Issue link: https://nebusinessmedia.uberflip.com/i/1523493
HARTFORDBUSINESS.COM | JULY 8, 2024 25 FOCUS | NONPROFITS EXPERT'S CORNER Here's how to avoid common pitfalls when managing charitable assets By Ryan Leichsenring I f one was to ask the leadership of a nonprofit about the biggest challenge facing the organiza- tion, the most common response likely would revolve around the organization's financial sustainability and stability. These leaders routinely are tasked with accomplishing more with less. At the same time, they may not have a firm grasp on the laws governing the expenditure of charitable assets. A better understanding of these rules can help organizations satisfy their budget requirements and avoid several common pitfalls. In Connecticut, the management of charitable assets is governed by the Uniform Prudent Management of Institutional Funds Act (UPMIFA), which applies to organizations holding charitable assets as well as government entities holding funds exclusively for a charitable purpose. Enforcement of UPMIFA is vested in the Attorney General's office. UPMIFA unequivocally states that an organization must honor the gift restrictions placed by donors. For example, a gift may be for a specific purpose, such as a capital improvement project. Timing restrictions can also be specified. Donors also may not want the gift to be fully expendable on a current basis. This could be a new scholarship fund structured as a permanent endowment from which periodic distributions are made in perpetuity. An organization that does not follow these restrictions may find itself with a donor-relations problem as well as an Attorney General inquiry. Fiduciary duties As a practical matter, nonprofit leaders would be wise to consider some immediate first steps to make sure they follow donor intent. First, does the organization have records describing the gifts it received? If yes, these documents should be organized and the restric- tions recorded. If not, the organiza- tion should take reasonable steps to assemble records. Second, the nonprofit should look past the total account balance to see the allocation of organization assets that are unrestricted, restricted for purpose and those that are part of a permanent endowment, which may also be purpose restricted. This overview will provide leader- ship with a more accurate summary of what assets are actually available to them for their projects. And finally, the leaders should educate the full board of direc- tors on these issues, so they can best fulfill their fiduciary duties to the organization. Donor connections On a positive note, understanding how UPMIFA impacts organizational finances can empower a nonprofit to fundraise effectively and strengthen its financial position. While fundraising is often most effective with a specific goal to present to donors, an organization can inform donors of the plans but request that the gift be unrestricted so there is flexibility. Make sure to educate anyone soliciting funds that any promises they make to a donor will be binding on the organization. And be careful with using the word "endowment" — which implies a permanent restriction — in any solic- itation, written or otherwise, when what the organization really means is a financial nest egg. Informed organizations also use written documents with any donor making a significant contribution. A good written document avoids confusion on how the gift can be used and does not need to be long or complicated. A nonprofit might consider adding language that gives it the unilateral right to change the purposes and/or timing of the gift's use, if the current gift terms become impractical or impossible. And finally, if the donors are still alive, they can agree in writing to amend their gift restrictions. Orga- nizations will find that these conver- sations do not have to be difficult. To the contrary, these conversations can strengthen their connection with donors. Ryan Leichsenring is a tax partner with Day Pitney LLP in the law firm's Hartford office. Windsor Federal Bank recently announced numerous promotions, including elevating Lauren Murphy to senior executive vice president, chief financial officer and credit risk officer. The bank also named a new hire: Jason White as executive vice president, chief operations and innovation officer. In his role, White will lead and support the bank's operations, risk, information technology, retail and digital transformation teams. He previously held chief informa- tion officer roles at Boston-based Berkshire Bank and the former Savings Institute Bank and Trust in Willimantic, which was acquired by Berkshire in 2019. Other promotions at Windsor Federal include: • David DiPiero to first vice president, compliance officer • Anthony Hernandez to assistant vice president, portfolio manager • Zach Ramalho to assistant vice president, branch officer • Hannah Muska to assistant branch manager, officer • Tricia Goodwin to credit admin specialist • Sergio Salvador Viveros to credit analyst II Glastonbury accounting firm Mahoney Sabol announced the appointment of Corey Veneziano as a partner in the firm's tax department. Veneziano specializes in tax consulting, planning and compliance services, assisting clients in mini- mizing tax liabilities and overcoming specific challenges unique to their respective industries. Before joining MahoneySabol, Veneziano spent 11 years at CLA, located in West Hartford, where he held the position of tax partner for the last eight years. Sacred Heart University in Fair- field has promoted Jeffrey LaBella to counseling and collegiate recovery director in the school's counseling center. Sacred Heart hired LaBella in 2019 as a counselor and alcohol and substance abuse program coordinator. Prior to that, LaBella worked as a residential counselor at Silver Hill Hospital in New Canaan. Thomaston Savings Bank has hired Jeff Taylor as its vice president, senior commercial loan officer. Taylor has over 20 years of experience serving clients in various capacities. In addition to serving the Connecticut Air National Guard for nine years, he sat on the board of directors for the Connecticut Main Street Center for five years. Seven leaders have been elected to the board of trustees of The Wadsworth Atheneum Museum of Art in Hartford. They include: • Duffield Ashmead, a Farmington resident and senior partner at the surgical practice, The Hand Center. • Susan Chandler, a historical architect for the Connecticut State Historic Preservation Office. • Aaron Crosson Sr., vice president and chief operating officer of U.S. commercial and data analytics and engineering technology at Cigna. • Burke Doar, executive vice pres- ident of TRUMPF Inc., a global technology company based in Farmington. • Camille Donald-Simpson, senior regulatory counsel and head of U.S. government affairs at insurer Beazley USA. • Tamara Williams, who recently retired as vice president and chief compliance officer for Prudential Financial's global sales practices program. • Henry M. Zachs, CEO of MCM Holdings LLC and chairman of Ziplink Inc. Norwich-based Dime Bank has announced that Nicholas Statoulas, the bank's chief consumer banking officer, has been promoted to the role of executive vice president, chief operating officer. In this newly appointed position, Statoulas will retain all of his current responsibilities plus direct oversight of Dime's business development strategy and functions in greater Hartford, including management of residential and commercial lending teams. The Glastonbury resident joined Dime in 2018 to oversee the bank's retail banking area. He previously held leadership roles at United Bank and Rockville Bank. Movers & Shakers Jason White Corey Veneziano Jeff Taylor Nicholas Statoulas