My last couple of posts on this blog revolved around inviting readers (most of whom are personal friends at this point) to share what they would do, personally, with a windfall of a million dollars.
The responses — some whimsical, some serious, some over-the-top in their attention to charity — carried forward a consistent theme (second only to that do-good stuff) of debt reduction and saving for retirement.
It wasn’t until after my follow-up post that it dawned on me how little was said about leaving inheritances for children. There were many references to paying for education for children and grandchildren — teaching them to fish, as it were, as opposed to stockpiling fish for them.
Meanwhile, this conversation has reminded me of an early experience in the psychology of non-profit boards. My first major development assignment was managing a capital campaign in the late 1980s to raise $2.5 million to build a museum for the Indiana Basketball Hall of Fame. Prior to and during that campaign, we were able to meet all the recurring annual operating expenses of the organization through the revenue streams from two existing special events, a banquet and a tournament. That allowed 100% of every outright charitable donation to go to the actual construction of the museum — although we had never made that explicit promise in our solicitations.
Once the museum was open, we suddenly had two significant new streams of recurring operating revenue — museum admissions, and gift shop proceeds. When combined with the old revenue programs and the fact that campaign pledge payments and even new gifts to “underwrite” naming opportunities continued to come in, we found ourselves in the enviable position of running a $200,000 operating surplus in our first year in the new building.
The board took to calling that balance “our endowment.”
As is always the case with new museums, attendance in the second year dropped, although we still banked another $100,000 operating surplus. By late in the second year, I was working on the operating budget for our third year, and grew frustrated at the board’s reluctance to re-invest any of the surplus — or even the interest it was earning — in new exhibits or programs or marketing expenditures that might draw enough new visitors to pay for themselves.
It took me a thoughtful conversation with my then-chair and mentor Tom Wallace to understand what was happening. The majority of the board — a great group of committed and hard-working guys (yes, all men) who were almost exclusively retired or nearly-retired basketball coaches and public school administrators — was telling me, “You’ll never build a retirement program if you don’t keep rolling the interest back in to it.”
I don’t mean to belittle that board. “Across the board,” they were the most equally-invested governance body I’ve worked with to this day. But they were projecting their own personal situations onto the organization. They saw our operating surpluses as a retirement fund, to be built up against that future day when other forms of “income” would go away.
As a group, their efforts had turned a $40,000-a-year operation into a $250,000-a-year operation. They feared that that six-fold increase might not be sustainable. I never did “win” that debate, but 25 years later the organization is still solvent and that “endowment” is now at $1.5 million — enough to be a significant contributor to future operating budgets. Only in the past five years have they had to start to tap into even the interest that that fund generates.
But I’ve also never forgotten that dynamic, and I’ve seen it at play in other organizations, especially churches. Perhaps it is “only human” to project our own personal financial concerns on to the organizations for which we are responsible.
But organizations — especially churches — should not plan for retirement. (Actually, some organizations do plan for self-liquidation. I’ve already mentioned the Nina Mason Pulliam and Herman Krannert trusts, and I’ll be coming back to them.) Churches, however, should have as a core part of their mission the constant recruitment and baptism of new generations into their membership.
For my Episcopalian readers, we are only days away from our annual meetings, when new vestry members are elected. I’m delighted, at Trinity Indy, to see that we have four younger candidates putting themselves out there for the risk of “rejection” that comes from standing for vestry and not being elected. It happened to me the first time I ran, and it was hard not to feel deflated by not being selected. It didn’t change my commitment to my church; and I’m sure the same will be true for any of these young people who don’t get elected this year.
But I also think it is very important that vestries and governing boards of any organization be balanced, with representatives of all their constituencies. Just as my daughters were more likely than my 50-something friends to look at a million-dollar windfall as a means of financing dreams, I think it is healthy for a governing body to have some representatives who are personally still looking forward to their peak earning years, and who project the same attitude of limitless possibility onto the assets of their congregation.