Regions Bank believes in shared value.
That means we can’t win as a business unless our stakeholders also succeed. At Regions we focus on our customers, associates, shareholders and communities. According to Leroy Abrahams, head of Community Engagement at Regions, investing in our community is an essential part of our business strategy because we can’t outgrow the communities where we operate.
Nonprofit organizations are a fundamental part of that investment, and Regions could not execute our engagement strategy without those community partners.
Abrahams welcomed participants of the recent Important Insights webinar by honoring their role in lifting up our communities.
Nonprofit organizations play a critical role in building a thriving and dynamic community. They work tirelessly to achieve their mission and support the people they serve.
Leroy Abrahams, head of Community Engagement at Regions
“Nonprofit organizations play a critical role in building a thriving and dynamic community,” Abrahams said. “They work tirelessly to achieve their mission and support the people they serve. The Important Insights learning series is designed to help them continue to build on their success. We want to give back to them by investing and sharing knowledge, experience and advice from our talented and highly skilled individuals within the bank.”
Regions has been hosting this free learning series since 2020 to provide a forum for Regions specialists to engage with nonprofit leaders on topics that may not always be top of mind for community organizations but could have an impact to their outcomes. Since its inception, the series has covered areas such as understanding economic and market factors, mitigating fraud, navigating the political landscape and engaging your workforce.
The topic this time was Growing Your Nonprofit and provided insights from Regions leaders on how organizations can build on their success, grow and expand while continuing to execute their vital mission. More than 170 participants representing 120 nonprofits across the Regions 15-state footprint joined the webinar that covered two key areas:
1. Evaluating Your Growth Readiness:
Jackson Parrish, head of Government and Institutional Banking Portfolio Management, and Richard Phillips, Government and Institutional Banking Products team leader, shared insights on key factors to consider when assessing your organization’s readiness for financial growth.
Key Insights
When evaluating growth strategies, nonprofits should consider these five pillars:
- Clear vision. The first step when thinking about growth opportunities is to decide as an organization what problem you’re trying to solve. Keep it simple, stay with your mission and avoid scope creep – when enthusiasm around an idea can expand it outside the scope of what you’re comfortable with. “Don’t sacrifice the quality of your core mission by venturing into something new,” cautioned Parrish. “A new venture can hurt you financially and negatively impact your human resources.”
- Broad buy-in. Make sure the board and leadership are on the same page about growth opportunities, then share the vision throughout the organization. “You need to make sure everyone’s marching to the beat of the same drum,” Parrish said, including your donor base and financial supporters.
- Capacity, including systems and people. “What some nonprofits don’t think about is the back-end processes,” Phillips noted. “It’s important to consider systems, especially financial reporting with potential increases in donations and expenses.” Phillips also encouraged leaders to factor in staff capacity with new initiatives, and the possibility of hiring more full-time employees or forming a formal volunteer base.
- Financial health. Parrish suggested four areas to think about when it comes to evaluating the financial health of the nonprofit. The first is clean and clear financial reporting, which builds confidence with constituents. Next is to think about concentration risk within your donor base and if you have any potential vulnerabilities. He also encouraged leaders to consider the financial sustainability of the new growth and to evaluate financial reserves in case of a slow donor season or unexpected costs involved in the growth phase. Organizations might also look into possible accreditations, which can give them additional credibility with external parties.
- Existing or potential partnerships. “There’s an old saying that if you want to go fast, go alone. But if you want to go far, go with others.” Phillips emphasized the importance of leveraging relationships with other nonprofits, community leaders or other contacts with different skill sets who can help hold you accountable and make sure you’re achieving what you want to achieve, “without majoring on the minors.”
2. Investing in Your Long-Term Success:
In the second part of the webinar, Alan McKnight, Chief Investment Officer, and Marcie Braswell, Regions Philanthropic Solutions executive, shared insights on how investments can help support the long-term success of nonprofits.
Key Insights
- Endowment overview. An endowment is an investment fund that’s created for the long-term support of a nonprofit. “An endowment can signal to your donors and the community that your nonprofit is financially stable and fiscally responsible, your board and donors are engaged, and you’re working to serve current needs and planning for your future,” Braswell said. Benefits of starting an endowment include reliable revenue, new avenues for donor support, a lifeline during a downturn, lasting support and expansion opportunities.
- Launching an endowment. “There are key questions to ask before engaging in an endowment conversation,” said Braswell. “Is your nonprofit currently on good financial footing? Do you have a strong donor base? Is there consensus that an endowment is needed?” If your organization decides to move forward, some sources of endowment funding include gifts, campaigns, selling of assets and surplus funds. Two common ways to form an endowment are creating a separate account or creating a separate legal entity. Lean into your key internal and external stakeholders to help you determine the best path for your organization.
- Establish a spending policy. “We believe you can only manage it if you can measure it,” McKnight said. It is important to have a clear view of the total costs associated to maintain your endowment to ensure that the corpus of the endowment is protected. By having this spending framework in place ahead of time, your organization will be better positioned to achieve your investment goals.
- Investment Policy Statement (IPS). An IPS is crucial to nonprofits who must balance the conflicting goals of long-term appreciation of endowment funds and the desire to spend from the endowment to meet operating needs. “It is a living, breathing document that espouses all that you are trying to achieve from an investment portfolio perspective,” said McKnight. “The hope is that this endowment will go on in perpetuity, and this investment policy statement will grow and evolve as you grow as an organization,” he said. “What you may need today as a small, early-funded endowment and nonprofit may look a little different five years later when you’re larger and have significantly more assets.”
- Strategic asset allocation. Asset allocation is the diversification across different asset classes. On average, security selection and market timing only account for a small residual portion of the variance of actual returns. Studies have shown that an asset allocation policy is the dominant contributor to total return of a portfolio when evaluating various aspects of the investment management process. Understanding the right risk return tradeoff for your organization’s investment is key. “Having someone who sits on the same side of the table with you is critical,” shared McKnight. “The market is going to change and what you want to achieve is going to change, so having someone to ask questions, do some research for you and help you understand – that will serve you well over time.”
Strong relationships with nonprofits are essential to Regions Bank. In addition to the philanthropic giving, board service, volunteer support, and community development lending and investments the bank provides, the Regions team hopes the Important Insights learning series adds value to what they do. Because these community partners certainly add value to all of us.
To learn more about Regions’ work in the community, visit the Regions Bank Community Engagement page. For information about how Regions helps nonprofits protect themselves from fraud, click here.
Non-deposit products including investments, securities, mutual funds, insurance products, crypto assets and annuities, are not FDIC insured, are not deposits, are not bank guaranteed, are not a condition of any banking activity, may lose value and are not insured by any government entity.