Community Vitality Center Governance Board Meeting Minutes

Gold Room, ISU Memorial Union, Ames, IA, April 24, 2003

Present: Beth Danowsky, Jane Halliburton, Mark Hamilton, Rick Morain, Art Neu, Steve Padgitt, Joan Philllips, Randy Pilkington, Randy Pleima, Guy Powell (A.M.), Doyle Scott, Tim Shields, Carol Smith, Mark Edelman, Interim Director; Sandy Burke, Recording Secretary.

Presenters, Invited Resource Persons, Guests: Don Buzzingham, Des Moines County Area Entrepreneurial Project; Terry Janssen, O’Brien County Regional Entrepreneurial Program; George Hammond, Palo Alto Area Virtual Incubator Project; Burt Chojnowski, Fairfield Entrepreneurs Association; Rand Fisher (P.M.), President, Iowa Area Development Group (IADG); Sue Cosner, Panora City Administrator; Mayor Jim Erb, Charles City (P.M.); Ellen Huntoon, Senator Harkin’s Office; Gilbert Phillips, Severin Roberts, and Karen Bolluyt (P.M.)

The meeting of the Community Vitality Center (CVC) Governance Board was called to order at 10:00 A.M. by Mark Hamilton, CVC Governance Board President. Hamilton asked those present to introduce themselves and then asked for comments on the minutes of the January 10, 2003 Governance Board meeting. There were no additions or corrections to the minutes and Guy Powell moved to approve the minutes as written. Seconded by Joan Phillips and all members voted “I”; none opposed. Minutes of the January 10, 2003 Governance Board meeting were approved.

Hamilton and Mark Edelman reviewed the agenda. Edelman said that the Board had requested to hear reports on the projects funded in the first year. The project reports would be spread over this and the next quarterly board meetings. Edelman also said that the Foundations Task Force had met in February and adopted a five step plan for Board consideration. Several legislative proposals emerged since the Task Force meeting. In addition, members of the Task Force have met with Michael Blouin, Director of IDED, and Johnny Danos, Iowa Council of Foundations and developed a “Rural Philanthropy Checklists and Briefing Report” on two of the legislative proposals (See cvcia.org website). As a result of the developments Board Chair Hamilton suggested the scheduling of a “Think Tank” session at this Board meeting with discussion of the new developments and next steps in mind. Jane Halliburton moved to approved the agenda and it was seconded by Rick Morain. All members voted “I”; none opposed and the agenda was approved as written.

Edelman introduced the morning presentations which were reports on four of the Entrepreneurship Pilot Demonstration Projects. These projects emerged from the Community Conversations on Entrepreneurship and were a part of second phase of the entrepreneurship project.

Don Buzzingham reported on the Des Moines County Area Entrepreneurial Project, sponsored by the Southeast Iowa Entrepreneurial Center, SCORE, SBDC, Extension and others to organize a collaborative initiative to inventory local support resources and create a business start-up manual featuring local contacts in printed and on-line form. This initiative grew out of the November 21st CVC community forum on entrepreneurship and a follow up January 22nd brainstorming session. They had decided to develop a localized business start-up notebook with local contacts and resources because all businesses had common start-up issues and they wanted to put the notebook online. They also were creating a theme or brand for the Burlington area and CD-DIAL had done 6 focus groups in support of this effort. Buzzingham said they were using the $10,000 from the CVC in a number of ways. Edelman added that he had attended the Des Moines County entrepreneurship forum and prior to that it didn’t appear that there was much collaboration but that now it did appear that collaboration was occurring in a much broader and more coordinated way.

The second Demonstration Project, the Northwest Regional Entrepreneurial Conference and Seeds of Success Program, was presented by Terry Janssen, sponsored by the O’Brien County Extension Council, Economic Development Corp, Community College, SBDC and others to provide training, assistance, and encouragement to Northwest Iowa residents interested in starting or expanding entrepreneurial businesses. He said that the CVC entrepreneurship forum was instrumental in getting people together and talking. They were going to organize a regional entrepreneurship conference for current and potential entrepreneurs. It will focus on business start-up topics. They want to promote sustainable entrepreneurial development. Edelman mentioned the equity capital tools and revolving loan funds in the farm bill and the state venture capital funds that could help them as well.

George Hammond talked about the formation of the Palo Alto Area Virtual Incubator – an Incubator Without Walls, sponsored by the Emmetsburg Community Development Commission and Palo Alto Extension, to create partnership that will sustain a virtual incubator of local expertise and mentors for assisting local business start-ups. They were working toward a partnership that would sustain local expertise and mentors for assisting local business start-ups.

Burt Chojnowski, President of the Fairfield Entrepreneurs Association presented a fourth Demonstration Project, the Jefferson County Entrepreneur Mentoring Demonstration Project. This project focused on expanding and sustaining a mentoring program to provide learning opportunities and support services in the area. There also was to be a Venture Capital Conference on May 8th that was being hosted by the FEA and co-sponsored by the CVC, IDED and others.

Edelman distributed a list with Board member term designations and nominations for the board developed by the nominating committee. [See Appendix]. According to the Terms of Governance, nominees can serve two full consecutive terms. Therefore, a person who had an initial one or two year term could still serve two full terms. Steve Padgitt asked if John Hartung did not accept the Board membership, did the structure of the Board need to have someone from the community colleges or private universities. Edelman said that Hartung agreed to have his name submitted until he found someone willing to serve. He added that the Small Business Development Centers (SBDCs) have linkages to the community colleges thus Lars Peterson also provides some representation to community college SBDC interests. Edelman added that previously the Board had suggested looking harder for minorities and women for the Board but fewer were in the final recommendations because of the standing membership requirement for the community college and private college representatives.

Art Neu noted that 6 people were going off the Board and 7 were coming on. Edelman said that the past Board included 20 members but the Terms of Governance allows up to 21 board members Neu asked if there was anything in the by-laws about people missing too many meetings. Edelman said there was no specific provision in the by-laws about board member removal for missing meetings. [However there is a stated expectation that board members responsibilities include attending meetings and participating in discussions and decisions.] Two members have resigned. In Governance terms allow for making nominations during the year.

Hamilton asked what was needed to amend the by-laws. Edelman said that there would need to be a majority vote of the Board [at two consecutive board meeting]. Hamilton commented that the efforts had not been successful to get the private colleges involved and perhaps they don’t necessarily perceive that they have a stake in the CVC. Padgitt noted that since the Board had now been functioning, perhaps there would be a better definition of private college’s involvement and what they might gain from it.

Neu said that the new nominations would be putting someone on for three years. Edelman noted that an entire group or association couldn’t be judged based on the participation of one or two individuals. Phillips said that the president of Buena Vista University was active and would be a good choice. Randy Pilkington thought that the Board had the right approach in letting the associations choose someone. Hamilton asked that if having 21 members was not allowed for the board what would need to be done to change the size of the board. Edelman replied that it would need a majority vote of the Board [at two consecutive board meetings]. Hamilton thought that if there were private sector people who wanted to be involved then there should be consideration given to increasing the size of the board.

Hamilton recessed the meeting for lunch.

Hamilton called the Board meeting back together and Edelman began a review of the Board’s interest in philanthropy issues. The Board approved a project related to philanthropy for 2nd year funding which was waiting on USDA approval. The Board had appointed a Community Foundation Initiative Task Force which met in February in Grinnell. The Task Force conceived a project supportive of private sector approaches to community philanthropy. The Task Force recommended a 5 step plan of action. Since February new legislation has been proposed with a bill coming from the Council on Foundations and another from Senator Angelo. There has been a meeting with Michael Blouin, Director IDED; and also with the Council on Foundations.

In meeting with the Council on Foundations on their legislative proposal, there was discussion of items that would be necessary to make the Endow Iowa bill more rural friendly. It did not appear that the Council on Foundations was interested in making such changes. Some on the Task Force thought it might be better to have the Endow Iowa bill rather than none at all. Others did not like the proposed bill and preferred there be no legislation at all. The Task Force analyzed the two bills and prepared a report on their rural implications.

Rand Fisher said that filing for nonprofit status with the IRS can take up to 6 months to a year. He also said that there was not a clear cut foundation certification process. Fisher said that the foundation certification issue was like that of certification of local chambers. There was a national chamber that can certify local chambers, but that most local chambers were not certified.

Neu wanted to see some clarification on the Angelo bill and the other bill. Phillips noted that lots of development activities are volunteer and they were not interested in achieving a level of sophistication required for certification. Smith said that the local level was of great importance. Danowsky asked what was the progress on the CVC project. Edelman said that the fiscal office advised that the initial steps not be initiated until second year funding is approved by USDA. He added that at the February meeting of the Task Force, the University of Iowa Nonprofit Center had volunteered to do the assessment of community foundations and that Iowa State would be doing the wealth study.

Padgitt said that setting up the foundation would be the easier part compared with getting people to actually give. Edelman saw three approaches in that the CVC could do our own foundation, the CVC could do this in collaboration with other existing foundations, or some combination of these. Hamilton noted that at the Grinnell meeting there had been agreement by the Task Force to go ahead and do the plan and the research things that needed to be done and then have an event unveiling this. Edelman thought that this plan was still able to be put into operation.

Edelman said that Jim Erb and Sue Cosner were invited to the Board meeting to provide some community input. Cosner has been working on philanthropy in Panora and said that they can raise money in the community but that it was a scattered effort. She thought that bringing these efforts together into one structure would be useful. She thought that help to small communities would not necessarily be forthcoming from agencies.

Erb said that in Charles City there is a foundation and at least 50 nonprofits. They don’t lack for project oriented fund raising but that he would like to go to a higher level with the foundation that they have but there is no staff with it. He thought that a variety of donors that one would need to work with couldn’t be reached. Staff and budget were needed to reach these donors and in Charles City they were trying to figure out how to do this. He also said that some of the nonprofits that were already there wanted to protect their donors and that there was concern of handing off donors to urban attorneys and banks. There was a problem in how to bring in other expertise without giving away control.

Morain noted that Maxine Moul would likely have had answers for the questions that Cosner and Erb have. Morain said that somewhere in our process there needed to be someone from the Nebraska Foundation or the Iowa Area Development Group to give consultation and guidance. Tim Shields thanked Fisher for his efforts on the foundations issue and asked where the Board wanted their discussion to focus. Edelman said that previously the Board had clarified how it would like to expend $20,000 of the $50,000 philanthropy project—that was to be for the transfer of wealth study, inventory of community foundations, and state case studies. However, the Board was not clear about whether the remaining 30,000 was to be (1) granted directly to communities for philanthropy demonstration projects, (2) granted to collaborating foundation entities to hire people to work with rural community leader interested in increasing philanthropy, or (3) to hire CVC staff that would work with collaborating foundations and rural communities. In addition, Edelman said the legislative issues had not been discussed by the board, and the emergence of the Iowa Council’s initiative and public incentives may influence how the CVC wants to proceed. Smith noted that the biggest issue may be the structure and platform of the foundation. Communities can raise money if they have a project but she wondered how to get them to raise money for something that benefits the community as a whole. Erb said that they were trying to reach farther to donors they were not already reaching. Smith said that this also needed a collaborative situation.

Hamilton thought that a session with someone like Moul could help these communities with these questions and added that community foundations would not all have a local staff. Danowsky wondered if there would need to be a person who could go to communities and work and consult with them.

Edelman suggested two questions to accomplish: 1) should the CVC give seed grants to development groups to hire staff, or 2) should the CVC hire staff to go and work with communities. Hamilton said there would also be the possibility to subcontract with Nebraska and have them come and consult. Erb suggested two things to focus on would be: 1) how to get the donations, and 2) how to invest and manage the donations and endowment. His suggestion would be to let market forces select the management and have the foundation focus on getting the money. Shields said that he liked the action part of Danowsky’s suggestion and thought there would be a range of needs by communities. For some there would need to be a raising of awareness that a foundation was possible. There would be others that were already knowledgeable and wanted to go to a higher level of sophistication. Fisher asked if there was a need for a statewide organization similar to Nebraska. Erb added that there was a need to find models that were not threatening to local level practitioners. Fisher said that the Iowa Area Development Group was not really ready to go to a statewide organization.

Pilkington commented that if one assumes that the legislation would pass, the Board should still not lose sight of what it was trying to do. There would still be a need for a statewide model and organization. It would be a repository of legal expertise and a source of how to organize and how to solicit funds. He added that the pending legislation would not meet our needs in terms of the transfer of wealth.

Neu commented that there wasn’t a community foundation in Carroll. Phillips said that Manning had 5 or so and that people would not let their money go to strangers. It took time to get a foundation going and for it to gain acceptance. She added that some there have said they don’t need any more new foundations. They should put projects together into the same foundation. Cosner said that even though there were questions, the contribution eventually does happen but that it wasn’t systematic and was done in a piecemeal fashion. Erb added that lower level contributions of $50,000 could be done fairly simply, but to reach up to $3 million that might involve a sale of a business much greater expertise was needed.

Danowsky commented that what we keep hearing is that we need someone to tell us how to do this. She added that perhaps we need a “how to” book on foundations. If we use the research of what we stood to lose, that is the wealth study, it had been very powerful in Nebraska. She said that if we are going to have a cafeteria of services then she was suggesting guides of how to move along in the process. Hamilton said that there would be a need for the professional or consulting expertise to go along to communities with the book.

Phillips said that we have been reviewing the things that brought us to this. Shields added that it was the wealth transfer, the short window of time, and that Iowa ranked low, 43rd, in charitable giving. Morain said that the Iowa Council on Foundations’ vision, if that legislation is approved, was that they would go out to rural towns and bring money into the nationally certified foundations—which are located mostly in the metro areas. He didn’t think we could rely on them to do this, particularly for small towns or rural areas that are not close in proximity to metro areas. This is where the CVC sees perhaps the greatest need. Erb said that there was potential in the transfer of wealth from a generation that still has a direct connection with Iowa even though they were out of state. He said that these people can be reached and some of that wealth could be brought back to the state. Hamilton added that the university foundations were good at fund raising but that they would not want to share with communities.

Smith said that we need to think about doing this as the CVC regardless of what happens with the pending legislation. She added that the issues are how the CVC can pursue how to help a community get organized for the common good, how we can use the service bureau model, and that people don’t let their money go to strangers. Hamilton asked whether we were now viewing the $30,000 of year two funding and trying to take the first steps toward creating a service bureau.

Edelman summarized that based on today’s discussion, the original idea of giving grants to communities does not represent the Board’s current thinking on preferred next steps. The Board appears to favor moving toward the development of a community philanthropy service bureau with a staff, materials, and possibly with some guidance from Nebraska and Task Force collaborators. Edelman added that this was probably closer to what Moul had suggested as a first step which was to have a core staff who were dedicated and knowledgeable and who were not part timers. This staff would then be the ones to go out to communities. Shields thought that Edelman had summarized and reflected the Board’s discussion and he asked if by the June Board meeting if a model could be presented. Edelman said that a beginning model could be worked out with the Foundations Task Force by the June meeting.

Hamilton asked if we were going to be hiring staff. Padgitt said that hiring staff would take the CVC in a different direction than originally planned. Hamilton said that staff could be contracted out. Phillips noted that the audience of Fisher’s organization was fairly rural and it was a likely organization that is known and also which knew the communities. Fisher said that this philanthropy effort was core to community vitality. As a foundation, CVC can provide input that enhances all else in a community and could play a role across many communities. If the legislation doesn’t pass then there could be further development of this. Edelman thanked everyone for clarifying and discussing the foundation effort and that the Board could expect a model at the next Board meeting.

Severin Roberts said that small business were either to make a living or as a hobby. She was interested in what could work and be promoted in smaller communities.

Edelman said that the next Board meeting was on June 27th. He gave an update on the Group of 82--which was a new rural organization made up of the 82 counties that were not metro or were not in a chamber alliance. It had grown from some pieces and ideas from the “Greater Iowa” group initiative last year and had organized to have some presence on economic development bills and then moving to a more permanent organization. Morain added that they had organized with a lobbying component and also a research component to do white papers and that the CVC could do some research for them. Edelman said that he has had further discussions with Diane Cookham-Johnson and had been asked to put together a proposal on community indicators. The indicators would also relate to some of the other CVC projects. At this point, he was in communication with the Group of 82.

Edelman also said that he had prepared a one-page summary of goals, accomplishments and future plans about the CVC as requested by ISU Extension administration for federal funding purposes. He shared it with CVC Board members and suggested that it is a good piece to use when explaining what the CVC does.

Edelman talked about the University direct charges for which the rules had now changed on the CVC’s class of grants. The CVC found out two days before the year two grant was submitted that the University can now ask for indirect charges. So, the whole CVC Center and project portfolio had to be revised before it was submitted. Charges for an outreach grant are 26% but he had been able to negotiate it down to 13% for the year two CVC grant. He was going to discuss this further with the Executive Committee and it would be on the agenda for the June Board meeting. Neu suggested putting it out for bid and Edelman said that at UNI the maximum for indirect charges is 13.5% which is much lower than ISU’s 26%. Edelman said that he would continue to explore this issue of indirect charges.

Edelman suggested that the June Board meeting might involve a recognition for departing members and orientation for new members. In addition, there would be a continuation of additional project reports. He went on to say that the Board meeting agenda was fairly full without the strategic planning activity. This activity was being dropped due to Michael Audino’s move to Florida.

Edelman requested consideration of the Board nominations. The nominations committee had met during lunch and was recommending increasing the size of the CVC Board up to 27. This would allow an increase in private sector participation and leave a couple of positions open for private college or community college representatives. Morain moved to increase the authorized Board membership to a maximum of 27. Seconded by Shields. Halliburton said that if this was a bylaws change there needed to be prior notification. Morain amended the motion to make it contingent on conforming to the governance of the Board. Shields seconded the amendment. [Terms of Goverance may be changed by majority vote of the Board at two consecutive meetings.] Danowsky called the question and all members voted “I”; none opposed and the first reading of motion to increase the Board size was approved.

Danowsky recommended that the Nomination Committee’s recommendations for Board Member Terms and Nominees be approved, that Joan Phillips and Severin Roberts be added to the nominee list for board membership, and that John Hartung be shifted to the alternate status until a person from a private college can be appointed. She also recommended looking for a community college representative and that Burt Chojnowski be added to the Board Member Nominee list for board membership. Halliburton moved to accept the Nominating Committee’s recommendations for Board Terms and nominees subject to Danowsky’s recommendations ; Shields seconded. All members voted “I”; none opposed. The motion regarding appointment of new Board members was approved.

Board Member Terms were approved as follows:

Board Nominees for Term Ending 2006 were approved as follows:

• Manuel A. Silva, Jr, Executive Director, Union County Dev. Association, Creston
• Mark Hamilton, Publisher, Iowa Falls
• Lars Peterson, Associate Director, Iowa Small Business Development Centers
• Jim Erb, Mayor, Charles City;
• Sue Cosner, City Manager, Panora
• Richard Warwick, Warwick Enterprises, Grinnell (entrepreneur)
• Joan Phillips, Panora/ Manning Betterment Foundation
• Severin Roberts, Entrepreneurship Development Consultant, Hubbard
• Burt Chojnowski, President Fairfield Entrepreneurs Association

Edelman passed out expense forms and discussed the opportunity for sharing half of the costs for Board members who that attend the Rural Venture Capital Conference being hosted by the Fairfield Entrepreneurs Association and co-sponsored by the CVC. Hamilton thanked the “lean” staff for their efforts. Pilkington added that due to tight budgets the CVC may have to narrow its focus.

The meeting was adjourned.