TUESDAY. Resource Raising: Developing a YBI Network US resource raising strategy.


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Andrew Devenport, CEO, YBI.
Henry Rogers, COO, Youth Business America.

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  • 5 mins
    Introduction by AD to the session.
    With particular focus on the goal of this session which is to initiate a process resulting in a strategy of how the members of the YBI Network can maximise the benefits of fundraising in the US.
  • 10 mins
    Andrew D and Henry R
    Four key donor types: 1. Mass market, 2. Wealthy individuals, 3. Corporations, 4. Foundations
    1. Mass market: difficult to capture, unsuitable for YBI network?
    2. Wealthy individuals/High net worths: c.2.2m in the US, 1% of population but c.42% of total giving
    3. Foundations: most giving from independent; historically only 6% of giving to international overseas recipients
    4. Corporations: corporations and their foundations c. $10.9bn, mainly from fortune 100 companies ($6m per firm)
    5. Public sector
    * Based on 2003 US market research
    Mass market: difficult to attract support without large scale presence, significant marketing investment and resources
    Wealthy individuals/HNWs
    Personal interest, relevant – NB Diaspora fundraising among wealthy individuals in the USA
    US specific interest in ‘naming’ or public philanthropy especially arts and culture
    Use networks to identify and approach e.g. Your Board, Diaspora network, local embassies, senior business networks
    Needs the personal approach, not ‘cold calling’
    3. Foundations
    Mission driven – very specific interests and remits
    Country/region e.g. domestic, Africa; sector e.g. education, health; type of intervention e.g. disaster relief
    Online resources
    www.foundationsearch.com; www.fconline.fdncenter.org; www.guidestar.com;
    Research, research, research!
    Find those with 85%+ fit with your mission areas
    4. Corporations
    Corporate social responsibility, recognised as giving back to the community
    Employee engagement
    Corps with interests/links/operations in your country
    YBI central point of coordination
    Finding a corporate champion, preferably a senior person within the business
    ‘Buffet approach’ of engagement opportunities and benefits including financial, pro bono, volunteer and employee engagement opportunities
    5. Public sector
    Tackling stated economic and social priorities
    Can be political e.g. Recent change in government has influenced policy
    Key factors for US donors:
    capacity building
    involvement with local community
    demonstrating why it is valuable
    American connection
    Source: US market research
  • Youth Unemployment is a significant issue in the United States and on that is growing due to the prolonged economic downturn. Statistics show that in communities where unemployment is running around 10-13 %, young people have rates between 25% and 50%. Frustrated by the lack of economic opportunity, and the ability to participate in traditional pathways to success they often turn to gang membership and crime to meet their needs.
    Though one of the wealthiest countries in the world, the United States has pockets of severe poverty in its cities existing side by side with great affluence. This is true of many of the communities that border the San Francisco Bay. Close to 1 million people live below the poverty level in an area where the cost of making ends meet is 2.5 times the official federal poverty level.
    The differences in quality of life are staggering. Statistics show that families from the poorer neighborhoods in cities like Oakland, Richmond and others have a life expectancy that is 10 years lower than their wealthier neighbors.
    It is surprising that micro-finance, while a concept growing in popularity in recent years in the Unites States, has had difficulty scaling in the United States. While ACCION is the most successful, it operates in a few only a few states. And of the 519 Micro-enterprise programs, none focus on helping youth start their own businesses.
  • Self Explanatory
  • 10 mins
    Philanthropy in the US is driven by Americans desire to give and get: give back to their communities and get back some of their tax dollars.
    To understand US tax code, one must understand that it has little to do with policy and much to do with Politics: who pays, how much and what are the exceptions to taxation. This results in a confusing array of regulations and forms that make little sense but are so ingrained in our culture that everyone accepts the process as normal. YBA in 2009 had three grants and $1,500 in expenses and had to submit a 25 page tax return that was based on a questionnaire that was 40 pages long.
    Tax regulations regarding charities impact two activities; rules on the reduction in taxes paid for donations by individual tax payers, and regulations governing the actiivities of charities that qualify for tax-exempt status. There are a variety of categories of Tax exempt charities including Public Charities supported by donations from the general public, Private Charities which are started by wealthy individuals (like the Bill and Melinda Gates Foundations). Each category has different regulations governing how they must operate to prevent abuse of the system. For Example, Private Charities in general must spend 5% of their endowment each year to maintain their exemption.
    There are also a variety of allowable activities which the IRS will permit to operated under “Exempt Purposes”. For YBA, our exempt purposes include operating a youth lending and mentoring program, and providing support for the YBI network.
    There is a differentiation between Tax-exempt Activities by YBA, and the tax-deductibility of donations to YBA and Charities.
    Principle #1: Individual Tax Payers (including companies) and some Private Foundations (under Expenditure Responsibility) need to make donations to a 501(c) (3) to qualify for a deduction: they cannot make the donation directly to a foreing charity and claim a deduction.
    Principle #2 Most other Public Charities, provided it is an “Exempt Activity” approved in their application to the IRS, may make donations to foreign Charities Directly.
  • 10 mins
    The IRS wants to make sure that funds raised from US sources are made to responsible and worthy causes overseas. Terrorism Financing is a major concern and focus of compliance.
    Earmarking or Pass-thru imply a Public Charity that is passively collecting money on behalf of, or controlled by a foreign Charity. To discourage this activity, donors will be denied a deduction.
    Public Charities, to preserve the deduction for their donors, must exercise and display Control and Oversight over grant funds flowing to foreign charities.
    “Designation”, the donor indicating to what foreign charity the funds will go to, is OK PROVIDED that the donor understands explicitly that the Board of YBA has the discretion to not follow the donor’s designation if it believes the funds have or will be misused. The funds won’t be returned to the donor, but used according the the Board’s discretion. The good news: the donor gets a tax-deduction.
    Friends of the Prince’s Trust operates under similar principles; Donors designate that the funds should go the the Prince’s Trust, but the Friends of the Prince’s Trust is an independent charity that has a board independent from the Prince’s Trust and receives reporting back from the PT as to how the funds have been utilized and they vote on each grant to the PT>
  • 10 mins
    To simplify the process of collecting donations through YBA for the Network, the following will occur.
    YBA’s by-laws and IRS registration permit grants to YBI as an “Exempt Purpose”.
    MOU Between YBI and YBA provides for groundrules, including OFAC Terrorism Financing Laws compliance.
    YBI prepares and presents a “YBI Buffet” grant request to YBA which includes a range of projects/countries it would like to provide financing, with milestones, reporting requirements and other KPI’s
    YBA’s Board approves the Buffet.
    YBI and affiliates conduct marketing campaign with individuals and companies, directign them to YBA.
    YBA receives funds from these sources, and confirms with donor what designaiton means and YBA Board’s full discretion.
    Quarterly, YBA Board will review grants, including performance of recipients provided by YBI. YBA’s Board will vote to approve grants, and YBA will remit funds to YBI.
    YBI will act as administator of the grants, and collect required reporting and send back to YBA.
    YBA will do periodic field audits of countries receiving grants.
  • This is the break -out and discussion phase.
    70 mins (45mins group discussions, 20 mins group report back, 5 mins summary)
    Suggest 5 groups separated by regions – because regional clusters may be the most relevant segregation .
    Latin America
    Europe, Canada
    Middle East / Africa
    Groups discuss the three questions, nominate a presenter to report back to the re-assembled group (in 5 x 4 min slots).
    AD gives summing up and that following GF a working group will be established to take this and other feeback and with YBA and YBI develop strategy.
  • This is the break -out and discussion phase.
    70 mins (45mins group discussions, 20 mins group report back, 5 mins summary)
    Suggest 5 groups separated by regions – because regional clusters may be the most relevant segregation .
    Latin America
    Europe, Canada
    Middle East / Africa
    Groups discuss the three questions, nominate a presenter to report back to the re-assembled group (in 5 x 4 min slots).
    AD gives summing up and that following GF a working group will be established to take this and other feeback and with YBA and YBI develop strategy.
  • TUESDAY. Resource Raising: Developing a YBI Network US resource raising strategy.

    1. 1. 26 May 2010 Resource raising Developing a Network Resourcing Strategy for the USA
    2. 2. Network Resourcing Strategy for the USA The aims of this session are, The opportunity of the USA • The resourcing opportunity • Introducing Youth Business America The mechanics of making and receiving USA originated donations • Key issues of raising tax deductable donations • Operational requirements Developing the network’s USA resourcing strategy
    3. 3. The resourcing opportunity
    4. 4. YOUTH BUSINESS AMERICA ADDRESSING A CRITICAL NEED  Young Americans impacted more than others by unemployment  San Francisco Bay Area has almost 1 in 5 families below poverty level  USA micro-enterprise development doesn’t focus on youth  Micro-finance in USA has scaling issues
    5. 5. YOUTH BUSINESS AMERICA IS: • A San Francisco Bay Area Pilot, commencing operations during the Fall of 2010 • Goal is 50 Entrepreneurs funded during first twelve months • Starting in late 2011, roll out program to other major metropolitan areas of the United States • Initial funding from the Arthur Guinness Fund, Ewing Marion Kauffman Foundation and Barclays Capital • Highly regulated as a lender; licensing in every state, subject to federal regulations on Equal Opportunity and Fair Credit
    6. 6. YOUTH BUSINESS AMERICA (2008,2009) 2008 Invited to attend the Clinton Global Initiative, Youth Business International commits to starting a Youth Business Program in the United States. 2009: February Youth Business America, Inc. forms as a 501(c )3 2009: September Diageo’s Arthur Guinness Fund commits $750,000 to launch Youth Business America at the 2009 Clinton Global Initiative 2009: December The Ewing Marion Kauffman Foundation commits $100,000 to fund Youth Business America’s Pilot Program.
    7. 7. YOUTH BUSINESS AMERICA (2010) 2010: January Office opens in Oakland with Volunteer Staff developing program 2010: February Pro-Bono Grants from Salesforce.com (CRM), Greene Radovsky and DLA Piper (Legal Advisors for Contracts and Human Resources) Deloitte provides in-kind services for Tax Advice and begins planning grant for infrastructure development 2010: April Pro-Bono Grant approved by Manatt, Phelps & Phillips for Financial Regulatory Advice; Licensing Application process commences.
    8. 8. • US Tax Code: Politics versus Policy • Variety of Tax-exempt Organizations • Tax- Exempt Activities vs. Tax Deductible Donations • Individuals, Companies (tax payers) and some Private Foundations need to make donations to 501 (c) (3) • Other Public Charities can make donations directly to foreign charities The mechanics of making and receiving USA originated donations
    9. 9. Fundamentals of Foreign Grant Making Process  Goal is to preserve donor’s Tax Deduction If donations are “earmarked” or charity a pass-thru, deduction denied, your donor is unhappy YBA must exercise appropriate Control & Oversight  Donor may “designate” but understand YBA board has final say The mechanics of making and receiving USA originated donations
    10. 10. Operations between YBA and YBI for fundraising. • YBA’s constitution and the YBI/YBA MoU • The approval process for a grant to your organisation • YBI co-ordination role: The YBI “Buffet” • Specific multi-year grants possible, but a challenge • Reporting and Communication not optional! • Compliance: no me metieron en la cárcel!
    11. 11. Any questions?
    12. 12. Developing the USA Strategy Breakout questions: What advantages do you see in working together for USA fundraising ? What is the best way to realise those advantages ? What resources can you commit to support such activities?