Memorandum from NCYM Trustees to Representative Session

M E M O R A N D U M

TO: NCYM Membership

FROM: Thomas E. Terrell, Jr., Chair, NCYM Trustees DATE: November 2, 2016

RE: Status of NCYM Reorganization of Assets

Friends:

I write to provide (I) a status report, in advance of the Representative Body Meeting on November 5, of the Committee’s discussions of the reorganization of NCYM assets; and (2) a brief history of the decisions that form the context of the Committee’s creation and the contours of the Committee’s charge.

The Committee

The Committee has no official name. It is comprised of the NCYM Trustees, the Trustees of NCYM Trust Funds, and the Stewardship-Finance Committee. Don Farlow serves ex-officio, and David Hobson, NCYM Treasurer, serves as recording clerk. We asked Heather Varner, Quaker Lake Director, and Tyler Surratt, Chairperson of the Quaker Lake Board, to attend our meetings because of Quaker Lake’s centrality to our discussions.

Meetings

The full Committee has met three times. Each time close to 100% of members attended. Meetings have been long, focused, respectful, and goal-oriented. Smaller sub-groups have met or discussed matters as needed to prepare for full Committee meetings and to gather large quantities of information.

Commitments

The Committee made several commitments at the outset to guide its decision-making process and recommendation to the Representative Body.

First, we committed to an outcome that is equitable, acknowledging that equity is difficult  to define  and  elusive.  Second,  we decided  that we have a moral  commitment  to the

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Pastor’s Pension Fund that overrides our legal flexibility to do otherwise. Third, we made a commitment to the long-term success and survival of Quaker Lake. Fourth, we committed to transparency. And fifth, we committed to a schedule of review and discussion that is deliberate and practical and not hindered by artificial and unworkable deadlines.

We hope that the process will be trusted by all and the recommendations we make will be accepted by most. The Committee graciously acknowledges that some individuals and some meetings are impatient and want immediate decisions and recommendations . I ask you to recognize that the Committee is working as rapidly as possible to get its arms around millions of dollars of assets and liabilities. The questions we must answer aren’t fully known. Answers to many of the known questions are not easy or clear. But know that we will get there.

Short History of Committee’s Creation/Mission

The Committee’s understanding of its mission is briefly outlined below . I repeat it here only because questions have been asked and alternative understandings have been expressed.

At the June 4, 2016 Representative Body meeting, the Executive Committee acknowledged “the differences among Friends in the North Carolina Yearly Meeting that are continuous and unabating,” and recommended “that the member meetings of North Carolina Yearly Meeting patiently commit to an orderly, deliberate, compassionate, and mutually respectful plan of separation into two yearly meetings  ….”

The Executive Committee also noted : “We further recognize that, if the Committee’s recommendation is approved by the Representative Body, a carefully structured discussion must occur that would consider matters of (1) faith, (2) organization , (3) property, and (4) law, and that this discussion must include multiple voices and viewpoints within the Yearly Meeting.”

It was approved that representatives should report to their respective monthly meetings and come to Annual Sessions in August prepared to respond to the Executive Committee ‘s recommendation.

Representative Body also decided on June 4 to charge the Executive Committee with “the limited task of identifying and organizing the components of the deliberate discussion … and to return to Annual Sessions with recommendations for consideration by the Yearly Meeting that pertain to process only ….” A “Draft Procedural Plan for Separation into Two Yearly Meetings”

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was distributed  to Ministry  and Counsel Clerks, Monthly  Meeting  Clerks and Pastors on   July

20th.

As Annual Session approached, the Executive Committee decided that hearing and listening were critical to this process, and we acknowledged that attempting all discussions in the context of the general assembly was limiting and imperfect. Accordingly, we held smaller breakout groups to provide more effective forums for full expression by more people of their questions, concerns, fears, ideas and expectations. Your feedback was written onto large tablets which were attached to the walls where the Executive Committee met during lunch. They were studied and considered by the full committee.

The consensus of all expressions was that a separation into two yearly meetings was not the sense of the Yearly Meeting. Based upon the Executive Committee ‘s review of your input, a “Minute of Reorganization” was quickly prepared to more accurately reflect members’ positions.

The “Minute of Reorganization” was approved in the afternoon business session on August 13. The “Minute of Reorganization” was distributed on August 15, and a revised “Procedural Plan for Reorganization into Two Groups” with a “Letter of Implementation” was forwarded the week of September 19.

Committee Discussions

Since September 19, the Committee has reviewed several asset division options and, of equal importance, the consequences of each. Although the Pastors’ Pension Fund and Quaker Lake Camp are being treated as priority assets, we are also mindful of the many ministries and missions supported by North Carolina Yearly Meeting.

We continue to explore options for ownership of trust funds and to seek ways to redirect certain funds when legally able. Among other things, we are learning that division and  separation will have consequences , and the loss of some ministries may be among them . At this point the details are not known.

Our second meeting was devoted entirely to Quaker Lake. Heather Varner and Tyler Surratt gave a detailed overview of Quaker Lake’s ministry, capital needs, cash flow, challenges, potential, and the dangers posed by a previously discussed shared use option. After hours of comment and discussion, the Committee unanimously expressed support for proceeding towards

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independent control. Each member was polled and the results ranged from somewhat supportive to strongly supportive, finding that this option gave us the best opportunity to protect Quaker Lake’s ministry, enable it to continue its amazing growth, and set it on a path of self-sufficiency. No one opposed this option.

It is not known what independent control would look like or how it would work. These are details for future Committee meetings. There are numerous details to consider, and the Committee is committed to working with those who know Quaker Lake’s operations to find the most workable solution(s). In the meantime, your input is always welcome.

Effect  of Alignments/Realignments

Realignments of meetings and quarters will not affect the Committee’s discussions or recommendations except as to equity.

Requests for Approval

The Committee will ask the Representative Body for approval of four items.

  1. Allocation of Funds for Legal, Accounting and Actuarial Services

The Committee’s work will not be inexpensive. Future tasks will require that we consult with actuaries for the Pastor’s Pension Fund, and accountants, appraisers and legal counsel for select matters affecting ownership, division and repurposing of trust funds, real estate sales, and other general matters. Our actuaries have given us a general (not binding) estimate of $33,000 to assist with the Pastor’s Pension Fund. We do not know how much it will cost to hire legal counsel, real estate appraisers and accountants.

We will ask the Representative Body to approve the expenditure of funds for these purposes, looking first at investment accounts and only secondarily to trust funds. There is insufficient income from askings to use askings as a funding source.

Except for actuaries, we have not selected any of the necessary consultants, but we will likely interview several candidates. We have decided only to hire professionals who are not affiliated with the NC Yearly Meeting.

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  1. Authority to Sell Property

Spring Garden Meeting and the Hilltop Road offices are the most obvious sources of funds for Quaker Lake and the Pastor’s Pension Fund. The market is strong at the moment, and waiting to sell carries risks.

We will ask the Representative Body for a three-part approval: (1) to initiate the process of selling Spring Garden and the Hilltop Road offices; (2) to delegate to the Executive Committee the authority to negotiate with purchasers, accept commercially acceptable offers, and bind the NCYM in sales to third parties ; and (3) to place the proceeds from sales into temporary accounts until recommendations for their use can been made.

A formal statement of authorization will be presented for approval,

  1. Pastor’s Pension Fund

To protect pastors who are vested under this plan, we join the Benefits and Insurance Committee and Executive Committee in asking the Representative Body for approval to terminate the plan, authorize the Committee to find sufficient sources to make the pension fund whole, and to buy out each vested member at present value.

Terminating the plan in 2017 requires that we start the process now. A detailed statement of authorization will be presented Saturday.

  1. Trust Funds

We will ask the Representative Body for approval to begin the process of reviewing all trust funds and determining where we have authority to repurpose certain trusts and to return to this body with recommendations for uses that are generally consistent with donors’ wishes yet more appropriate to the ministries of a reorganized NCYM . The Committee’s authority to do this was likely implied at its creation, but we will request that the authority be made clear.

Questions/Suggestions

I will make periodic reports so that NCYM members know the status of our discussions.

Ifyou have technical questions, Don Farlow has an outstanding grasp of NCYM finances, and he

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is the best person to contact. I am also pleased to discuss matters with you. Email is my  preferred form of communication. You can reach me at tom.terrell@nullsmithmoorelaw.com. My direct office line is 336-378-5412. You may also wish to contact Dick Coe (Trustee of Trust Funds) or Gwen Taylor, Chair, Stewardship-Finance.

Next Meeting

Our next meeting is November 21.

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