Community Foundation of St. Clair County

“There are a few instances, as explained below, in which one of the foundation's board of trustees has a business or family relationship with another of the foundation's trustees. Given the fact that the foundation's board consists of 29 voting trustees (including the president), no two or three trustees together could control nor place undue influence on any business or activities conducted by the foundation's board. Even with a periodic vacancy on the board that may arise, the resulting impact is immaterially changed. One of the community foundation's strengths is that our governance is structured to engage key community leaders from all business aspects and geographic areas of the county. Given this approach and the fact that our board is fairly large in comparison (at 29 voting members), there inevitably will be some situations where a relationship may arise. In each of these instances, however, the foundation has taken measures to maintain transparency, keep any transaction at arms-length, and enforce its conflict of interest policy. Annually, all board members complete a disclosure of potential conflicts of interest, including service on other boards, family, which is summarized in board books and are disclosed verbally and in meeting minutes when conflicts of interest arise. In their respective businesses, board members may have business relationships with other board members whether it is through a financial institution, law firm, accounting firm etc; however, the community foundation and its supporting organizations have had no involvement otherwise with the respective to those potential relationships. Following is a summary of the business and/or family relationships that existed in 2021: 1. The foundation maintains deposit accounts at all area financial institutions in an effort to demonstrate impartiality as well as to maximize fdic insurance coverage on funds held. Two trustees, will oldford and steve schweihofer began working together in 2021 at eastern michigan bank and trustees tim ward and donna niester also serve on eastern michigan bank's board. Another 2021 trustee, roy klecha is the retired president of northstar bank who still serves on its board. These deposit accounts meet the same requirements / criteria of accounts offered to non-profit organizations in the general public. None of these individuals are directly involved with our deposit banking relationships or serve in an officer capacity for the foundation, and none are authorized signers on those accounts or could not otherwise conduct activity for those accounts. Similarly, in their banking roles, each may have banking relationships with other trustees/banks; however, the community foundation has had no involvement otherwise with the respective businesses to which the trustees have relationships. 2. Two local attorneys served as trustees on the foundation's board in 2021, charles kelly and janal mossett, both of whom are partners at kelly law firm. Although the foundation would typically engage the services of independent attorneys when necessary, in the capacity of trustee, these two, given their expertise and knowledge, from time to time may provide legal counsel on general matters should such matters arise. 3. Trustee jim charron is a financial advisor with oppenheimer & co., inc. Who had a long-standing client relationship with the knowlton foundation and its founding family. In 2020, the knowlton foundation moved forward with its succession and dissolution plans, transferring all its assets to our community foundation in 2020. Pursuant to terms outlined in an investment policy addendum, the finance & investment committee reviewed and approved the donor's recommendation to retain the endowed assets in a separate investment pool managed by jim charron and ryan charron (his son) at oppenheimer. This donor pool's performance and compliance to our investment policy is reviewed quarterly by our investment advisor and finance & investment committee.”

“7. Several trustees have working relationships with another. As referenced in previous paragraphs, trustees william "will" oldford, steve schweihofer, donna niester, and tim ward have a business relationship through eastern michigan bank, and both charles kelly and janal mossett are partners at kelly law firm. Additionally, trustees gerry kramer and korissa wilkins both work at kramer realty, three other trustees work for the county of st. Clair: michael wendling as prosecuting attorney, john tomlinson as probate judge, and sherri faust as an environmental health educator with its health department. It should be noted that the foundation contracts with the county of st. Clair to manage the day-to-day operations of our blue water river walk property held in our supporting organization, blue water land fund. As employees of the county's court system, these three individuals were not involved with that transaction or those responsibilities. In all of these working relationships, each respective trustee was independently appointed to the board based upon his/her respective skill sets, experience, community involvement and other factors and their role at the foundation is not impacted by their working relationships. For the reasons outlined in the initial paragraphs of this narrative, similar to family relationships, the foundation's governance structure, and policies and practices are such that no two or three trustees together could significantly influence board action and foundation operations. 8. Trustee hale walker is part owner of mi mutual, inc., a local mortgage lender with offices adjacent to our foundation's office building. Trustee walker's business ownership interest includes mi mutual's office building as well as the courtyard parcel in front of our businesses, for which we jointly own. Beyond that shared property interest, the foundation's potential business relationships with mi mutual inc. Would be limited to the foundation being the recipient for charitable gifts, which would be handled similarly to those gifts from any other donors (see notes on trustee giving expectations above).”

“The community foundation of st. Clair county's board of trustees meet the last tuesday of each calendar quarter at a minimum. The business agenda of these board meetings include a review of internal financial statements and investment reports that have been reviewed and accepted by its finance & investment committee at one of their monthly meetings. Annually at the recommendation of its audit committee, the board of trustees engage the services of an independent auditing firm to perform an audit of its financial records and issue audited consolidated financial statements for the calendar year. Additionally, as part of the engagement, the auditing firm is hired to draft the annual form 990 for both the community foundation of st. Clair county and its supporting organizations, the community renaissance fund and the blue water land fund; however, community foundation staff are significantly involved in this process. Membership on both the audit committee and the finance and investment committee include a number of board trustees as well as other community members with financial or audit experience. Aside from meeting with foundation management, the independent auditors meet jointly with both the foundation's audit committee and the foundation's finance & investment committee to present the audited financial statements and review the results of its annual audit. Subsequently, the consolidated audit report is presented to and reviewed by the foundation's board of trustees at its june board meeting. Due to the timing associated with the aforementioned levels of review over the audit report, an automatic extension for filing of the form 990 (from the initial may 15th deadline) is typically required. After the final consolidated financial statements have been issued, the form 990s for the community foundation and its two "controlled" supporting organizations are drafted by the independent audit firm and its tax manager, with the direct assistance of the foundation's director of finance. The final draft of the form 990s are reviewed by the foundation's director of finance and then signed by the foundation's president and ceo before filing and after the board's acceptance. The form 990s (for the community foundation and its supported organizations) are distributed to the respective board of trustees for their reviews prior to filing. For the sake of transparency and time-relevance, it is the goal of foundation management to file the form 990s as quickly as possible. If a formal review at a scheduled board of trustee meeting is feasible within the timeframe, foundation management will do so, and the meeting minutes will reflect their formal review. If such a formal review will delay the filing unnecessarily, foundation management will distribute electronically (or in hard copy) a copy of the drafted form 990s for board trustees' reviews. An explanatory cover letter will accompany these form 990s with review notes that 'walk' trustees through the document and correlate the return back to the audited financial statements. This cover includes a request that trustees contact the director of finance with any questions and/or to schedule individual reviews as deemed necessary. Each board trustee is requested to document their acceptance of the form 990s formally via a reply to the electronic distribution, or hard copy distribution. Evidence of board of trustee review and approval will be retained in the form 990 files. Upon approval of the board of trustees, the form 990s will be filed. Electronic file versions of the form 990s are then made available on the foundation's website (www.stclairfoundation.org), uploaded to guidestar.org (a resource relative to non-profit organizations), and are also available upon request or in person.”

“The community foundation of st. Clair county and its supporting organizations have a board-approved conflict of interest policy that is consistent with such policies of the council on foundations and the council of michigan foundations. All board trustees, including foundation officers, committee members and staff members must review the policy annually and sign a statement which affirms that they: a. Have received a copy of the conflict of interest policy; b. Have read and understand the policy as well as the need to comply with the policy (given that the community foundation mission is charitable and in order to maintain its federal tax exemption it must engage primarily in activities which accomplish one or more of its tax-exempt purposes). C. Have listed all areas of potential conflicts of interest that exist as of the date they are completing the disclosure form, including service on other non-profit boards, financial interests, and family or business relationships; and d. Have agreed to disclose others as they may arise through the year, and when the potential for conflict arises, agree to verbally disclose such areas of potential conflict at all committee / board meetings. In 2011, the foundation established additional conflict of interest policy and disclosure criteria for the position of board chairman. This criteria is an appendix to the existing policy. Foundation management reviews these conflict of interest disclosures upon receipt, summarizes for the board and includes in board books. The disclosure forms are maintained on file. In conducting board or committee business, an interested person must disclose the existence of any actual or possible conflict, and be given the opportunity to disclose all material facts to the board and/or committee. After disclosure, the chair of the board or committee, along with staff, shall have an open discussion as to the material nature of the possible conflict. As deemed appropriate, the interested person may be asked to leave the room during discussion and voting, or the interested party may remain in the meeting and part of discussion yet abstain from voting on any motion. The chairperson of the board or committee may, if appropriate, ask staff and/or other volunteers to investigate alternatives to the proposed transaction or arrangement so that the conflict may be avoided. If the board or committee has reasonable cause to believe that a member has failed to disclose actual or possible conflicts of interest, it shall inform the member of the basis for such belief and afford the member an opportunity to explain the alleged failure to disclose. After hearing the member's response and after making further investigation as warranted by the circumstances, the board or committee shall determine the best course of action to avoid any real or perceived conflict. Such action may include revoking or changing any previous decision or action taken prior to learning of the conflict. The minutes of the board and committees shall contain the names of members and staff present at the meeting, the names of members who have a possible conflict of interest with the associated group, organization, business or transaction for which the conflict may exist, and documentation as to what action was taken in regards to the conflict.”

“Annually, an executive compensation committee, recommended by the governance committee and approved by the board, will seek input from the board of trustees on the foundation's president/ceo current year performance and then initiate an annual review of his/her wage and benefit package, including determination of a performance award (bonus) to be paid in january. On january 1, 2021, the foundation's president/ceo became fully vested in the final class year's deferred compensation benefits under the previous top hat plan, and the funds were distributed on january 26, 2021. It is the board of trustee's current premise that the president/ceo's accomplishments based upon input from the board, donors and community partners since his 2002 hiring is in the top 10-20% of all foundation ceos in michigan. Furthermore, it is agreed that the market for the services of foundation ceos is not restricted to this local region or even michigan but rather would extend nationally into the midwest's east north central region. It is the board's current premise that the president/ceo's wage and benefit package should be commensurate with his performance at the 75th+ percentile of foundation ceos in this broader region. In its review, this executive compensation committee will utilize compensation data from the annual council on foundations' grantmakers salary and benefits report for foundations with assets between $50 -$99.9 million in the midwest's east north central region. From time to time, the executive compensation committee may also review compensation data from the chronicle of philanthropy. The executive compensation committee's review of the president/ceo's wage and benefits package will take place each fall after the council on foundation's release of its current year salaries and benefits report, at which time they will develop a recommendation leading up to the board's december meeting. The executive compensation committee's recommendations address his base salary and benefit package in aggregate based upon his work for the community foundation and its supporting organizations, the community renaissance fund and blue water land fund, inc. His aggregate compensation and benefits are currently recorded in full within the community foundation of st. Clair county's financial statements and the form 990s for each of these respective organizations disclose that compensation and benefits package and the entity relationships. At each december board meeting, the executive compensation committee will seek board input and formally conduct the president/ceo's performance review with the board. At that time, the executive compensation committee's recommendation on the president/ceo's wage and benefits package is presented to take effect in the upcoming calendar year. Following that input and review, the board will take action on the wage and benefit package recommendation at that meeting or the upcoming january board meeting in conjunction with the president/ceo's performance award action for the current year to be paid out in january.”

“It is the goal of the foundation, its staff, and board to be accountable and transparent to our donors and the entire community by regularly disseminating our program and financial information. It is our intent to comply with the internal revenue code and regulations with respect to public inspection of the form 990s, irs form 990-ts to the extent a filing were required, and the irs determination letters for the community foundation and its controlled supporting organizations. Therefore, the foundation will: 1) make these documents available for public inspection at its offices during regular business hours without charge; 2) provide a copy without charge, other than a reasonable fee for reproduction and actual postage costs, of all or any part of these documents required to be made available for public inspection to any individual who makes a request for such a copy in person or in writing; and 3) upload and maintain on our website the foundation's audited financial statements, form 990s and form 990-ts to the extent filings were required for a minimum of 3 years. Additionally, the guidestar organization serves as a resource for those individuals and organizations wishing to research non-profit organizations by working with the irs to make available the 990s of all non-profit organizations. Recognizing that this availability is sometimes delayed and readers may not understand the full picture of who we are and what we do through the form 990 alone, the foundation will pay the nominal fee to voluntarily have its irs form 990s uploaded to guidestar's website, along with its audited financial statements that includes an opening cover letter from management discussing key philosophies, initiatives and the financials.”

“The community foundation of st. Clair county, tax id # 38-1872132, acts as common paymaster for both its organization and its two supporting organizations the community renaissance fund, tax id # 20-1649237 and the blue water land fund, inc., tax id 45-2908074. While all form w-2s are reported under and taxes are paid through the community foundation's tax id # 38-1872132, wages, benefits and related taxes are allocated and recorded between the foundation and its supporting organizations based upon the assigned responsibilities, time spent and specific work performed. Of the 16 form w-2s filed in 2021, 12 were associated with programs and initiated under the core community foundation, two of which are part-time employees and another two left community foundation employment in 2021. The remaining four form w-2s are part-time employees associated with our supporting organization, community renaissance zone, and its knowlton museum operation, two of which left employment in 2021. Although audited financial statements reflect the consolidation of all organizations, separate form 990s are filed for each organization independently. Consequently, this common paymaster status and the existence of shared employees should be noted. While the foundation's president/ceo and vice president oversee supporting organization's operations. And other foundation staff provide limited transaction processing, this time and related wages/benefits are absorbed under the community foundation's operations. That said, in compliance with irs requirements, wages and benefits for the president/ceo and any key employee (under irs definition) must be reported under the respective foundation and supporting organization's form 990s.”

“The community foundation holds a number of agency endowments, and our audited financial statements reflect these agency shares as a liability in compliance with the asc 605 accounting standard. Whereas the community foundation maintains legal ownership to all endowments, the respective agencies do hold a beneficial interest in related investments. Prior to 2021, form 990 reporting has mirrored the audited financial statements excluding agency gifts and investment earnings/expense. Community foundation board action would be required for release of agency funds, and thus, in retrospective, we believe that beneficial interest status deems agency fund shares as 'unrealized' until that action takes place. Consequently, beginning with the 2021 form 990, agency fund shares are no longer excluded from 990 reporting. Additionally for schedule a, part ii, sections a & b, the preceding four years 2017-2020 have been restated to provide an apples to apples comparison.”

“Prior year grants refunded 41,480. Agency fund activity -2,901,133.”