FY16 January BOD Meeting Minutes

Cantus
Board of Directors Meeting—1201 Marquette Avenue, Suite 100
January 25, 2016
6:00 – 8:00 pm
 
Present: Katie Berg, Pete Cochrane, Liz Cutter, Jim Dorsey, Chris Foss, Martha Graber, Wendy Holmes, Patricia Kirkpatrick, Libby Larsen, Noel McCormick, Brock Metzger, Marit Smaby Nowlin, Chuck Peterson, Jeff Reed, Karl Reichert, Paul Rudoi, Craig Shulstad
 
Staff: Jeff Bina, Joey Hillesheim, Mary Lee, Carly Thornberry
 
Absent: David Ranheim, Julie Carver
 
 
AGENDA
  1. WH: Call to order                                                                                 6:06pm
    1. Wendy Holmes presiding
  2. WH: Approve: Minutes of FY16 December meeting
  3. Motion: Pete Cochrane, 2nd Jeff Reed; motion carries
  4. CP: FY15 Audit and 990
    1. The Finance Committee recently reviewed the audit and met with the auditor.
    2. The audit was clean.
    3. The management letter included the following weaknesses in internal controls:
      1. Segregation of duties.
      2. Payroll Approval Process
  5. Approve: FY15 Audit
  6. Motion: Chuck Peterson, 2nd Libby Larsen; motion carries
  7. Approve: FY15 990
  8. Motion: Chuck Peterson, 2nd Pete Cochrane; motion carries
  9. Pete/ML: Case for diversity
    1. Pete: First we have to answer the question: what do we mean by diversity? The Governance Committee will address diversity, trying to establish what it means to Cantus, why it is important, and how do we sustain a commitment to diversity. We wanted to bring it to the board and gather data before further committee discussions.
    2. Discussion included:
      1. What does it look like for Cantus
      2. Initial steps for Cantus
      3. Ensemble must be involved in all areas of this conversation.
    3. The Nominating and Governance Committee will review this conversation and begin creating a workplan to bring back to board.
  10. Discussion: Committee and/or Company Reports
    1. Development report
      1. Carly: We had a very successful end of the year giving campaign. We are $18K ahead of this time last year in terms of individual giving. We are 61% to our goal.
      2. The most significant change in our approach was that our letters were segmented based upon specific patron giving history.
      3. Our next giving push will be around HSR.
    2. Open Rehearsal sign-up was distributed.
    3. HSR Volunteer needs: Saturday, February 27
    4. Idol Update
  11. CP: Treasurer’s Report
    1. Statement of Position:
      1. We were in a good cash position at the end of December.
      2. We had $80K drawn on the line of credit and $50K in payables.
      3. Chuck: We must now pay close attention to Unrestricted Net Assets which is the number that tells us how much capital we have once we take out restricted grants.
    2. Statement of Activities
      1. Loss in government funding from two MSAB grants that were declined.
      2. The budget is pretty much flowing as we had hoped it would flow – had we received the MSAB grants.
    3. Chuck: The Finance Committee met last week with the financial team at CLA and Alison, our contact from the Nonprofits Assistance Fund. We took a brutally honest look at our short term and long term challenges:
      1. Short term issue: how to we get to as close to a balanced budget as possible this year? We’re aiming for $40K shortfall.
      2. Long term issue: it will probably take us up to three years to get out of this financial situation. This is because 1) it won’t be easy to fill a $100K funding gap and 2) we won’t be able to pay off the line of credit this year – which means it will not be available for renewal – which means we won’t have a line of credit during the most difficult times of the next year.
      3. Mary is working on 18-month cash flow projection that will indicate what we need minimally to keep our organization moving forward. Her projection will inform what kind of cuts will need to be made. Expected for February meeting.
      4. Alison from NAF also made us aware that because we’ve borrowed against temporarily restricted funds in the past we’ve actually been running operating shortfalls. NAF said if we continue to borrow against temporarily restricted funds it could be the end of Cantus.
      5. Our long-term solution: NAF wants to help however they can. We had a conversation about our current line of credit becoming a longer-term working capital loan. This could be structured in a variety of ways, and it’s an offer we may want to consider.
      6. The Finance Committee will start meeting monthly. Next month we should come back to board with 18-month cash flow projection.
      7. Chuck: This really truly was a perfect storm. No one would have expected to lose two arts board grants in one year.
      8. Wendy: The silver lining is that it is a wake up call that will force us to face longer-term issues. We’ll be more durable the next time we don’t get a grant or face other financial challenges.
  12. Accept: FY16 YTD Financials
  13. Motion: Jeff Reed, 2nd Katie Berg
  14. ML: Shortfall review and discussion
    1. Mary discussed FY16 Shortfall Management Memo and the January projection included in board materials:
    2. Paul: The singers have created a forum to discuss these challenges and ensure a common understanding.
    3. Craig: I would hate to see this get in the way of the artists’ ability to do their work.
  15. Approve: 6-month elimination of employee 403b contribution
  16. Motion: Chuck Peterson, 2nd Noel McCormick; motion carries
  17. Executive Session: Board and ML to discuss shortfall
  18. WH: Adjourn