Constraining Trustees’ Power to Spend Unrestricted Trust Fund Principal Without the Body’s Consent
Editorial by Tim Connolly
Over Fall Sessions recently (2019), I had the pleasure of sitting in on an open meeting of our Trustees. NYYM is blessed to be in such capable, likable and well-intentioned hands. I left the meeting feeling that I trust our Trustees to handle most matters well and in the best interests of the body.
There is one matter that is left up to our Trustees’ discretion which concerns me. This matter is their current power, without the consent of the body, to use principal unrestricted by trusts governing various NYYM Trust Funds to pay for NYYM operating expenses. I believe this power should be constrained by the body. And I believe monthly meetings that agree with this point of view should let our Trustees know this via minute prior to Spring Sessions, 2020. Failure to do so may result in our Trustees spending trust fund principal on operating expenses at the end of 2020.
Our Trustees do not need anyone’s permission or consent to spend unrestricted principal. And this power may be at variance with the unwritten intentions of the unrestricted trusts’ donors and/or with the collective will of the NYYM body. Spending unrestricted principal on operating expenses facilitates a propensity to spend beyond our means, a propensity which in my opinion is at variance with Quaker testimonies of stewardship and integrity.
Approximately $1.8 million of NYYM trust fund principal is unrestricted in several trust funds. This means the Trustees may tap this principal at their sole discretion as a source of funding for NYYM operations or whatever other purposes the Trustees deem appropriate. They can exercise this power unilaterally and independent of the body.
While state and Federal governments habitually and regularly spend beyond their means, I feel Quakers should not. We should live within our means. When financial resources shrink, our programs should shrink too. This would be in keeping with our testimony of stewardship. We should serve as a model to the world: not living within our financial means should be avoided. We should have the integrity to show the world and our children, who will inherit our assets and liabilities and any financial profligacy, that we will not use up today the resources that were and are intended for our descendants tomorrow. And by showing stewardship and integrity in this regard, we will honor the memory of and align with the good financial stewardship of the original trust fund donors who did the hard work of not living beyond their means, creating a financial surplus and thereafter donating it to NYYM. Had our donors spent their principal in their lifetimes, would we ever have become the beneficiaries of their largesse? Of course not! It never would have existed. Why do we feel entitled to do what they never did in the management of their own financial affairs: allow savings contributed to trust fund principal to be dribbled away?
What prompts this missive is the NYYM proposal, as set forth in the Financial Services Committee Report To Fall Sessions, to fund full time staff support for youth and young adults (Y/YA) from unrestricted trust fund principal accounts in a total cumulative amount of up to $109,000 over a maximum three year period, with a budgeted advance from unrestricted trust fund principal estimated at $10,000 in December, 2020.
I am in favor of creating the proposed position. I am not in favor of the way that is proposed to fund it. My competence on conceiving financial mechanisms to so fund is amazingly limited. On the other hand, I’m mindful that while any jackass can kick down a barn door, it takes a carpenter to build one. And so in the interests of wanting to be a carpenter, not a jackass, I would offer the following suggestions, probably flawed, on how to fund the Y/YA position:
- Loan the principal advances, do not “gift” them, from unrestricted trust funds to NYYM operating accounts. Repay those loans from members’ contributions in the future or from a special assessment of monthly meetings or both, the terms and assessment formula to be determined.
- In lieu of or in addition to loaning the principal advances, have each recipient of yearly meeting funds express how much of a reduction in their funding they will agree to in order to facilitate funding of the Youth coordinator position. For example, if 100 line items of NYYM expense were to accept $100 less for the year, the projected 2020 $10,000 shortfall for the Y/YA position would be covered.
If you agree with any component of this note, or have other constructive suggestions on how to fund the position, discuss it at your Meeting and send a minute of unity to our Trustees before Spring Sessions. And let them know that you wish to rescind their unilateral right to make distributions from unrestricted NYYM Trust Fund principal accounts without consent of the body. Failure to communicate with our Trustees on this matter before the Spring Sessions consideration of the remaining 2020 annual budget will give them the ongoing right to spend unrestricted trust fund principal at their discretion, independent of the body.
November 4, 2019