TO:
Honorable Mayor and Members of the City Council
THROUGH:
Bruce Moe, City Manager
FROM:
Mark Leyman, Parks and Recreation Director
Linda Robb, Senior Management Analyst
SUBJECT:Title
Consideration of the Parks and Recreation Commission Proposal for Establishing a 501(c)(3) Non-Profit Organization and Donation Policy Update, and if Approved, Appropriate $104,900 from General Fund (Parks and Recreation Director Leyman).
(Estimated time: 45 Mins.)
A) DISCUSS AND PROVIDE DIRECTION
B) APPROPRIATE FUNDS
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Recommended Action
RECOMMENDATION:
Staff recommends that the City Council consider the Parks and Recreation Commission proposal for establishing a 501(c)(3) non-profit organization and updated Donation Policy, and, if approved, appropriate $104,900 from the General Fund.
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FISCAL IMPLICATIONS:
Staff estimates that the proposed Non-Profit Organization would require a three-year funding commitment from the City, with $104,900 of start-up costs for Fiscal Year (FY) 2023-2024, and $73,700 for years two and three (FY 2024-2025 and FY 2025-2026). A proposed budget for the Non-Profit Organization is attached. If City Council approves moving forward with the establishment of a Non-Profit Organization, staff recommends an appropriation of $104,900 from the General Fund in FY 2023-2024. Future years will be budgeted accordingly.
BACKGROUND:
The current donation policy was approved by the City Council on June 20, 2020. At the January 4, 2021, Joint Commission meeting, the Parks and Recreation Commission was instructed to explore a legacy donation program.
At the January 11, 2022 Joint Commission meeting, Council discussed concerns with the current donation programs and directed the Commission to explore establishing a park non-profit to potentially replace the existing donation programs. The Ad-Hoc Committee met with City administration, MBX administrators, local and national organizations that specialize in procuring funds for municipal improvements, and professionals who have been involved with private/public fundraising for civic improvements to gain a better understanding of non-profit operations and structure.
DISCUSSION:
The Ad-Hoc Committee has developed a proposal, outlining the history, purpose and structure of the proposed 501(c)(3) organization.
Overview and History
The City of Manhattan Beach has historically had a donation program that was originally created to respond to the desire of Manhattan Beach community members to improve and support their parks, facilities, and open spaces. That program generated funds primarily to support the planting of new trees and the addition of park benches. Discussions with City Council in May 2020 and January 2021 regarding the program led to putting the existing donation program on hold and to the 2022 initiation of a non-profit 501(c)(3) donation program for the City.
Larger donations to the City to date have been made through other specific private 501(c)(3) corporations established for projects on an individualized basis, such as the recently installed Catalina Classic sculpture and the upcoming renovation of the MB Community Center.
At this time, no general City-affiliated public/private partnership 501(c)(3) vehicle exists for community members, business enterprises, or other interested parties to easily donate to improvement opportunities on a tax-deductible basis for the benefit of the City and its community.
Mission Statement
LoveMB (the selected name of the proposed non-profit) is a 501(c)(3) non-profit corporation established to receive tax-exempt donations from individuals, business enterprises and other interested parties in order to promote, enhance and preserve activities, programs, facilities, parks, and open spaces for the enjoyment, appreciation, and improved quality of life of Manhattan Beach community members.
Specific objectives of LoveMB will be:
1. To educate and promote the benefits of the wide variety of City activities, programs, parks, and open spaces to the community and its residents.
2. To collaborate as a public/private partnership with the City on those projects deemed worthy of fundraising. These projects may include renovations, restorations, new construction, services, programming or activities within the City.
3. To develop partnerships with individuals, regional/local organizations and enterprises interested in collaborating in service and support of the Manhattan Beach community and the Foundation.
4. To pursue new sources of funding, which may include grants and memberships.
5. To market awareness of the Foundation’s existence as a tax-deductible, simple means by which community members can donate to support projects within Manhattan Beach.
Donation Opportunities
1. Tribute items requiring donations of less than $25,000. Examples may include park benches, trees, pavers and tiles.
2. Capital improvement projects over $25,000. Examples may include projects such as a renovated Begg aquatics center, a renovated Joslyn Center, community gardens, youth programs, or renovated park play structures.
3. Annual Gifts-donations may be made on an unrestricted funds basis to be contributed annually for ongoing Foundation/City approved purposes.
Governance and Board of Directors
A Board of Directors will be established to lead and manage the operations of the Foundation.
1. The Board will consist of four (4) Officers: a Chairperson, Vice-Chair, Secretary and Treasurer.
2. The authorized number of Board members will be no less than nine (9) and may be as many as thirteen (13), and will include:
a. City representation (Administrative staff members and/or City Council Members)
b. MBUSD representation (Administrative staff and/or Trustees)
c. Parks and Rec Department Director
d. Public Works representative
e. Parks and Rec Commission representative
f. Arts Commission representative
g. Older Adult representative from the community
3. Each member will serve a three (3) year term and not more than two (2) consecutive terms.
Specific Board responsibilities will be to:
● Conduct and manage all business of the Foundation, and to make such rules and regulations that are not inconsistent with law, or with the Articles of Incorporation or the Bylaws.
● Solicit, accept and receive monetary or non-monetary donations, subject to specified guidelines, on behalf of The Foundation and its sponsored projects.
● Work collaboratively with the City, City Council, City departments, and MBUSD, where applicable, and ensure thorough review of proposed projects and distribution of funding raised for those projects, subject to a mutually agreed upon schedule.
● Represent the Foundation in all activities necessary and appropriate in support of the primary purposes of LoveMB.
Administration and Finance
LoveMB will establish its own accounts and operating budget for the Foundation’s operations in support of its approved projects, activities, and programs.
• The Foundation will have an Executive Director to administer all affairs of the Foundation on a daily basis.
• The Foundation will hire an independent bookkeeper to record and track all donations, investments, and operating expenses, including both restricted and unrestricted funds.
• The Foundation will keep accurate books and records of all accounts, along with minutes of all Board meetings, which shall be available to the public.
• Any member of the Board of Directors, the Manhattan Beach City Council, or the City of Manhattan Beach shall have the right at any reasonable time to review all books, records, documents and property of the Foundation.
• Revenue sources may include directed donations for specific projects, unrestricted general donations to the Foundation, grant awards, endowment and trust gifts, donations-in-kind such as real property, and other potential revenue streams, such as memberships.
• LoveMB may also serve as a fiscal sponsor for community organizations or for programs of the City that are aligned with the mission of The Foundation.
• The Foundation will provide an annual report to the City that will include:
o The status of activities, programming and staffing of the Foundation.
o The assets and liabilities including donations, investments, real property, trust, grant and endowment funds of the Foundation.
o The donation and other revenues of the Foundation, both unrestricted and restricted, detailed by project where appropriate.
o The expenses and disbursements of the Foundation, for both general and restricted purposes.
o The report required shall be accompanied by an audit report of independent certified public accountants, if required by law.
• The fundraising work of LoveMB will directly accrue to the benefit of the City and the residents of Manhattan Beach. Therefore, as the primary beneficiary, the City agrees to participate with start-up funds in support of the establishment of the partnership.
Communication Plans
• A domain name of LoveMB will be verified and secured for the Foundation’s website.
• The website will serve as a communication vehicle for the community-at-large and will provide an ongoing project list and associated timeline as agreed to and supported by both LoveMB and the City Council.
• As the intended beneficiary of the Foundation’s fundraising, the City will provide marketing support in the form of a link from the City’s website, its Parks and Recreation website, and its Older Adult website to the Foundation
Bylaws and MOU Documentation and Development
• The Bylaws have been drafted and require additional review by legal counsel.
• A draft MOU has been created which requires collaboration and discussion with the City and its legal counsel.
Website Links
• Attached is a summary list of long-standing, municipal 501(c)(3) organizations that were evaluated by the committee in the research, development, and support of the establishment of LoveMB.
• This list denotes a variety of best practices relevant to the work of this committee. They are highlighted in the “Look At” section under each city’s foundation link. The examples range from large cities to small, rural to urban, and vary as to the breadth of fundraising activities in which they engage.
Budget
The Ad-Hoc Committee met with numerous non-profit executives and experts to develop the projected budget (detailed budget attached). Based on industry best practiced in establishing a successful non-profit, a 3-year funding commitment is requested. The immediate funding needs will focus on legal fees to establish the MOU and By-Laws, branding and website development. LoveMB Board members will update City Council with milestones moving forward, to include financial statements, using Generally Accepted Accounting Principles standards on a biannual basis. The budget summary below highlights the first year request, and ongoing costs for years two and three.
Start-up Costs Ongoing
Administrative $16,800 $14,700
Marketing/Branding $48,100 $4,000
Executive Director/Grant Writing $40,000 $55,000
Totals $104,900 $73,700
The above proposal has been shaped by members of the Parks and Recreation Commission Ad-Hoc Committee through hundreds of hours of due diligence, creating a mission and vision to support the City and build community.
Manhattan Beach has a rich history of community involvement and a long-standing tradition of residents, businesses, and organizations coming together to support local causes. However, as our city continues to grow and evolve, it is important to formalize the process of receiving and managing donations to ensure efficiency, transparency, and accountability. The establishment of a non-profit organization to receive donations on behalf of the City of Manhattan Beach will benefit the city, its residents, and those who wish to contribute to our community's growth and development.
Donation Policy
The Donation Policy (attached) was amended to remove references to the previous donation catalogue.
CONCLUSION:
Staff is seeking direction from the City Council on the following items:
• Support of the name: LoveMB
• Staff time: LoveMB requests the following City staff support:
o Review of Bylaws and Memorandum of Understanding by City Attorney
o Review of technology needs by Information and Technology Department for the City to integrate with LoveMB website
o Review of Public Works needs to create inventory of amenities, establishing contracts with third party vendors to fulfill donor program deliverables (i.e. trees, benches, and other amenities)
o Review of financial integration, accounting, and auditing by Finance Department
• Board composition
o Number of board members
o Council representation
o Voting or non-voting
• Donation opportunities -monthly, lifetime giving, projects, programs, etc. If approved, LoveMB will develop options for Council consideration and return in six months with a “pilot” website and deliverables.
PUBLIC OUTREACH:
The Parks and Recreation discusses and provides updates on the 501(c)3 project at every commission meeting as part of their work plan.
LEGAL REVIEW:
The City Attorney has reviewed the LoveMB 501(c)(3) Foundation proposal and updated donation policy.
ATTACHMENTS:
1. Updated Donation Policy
2. LoveMB Proposed Budget
3. LoveMB Foundation Proposal
4. Municipal 501(c)(3) Website List
5. PowerPoint Presentation