Finances for a small fraternal / benevolent organization

[HipCoyote]

Dear Friends

Situation

Here is a situation I have not seen here. Even though this is not "personal finances" I am hoping this posting is allowed given the small numbers involved and similarity to personal finances.

I am involved with a small local “Fraternal Beneficiary Society.” Our group has the 501c8 status, so we pay no taxes. We support various charities and have a budget of about $31,000 per year. (More on budget at the end of this posting.) We have a total of approximately $750,000 separated into two accounts at Edward Jones. (It is a long story how EJ came to manage the funds. I am a dedicated Boglehead and only recently became involved in the finances of this organization.)

I have made a recommendation to move the funds from EJ to Fidelity and that we follow a Bogleheads portfolio. The Financial Committee is leaning towards agreement. I like Fido because I have my money there, there is a local office nearby and I have an excellent point of contact there who has proven to be responsive. I am asking the Bogleheads community to comment on my plan for the reinvestment of the funds.

Current Portfolios

EJ Account 1: Value is $450,000. AUM fees fee is 1.23%. (They give us a so-called discount!). This is a “United Management Account” with an approximate 49% stocks and 51% bonds. When taking international equities into account the AA is 30% US Stocks, 19% international stocks and 51% Bonds. This account has over 200 individual stocks with 7 bond mutual funds. The stocks within this portfolio are not important for this discussion. EJ buys and sells funds often. Some positions are less than $1000. (The financial advisor told us they had the multiple stocks for tax loss harvesting and that their analysts do a better job of stock picking…except we pay no taxes.)

EJ Account 2: Value is $250,000. This is an “Advisory” account with fifteen mutual funds. AUM fees are 1.15%. The AA is similar to Account 1: 40% US equities, 19% international equities, 51% bond funds. The funds in this account are not important. (The advisor said they examine the account every two weeks to determine if funds needed to be bought / sold.)

Total AUM fees paid for both EJ accounts in 2022 is $9500. Note that our budget is only $31,000.

Rationale for moving:
I have done back testing comparing the existing EJ funds to a simpler low-cost index fund portfolio. It will come to no surprise, given the AUM fees of EJ, it was obvious that the index fund portfolio would outperform the EJ portfolios. In addition, I did some Monte Carlo analysis that also showed the forward viability of the index fund portfolio was better than the EJ portfolios.

Recommended Portfolio
Two years of operating expenses, approximately $63,000, be placed into a money market fund such as SPAAX.

Remaining funds AA: 60% equities – 40% bond AA portfolio with 15% of the equities being placed into the international equities market. A recommended AA and portfolio would be:

8.4% cash instruments (SPAAX – Government Money Market) or similar
36.64% Bonds (FTBFX – Total Bond Market) or similar
8.25% International Equities (FTIHX - Total International Stock Market) or similar.
46.71% US Equities FSKAX (Total US Stock Market) or similar.

My recommendation is that we use funds from the SPAAX when the market is down (I have not yet defined that) and sell funds when the market is up.

I recommended that we rebalance twice a year or whenever the AA is off by +- 5%. The Financial Committee shall review the Financial Policy Statement (written by me) every year at budget time.

I recognized that $30,000 is 4% of the portfolio. The long-term viability of the organization is in question, as it is with many of these types of organizations. Given that we will no longer be spending an added $9500 annually in AUM fees, I proposed we can modestly increase our budget to $37,000 or so and continue to be financially viable for at least a decade, if not longer. What is certain is that if we continued to spend $31,000 per year and pay $9500 in fees, the viability of the organization’s finances were headed toward ruin.

What are your thoughts? What am I missing and how can I do better?

[retired@50]

Why the switch from a roughly 50/50 stock/bond mix to 60/40?

I'd be worried about getting blamed the next time the stock market drops. If you hold the asset mix steady, you might be less culpable.

Regards,

[HipCoyote]

Why the switch from a roughly 50/50 stock/bond mix to 60/40?

I'd be worried about getting blamed the next time the stock market drops. If you hold the asset mix steady, you might be less culpable.

Regards,

Thanks for your reply. I considered that. I thought we needed to go a bit more aggressive simply because we needed to do so to keep financially viable. To me, the first question is if my recommendations make sense, not worry about blame. Certainly I will examine a 50-50 mix and do some math on that as well. The interesting thing about blame is that this group does not have a lot of people who understand any of this, so blame could come about. I had a long career where I had to make decisions that often were controversial, difficult and sometimes newsworthy. I, frankly, could care less about them blaming me for the market. They don't like it, they can have the books back and have someone else take care of it for 1.25% and I'll go fishing!

[retired@50]

Why the switch from a roughly 50/50 stock/bond mix to 60/40?

I'd be worried about getting blamed the next time the stock market drops. If you hold the asset mix steady, you might be less culpable.

Regards,

Thanks for your reply. I considered that. I thought we needed to go a bit more aggressive simply because we needed to do so to keep financially viable. To me, the first question is if my recommendations make sense, not worry about blame. Certainly I will examine a 50-50 mix and do some math on that as well. The interesting thing about blame is that this group does not have a lot of people who understand any of this, so blame could come about. I had a long career where I had to make decisions that often were controversial, difficult and sometimes newsworthy. I, frankly, could care less about them blaming me for the market. They don't like it, they can have the books back and have someone else take care of it for 1.25% and I'll go fishing!

Yes, the recommendations make sense, and of course getting away from EJ will help the longevity of the organization.

If it were me, I'd try to establish some institutional knowledge with regard to finances (assuming that's possible). It may help the organization endure beyond your tenure.

Regards,

[pizzy]

Why the switch from a roughly 50/50 stock/bond mix to 60/40?

I'd be worried about getting blamed the next time the stock market drops. If you hold the asset mix steady, you might be less culpable.

Regards,

Thanks for your reply. I considered that. I thought we needed to go a bit more aggressive simply because we needed to do so to keep financially viable. To me, the first question is if my recommendations make sense, not worry about blame. Certainly I will examine a 50-50 mix and do some math on that as well. The interesting thing about blame is that this group does not have a lot of people who understand any of this, so blame could come about. I had a long career where I had to make decisions that often were controversial, difficult and sometimes newsworthy. I, frankly, could care less about them blaming me for the market. They don't like it, they can have the books back and have someone else take care of it for 1.25% and I'll go fishing!

It sounds like you, in fact, do care.

[Mike Scott]

Be sure you understand how Fidelity would administer the account including any potential fees before making the final decision.
I would stick with the current allocations for the transistion.
Be sure the collective group is making the decision so you are not carrying the blame for any missteps along the way.
It may be worth paying for a one time financial planner review for and independent institutional reference and documentation.

I am a member of a similar organization who holds a small account with Raymond James.
They will hold this account forever because there are much larger problems to deal with and no one wants to make a decision.
Sometimes you have to let things go.

[HipCoyote]

Be sure you understand how Fidelity would administer the account including any potential fees before making the final decision.
I would stick with the current allocations for the transistion.
Be sure the collective group is making the decision so you are not carrying the blame for any missteps along the way.
It may be worth paying for a one time financial planner review for and independent institutional reference and documentation.

I am a member of a similar organization who holds a small account with Raymond James.
They will hold this account forever because there are much larger problems to deal with and no one wants to make a decision.
Sometimes you have to let things go.

Thanks...I do have an hourly fee only advisor who may offer advice. A non-profit is a bit out of his wheelhouse, but this is pretty simple stuff. I will double check and pursue this.

I will certainly consider keeping the same allocation..although we don't have any cash positions right now, so there is a bit of a difference.

I will triple check the Fido fees...we are not asking for any management from them, but given that it is not a personal account, I'll firm this up.

Re: letting go..yep. If they dicker or want to leave half at Ej and self manage half to "see what happens" I am going to let them just leave the stuff at EJ and move on. This group can have a one hour conversation about upping a donation by $250 to some group...so it could happen. But overall we do some positive stuff for our community.

[HipCoyote]

It sounds like you, in fact, do care.

Certainly about the organization and its continued work. And nice members.

[SnowBog]

My only thought/concern is this part:

...
8.4% cash instruments (SPAAX – Government Money Market) or similar
...
My recommendation is that we use funds from the SPAAX when the market is down (I have not yet defined that) and sell funds when the market is up.

This is a "bucket" approach - and IMHO these don't work out as intended - while adding an extra unnecessary layer of complexity.

The cash "bucket" would have less than 2 years expenses. What will you do when the market is down for more than two years? That's always one of the problems with a "bucket" - it has to be refilled - but it's not always going to align to your plan.

Instead I'd recommend dropping the concept of the "bucket". A simple AA will - on its own - help manage the "don't sell stocks when market is down".

Let's say markets crash by 50% and lasts 3 years. Your "bucket" wouldn't have survived (run out before 2 years). With just your AA, your withdrawals would come from whatever is "over" it's allocation - in this case fixed income. When stocks recover, they'll be "over" their allocation - and withdrawals come there.

IMHO this is far simpler to manage, achieves the intended result better (under a wider set of conditions), and thinking long term - is easier for others to follow if you decide you'd rather be fishing!

[FellsGuy]

Under no good deed goes unpunished I'd leave it be, you are correct, but when dealing with people who lack knowledge in this area there will always be a contingent convinced this is a grave error to leave their "expert advisor". People are going to hear even when you don't say it a promise of greater returns and every one day blip in the market will be "see I told you this was a bad idea" and always suspicion that you and "your" fidelity guy have benefited in some way. Never mind every year you will have to prove better results and justify not moving back to EJ.
But you do you

[HipCoyote]

My only thought/concern is this part:

...
8.4% cash instruments (SPAAX – Government Money Market) or similar
...
My recommendation is that we use funds from the SPAAX when the market is down (I have not yet defined that) and sell funds when the market is up.

This is a "bucket" approach - and IMHO these don't work out as intended - while adding an extra unnecessary layer of complexity.

The cash "bucket" would have less than 2 years expenses. What will you do when the market is down for more than two years? That's always one of the problems with a "bucket" - it has to be refilled - but it's not always going to align to your plan.

Instead I'd recommend dropping the concept of the "bucket". A simple AA will - on its own - help manage the "don't sell stocks when market is down".

Let's say markets crash by 50% and lasts 3 years. Your "bucket" wouldn't have survived (run out before 2 years). With just your AA, your withdrawals would come from whatever is "over" it's allocation - in this case fixed income. When stocks recover, they'll be "over" their allocation - and withdrawals come there.

IMHO this is far simpler to manage, achieves the intended result better (under a wider set of conditions), and thinking long term - is easier for others to follow if you decide you'd rather be fishing!

Excellent points...

[HipCoyote]

Under no good deed goes unpunished I'd leave it be, you are correct, but when dealing with people who lack knowledge in this area there will always be a contingent convinced this is a grave error to leave their "expert advisor". People are going to hear even when you don't say it a promise of greater returns and every one day blip in the market will be "see I told you this was a bad idea" and always suspicion that you and "your" fidelity guy have benefited in some way. Never mind every year you will have to prove better results and justify not moving back to EJ.
But you do you

I wish I could say you were absolutely wrong...but I can't. You just might have a point.

[Sandwich]

....
I am involved with a small local “Fraternal Beneficiary Society.” Our group has the 501c8 status, so we pay no taxes. We support various charities and have a budget of about $31,000 per year. (More on budget at the end of this posting.) We have a total of approximately $750,000 separated into two accounts at Edward Jones.
....

Current Portfolios

EJ Account 1: Value is $450,000. AUM fees fee is 1.23%. (They give us a so-called discount!). This is a “United Management Account” with an approximate 49% stocks and 51% bonds. When taking international equities into account the AA is 30% US Stocks, 19% international stocks and 51% Bonds. This account has over 200 individual stocks with 7 bond mutual funds. The stocks within this portfolio are not important for this discussion. EJ buys and sells funds often. Some positions are less than $1000. (The financial advisor told us they had the multiple stocks for tax loss harvesting and that their analysts do a better job of stock picking…except we pay no taxes.)

EJ Account 2: Value is $250,000. This is an “Advisory” account with fifteen mutual funds. AUM fees are 1.15%. The AA is similar to Account 1: 40% US equities, 19% international equities, 51% bond funds. The funds in this account are not important. (The advisor said they examine the account every two weeks to determine if funds needed to be bought / sold.)

Total AUM fees paid for both EJ accounts in 2022 is $9500. Note that our budget is only $31,000.
....

Recommended Portfolio
Two years of operating expenses, approximately $63,000, be placed into a money market fund such as SPAAX.

Remaining funds AA: 60% equities – 40% bond AA portfolio
....
I recommended that we rebalance twice a year or whenever the AA is off by +- 5%. The Financial Committee shall review the Financial Policy Statement (written by me) every year at budget time.

...
What are your thoughts? What am I missing and how can I do better?

What is the reason that there are two separate EJ accounts ? What was the annual income on these accounts ?

I imagine that the current EJ investment reports are lengthy / dense to read given the number of underlying investments so simplifying to a few index funds would be a welcome change for any of the financial committee members who actually takes time to read the EJ reports before using it as a paperweight.

If your fraternal group desires to stay with EJ to avoid the possibility that some may blame you if things go sour with Fidelity, consider working within the EJ framework to meet your simplification goals.

I speak from recent experience. My civic group asked me to be part of a committee overlooking their charitable funds. Like you, I noted the amount going out toward "advisory fees" and floated the idea of moving to a low cost brokerage. I was informed that they would be staying with their AUM "expert advisor".... the thought being that the "expert advisor" would be the one to "blame" if returns are low.

The total funds are less than your group and currently over 30% of investment income is used to pay for the "advisory" fees.

As the newest member of the committee, I have made suggestions after reading the dense monthly reports to swap out of a couple of high e/r funds, one with a Morningstar rating of 1-star for a couple of Vanguard index funds. I am making suggestions to move the portfolio towards simplification (i.e., one subaccount valued under $ 100k is invested in 5 bond funds / etfs) noting Morningstar ratings and expenses of the underlying investments. I am hoping that over the next year or so, after conversations amongst the civic group and the advisor, that the portfolio can be simplified into higher rated investments that will result in the % of investment income required to pay advisory fees to drop in half.

Good luck.

[livesoft]

I am on the Finance Committee of a non-profit. The investments were in atrocious annuities in the past with an expensive advisor. Now they are in the 40/60 Vanguard LifeStrategy Conservative Growth fund which has an expense ratio of 0.12%. We now have an IPS which states the portfolio should have 40% equities and 60% fixed income. While we could get to 40/60 with separate funds, the single fund VSCGX is perfect. We don't even have buckets anymore. Simple. Worked fine through Covid-19, too. Also anybody who wants to know the performance of the non-profit's portfolio can just go to Vanguard.com and see it. No need to do any math by combining the results of various funds.

[HipCoyote]

I am on the Finance Committee of a non-profit. The investments were in atrocious annuities in the past with an expensive advisor. Now they are in the 40/60 Vanguard LifeStrategy Conservative Growth fund which has an expense ratio of 0.12%. We now have an IPS which states the portfolio should have 40% equities and 60% fixed income. While we could get to 40/60 with separate funds, the single fund VSCGX is perfect. We don't even have buckets anymore. Simple. Worked fine through Covid-19, too. Also anybody who wants to know the performance of the non-profit's portfolio can just go to Vanguard.com and see it. No need to do any math by combining the results of various funds.

Now that is an excellent suggestion.

[dogagility]

I am on the Finance Committee of a non-profit. The investments were in atrocious annuities in the past with an expensive advisor. Now they are in the 40/60 Vanguard LifeStrategy Conservative Growth fund which has an expense ratio of 0.12%. We now have an IPS which states the portfolio should have 40% equities and 60% fixed income. While we could get to 40/60 with separate funds, the single fund VSCGX is perfect. We don't even have buckets anymore. Simple. Worked fine through Covid-19, too. Also anybody who wants to know the performance of the non-profit's portfolio can just go to Vanguard.com and see it. No need to do any math by combining the results of various funds.

Now that is an excellent suggestion.

Yes, it is. Removes the complexity of the proposed bucket approach (which has no benefit). When you leave the organization, anybody can manage a single fund.

[crefwatch]

It would be helpful to know if this group has any substantial function other than distributing money to certain other charities. What percent of your annual budget, and of each current year contribution, is spent on such "program activities?" Is there a good reason to keep going, or have higher costs in modern life made the group inefficient and obsolete?

I question such a risky asset allocation, especially if the group is already in peril. Having an overpaid EJ broker (that's what he is) will not make you or the investment committee look better during a prolonged down market.

[Elric]

It would be helpful to know a bit more / confirm assumptions.

Does your organization have any new income coming in each year? Does it have any significant expenses (in addition to the advisor and making donations)? How dependent on your organization's donations are the recipients?

The concept of setting aside 2 years of operating expenses would tend to be what an organization does to have operational reserves. 2 years, from my reading, tends to be the upper bound, and it depends on the portion of expenses that must be paid each year without severe impact, and how likely it is that new income would go down, and by how much. For example, if your organization pays rent or a mortgage, then you want emergency funds in case your sources of new income dry up. But it doesn't sound like this is the case here. You need some operating cash, but perhaps not that much.

I'm not sure why, in addition to this cash, you propose additional funds in cash (other than that cash is doing well right now, but it's not locked in for an long term).

You seem to realize that your proposed burn rate should last at least a decade, but is not a perpetually sustainable one. Is that the plan for the organization? Is the full board in agreement on this?

Only you can judge how the board will feel should the investments drop in value and how OK you are that some may unfairly blame you. I'm interested in this thread as I'm on the board for a non-profit school. We just recently determined the amount to keep for operating reserves and passed an operating reserves policy. We're in the process of getting a better handle on our capital reserves needs, and after that comes determining a quasi-endowment strategy and investment approach. Whether or not to engage an advisor will be one of the issues the board will need to tackle, keeping in mind the cost vs. the comfort and expertise of the board, whose members will change out over time.

[random_walker_77]

To what extent are the reserves funding the annual budget? How much is coming from member dues? A perpetual withdrawal rate is probably around 2-2.5%. 4% is a safe withdrawal rate that should be good for 30 years, but w/ the advisor fees, this organization might be drawing over 5%

Perhaps fundraising needs to be emphasized.

Outcomes don't always align with strategy. A better strategy can yield poorer outcomes. A poor strategy (such as buying lottery tickets) can yield outperformance. The $9K/yr you could save on advisory fees which has been yielding underperformance can cushion some of this risk, and the savings on advisory fees is a sure thing.

[CedarWaxWing]

Under no good deed goes unpunished I'd leave it be, you are correct, but when dealing with people who lack knowledge in this area there will always be a contingent convinced this is a grave error to leave their "expert advisor". People are going to hear even when you don't say it a promise of greater returns and every one day blip in the market will be "see I told you this was a bad idea" and always suspicion that you and "your" fidelity guy have benefited in some way. Never mind every year you will have to prove better results and justify not moving back to EJ.
But you do you

I wish I could say you were absolutely wrong...but I can't. You just might have a point.

It would seem that your organization should "hire" Mark Zoril of PlanVision. Having him on board will not be expensive, and he could review your plan. If and when you leave... Mark can continue to advise the organization no matter who replaces you. Assuming that he would want that relationship.

[marlin2023]

I would go with an income portfolio. get some funds that produce decent income, hdv, vym, schd, and whatever they pay out you get to spend. then you never worry about how much to sell. You can get 4% in dividends these days. maybe keep 5-10% in cash for rainy day. be careful with stretching for yield with dividend funds.

Dividends tend to fair better then stock values. In 2008 vym was down 50% but the dividends were only down 25%. that's why i like them.

[HipCoyote]

It would be helpful to know if this group has any substantial function other than distributing money to certain other charities. What percent of your annual budget, and of each current year contribution, is spent on such "program activities?" Is there a good reason to keep going, or have higher costs in modern life made the group inefficient and obsolete?

In addition to distribution of funds, the organization is a fraternal org, meaning there are some social activities that we do and some small benefits as well. The reason for keeping going is a very long story at this point. I do not see this chapter having a life beyond 10 years. For now, the org needs to stay in place.

[HipCoyote]

It would be helpful to know a bit more / confirm assumptions.

Does your organization have any new income coming in each year? Does it have any significant expenses (in addition to the advisor and making donations)? How dependent on your organization's donations are the recipients?

We do not have much added income coming in. All significant expenses are funded from the accounts. We are not dependant on donations.

The concept of setting aside 2 years of operating expenses would tend to be what an organization does to have operational reserves. 2 years, from my reading, tends to be the upper bound, and it depends on the portion of expenses that must be paid each year without severe impact, and how likely it is that new income would go down, and by how much. For example, if your organization pays rent or a mortgage, then you want emergency funds in case your sources of new income dry up. But it doesn't sound like this is the case here. You need some operating cash, but perhaps not that much.

Our rent is to another fraternal organization who has its own lodge where we have our meetings. Rent is quite small. There are a few mandatory expenses such as insurance and some national dues, but that's it. Maybe $4k per year. The rest of the expenditures are discretionary.[/quote]

I'm not sure why, in addition to this cash, you propose additional funds in cash (other than that cash is doing well right now, but it's not locked in for an long term).

The only cash was the two years which I figured into to the AA. There was no cash in addition to that...maybe I wasn't clear.

You seem to realize that your proposed burn rate should last at least a decade, but is not a perpetually sustainable one. Is that the plan for the organization? Is the full board in agreement on this?

Bingo. What we have here is an organization with some funds, a budget demand that will eventually whittle down the accounts balances and that will be that. Unlike a human who has a life span, meaning there is always an end point where funds are no longer needed, an organization does not. The reality is that the org either reduces its expenses, increases its funds through fund raising, or hope for a dramatic upswing in the markets.
The group has not really had the discussion of financial reality until now.

Only you can judge how the board will feel should the investments drop in value and how OK you are that some may unfairly blame you. I'm interested in this thread as I'm on the board for a non-profit school. We just recently determined the amount to keep for operating reserves and passed an operating reserves policy. We're in the process of getting a better handle on our capital reserves needs, and after that comes determining a quasi-endowment strategy and investment approach. Whether or not to engage an advisor will be one of the issues the board will need to tackle, keeping in mind the cost vs. the comfort and expertise of the board, whose members will change out over time.

The issue of blame has come up several times. As I mentioned in other responses, I am not that concerned about it. But, to obviate some of that potential, we have a Financial Committee who has to approve the plan. I have written in the plan that the Committee must review the plan yearly, make adjustments as needed such as AA. We also have a budget committee who develops a budget every year. Right now, the accounts were placed into EJ by one guy who essentially resurrected the organization and secured the funds from a legal entanglement with the national chapter ....very long and unnecessary story for our purposes here. But it was one guy who handled the funds and the entire chapter really didn't care, have the acumen to examine what was going on, etc. The only demand was one member wanted to know the balance of the accounts this year vs. last year. It was great fun while the market was going up and people understood when the market went down. But no one thought to ask what the performances of the accounts were visa vie a benchmark, fees, AA, AUM fees, potential longevity of the funds or anything else. My first few meetings and I was concerned. When I saw that AUM fees were over $9K and our budget was only $31K, it was obvious there was a problem.

The private school matter has a greater consequence of failure. Our org fails and a few charities will have to fill in some gaps.
We do not fully fund any charity. A dear friend of ours was a teacher at a religious school. Much of their circle of friends, social life and professional life was wrapped up in that school. Well, it shut down after a few near misses. Funding was just too difficult. Several hundred kids were displaced. It was awful to watch.

Bringing other board members on line with finances is going to be a challenge. The starting point is a financial policy statement, better briefings at each meeting on the accounts, and a reevaluation of the portfolio by the Financial Committee is a starting point.

[crefwatch]

My well-off postwar suburb of NYC, in NW Bergen County, had an empty Masonic Temple on our one Industrially zoned street. That was in 1996. A few years later, it was torn down and replaced with a small office/commercial building. Thinking about The Music Man (even though it's fiction), it's hard to imagine a time when people had enough leisure to belong to fraternal organizations. I worked in a NYC building built by a chapter of Masons in 1928. They were bankrupt by 1932, but that was a special case, of course.

I'd comment that the health of my wife's plant-related societies (most of them, in fact, 401(c)3 charities) is directly related to the commitment and talents of the officers and boards. Especially as these people age (and become anxious to visit grandchildren, as well as having trouble driving at night and aches and pains, and all the rest), newer generations have to be actively persuaded to participate. Many of them have no "institutional memory" of the society, and may make careless or thoughtless decisions. These could range from "Let's serve Champagne at the first meeting of the year!" to "Let's invest more aggressively."

I wonder if it would be more dignified to evaluate the situation, and make plans to wind down the company gracefully, maybe even leaving a legacy for the membership's favorite charity? The effort required to evaluate such a plan so may provide a window on the future management pipeline, gloomy or rosy, for the organization.

[Elric]

Our rent is to another fraternal organization who has its own lodge where we have our meetings. Rent is quite small. There are a few mandatory expenses such as insurance and some national dues, but that's it. Maybe $4k per year. The rest of the expenditures are discretionary.

Based on that information, I'd say you don't NEED to keep more than a max. of about $8K in cash or cash-like investments. That's 2 years of operating costs for your organization. And not keeping more frees up funds for higher volatility, but higher average return investments. That's general advice, you may feel you don't need this, as you're OK if you run out of funds after 10 or more years.

Bingo. What we have here is an organization with some funds, a budget demand that will eventually whittle down the accounts balances and that will be that. Unlike a human who has a life span, meaning there is always an end point where funds are no longer needed, an organization does not. The reality is that the org either reduces its expenses, increases its funds through fund raising, or hope for a dramatic upswing in the markets.
The group has not really had the discussion of financial reality until now.

If you wanted to, and I'm not saying you should, you could keep outlays down to 2.5-3% or so, and have a good chance of running indefinitely. But with membership aging, etc., I gather that's not a goal. Which is fine.

Bringing other board members on line with finances is going to be a challenge. The starting point is a financial policy statement, better briefings at each meeting on the accounts, and a reevaluation of the portfolio by the Financial Committee is a starting point.

Sounds like a sound plan!