CEO helps charitable people
achieve goals
Barbara Hughes brings financial savvy to nonprofit agencies and donors,
managing $150 million
In 1995, Santa Rosa attorney Charles DeMeo died and left a $16 million bequest to help teens and homeless mothers. He donated his fortune to the Community Foundation Sonoma County. The money funded a teen club called "Chops."
Barbara Hughes, a former community bank executive, became CEO of the Community Foundation nearly three years ago. She uses her knowledge of money and investing to help folks with money do something good with it.
"Most of my career was in banking and finance," Hughes says. "This was a bit of a change for me." She also had experience in mergers and acquisitions.
She took a break to consult to nonprofit agencies. "My husband and I had always been interested in hunger," Hughes says. "We supported food banks" such as America's Second Harvest. That organization sent her to South Dakota to orchestrate a merger between two food banks. Then she did consulting about human resources and organization. "I was ready to move away from the corporate side," she says.
"I was ready to move away from the corporate side."
In California she worked in finance and treasury for Fireman's Fund. Her strong background in finance and dedication to food banks helped her land the job leading the Community Foundation.
"Our mission is to support the local community through effective philanthropy," Hughes says. She works with professional advisors such as attorneys, financial consultants and estate planners to help people who want to use their wealth to support good causes. Donors may be living or deceased.
Some people leave money as bequests, governed by specific intentions of the donors. The Community Foundation manages endowment funds and spends about 4 percent of the principal each year to make grants to nonprofit agencies. With donor-advised "expendable funds," all the capital can be spent.
For its own administration the Community Foundation charges a 1.5 percent annual fee of funds under management, about $150 million in 2011. The foundation's operating budget is about $1.7 million a year.
"When someone leaves us a large bequest, they usually say they are interested in one or two things," Hughes says. "In Charles DeMeo's case, he was interested in the teens of Santa Rosa. He wanted to support them through some sort of sports social facility. He used to look out his window and see kids hanging out after school. He saw they needed somewhere to go." Thus was born the teen center, funded in part by DeMeo's endowment.
DeMeo also wanted to help young single mothers. "We get broad instruction," Hughes says. "We figure out the best use of the money." She and her staff of 12 may convene representatives of relevant nonprofit agencies to determine how to allocate funds.
"This is as fun as banking . . . . We sit down with folks who are trying to think about their legacy."
Not all donors are wealthy. Some funds have only a few thousand dollars. Beyond the feeling of making positive change in the world, donors may enjoy tax advantages from contributing money to charitable causes.
Hughes uses her financial savvy to analyze nonprofit agencies for prospective donors. Are they run efficiently? Do they spend money wisely to further the agency's mission? "It's fun for me to do that," she says. Some donors look for healthy financial structures and accountability in a nonprofit agency before they will consider giving money. "They are looking for businesslike behavior," Hughes says. Such donors consider their gifts as investments. "They look for something tangible: have you fed this many more people or housed this many more homeless people?" Some small nonprofit agencies don't have strong financial structures.
"This is as fun as banking, but very different," she says. "What we do is similar to what an estate planning attorney does. We sit down with folks who are trying to think about their legacy. They love the community. They have grown up here, raised their children here. It's a very intimate relationship that develops over time. I get to know them, understand their interests. How can we best make their dreams and wishes live on after their lifetime?"
"How can we best make their dreams and wishes live on after their lifetime?"
Part of her job is to visit nonprofit agencies such as Becoming Independent or Social Advocates for Youth to ensure that their work aligns with the intentions of her donors. Out of nearly 3,200 nonprofit agencies in Sonoma County, she helps about 500 through some 1,000 grants a year.
In a challenging economy, she also encourages nonprofit agencies to collaborate. "Nonprofits are struggling," she says. "Some are quite desperate," especially as funding from state and local governments dwindles. Agencies often have redundant operations such as accounting or receptionists. "They could share resources and have more money go to their missions," she says. Most Community Foundation grants go to help local agencies, though donors can send money anywhere in the world.
"Donors have been amazingly, continuously generous even at the depths of the economic downturn," she says. "But nonprofits are hurting a lot. They are all having to look at their operations and their missions. Is there a way they can make internal changes to remain viable?"
The Community Foundation also sponsors speakers who train nonprofit leaders about how to create boards that have strong fund-raising skills, for example.
"Donors have been amazingly, continuously generous . . . . But nonprofits are hurting."
Typical nonprofit agencies spend seven to 10 percent of their budgets on fundraising activities, and even more in recent years. "As nonprofit boards look for leaders for their organizations, they're very aware that there's a need for a broad set of skills—not only passion for the mission," she says, but financial smarts and responsible management to ensure long-term sustainability.
Even for nonprofit agencies, money drives services. Without money, the mission falters and eventually fails. The Community Foundation helps to build capacity and strong financial infrastructure in nonprofit agencies.
"I can tell the folks who are businesspeople and the people who come out of nonprofits and what they are looking for," Hughes says."Disciplines that are part of a business culture can be very nicely melded with the passion that is part of a nonprofit culture. If you do that, you have a strong organization that can meet the needs of the community. Passion is necessary. But the reality of the world we live in today—a changed world—has to come into play now. If you hope to meet the needs of your constituents into the future, you have to make changes. It's naive not to. That is the harsh reality."
"Disciplines that are part of a business culture can be very nicely melded with the passion that is part of a nonprofit culture."
There are many jobs open for fund development and media professionals in nonprofit organizations, Hughes says. Nonprofits have turned to sales and marketing to survive. "There has been a change," she observes.
Donors select how they want to manage assets they give to the Community Foundation: long-term, intermediate-term, short-term or socially responsible. The board manages funds through an investment committee of volunteer investment professionals and a consulting firm that is part of Morgan Stanley. "There is a stewardship aspect to managing somebody's funds," Hughes says. "We feel a high responsibility."
With the DeMeo funds of $16 million in 1995, the Community Foundation has made grants totaling nearly $13 million, and still has remaining capital of almost $13 million. "It's pretty amazing," Hughes says.
Some nonprofit agencies with their own endowment funds use the Community Foundation as their money manager, drawing operating cash from their funds. The Community Fund acts as a type of mutual fund.
"In two and a half years, I have never dreaded anything coming in here," Hughes says. "When I think of all the things I get to do each day, I am pretty fortunate! This is such an interesting job for me. It blends the business side with giving to the community. It is good and meaningful work."
"The most fun is talking to donors and thinking about ways to make their philanthropy real," Hughes says. "One donor has a 16-year-old grandson. How can the grandson give back? How do I get him involved in helping think about who to donate money to?"
One donor wanted to leave money to support English bulldogs. "We didn't know anything about English bulldogs," Hughes says, laughing. "It was so narrow! Finally we got him to expand that to support organizations for small animal welfare. We're funding spay and neuter clinics for cats."
—James Dunn
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