Kate.Barr
Forum Replies Created
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Our organization has had various roles with several organizations through the process of dissolution. The messiest ones don’t have the resources to satisfy all of their obligations, so that’s a whole different topic. Fortunately that’s not the situation here. I’d say that the key things to watch for/prepare for is to be sure there’s been diligent work to identify any and all financial or legal obligations, to work with employee benefit plans and insurance companies to make sure than any tails or ongoing liabilities or costs are accounted and reserved for, and to be sure there are board members who are aware of and prepared for the reality that they will have some responsibilities for a period of time after the dissolution (it could be a few months and it could be a full year.)
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Approving a deficit budget is a commitment to using reserves intentionally. It’s great if you don’t have to, but the practice of making them available seems like a statement.
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Thanks, Jennifer, this is a great example of an option that doesn’t require a while investment policy review and risk management. Banks offer sweep accounts and a few other cash investing options that aren’t top of mind for most of us. It’s a good reminder to probe and ask what they have available, and then to check around for other options. We had a sweep account as well and then when rates dropped so much in 2021 it wasn’t really worth it. As rates have gone back up this year it was worth reinstating the service.
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I agree, Dana, this is an important factor for many nonprofits. I’ve seen it addressed at two points in the process – the selection of an advisor or money manager and then at the investment policy level. I read an RFP for money managers last year that included some good language and criteria about this. I’ll track that down and ask permission to share it.
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That seems like a good approach, Dick. Did you have a process for choosing the community foundation to manage the funds, or has that been a long established relationship?