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Partner Spotlight: Network for Good


Since its inception, Network for Good has processed more than $86 million in donations for more than 20,000 nonprofit organizations. Network for Good has recently merged with Groundspring to provide nonprofits with easy-to-use, low-cost tools for on-line engagement, including:

Basic DonateNow

A free solution for accepting on-line donations from your Web site, featuring recurring donations, eCards, automated tax receipts, and on-line donation history.


From the President's Office, August 2006


Dear Friend:

Have you seen the latest results from the Giving USA Foundation?

Their new report summarizing charitable giving during 2005 found that giving was up $15 billion, or 6.1 percent, over 2004. In total, Americans contributed more than $260 billion to charity last year. That's a remarkable number, isn't it? It underscores once again how much Americans value the work of the nonprofit sector and how generous they are in supporting the services we provide.

The $260 billion figure also reminds me how important it is for all of us to pay special attention to earning and retaining the trust that donors place in us. For me that includes being totally transparent in what we do—sharing information and finances and important information about programs and missions. But it also means being accountable: what did we do with supporters' money? Are we being efficient in how we use it? Are our activities effective and resulting in the changes we said they would? Donors are putting a lot of confidence in us, and we have an obligation to meet their trust.

The report only includes charitable contributions and doesn't attempt to measure all of the other ways that nonprofits affect the economies of our communities, such as retirement plans, business expenses and operations, and payroll taxes. Given the important role our sector plays in the nation's economy, why aren't we exercising more political clout when it comes to establishing priorities for federal, state, and local governments?

Giving USA 2006 found that nearly half—2.8 percent—of the increase in giving went to disaster relief and recovery. In total that was more than $7 billion. The report conjectures that most of the disaster support was on top of normal contributions and didn't have much influence on traditional giving patterns. Here at GuideStar, we also noticed the impact of disaster relief, with huge spikes in traffic to our Web site around the tsunami and Katrina disasters. Our users were looking for more information about nonprofits, since many were learning about certain types of organizations and making contributions to specific nonprofits for the first time. GuideStar became a place where donors could research, identify services, and contribute with confidence.

What do you think? I'd be interested in hearing about your experiences last year and what it means for your organization and the sector as a whole.

Sincerely,

Bob Ottenhoff
President and CEO

Introducing Gov@GuideStar


Federal, state, and local governments play three critical roles in the nonprofit sector: they provide 71 percent of program service funds through grants and contracts, they oversee organizations that report $1.1 trillion in revenues and $1.9 trillion in total assets, and they set public policy that establishes the ground rules in which the sector operates. Now GuideStar has launched Gov@GuideStar to help government decision makers do their jobs more quickly and easily.


Faxes to Your Members: New Rules Effective August 1, 2006


Note: The following discussion is provided for informational purposes only and is not intended to serve as legal advice. For specific information about fax advertising rules, consult your attorney.

Since 1991, the telemarketing and fax advertising rules promulgated by the Federal Communications Commission (FCC) under the Telephone Consumer Protection Act (TCPA) have been revised numerous times. The most significant revision was the FCC's reversal of its earlier ruling permitting persons or entities with an established business relationship with a recipient to send unsolicited fax advertisements. This reversal—and the legislation that succeeded it—can have significant consequences to all nonprofit organizations with large numbers of members.

An established business relationship, or EBR, is defined as "a prior or existing relationship formed by a voluntary two-way communication between a person or entity and a residential subscriber with or without an exchange of consideration, on the basis of an inquiry, application, purchase or transaction by the residential subscriber regarding products or services offered by such persons or entity, which relationship has not been previously terminated by either party." Common examples of EBRs include an organization's relationship with its members, donors, clients, or customers.

It is important to note that the TCPA, as originally enacted and as amended by the Junk Fax Protection Act of July 9, 2005, does not prohibit the sending of faxes that are not commercial in nature. The FCC recently clarified "that messages that do not promote a commercial product or service, including all messages involving political or religious discourse, such as a request for a donation to a political campaign, political action committee or charitable organization, are not unsolicited advertisements under the TCPA." Therefore, nonprofit organizations may continue to send faxes that are not commercial in nature to any recipient at any fax number and without the opt-out notice requirements described below without violating the TCPA.

Beginning August 1, 2006, however, nonprofit organizations sending unsolicited fax advertisements must comply with the following rules:

  • The organization must have either an EBR with the recipient or have received the recipient's express written permission to receive unsolicited fax advertisements.

  • If the organization is relying on an EBR to send unsolicited fax advertisements, the organization must have obtained the recipient's fax number directly from the recipient. In alternative, the organization may obtain the recipient's fax number from the recipient's own directory, advertisement, or site on the Internet, provided that the recipient has not noted on such materials that it does not accept unsolicited advertisements at the fax number in question. Additionally, an organization may obtain the recipient's fax number from a purchased mailing list, provided that the organization takes reasonable steps to verify that the recipient consented to have its fax number included in the purchased mailing list.

  • If, however, the EBR existed before July 9, 2005, and the organization also possessed the recipient's fax number before July 9, 2005, the organization may send the fax advertisements without demonstrating how the number was obtained.

  • The fax must identify the telephone number of the sending fax machine or the organization sending the fax.

  • The fax must include the date and time it was sent.

  • The fax must contain an opt-out notice stating that the recipient is entitled to request that the organization not send any future unsolicited advertisements.

  • The opt-out notice must be clear and conspicuous and on the first page of the fax.

  • The opt-out notice must include a telephone number, fax number, and cost-free mechanism (including a toll-free telephone number, local number for local recipients, toll-free fax number, Web site address, or e-mail address) to opt out of faxes. These numbers and cost-free mechanism must permit the recipient to make opt-out requests 24 hours a day, 7 days a week.

  • The fax must state that the recipient may request the organization not to send any future faxes and that failure to comply with the request within 30 days is unlawful.

  • The organizations must honor a recipient's request not to receive faxes within the shortest reasonable time from the date of such request, not to exceed 30 days. Thereafter, the organization may not send any fax advertisements to that recipient, regardless of whether an EBR continues to exist, unless the recipient later provides prior express permission to receive unsolicited fax advertisements.
Failure to comply with these rules can be very costly to an organization. The FCC may impose fines of up to $11,000 for each unsolicited fax advertisement sent in violation of the TCPA. More significantly, the TCPA authorizes recipients of unsolicited fax advertisements to file civil lawsuits against organizations and provides for statutory remedies of up to $1,500 for each unsolicited fax advertisement received. Although many such claims are brought by individual recipients, there are several class action lawsuits pending throughout the United States seeking statutory damages in the hundreds of millions of dollars on behalf of all of the recipients who ever received an unsolicited fax advertisement from a company in violation of the TCPA.

Elissa F. Borges, Esq., Ober|Kaler
© 2006, Ober|Kaler

Elissa F. Borges is an attorney practicing in the Nonprofits Group of Ober|Kaler. She is based in the firm's Baltimore office and can be reached at (410) 347-7327 or efborges@ober.com.

Partner Spotlight: Hands On Network


Hands On NetworkHands On Network brings together people to strengthen communities through meaningful volunteer action. We are a growing network of a half million volunteers and 58 volunteer organizations in and outside the United States. Together, we help people be the change they want to see in their communities.

Hands On Network has launched a campaign to create a nationwide civic change movement. With our two-year Hands On Campaign, we are mobilizing 100,000 Volunteer Leaders on projects designed to have tangible impact on children and education, health and wellness, and the environment. Volunteer Leaders develop and manage rewarding service projects that meet local needs and engage volunteers in a meaningful way.

Hands On Network is offering FREE on-line Volunteer Leader training to individuals who want to help set a new standard for volunteerism. Visit the site and become a Volunteer Leader today! If interested in face-to-face training for groups of 20 or more, contact behandson@handsonnetwork.org.

Siphoning Off Philanthropy: July Question of the Month Results


Last October, several participants in GuideStar's annual nonprofit economic survey mentioned the impact that gas prices were having on their organizations. This summer, with fuel costs averaging $3.00 a gallon nationally, we decided to revisit the issue. Thus, the July Question of the Month asked, "Are gas prices affecting your nonprofit organization?" and "Are gas prices affecting your personal charitable giving?"
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Hairsplitting Traps to Avoid in Direct Mail Fundraising


Excerpt from Open Immediately! Straight Talk on Direct Mail Fundraising: What Works, What Doesn't, and Why

The key to success in direct mail fundraising is making sure you have a schedule that includes enough mailings to give your donors, and prospective donors, sufficient opportunities to support your organization. If you're spending all your time trying to make each mailing perfect, you won't be able to get out all your mailings.

The other danger of hairsplitting is that you could end up spending too much money on paper stock, laser personalization, or graphic design. It's unlikely that your more expensive mailing will produce enough income to offset the extra cost or generate enough additional returns to keep your membership or donor database growing.

Spending extra money, testing lots of variables—and hairsplitting in general—do make sense for those organizations that mail in large volumes and have very large donor bases. And, if your organization is blessed with lots of donors who send gifts of $100 or more in response to your mailings, then the cost-benefit ratio tips in favor of more elaborate and expensive packages, particularly the use of postage and personalization.

With that in mind, what are some things you can do to avoid hairsplitting traps?

  1. Use white offset paper or a standard cream offset stock (and in almost all cases, using recycled paper doesn't cost any more and helps our environment). Besides costing more, most colored stock or glossy papers make it more difficult to read your letters.

  2. Use standard sized envelopes. Yes, the firm I work with uses lots of odd-sized and oversize envelopes when mailing for our clients, but only when we're mailing in large quantity or have been able to "gang" several projects together. The big disadvantage of non-standard envelopes is that they may fail to meet postal criteria or require additional postage.

  3. Forget about using brochures or other inserts. Development staff and executive directors can spend weeks agonizing over the text and design of brochures or inserts. But in most cases these enclosures actually depress response. In direct mail fundraising, the letter is the workhorse of persuasion.

  4. Don't offer premiums for acquiring new members. The purpose of direct mail fundraising is to provide a convenient way for enlightened and generous individuals to support causes and endeavors they believe in. In some instances, offering a premium lowers the response rate. Ill will is often created as well, since many organizations have a dickens of time sending out premiums in a timely manner.

  5. Discontinue the use of business reply envelopes. For your best donors, you can put a postage stamp on the reply envelope, but for almost all your other donors and prospective donors, letting them pay the postage doesn't decrease response and may in fact increase response.

  6. Use black ink—and use other ink colors sparingly. When using two colors, you can hardly ever go wrong with dark blue for the signature and the organization's logo (i.e., letterhead). Of course, the text of the letter should be in black. Any other color combination is hard to read (especially for older adults), reduces comprehension, and increases the cost of your mailing.

  7. Don't worry about the alignment of your teaser. In fact, don't worry about teasers at all. Hardly any of the tests we've conducted for dozens of clients show that the addition of a teaser increases response. And it's so easy to be too clever. Stick with your organization's logo (unless it is too elaborate) and the "typed" name of the person signing the letter.

  8. Save space and reduce confusion by not offering the option of making credit card gifts. Mailings whose reply devices have a line for credit card gifts often get lower response rates. BIG DISCLAIMER: Credit cards are helpful if you're inviting your members or donors to participate in a monthly giving program. And many individuals seem to prefer using their credit cards in responding to telephone fundraising and when signing up for special events.

  9. Have your executive director or president sign the letter. Don't spend time trying to recruit a celebrity or worrying about which member of the board should sign. Members and donors expect the chief executive officer to know what's going on, to care about the organization, and to be responsible enough to ask them to send a gift. For variety's sake, in the course of a year, you may wish to have another staff member, board member, or other volunteer sign the letter, as long as they don't edit your drafts to death.

  10. Do spend more time and more money on your thank you letters and notes, as long as you don't delay in getting them out. Don't try to save money by sending out your thanks via bulk mail. And don't send out postcards.
Thank you letters are a lovely place to include inserts to keep your members and donors better informed. And I guarantee you don't need to test, or split hairs, over the value of hand-written thank you notes to those who make generous gifts.

Stephen Hitchcock
© 2004. Excerpted from Open Immediately! Straight Talk on Direct Mail Fundraising: What Works, What Doesn't, and Why. Excerpted with permission of Emerson & Church, Publishers.

Stephen Hitchcock is vice president of client services at Mal Warwick and Associates.

Tenets of Leadership


Volumes have been written on leadership, many by highly successful, widely recognized men and women. A frequent topic is whether leaders are born or made. Indeed, this was the first question posed to my MBA class and one which we hotly debated, each from our own perspective and for our own motives (or internal reinforcement?). Over time I've learned that it doesn't matter. The best leaders make it their business to know enough that they not only recognize the right thing to do, they do it. Leaders are teachable.

Leaders step up when it matters, when others hesitate. With a nod to Kenny Rogers, leadership is knowing "when to hold 'em, fold 'em, walk away, or run." Leaders do the right thing in the interest of that which they are ethically bound to represent. In the best cases, that's consistent with the greater interest, and that also coincides with their own interests. Leaders have to eat, too, after all.

Leaders inspire others through their actions. Leaders can be good or evil, but leaders lead and followers choose, are even compelled, to follow, each with their own motives in mind. Leaders know what those motives are and how to satisfy them to elicit required levels of quality and performance. Leaders don't divisively manipulate; leaders openly generate trust through confident transparency and a sense of common purpose.

If you are born a leader, it comes easily to you. In fact, your issue is more likely to be understanding when to sit down. If you want to learn to lead, congratulations—you have the most important trait—you are willing to adapt, and that's imperative to strong leadership. Leaders actively listen, are open to new ideas, know they don't know everything, can be wrong, and are secure enough to apologize, forgive, forget, and move on.

Leaders know that to lead well, you have to want to lead. Leadership can be very tiring because leaders give of themselves to fill up the cracks in the wall, the chinks in the armor. Leaders hold the followers up until followers can stand on their own two feet with confidence. Leaders inspire because they have courage, because they will face the "front line" of whatever's necessary. Leaders roll up their sleeves when it's necessary, bailing the rowboat if it means sinking or surviving. Leaders are up to their ankles in mud in the trenches along with everyone else.

And leaders also know that to survive next time, the organization must have a common vision, a purpose that's beyond individuals and true to the greater vision the organization exists to serve. Leaders create that vision or—if they can't—they bring in someone who can help them create it. Leaders think, not just do. They make sure that there is a scout helping inform the next steps, based on the end goal as well as the next right footfall.

Leaders from some organizations sit in the dunk tank, cheerfully going under. People eagerly line up behind them because it's fun. Leaders of other kinds of organizations are the first to recognize new trends affecting their organizations, where the revenue's going to come from, that their constituents' needs are changing, and that that evolution is going to accelerate in the future. Some leaders are best at building, others at maintaining, still others at integrating. There are even leaders best at helping followers move on to the next right thing with dignity and purpose.

Born or made, where do you stack up? Where do you begin to improve your skills or those of your followers? It all begins with you, because you're the one that people are watching, emulating, and/or trying to outmaneuver.

Characteristics of a Leader

  1. You understand your organization's greater purpose, or you have an active plan to understand it, create it, modify it, or change it. To do any of the above, you've ensured you have the best information and resources you can afford, you've carefully considered who and what you need to include, and you know where those resources are going to come from and/or where you're going to get them if they're lacking.

  2. Purpose in hand (or planned for), you know exactly where the money's coming from and where it's going. Your greatest duty outside the vision of the organization is to ensure it's an ongoing concern. Yes, this can mean having to make the hard decisions; unfortunately, that's your call, and you have to do it to lead effectively. If you don't know, understand, or trust the numbers, you've got an active plan to fix that. Unfortunately, the higher up in the organization you are, the more likely it is that people are coloring their information in their own interests or for their own motives. One of your jobs is to know the numbers well enough to be able to identify when that happens and to know better than that. "The buck definitely stops with you." No excuses.

  3. Similarly, you understand where your human resources are coming from and where they need to go as a group and as individuals. You know where you're short handed on talent and ideas, where you're strong. You have an active plan to ensure that you're keeping the pipeline filled, you're financially and intrinsically rewarding people, motivating them through leadership—not "the stick"—and ensuring you're not permitting anyone to abuse those resources by burning them out until they quit or fall into sobbing puddles on the floor. You fight for your staff with zest equal to your fight for your organization's purpose, but you also give people specific performance benchmarks and then hold them accountable for reaching those benchmarks, delivering predictable consequences should they fail.

  4. You get it. By that I mean that, whether you're a front-line service delivery person or a business school leader, you know what your constituents need and want and your organization's place in making that happen. You understand the various choices, what works, and why some things don't work. You've participated in where the lines in the sand are drawn and resist the temptation to be everything to everyone.
I could spend a year—two—three—eternity—writing about leadership. After leading and being led, learning, succeeding, and making mistakes over the years, the single-most important thing all good leaders have is tremendous focus. The above are some places to start whether you're a board chair, member, executive director, department head, manager, or in the mail room.

Born or made, if you want to lead well, you can.

Cheryl Gidley, Gidley Consulting
© 2006, Gidley Consulting

Cheryl Gidley, a former Fortune 35+ executive, is a nonprofit MBA offering management and administration services and counsel. She serves on various boards and committees and is director for several nonprofit and for-profit organizations. Her groundbreaking methodology, The Best of Both WorldsTM, has been featured in Philanthropy News Digest. For more information, go to www.gidleyconsulting.com. Cheryl welcomes your comments at  cheryl.gidley@gidleyconsulting.com.

August 2006 Charity Reform Update: House Approves Charitable Giving Incentives and Reforms


Last week, on July 28, the House of Representatives approved a package of charitable giving incentives and reforms as part of pension reform legislation (H.R. 4). [Editor's note: President Bush signed H.R. 4, the Pension Protection Act of 2006, into law on August 17, 2006.] The charitable package is, in many respects, a watered-down version of provisions that were advanced by Senate Finance Committee chairman Chuck Grassley and the Panel on the Nonprofit Sector.

H.R. 4 now moves to the Senate for consideration, but passage is far from certain.

Charitable Giving Incentives. H.R. 4 contains seven separate giving incentives, all of which would run through the end of 2007. These incentives, according to a summary prepared by House Ways and Means Committee staff, include:

  • Tax-Free Distributions from IRAs for Charitable Purposes. The IRA "rollover" provides an exclusion from gross income for certain distributions of up to $100,000 from a traditional individual retirement account (IRA) or a Roth IRA, which would otherwise be included in income. To qualify, the charitable distribution must be made to a tax-exempt organization to which deductible contributions can be made.

  • Contributions of Food Inventory. For donations of food inventory, the provision extends an enhanced deduction for all trades and businesses.

  • Certain Payments to Controlling Exempt Organizations. Under current law, rent, royalty, annuity, and interest income paid to a tax-exempt organization by a controlled taxable subsidiary is generally treated as unrelated business income, which is taxable to the tax-exempt parent organization. The provision provides that payments received or accrued by certain exempt parents from taxable controlled subsidiaries will not be treated as unrelated business taxable income.

  • Qualified Conservation Contributions. The provision raises the charitable deduction limit from 30 percent of adjusted gross income to 50 percent of adjusted gross income for qualified conservation contributions, provided that such contribution does not prevent the use of the donated land for farming or ranching purposes. The charitable deduction limit is raised to 100 percent of adjusted gross income for eligible farmers and ranchers.
Charitable Reforms. H.R. 4 also contains nearly 20 reforms designed to increase regulation of exempt organizations. According to the House Ways and Means summary, these reforms include:

  • Life Insurance Contracts. Under the provision, charitable organizations must report certain acquisitions of interests in certain insurance contracts for two years beginning on the date of enactment. The IRS is required to issue a report within 30 months after the date of enactment examining if acquisitions of applicable insurance contracts is consistent with the tax-exempt purposes of those charitable organizations that acquire such contracts.

  • Clothing and Household Items. The provision specifies that no deduction is allowed for charitable contributions of clothing and household items if such items are not in good used condition or better. In addition, the IRS may deny a deduction for any item with minimal monetary value.
  • Fines and Penalties Applicable to Charitable Organizations. The provision doubles the amount of excise taxes applicable to certain activities, such as taxes on self-dealing and excess benefit transactions, failure to distribute income, and excess business holdings, by charities, social welfare organizations, private foundations, and exempt organization managers.

  • Notification Requirement for Exempt Organization. The provision requires certain exempt organizations to file an annual notice with the IRS containing basic contact and financial information. The requirement applies to organizations that currently do not have an annual filing requirement because their gross receipts are less than $25,000.

  • Public Disclosure of Information Relating to Unrelated Business Income Tax Returns. The provision extends the present-law public disclosure requirements applicable to Form 990 to the unrelated business income tax returns of Section 501(c)(3) organizations.

  • Donor-Advised Funds. The provision applies an excess benefits transaction tax on any grant, loan, compensation, or other similar payments from a donor-advised fund to a person that with respect to such fund is a donor, donor adviser, or a related person, and from a supporting organization to a substantial contributor or a related person. The provision imposes excess business holdings rules on donor-advised funds and Type III supporting organizations. Transition rules apply to the present holdings of donor-advised funds and supporting organizations. Supporting organizations that are functionally integrated with their charity would not be subject to any excess business holdings rules.
Perry Wasserman, 501(c) STRATEGIES
© 2006, 501(c) STRATEGIES

Perry Wasserman is managing director of 501(c) STRATEGIES, a Washington, D.C.-based government relations and communications firm representing GuideStar and other nonprofits on federal public policy issues. For more information on their work and services, please visit www.501cStrategies.com.

CLEAR Circles: Supporting Nonprofit Leaders in a New Way


Being a nonprofit executive director can be isolating. Trying to create an environment that attracts and maintains committed and talented people on shoestring budgets can be exhausting. Working with boards of directors who may be dedicated to the organization's mission but don't understand their true roles and responsibilities is frustrating. Confronting daunting social issues on a daily basis can be painful. Facing an increasingly competitive environment from a perspective that has not traditionally been competition oriented is daunting. With weighty issues like these bearing down on them daily, where can nonprofit leaders turn for support and problem solving?

The Nonprofit Center at La Salle University in Philadelphia, which is committed to strengthening the nonprofit sector through professional development, capacity building, and leadership initiatives, has adapted a national model first pioneered for corporate executives to provide missing support for area nonprofit leaders.

The concept is simple, explains Laura Otten, Ph.D., director of the Nonprofit Center and a CLEAR Circle facilitator. A Circle comprises seven or eight executive directors and a professional facilitator, who agree to meet monthly for two-hour sessions over nine months.

"Discussion is driven and shaped by group members, who help one another voice problems, share insights and experiences, questions and concerns, and jointly problem solve. What is unique and valuable," Otten says, "is the strict adherence to confidentiality so people can say things they could never say to staff or board members. They are in the presence of people who truly 'get it,'" she added, "and that makes this program work."

What kind of issues get addressed in CLEAR Circles?

  • My life is out of control. How do I get balance back between work and home?
  • How do I get my board to do their job and not mine?
  • What do I do about an employee whose personal life is affecting his work?
  • How am I supposed to solicit major gifts when our own board doesn't support us?
  • My last choice for board chair just got elected. Where do I go from here?
Sessions focus on group members helping each other achieve their professional and even personal goals through highly focused questioning and the exchange of feedback. At the end of each session, participants reflect on the quality of the process to ensure that it remains highly relevant and productive.

"The modest fees for CLEAR Circles are meant to make them accessible, particularly because many executive directors are reluctant to spend money on their own development," Otten said. "Each participant pays $380 for all nine sessions, if they have a membership in the Nonprofit Center. The cost for non-members is $450. Many organizations consider the unique support so valuable, and the advancement of personal and organizational effectiveness so measurable, that board members refer executive directors and cover the fees."

The Nonprofit Center currently operates six CLEAR Circles, half of which are continuing into their fourth year together, having elected to continue after the initial nine-month commitment. Given the overwhelmingly positive response from participants, new Circles are being formed in different parts of the Center's service area to make them as convenient as possible for future members.

Quotes from CLEAR Circle Participants

"The CLEAR Circle has been a terrific experience. Each person brings so much and we learn from each other. I was surprised ... at how smart we have gotten. I thought the feedback we gave [to a member] could have come from a high priced consulting firm and the only difference would have been the packaging."

-- Peter Rittenhouse, Executive Director, Friends Center Corporation, two-year CLEAR Circle Participant

"CLEAR was exactly what I was looking for. ... There are issues that you just can't really discuss with your board or staff, but about which you want advice. The best part of CLEAR for me is the open communication between participants. ... We give and receive honest and direct feedback that is very helpful. Sometimes just talking about situations I'm facing gives me the perspective I need. I am so thankful that the Nonprofit Center identified this need to provide this forum."

-- Amy Holdsman, Executive Director, White Williams Scholars (two-year CLEAR Circle participant)

"I became a member of Clear Circle two years ago ... and it has been the best thing I could do for my development as a Director."

-- Sandra Cross, Executive Director, Grand Central, Inc.