and its limitless healing possibilities. We’re going invite artists to share their songs and play live will be listening and talking about great music from yesterday to today, so you’re invited to share in our musical conversation. Your ears will be delighted with the sound of music and our voices. Join austin and sloan live thursdays at eleven a. M on talking alternative dot com. You’re listening to the talking alternative network. Lively conversation. Top trends, sound advice, that’s. Tony martignetti, yeah, that’s. Tony martignetti non-profit radio. And i’m travis frazier from united way of new york city, and i’m michelle walls from the us fund for unicef hyre. Welcome back time for tony’s take two again were pre recorded this week, so i can’t send live listener love i feel bad about that. I could guess a couple, i’m sure we have listeners from china ni hao and and we’re also we certainly have listeners from tokyo a bit there live listeners from tokyo and i forgot to have tio how teo konichiwa konichiwa for our listeners in japan and taiwan excuse me about taiwan is out there also where in the u s um, north carolina, california, new jersey, new york i hope i bet you’re out there. I’ll bet you’re out there durney stick to this week i wanted just remind you that i host a monthly podcast for the chronicle of philanthropy, and that is called fund-raising fundamentals. And this month i talked to consultant rosetta thurman about thie cycle in charities that causes fundraisers to be dissatisfied with their work and ceos to be dissatisfied with their fundraisers, which leads fundraisers to bail out of jobs all to the detriment of charitable missions. Now we talk with rosette about the causes and what fundraisers khun due to break the cycle and that’s on fund-raising fundamentals? You’ll find it on the chronicle of philanthropy website. You’ll also find it on itunes, and there are links on my blogged at tony martignetti dot com and that is tony’s take two for friday, the twenty second of march twelfth show of the year. I now have a vintage version of non-profit radio. This is compensation clarity with jean takagi and emily chan. Right now we have jean takagi and emily chan on the line. We have them, don’t we both excellent. Jean is principal of neo the non-profit and exempt organizations law group in san francisco. He edits the popular blogger at non-profit law block, dot com and he’s at g tak gt a k on twitter. Emily chan is an attorney at d’oh and she’s, principal contributor to the non-profit lob log she’s the american bar association’s twenty twelve outstanding young non-profit lawyer and you can follow emily at emily chan at emily c h a n a million gene welcome back. Hi, tony. Hi, tony. Good to have you back. We’re talking this month about compensation because it seems to flow from what emily and i talked about just a couple of weeks ago, so emily, why don’t you? Why don’t you lead us into this from from last month? Sure, so are lots. So he talked about the private benefit rules at at the ad buy squeezed in a very big phrase there the preventable cruise up to the reasonable miss, and we’re going to get not this show, but basically we’re going to look at the penalty that the irish usually while imposed when they find an inappropriate benefit going. Teo insider as we talked about last week, ok, so now we’re really looking at, i guess, practically speaking, the kind of penalties that organizations should be very knowledgeable about and also very wary of so that they could follow the best practices and make sure they’re protecting their organizations. All right, you were cutting out a little bit, emily, but we were able to fix the sound quality. Just say that. Say that. Say that very, very rich and wordy phrase again from from last month that will talk more about just say that again because you cut out a little bit there. Rebuttable presumption of reasonableness. All right, we look forward to getting into that gene. What are the general guidelines? For compensation for and who are we talking about? Whose compensation are we talking about? And what of those general rules? Well, practically speaking, we’re talking about the compensation of the executives, so that would be the executive director or ceo or president, and of the cfo or treasure the organization has compensated, chief financial officer okay? And what are the rules generally, that just that it has to be fair and not excessive, that that’s practically the rule, tony so it can’t be excessive and and the way we try to judge that is we try to look at what comparable organizations air paying, and so the big question is, what is a comparable organization and what is a comparable position to compare? You know who we want to pay to another organization and what what they’re paying, let me throw something interesting at least interesting to me, and maybe you have the legal minds may not find it interesting, but what i do over here, you said it’s only for executives, but what i see in ah lot at colleges and universities, the the highest paid people there are often coaches, sports coach is like a basketball football. Coach at at a big big, you know, big name program, does this this excessive compensation apply to them? Also are on ly to the executives of the organization that’s a great question, tony. Thank you. We’ll bring you back next month. Thank you. Dream the area when we’re talking about big institutions like colleges and universities and healthcare systems and big non-profit hospital, the range of what we call disqualified persons or insiders definitely goes up. People have substantial influence over the organization or a particular segment of that organization. So football coaches will probably be drawn in into that equation when they have a huge influence on on the institution itself. Okay, there are just more general rule beside the what we call the intermediate sanction rule. Their excess benefit transaction rolls the night i go into jargon dale for that. Oh, my god. Yeah. All right. We’re gonna get to that stuff, apparently. And broader doctrines that you could get in trouble for as well. Okay. Broader than just the executive. So it’s so it’s those who can exercise ah, lot of control over the organization, wherever they are, wherever they are in the hierarchy. That’s a good way to think of it. Okay, cool. That’s the late person. I’m gonna turn you, but you wouldn’t know it the way i talk. Okay. Let’s. See, what is this intermediate sanction? Emily what? Intermediate? To what? What’s, the more extreme. So the more extreme penalty comes from the world. We have that last month with private benefit private kermit, we’re technically really the penalty is replication of sabat on that thing’s pretty severe. Especially if a benefit confirmed it was only a little bit more than what it should have been. So what the irs produced then what? Something that they called their intermediate sanctions. Also the excess benefit transaction will which instead of replicating tax exempt status, so actually impose a penalty tax on that access benefits. So it can be suppose both on the insider who benefited. And it usually starts with a twenty five percent penalty talks of the excess amount. But also boardmember should know that they can also be taxed of ten percent of the access amount if they knowingly approve the transaction. Okay, knowingly mean let’s. Just stick with compensation at this point. Let’s not let’s, not get too the xx of benefits we’re just talking about direct compensation, cash, cash compensation. So so boardmember sze, who knowingly approved it meaning meaning they knew that it was excessive, right? So they have actual knowledge of the transaction, and when i use the term access benefit, i don’t mean the stuff on top of what say base salary, just an excess benefit itself, which could be a large compensation o just the way that i used that term in the way that fused with the rules. So um and boardmember, who would be considered knowingly approving such a transaction, would be someone who knows the terms of the transaction. I’m also aware of the possibility that that transaction might be excessive in violation of this excess benefit transactional on and also, you know, failing to make those reasonable tends to figure out whether it is actually excessive, but this goes back to the fiduciary duties of directors and making sure that there, meeting their duty of carrie’s, loves their duty of loyalty and making sure that they’re making informed decisions and that it is in the best interest of the organization by not being something that okay, and we have talked about those those duties those fiduciary duties previously can can these penalties that are levied against boardmember sze can they can they be paid by the organization? I’m generally no. So this would actually be triggered under state law of there are provisions that have to do is indemnification, which is the organization’s ability to cover expenses that would come out to a show like this. They’re being stewed in your capacity as like an officer dirac, the organization and generally that’s. Probably not going to be okay under state law, no matter what. Okay, okay. Let’s. See? Okay, gene let’s, let’s. Turn to you and let’s talk a little about the this the rebuttable presumption of reasonableness that emily mentioned before. What? What what’s that how does that play in here? So these procedures are useful wherever you’re know where you were, you know that you’re going to compensate one of these insiders amount that is not obviously way below market level, but you should go through these procedures just as a general rule. Anyway, if you’re anywhere near paying market rate compensation and their three step, the first step is getting advance approval by the board of directors before you. Enter into that confrontation transaction after the interested party there’s uninterested director in there is going to be compensated abstains from that vote and does not participate in that. Okay. And that would include on executive officer who’s who’s on the board. Because of that position, ex officio boardmember they should they should abstain as well if we’re talking about their compensation. Right? Okay, so you get the advance approval with with the abstention of the person who’s involved what it would else duitz step two is reliance on appropriate comparability data. So we’re looking at comparable salaries from similarly situated organizations for similar positions of similar work. So it’s all about getting the right comparable. It might be done through salary surveys, working with professionals that our salary experts in the non-profit area, or maybe looking at form nine nineties they’re different concerns about just taking other organizations form nine nineties to make sure that the right comparables but a lot of smaller organizations do it that way. What are those? Well, before we go on, what are those concerns about using the nine? Ninety? Well, they might not reflect in the nine, ninety special payments investing of like deferred compensation, though some organizations may look like they’re playing a really high salary, but those were just the result of past things that have been obligations that were paid in the reporting year. So you can’t really consider that a part of the the annual salary, for example, of that executive that showing on the nine, ninety that would not be good. Comparable. Okay, so i mean, can a small charity avoid having to hyre ah, compensation expert to do these comparability surveys? What are the other ways? Or maybe there is no other way. Well, there are some compensation surveys that are out there for free as well. You confined things from charity navigator. And i believe guys start might have some some compensation service for free. You have to be careful, though, because sometimes the ranges of the size of the organization don’t play in your favor. So, you know, they may say, well, this is the average compensation for organizations with annual budget between one million and ten million. And depending upon where you fit in that structure, using the average may not be appropriate for your organization. Right? Okay. Okay. Um and then add a couple more things to the comparability that it’s because you brought a small organization a general rule for organizations with less than one billion and gross receipts toe have at least three comparable so it’s not necessarily there. You know why spread search for comparability data. But tow have three is generally considered reasonable. And another thing to consider is really just giving you an idea of the band wins a salary that’s out there. But it would be problematic for an organisation to just look face purely on numbers and decide ok, just because it fits in the band with that that’s appropriate. I mean, that kind of goes back to your example of the football coaches where sometimes just so skewed that if you keep pushing the upper limit of the band, when you just start to see these ranges leaves up and up and you really do need a look that performance on the duties that are being like that? Yes. Okay, of course. The right, the person’s performance as well. Not just what other people are paying somebody similar in a similar organization. Okay, thanks so much. Thank you. Look at the geography because i know. In manhattan in san francisco, where we are the average salary’s going to be much higher than somewhere in des moines, iowa. Yeah. Okay. Okay. And there’s one more part to the rebuttable presumption. Can you can you explain that in about a minute, gene? Yeah, the third part is just timely. An adequate documentation of the board action. So that means really putting it down in the minutes on getting those minutes approved by the next board meeting. So you just want to make sure that you’ve documented it. And if you’ve got comparable, attach the comparable to the minutes to prove that the board has actually looked at these before making that determination and approval. All right, now that we’ve explained the three prongs of the rebuttable presumption gene, please explain what the hell a rebuttable presumption is. That’s great. What what it does is it shift the burden from your organization, have to prove that the salary is reasonable and shift it to the irs to prove that it’s unreasonable, which the irs doesn’t want to do because it takes a lot of work. So if you just go through these procedures, you kind of put a big barrier to the irs to go after you brew for paying excessive amounts because you say i’ve used the procedures that treasury regulations have approved this is the way it should be done in the iris used to get it back off at that point, unless they think they have a really big fight. So then write if you follow these procedures, the compensation is presumed to be reasonable. But the irs has the option, although it’s unlikely that it would exercise it to rebut that presumption and try to prove that the compensation was unreasonable. Is that right? If they want to take it to court, if there were. Okay. Okay. Likely. Okay, but it’s presumed rash reasonable if you follow the three prongs that you laid out, correct. Okay, we’re going to take a break. And when we come back, jean and emily and i are going to a little role play exercise, we’re going to be the board of directors and we’re going to decide on somebody’s compensation. Um, i don’t know. One of you two is going to chair the meeting, so you’re welcome over this break to figure out who that’s going to be. And i’m going to be a boardmember and then the other person be boardmember, too. So stay with us for that role. Play exercise. Don’t know what’s going to happen. I hope you’ll stay with us. You’re listening to the talking alternative network. Duitz are you stuck in your business or career trying to take your business to the next level, and it keeps hitting a wall? This is sam liebowitz, the conscious consultant. I will help you get to the root cause of your abundance issues and help move you forward in your life. Call me now and let’s. Create the future you dream of. Two, one, two, seven, two, one, eight, one, eight, three, that’s to one to seven to one, eight one eight three. The conscious consultant helping conscious people. Be better business people. Buy-in have you ever considered consulting a road map when you feel you need help getting to your destination when the normal path seems blocked? A little help can come in handy when choosing an alternate route. Your natal chart is a map of your potentials. It addresses relationships, finance, business, health and, above all, creativity. Current planetary cycles can either support or challenge your object. Dafs. I’m montgomery taylor. If you would like to explore the help of a private astrological reading, please contact me at monte at monty taylor dot. Com let’s monte m o nt y at monty taylor dot com. Talking alternative radio twenty four hours a day. I got more live listener love laurel, maryland bend, oregon, and tokyo welcome to our second listener in tokyo. We got more tokyo listeners than we have oregon or south carolina or north carolina listeners maurin tokyo than most other states listening. Okay, jean emily, we’re talking about compensation, compensation, clarity, and we’re going to our role play board board meeting now. Who’s the chair. I’m okay. Genes the chair. Emily, you and i are board members or way just regular boardmember zor is one of our compensation under discussion or what? I think we’re about boardmember okay, but neither of us has our compensation under consideration that person’s removed. Okay. All right. Go ahead, gene. You’re gonna share the meeting, okay, tony so right now we’re talking about approving the compensation of the candidate who is going to be our executive way, didn’t approve. We didn’t prove last month’s meeting meeting minutes. What kind of what kind of foisting? Of ah, fake what? We didn’t approve last minutes less months. Amina melkis consent agenda earlier, tunney and now we’re on the second part of our meeting. We’re okay. All right, go ahead. I’m taking my time taking my fiduciary. Duty very seriously. I want you to write that care, loyalty and what’s my third fiduciary duty. Besides karen loyalty, a lot of people like this, they obedience. Obedience. Okay, well, i’m not all right. Well, i mean, i’m failing on three, but but i’m taking my first two very seriously. All right, go ahead. Emily. Emily obviously doesn’t care, but she’s like lester, let me see lackluster boardmember i hope your term is up soon. Emily all right, okay, so we’ve got an executive director that we need to hire, and this executive director is pushing us for a salary of one hundred thousand dollars and the possibility of bonuses of up to twenty thousand dollars for pizza. We’ve got a million bucks in our budget, and we’re not really sure whether approve this compensation or not. He looks like a great candidate, but there’s some other candidates out there as well. What do you think, tony? Should should we hire this person that the salary they’re asking for? Well, do we have any comparable data by organizations that are similar to ours? Go thin geographics and also annual budget on dh with that data also be comparable in terms of this person’s responsibilities. Emily, i think you were convicted. You right? Collecting this data? Yeah. So i researched some organizations that of similar type similar size and similar roles of executive directors. And i found three different data points. So, uh, one and these they’re all in our geographical area. One is eighty thousand one. Report ninety thousand and another one report. One hundred and ten thousand. Okay. We’re looking at one hundred thousand with the possibility of a twenty thousand dollar bonus. What do you think, tony? Um, i guess the bass sounds or so we have. Eighty ninety. First of all, i’m assuming that emily knows what she’s doing when she says that these things are similar and putting a lot of faith in her because i could be personally liable if this turns out to be excessive compensation. Um, only if you know that it’s expensive. Funny, but that’s. All right, that’s. Right. Okay. Raise a good point about the line. What do you need? A reliable source. Okay, well, your outstanding young lawyer. So i’ll assume that you’re on. You’re on the board. Very in doing this. Surveys what i brought to the board. Meeting and we’re going to attach them to the minutes of the okay, i like the i’d liketo like the base of one hundred. I’m not sure about the extra bonus of twenty family. What do you think about that extra bonus of twenty when the high of our comparable is only one ten? I don’t think it’s necessarily problematic if we have adequate justification for allowing that for example, if thiss opportunity with this executive director is probably going to pass us by, we are in a bind because we’re now doing an executive director succession that we didn’t anticipate and the organization’s going to be really hurt if we don’t find somebody who’s qualified and this is the most qualified person we found and we’re actually getting a really good deal for this person and it is discretionary, so it’s going to be up to the board at the end of the year and we have put a limit on it, you know, maybe we should evaluate again looking at our revenues and looking again at the comparability data whether twenty thousand is reasonable, but i’m not opposed to putting the opportunity of a bonus into the contract. Right now, that’s. A bunch of malarkey. I’m walking out of this meeting. Did you hear me? Did you? My footsteps and i just slammed the door closed. I i’ll propose i’ll ask to see if there’s a motion to approve a one hundred thousand dollars based salary with a possibility of a ten thousand dollar bonus. And we will actually look at the possibility of a further ten thousand dollar bonus if we hit certain revenue goals that might allow us to look at other comparable, do you think that’s reasonable? All right, i’ll come back into the meeting. All right? I’ll go along with that. We have to wrap up our meeting very quickly. Yes, i would approve that. Okay, so family makes the most money. Wilbekin were approved. We’ve got it as a draft that being the diligent boardmember i am just a reminder that we need to have adequate documentation and our board minutes. So i’m going to write down the terms of the transaction. We approve the date it was approved, the board members that were present during the debate who voted. I’m also going to attack the comparability data on there and as well document the fact that we followed our conflict of interest policy and removed the executive director from the conversation that was emily chan she’s, an attorney at neo non-profit exempt organizations law group and our board chair was jean takagi he’s, the principal of neo. You’ll find them both blogging at non-profit law blogged, dot com, gene and emily, thank you very much. My pleasure, thanks to my guests this week, evan giller and emily chan and jean takagi next week, aziz said, i’m recording this show weeks in advance, so you’ll i don’t know what’s going to be on here the twenty ninth completely, but have i ever let you down? I have not. So hopefully you don’t think i have let you down? I do know, scott koegler will be with me on march twenty ninth. You can count on that good old scotty will be here. He’s, our technology contributor and the editor of non-profit technology news what’s he going to talk about the man is only human. I can’t ask him this many weeks in advance, but has he has? Scott koegler ever let you down? We’re all over the social web, but you can’t make a click without sparkle a testa smacking your head into tony martignetti non-profit radio itunes, facebook, youtube, twitter, linkedin, four, square pinterest. Slideshare facebook. If you’ve been to the facebook page lately, if you love the show, please like the facebook page and more of our information will get into your news feed. Our creative producer is claire meyerhoff. Sam liebowitz is our line producer on the assistant producer is janice taylor. Shows social media is by regina walton of organic social media and the remote producer of tony martignetti non-profit radio is john federico of the new rules. Oh, i hope you will be with me next friday, one, two, two p, m eastern on talking alternative broadcasting at talking alternative dot com. Oppcoll i didn’t think that shooting. Good ending. You’re listening to the talking alternate network. Duitz get him. Thing. Good hi, i’m donna and i’m done were certified mediators, and i am a family and couples licensed therapists and author of please don’t buy me ice cream are show new beginnings is about helping you and your family recover financially and emotionally and start the beginning of your life. We’ll answer your questions on divorce, family court, co parenting, personal development, new relationships, blending families and more dahna and i will bring you to a place of empowerment and belief that even though marriages may end, families are forever join us every monday, starting september tenth at ten am on talking alternative dot com are you suffering from aches and pains? Has traditional medicine let you down? Are you tired of taking toxic medications? Then come to the double diamond wellness center and learn how our natural methods can help you, too? He’ll call us now at to one to seven to one eight one eight three that’s two one two seven to one eight one eight three or find us on the web at www dot double diamond wellness dot com we look forward to serving you. You’re listening to talking alternative network at www dot talking alternative dot com, now broadcasting twenty four hours a day. This is tony martignetti aptly named host of tony martignetti non-profit radio big non-profit ideas for the other ninety five percent technology fund-raising compliance, social media, small and medium non-profits have needs in all these areas. My guests are expert in all these areas and mohr. Tony martignetti non-profit radio fridays, one to two eastern on talking alternative broadcasting are you fed up with talking points, rhetoric everywhere you turn left or right? 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