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In Part 1 this exclusive four part Nonprofit.Courses interview, Lorrie Hartley, Executive Director of the TKD Foundation, a family foundation in Missouri, talks about how she became the leader of a foundation, the network among foundation funders, and some of the issues in running a foundation.
Here’s a Transcript of our Conversation
Behind the Foundation Curtain Part 1
Matt Hugg: Hi, this is Matt Hugg, with Nonprofit Courses. Have you ever wondered what it’s like to be on the other side, to be on the side that gives away money? Well, today we’re going to pull back the curtain on that, and you’re going to have a chance to meet Lorrie Hartley, who is the Executive Director of the TKD Foundation of Missouri. Lorrie has been generous enough to give us a chunk of her time to really give us insight on what it’s like to be a funder. This is really important, because, you know, it’s not—I think you probably know this, right? It’s not just filling out papers, and submitting them and getting money. There’s a lot more to it than that. And there’s a lot of reasons behind the actions that she takes, and other foundation executives take.
Now a couple things here. First of all, you should know this is not an invitation to send an application that TKD Foundation. Chances are, you won’t qualify for their funding, especially if you’re not in their part of rural Missouri. But also, I want you to know that Lorrie sees this relationship from both sides of the equation. Lorrie, before becoming an executive director of a charitable gift foundation, was a fundraiser. She has a CFRE, a Certified Fund Raising Executive designation. She raised money for a lot of healthcare and other organizations. So, she sees it from the nonprofit point of view. And that’s huge. And you can see how that informs how she operates in this environment, and giving out the funds that are entrusted to her.
Now, TKD is a family foundation, so that’s going to be a little different than some bigger you know, major foundations around the country, but you’d be surprised at how much what Lorrie says is going to reflect what the broader experience is. All right. Thank you very much. And let’s get started.
Hi, this is Matt Hugg with Nonprofit.Courses, and today, I have something special for you. I have Lorrie Hartley. Lorrie is executive director of the TKD Foundation. And Lorrie is here to talk today about what it’s like from her side of the funding picture. And I’m just going to read a couple things out of your bio here, and maybe you can tell us a little bit about yourself beyond that. So you’ve been on both sides of this fence, right? You were a fundraiser and now you are giving out the money.
Lorrie Hartley: Yes. So I have 20 years of nonprofit experience in the public and private sector. Ten years we’re in healthcare fundraising. Seven years was with disaster relief, emergency services, food pantry, and shelter for battered women and children. And then for almost last three, it’s been working with a private family foundation, and vetting out nonprofits and providing them funding.
Matt Hugg: That’s great. So, you have a unique perspective on both sides of this fence. And you’re a CFRE, which means a lot to a lot of people, the fact that you know thoroughly what that side looks like. And I’m sure that it will talk a little bit about how that might work in your decision-making processes. Tell us about you know, about your career—and you said a little bit in the intro about what you did, but how did your experiences in the past inform what you’re doing now?
Lorrie Hartley: So I work at the TKD Foundation, which is a private family foundation and TKD, that is the initials of the founders, Ted and Kim Day. And Ted was actually the president of the Healthcare Foundation that I worked for. And so that relationship was developed with Ted and Kim both over a 10-year period. And when they decided that they wanted to move to private family philanthropy so they could expand their vision and their mission, their personal mission on giving. It was a natural fit. And it wasn’t only myself that went, it was also a colleague that worked at the health care foundation with me.
Matt Hugg: Oh, that’s great.
Lorrie Hartley: And I think how that was influenced, is just the trust does build up, because there was a lot of philanthropy, and philanthropic gifts that were given to create the Delbert Day Cancer Institute through their family. And so they already knew donor intent would be taken care of. And they already knew that the relationship is key and everything, and understood the processes and the governance, and everything would be taken care of in a programmatic manner.
Matt Hugg: You know, obviously other people who do similar things to you do. Is this typical of their backgrounds? Or what kind of backgrounds other people in the field come with?
Lorrie Hartley: No, it’s not typical. A lot of times, because we’re considered—we are a private family foundation and we are a lien funder. A lot of times, you will have the families that run their own family foundations, and sometimes they have one to four staff members. So the backgrounds can vary. You will always want to have your legal in place and accounting, but for there to be 40 years of experience between myself and a colleague with fundraising experience, I think that’s unique. But that also works in the advantage of the nonprofit’s that are applying for funding. Because we understand what they’re trying to say to us. We understand the difficulties they’re having, we understand their mission, we understand financials and how hard it is to raise those funding dollars.
Matt Hugg: That makes a lot of sense, right? That you can kind of put yourself in their shoes, like you would hope that they are going to put themselves in your shoes if that’s possible for them.
Lorrie Hartley: Oh, absolutely.
Matt Hugg: Yeah. To a lot of our viewers, you have the dream job. [Laughs] It’s true. I’m not going to say all the time, but every once in a while, I get somebody say, “Oh, what I really would like to do is be on the other side and be somebody who’s in charge of giving away money as they see it.” You know, you kind of laugh there, right? I mean, it’s easy, right? Nothing to it.
Lorrie Hartley: It’s especially really hard to give money away. It’s been a huge learning experience for me coming from the other side understanding, one, why grants are approved and why they’re rejected, making sure that we do a lot of research. We research every nonprofit. We have a closed application process. And what that means is that we go out, we vet the nonprofits, and then we ask them to apply.
Matt Hugg: Oh, okay, now so how does a nonprofit get into that cycle? I mean, you just kind of find them? Or how’s that work?
Lorrie Hartley: So everything is based on mission. Okay, so we have to have mission alignment, and then it’s a very thorough process. It was making sure that the budget numbers were right, their assets. We set a bottom number for assets, and then we pulled information. GuideStar is king and us being able to research nonprofits. Going down their 990s, we look at board members, we look at the last three years; are they maintaining their finances? Is it going down? Is there a lot of turnover? And then we go and look on the website. We’re looking for audited financial.
Matt Hugg: When you say a lot of turnover, who are you looking at the turnover? I mean, in terms of leadership in terms of line staff?
Lorrie Hartley: More leadership, looking at the board members, looking at the executive director or the CEO, how long…That’s important for us, because it shows stability; stability all the way around. And when we look at the 990s, to figure out who else has given to them, because anything over $5,000 is listed on the 990s, unless, of course, it was given through a Donor Advised Fund, then it’s not listed, but we’re looking for that and if there’s anything listed and if it’s an organization or somebody we know, we’ll reach out and give them a call, and hasn’t been a good experience.
Matt Hugg: Fascinating. So you are doing, in fact, it sounds like more research on them than they might be doing on you to identify you as a funder?
Lorrie Hartley: Yes. So it’s very important. So I look at myself as the gatekeeper for the TKD Foundation, and to put TKD, Ted and Kim’s name on something, it must pass the highest integrity accountability that there can be, because I do not want their name to be put on something that will have a black eye, is not positive, and does it represent them of who they are personally, right.
Matt Hugg: Right. Now that’s huge I can see… I mean, you carry their reputation in your hands when you’re doing–
Lorrie Hartley: Yes, absolutely.
Matt Hugg: That makes a big difference. So do they have…? And talking in general terms and then not necessarily specific organizations, but are they like, at least the impression is from the other side that well, you only give to these foundations, it’s a setlist? I mean, you said you know, you kind of bring them into the cycle, but you’re pretty locked in or does that vary much?
Lorrie Hartley: It varies. So when we say we decided when we started the TKD Foundation—it was started in February of 2018—that we were going to start with our local community. And that has ranged about 150 miles. I was able to run reports and pull data—I’m very data-driven—and nobody was excluded based on that list. And then we broke it down. And as long as they’re audited financials were good. It’s important for an organization to have them on their website. Make it easy, list your board members, that’s important. The more information that’s out there, the better opportunity there is for us to get to know you before we have that conversation.
Matt Hugg: Okay, that’s really good to know. So as my mother would say, your reputation precedes you.
Lorrie Hartley: Yes. And we’re looking at newspaper articles, your social media, how’s the organization being represented currently? And do we want to be represented with you.
Matt Hugg: Okay, you mentioned you talk to other grantors or other people who have worked with your funders. You belong to a national organization, correct?
Lorrie Hartley: Yes, Exponent Philanthropy.
Matt Hugg: Okay. Great. And then, obviously, then there are local funders as well. Tell me about those interactions with the, you know, assuming that you would be able to go to a conference. [Laughs]
Lorrie Hartley: Right. [Laughs]
Matt Hugg: Given when we’re filming this in 2020, but talk to me about the kind of things that, you know, what’s on the other side of that veil? What do they talk about, those funders, among each other.
Lorrie Hartley: So we just had a funding collaborative, and it was funders—there were 20 of us from all over the state of Missouri. We met in Springfield, and what we were talking about, and this was during April, and so when COVID hit, and we were seeking to understand what everybody was hearing on the ground for how the nonprofits were being affected, and how we could help. And we were all talking about different priorities in our current areas that maybe we don’t fund. But we’re bringing those nonprofits up, because we want to make sure that if someone’s got a mission, nonprofits, they’re always doing good work. And just because we’re doing good work, we can’t fund everybody. But it does not mean that we do not know somebody that would fund them.
Matt Hugg: Hmm. So would you proactive say, if somebody sent you an application that just didn’t fit you, would you either say to them or say to the other funder, “Hey, check this out.” If it was, I mean, would you refer folks to other funders?
Lorrie Hartley: Oh, absolutely.
Matt Hugg: Okay.
Lorrie Hartley: Absolutely. And you give the funder a courtesy, say, “I received this application, can I make an introduction for you? This might be something that you would be interested in.”
Matt Hugg: Okay, just like you would a person that way?
Lorrie Hartley: Absolutely.
Matt Hugg: You know, say, “Hey, can I introduce you to my friend before you actually do that?”
Lorrie Hartley: Yeah, you honor it. You honor the relationship on both sides of it.
Matt Hugg: All right. That’s cool. That’s great. Okay, on the dark side of that, do you tell folks, “Okay, you don’t want to work with them.”
Lorrie Hartley: Dishonesty?
Matt Hugg: Did they get reputations like that sometimes?
Lorrie Hartley: Yes. And if your nonprofit has a black eye, it is hard to overcome that.
Matt Hugg: Again, in general terms, what’s a black eye?
Lorrie Hartley: A black eye would be misappropriation of funds.
Matt Hugg: Okay.
Lorrie Hartley: Scandals. It’s scandalous. You can imagine what those are. And the good example I can give is when in Oklahoma, Garth Brooks gave a gift, a $500,000 naming gift in honor of his mother to a healthcare system, and then they did not put the name on the building. And it was a big court deal.
Matt Hugg: Okay. It wasn’t like Garth Brooks said, “No, no, do this.”
Lorrie Hartley: Right. He took them to court and got his money back.
Matt Hugg: Really? Okay.
Lorrie Hartley: Yes. His donor intent wasn’t matched.
Matt Hugg: Gotcha. Right. Right, right.
Lorrie Hartley: That’s two black eyes?
Matt Hugg: Yeah. All right. So how they treat their donors, whether it’s somebody like that, obviously Garth Brooks people know, right, but individuals or foundations or whatever, right?
Lorrie Hartley: I mean, certainly, like a private family foundation, there is stewardship involved. Yeah, they should be treated just like a major gift donor.
Matt Hugg: Right. Right.
Lorrie Hartley: You know, a lot of organizations have societies pillar societies, you should offer that to your foundations, people that are giving you money to honor them.
Matt Hugg: Yeah, yeah. And you bring up a very good point. And one thing that I, during my fundraising career, was family foundations and family businesses, really, are a person, not necessarily an entity.
Lorrie Hartley: That is correct.
Matt Hugg: You have to treat them like that person. I would tell a little story in my classes about somebody seeing a local car dealer when I was in Cincinnati, and the guy told me when I asked him for his gift, That the fella before me came in and said, “Okay, great. So thank you very much for your gift from your car dealer. Now, how do I get a gift from you?” Have you had folks make that confusion between your benefactors and the foundation?
Lorrie Hartley: Absolutely. And they have hired staff for a reason. They want that protection. They want their privacy. And they want to…Because it’s community, it is all about community. And for example, like on the business cards, they will hand out the business card, but it has my email and my phone number on it. So when you call or email, it’s coming back to me. There’s a reason for that.
Matt Hugg: Gotcha. Yeah. Yeah, that makes a lot of sense. You mentioned that there’s professional organizations for funders. What’s the education? What are the topics that funders are learning about these days that impact the nonprofit’s they serve?
Lorrie Hartley: We’re certainly learning about, you know, the markets is volatile.
Matt Hugg: Okay.
Lorrie Hartley: And so investments are very crucial, because if we’re not making money, we’re not able to give money.
Matt Hugg: Gotcha.
Lorrie Hartley: And for us, we have to bring in 7% return on investment, to be able for just the regular operations to sustain.
Matt Hugg: Okay.
Lorrie Hartley: So investments are very important. The other thing that’s very important for us is conflict of interest and self-dealing issues.
Matt Hugg: Right.
Lorrie Hartley: Those are, you know, very important, for example, if we have someone that we want to take out to dinner, but they’re also one of our grantees, and we cannot buy them dinner because you get into self-dealing, you cannot do that.
Matt Hugg: Well, that’s a very interesting point. So it’s more than just the courtesy of buying dinner for the grantor, there’s actually legal implications there.
Lorrie Hartley: There are legal implications, and I can be the fly in the ointment and saying, “We can’t buy them dinner,” and if my husband goes with me because I work there, he can’t be included in that. My dinner could be bought because I work there, his could not, because we’re married. There’s all these issues and challenges that you would never think exist. And then you go back and you do the accounting and you document everything.
Matt Hugg: Right, right. So, best to meet in a park on two benches where everybody’s bringing their own coffee.
Lorrie Hartley: Bring your own lunch.
Matt Hugg: There you go. That’s it. But no, I mean, it makes sense. And I’ve dealt with folks in government agencies where it’s somewhat similar where you know, you can’t buy the person at NIH lunch, you know that’s a problem, right? And so you’re facing similar kinds of things, maybe not the exact ones, but things like that.
Lorrie Hartley: Correct.
Matt Hugg: Anything else like that, that folks need to know when they’re interacting with you?
Lorrie Hartley: So a lot of times they’ll invite us to events, which is great. But that event, if we attend the event, those funds cannot come out of the foundation, those funds come from us personally.
Matt Hugg: Hmm. Okay. And if you’re invited as a guest without paying, does that have an implication?
Lorrie Hartley: It would if it’s over $25. So that’s the max and we can’t do that and you can’t go—and we can go personally, but you can’t go as organization.
Matt Hugg: Okay, so if they’re going to send you tickets to the gala that are $100 each, then you’re on the hook. So your husband would come in for $175 of that, if you want to go?
Lorrie Hartley: That’s correct.
Matt Hugg: Okay.
Lorrie Hartley: And then all that needs to be documented.
Matt Hugg: Right. Exactly. Well, okay, so it’s not…even though you want to work with somebody like yourself, or your benefactors as individuals, because the foundation’s there, it makes things a little more complicated.
Lorrie Hartley: It does make things complicated and you’ve just got to honor the rules, the laws. There’s legalities. And like I said, I’m the gatekeeper that; I’m not always popular within those set guidelines, but that’s okay.
Matt Hugg: Now with whom are you not popular?
Lorrie Hartley: Well, we’ve had some instances within our founders not being happy about the self-dealing rules and understanding. For a long time when we would go any meeting, feel like, “Ugh, self-dealing.” But that’s okay. We’re in a new spot. Like, we were a new foundation, but it was for the protection.
Matt Hugg: Yeah, of course.
Lorrie Hartley: And that’s the key of the relationship. They are employing me to make sure that they are safe, and taken care of.
Matt Hugg: And that’s good for people who are applying for funds to know, that you’re not there just to be a grumpy person and to throw up a screen, and all that. I mean, yeah, to some extent, but really, there’s a reason behind it. It’s not just because you know, you feel like being grumpy.
Lorrie Hartley: No. So the heart of who I am, and the heart of who the founders are, is to be a difference for mankind and give philanthropic gifts and to ensure nonprofits’ mission, that they succeed.
Matt Hugg: And that’s kind of the antithesis of what you have to be in some roles of what you’re doing.
Lorrie Hartley: Absolutely. Yeah, wow.
Matt Hugg: Are there circumstances that you… have you ever brought together, or either looking for nonprofits to collaborate, or to have them come together by your behest, that you prompt that or you’re not worried about that?
Lorrie Hartley: So collaboration for the TKD Foundation is key, and it’s very important. So when we did our first round of funding last year, in August, of 2019, we brought all of our grantees together. And they each got to do a presentation, they each got to share about what they do with their nonprofit, what their missions are, and how they were making a difference. And there has been a lot of collaboration and relationships built on that.
Matt Hugg: Wow. And so they met… I mean, it wasn’t just one at a time, and everybody in their own rooms, they all met with each other and had a chance to interact?
Lorrie Hartley: Interact, network, talk, and not just share about what we fund, but share about their whole organization and share about what they’re doing. It was really a great opportunity. And those relationships are being built and strengthened within our own community because of that.
Matt Hugg: Cool, that’s really great, because now you’re out there, you know, kind of synergizing these relationships, and that makes a big difference for everybody. Do other funders in your community do something similar.
Lorrie Hartley: There are not funders in our community, but there are other nonprofits. We have nonprofits that network together, and they have meetings on a monthly basis, and everybody coming together and sharing their successes and challenges, what’s going well and what could be working better.
Matt Hugg: Okay. That’s great. That’s great. Now, how integrated are you as a funder into the nonprofit community where you are? I mean, I imagine at some level, you show up and the tone changes, right?
Lorrie Hartley: It does. And so we’re very mindful. Because one, we don’t want to give false hope. You know, if a funder is in a room or somebody wants a to meet with us, and the money’s already been allocated, that’s not our priority for the year, just being top of mind that we’re not going to be able to get funding. And yes, the tone changes. So we’re just very cautious about where we put ourselves and how we present ourselves, and be very transparent.
Matt Hugg: Right, right. Yeah, that’s huge. And I’m sure appreciate it, too. Although sometimes disappointing, also.
Lorrie Hartley: Yes. However, there were food disparity is very important, and it has been. So we have a local food pantry that built a new building. But that wasn’t one of our priorities. But I was able to meet with the executive director and because of my past experience working in a food pantry, I was able to share with her a foundation and she received $100,000. And she was not asking us for money. She was just asking, “Do you know anybody?” and that worked out really well. And then I was able to proof her grant for her and help.
Matt Hugg: Oh, wow. Okay. But you know, and honestly, that’s not something, I think…Everybody who’s watching this, I hope you realize you went above and beyond.
Lorrie Hartley: And maybe that’s because I’ve been on the other side. I’ve been in her shoes, and I want her to succeed, right?
Matt Hugg: No, no, I think it’s super. It’s great. And I’m sure that everybody was grateful for it, but they shouldn’t walk into your typical foundation and say, “Can you proof this application?”
Lorrie Hartley: That is correct.
Matt Hugg: That’s probably not going to happen.
Lorrie Hartley: You’re right.
Matt Hugg: But let’s talk about the applications a little bit here. In fact, you know what, now is probably a good time just to take a break. We’re going to pause the action here. And when we come back, we’re going to talk about funding directly, you know, how people actually do applications and what your responses are to some of that. So, thanks a lot, and we’ll see you on the next section, next video.