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Attorney James A. List Named President of The Arc Baltimore

New Slate of Officers Also Elected at Organization’s 2011 Annual Meeting

Baltimore, MD (6/21/11) — James A. List, founding partner of The Law Offices of James A. List, LLC, has been named President of The Arc Baltimore Board of Directors.

List, whose firm focuses a substantial part of its practice on working with families which have members with developmental disabilities, was elected to the post when The Arc Baltimore held its 2011 Annual Meeting and Awards Ceremony at the Crowne Plaza Baltimore in Timonium, MD. List previously served as The Arc’s Vice President.

Also elected officers during the Annual Meeting were: Carla N. Murphy, Esq., a principal in Ober/Kaler’s Employment and Litigation Groups (elected Vice President); Thomas Sand, a partner at Ernst & Young, LLP (Secretary); and Michael J. Young, CPA, a director at Stout, Causey & Horning, P.A. and SC&H Tax and Advisory Services (Treasurer). Gilbert F. Kennedy, III is The Arc Baltimore’s Immediate Past President.

“The Arc Baltimore’s Annual Meeting celebrates a tradition of volunteer and staff commitment,” says the organization’s Executive Director, Stephen H. Morgan. “The contributions and continuing commitment of these individuals have been critical to The Arc’s continued success in serving individuals with intellectual and developmental disabilities.” The officers assume their new posts effective July 1.

In addition to the election of new officers, the 2011 Annual Meeting celebrated The Arc Baltimore’s recent decision to join with a network of more than 700 other independent Arc chapters nationally in introducing a new mission, brand identity, and logo, all of which embody those qualities that have always been at the heart of The Arc’s mission - opportunity, achievement, respect, and connection.

“The new mission, brand, and logo mark our opportunity to build on the progress we have made, while continuing to raise awareness around the challenges faced by more than seven million Americans and their families as they strive to be fully included in society,” says Morgan.

About The Arc Baltimore:

Dedicated to helping individuals with intellectual and developmental disabilities achieve their greatest potential since 1949, The Arc Baltimore supports more than 4,000 Baltimore City and Baltimore County residents with intellectual and developmental disabilities and their families. As one of the nation’s largest and most respected organizations of its kind, The Arc Baltimore is an indispensable resource, providing vocational training, residential services, supported employment, and other programs and services. For more information, visit www.thearcbaltimore.org or call 410-296-2272.

The following article was written by James A. List, Esq. and recently published in Contributions Magazine.

When it comes to fundraising, many charitable, academic, and religious organizations are incredibly skilled. Some of these organizations have instant name recognition. They regularly receive media coverage. And they pull in hundreds of thousands of dollars from supporters in annual fundraising efforts.

There’s no doubt that successful fundraising is an acquired skill. It does not happen by chance.  It’s the reason why organizations compete so intensely to hire persons with outstanding fundraising skills and a successful track record.

Given that, it is somewhat baffling why so many of the organizations that are most successful in fundraising struggle when it comes to building an endowment. Other non-profits, meanwhile, seem to have struck a balance, building both highly effective fundraising efforts and endowments that rival the budgets of emerging nations. Why is that?

It is important to recognize that there is an inherent conflict between annual fundraising objectives and building an endowment. On the fundraising side, all organizations have to balance their budgets. Virtually all strive to grow the services they offer and the number of people they serve. Senior executives of these organizations often have bonuses tied to annual fundraising objectives. Boards of directors and trustees want to accomplish certain goals and have an obligation to their donors and constituents to do so.

Now add to this the fact that there are various non-profit certifications and standards, all of which tend to focus on annual fundraising, capital campaigns, board participation, and donor designations. An organization’s by-laws may even establish funding expectations.

All of these annual organizational goals conflict with building endowments. Endowments represent a long-term commitment for an organization. Endowments take time to build with donations and earnings. And bottom line, executives, board members, supporters, donors, and other constituents tend to be impatient. They want to see tangible results NOW.

Even in cases in which a non-profit has managed to build a substantial endowment, it’s often tempting to use endowment income or principal to meet current operating needs. Doing so, however, clearly inhibits growth and delays the endowment from providing its ultimate goals.

Take, for example, the case of a private high school that wants to create an endowment providing four $2,500 scholarships each year to needy children in each grade. To make that happen, Year One would require $10,000 per annum, Year Two $20,000 per annum (eight total scholarships), and so on, until there are $40,000 per year of scholarships being awarded, four for each grade. Assuming that the endowment earns 5 percent a year, the endowment would require $800,000 to be able to support these 16 scholarships.

That seems fairly clear cut, but every year the school has budget shortfalls. The teacher’s 401(k) plan is chronically underfunded. To address this issue, the school’s trustees vote to use 1.5 percent of the earnings from the endowment, or $12,000, to fund the 401(k). That decision, however, leaves the school facing a number of difficult choices - it can make aggressive and risky investment decisions in its endowment portfolio, eliminate the scholarships, or use endowment principal. The last choice impacts future earnings, as there is less principal invested. Besides, these decisions may be contrary to the donor’s intent.

This example illustrates the dilemma many non-profit organizations face in trying to build an endowment. The long-term nature of endowments is somewhat contrary to our collective natures. Directors, trustees, constituents, and donors want to see results. And trustees and employees often prefer funding a summer camp next year to deferring that camp for 10 years so that it can be funded every year thereafter.

Capital campaigns also conflict with endowment building. Capital campaigns have very specific goals - construct a new building, renovate existing facilities, acquire more land. The organization solicits regular donors for these campaigns. And sometimes when these capital campaigns fall a little short of their financial goals, other sources - most prominently, endowments - are “raided” to make up the deficit.

To address these and other issues which can make it difficult for an organization to build its endowment, non-profits should adopt the following guidelines:

1. Set specific endowment goals, with particular attention to the amount of principal required before funding programs, the use of income and principal, the investment policy, the protections from operating budget demands, and protections to a donor’s intent.
2. Separate endowment fundraising campaigns from annual and capital fundraising efforts, which will help to ensure that endowment gifts do not compromise other gifts from the same donors. (Endowment campaigns, in fact, are often directed to a small sub-set of the overall donor pool.)
3. Understand the basics of estate planning and taxes, and be willing to meet with a donor’s financial, legal, and accounting advisors.
4. Study potential donors and understand their charitable motives.

With respect to charitable motives, it’s important to recognize that people make donations for a variety of reasons. Some sincerely care about the organization’s mission. Sometimes, an individual has suffered from a disease or illness, and their family and friends make contributions to organizations which provide support, research, and care. Some donors wish to thank a non-profit that has enriched their lives. Still others are motivated by recognition. There are donors (or their families) who take great pride in seeing their family name on a building.

Rare is the donor who cares solely about taxes or recognition. Most endowment decisions are impacted by all of these issues. What makes this difficult for the organization is that each endowment donor is unique. As a result, endowment gift planning has to be done in small groups or with individuals, and it has to be personalized.  This time commitment is a huge challenge for most non-profit organizations - but it can be made easier if these guidelines for building an endowment are carefully followed.

James A. List is founding partner of The Law Offices of James A. List, LLC, a Mid-Atlantic law firm which serves business owners and individuals with estate planning, asset protection, and trust needs. In the estate planning area, the firm counsels clients in the use of asset protection trusts, special needs trusts, and dynasty trusts; traditional wills and revocable and irrevocable trusts; and powers of attorney and medical directives. The firm also focuses a substantial part of its practice on working with families which have members with developmental disabilities.