Fall 2008
Voices in Philanthropy
Lessons Learned from Economic Downturns
Wendy Roy, Executive Director, Grand Rapids Area Community Foundation
As the first full-time director of a brand-new community foundation in 1997, I saw the stock market soaring and funds growing so fast we were making donors giddy. They thought they were smart to give to an organization capable of growing their funds so rapidly. We thought we were brilliant in building our rural foundation at a pace at which we never dreamed.
The dotcom bust earlier in this decade challenged all of our perceptions of what to expect when investing endowments for the future. What lessons did we learn for the current downturn in the stock market?
Maximize Foundation Response to Crisis
Globalization has hit northern Minnesota. Our small community has seen plant closings, corporate downsizing and an unemployment rate 60 percent higher than the state average. The foundation board has responded by concentrating on workforce development, particularly through education.
Criteria for crisis funding have shifted to families and individuals who need help getting to their jobs, staying employed, and keeping a roof over their heads. Collaborative efforts with other agencies on workforce training are beginning to pay off.
Only Make Promises You Can Keep
Early in my career it seemed so easy to explain that an endowment would generate x-percent annually. The long-term was always mentioned, but never stressed. Since the early 2000s, my message to organizational boards regarding their endowments carries three points about investment returns: think long-term, think long-term and, of course, think long-term. We've had very few calls in this economic downturn because now we only promise great service.
Talk with private investment managers and they'll tell you their clients don't call when the stock market is doing well, but they often panic when they begin to see negative numbers. Community foundation donors aren't much different, but annual endowment education for agency boards has paid off.
Strengthen the Organization in Other Ways
In my world it doesn't take long to realize that when appreciated assets are hard to find, donations will be down. With the outlook being a slow recovery, we've shifted our emphasis to planned giving.
The community foundation has always had strong ties to the professional community, but we're stepping up our marketing to them, as well as to potential donors. We're also taking the opportunity to review and refine investment strategies and policies, branding our organization and successfully discovering innovative ways to grow our own administrative endowment.
It's much simpler to manage a community foundation when the economy is booming. But when change comes, we're much better prepared. In our small-staffed office, we rely on our board members to recommend adjustments to our strategic plan to meet current needs.
Challenges of economic downturns bring opportunities to allow our organization to better serve the common good. I believe our constituents benefit from all of the activities of the community foundation — from responding to immediate needs in the community, to promising and delivering good service, to planning for the future.
Growing Equality for Women and Girls
Lee Roper-Batker, President and CEO, Women's Foundation of Minnesota
This year, the Women's Foundation of Minnesota celebrates its 25th anniversary. As the first statewide women's fund in the nation, this milestone provides us the unique opportunity to reflect on where we've been and where we want to go to grow equality for all Minnesota women and girls.
As we look back, these "big headlines" speak to our impact:
- Granted $9 million to over 800 nonprofits across the state.
- Became the first women's foundation in the world to start a funding program and endowment just for girls through our girlsBEST (girls Building Economic Success Together) Fund.
- Created national research blueprints from our reports: Status of Women in Minnesota Counties (2004), Status of Women of Color in Minnesota (2005), and Status of Girls in Minnesota (2008).
- Was the first women's foundation in the world to receive a $1 million gift and have built one of the largest endowments.
How did we get here? Through a bold vision, strategic planning, and the collective work of many partners. And during the past eight years, the foundation has institutionalized its ethos into core values and operating norms, including diversity, transformational learning and hope.
Diversity
Diversity is a core value that guides the Women's Foundation's grantmaking, administrative practices and policies. When I joined the organization in 2001, we had one woman of color on our board and no staff members of color. Today, women of color comprise half of our 20-member board of trustees and 40 percent of staff. Altogether, we are women of varying races and ethnicities, abilities, ages, classes and sexual orientations.
Leading from this core value of diversity brings us increased perspective and understanding — and it helps democratize the foundation.
Transformational Learning
Transformational learning institutionalizes the foundation's practice of listening and responding to communities. We evaluate our work to build a learning community and use this information to influence our decisions and advance social change.
During our 14-community listening tour in 2001, we learned that women and men wanted us to invest now in boosting girls' future economic success — and so the girlsBEST Fund was launched. Evaluation of girlsBEST last year showed a model and theory of change that's working. Participation in girlsBEST raised girls' grades, self-esteem, leadership ability and expectations for the future. Next year we'll disseminate the girlsBEST model with women's funds around the globe.
This year we traveled to 18 communities across the state to share key findings from our new research report, Status of Girls in Minnesota. We wanted to learn if and how our findings resonated in greater Minnesota, in communities of color, and in the disabilities and LGBT communities.
Whether we were in Warroad or Marshall, holding a Seven-Nations' meeting in Bemidji with Northern Tribal leaders or at the Courage Center in Minneapolis, we learned Minnesotans share a common yearning: to improve the lives of girls.
Hope
For 25 years we've evolved and thrived as a community foundation. We've led from our core values and stood on operating norms arising from the input of over 400 women's voices across the state. It was these founding women whose collective vision and resources created a community foundation to champion women and girls' social, political and economic equality.
We're proud to have worked in partnership with so many to invest in women's equality. We continue to hold the simple truth that when women thrive, families thrive and communities thrive. Looking forward, as we craft our next five-year strategic plan, we've added one more core value to our work: hope. We believe that our shared vision and collective efforts will make the poverty, racism and sexism that hold women at the bottom ... history.
A Community Foundation in a
Social Justice Context
Gregory Grinley, Executive Director, PFund Foundation
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Photo by Paul Nixdorf |
As the only foundation advancing social justice specifically for lesbian, gay, bisexual and transgender (LGBT) communities in Minnesota and the Upper Midwest, PFund occupies a unique space in our region. We have a tremendous opportunity to inspire philanthropy within and beyond LGBT communities.
Much of our support comes from the LGBT community, but as PFund has become more intentional about funding in a larger social justice framework, we're seeing more doors open. Our donors are interested in multiple issues. Equality for LGBT people is certainly the lens we use for all our work, but we are part of something bigger.
Racial equity, the arts, economic justice, immigrant rights, women's rights — all these and many more are part of a larger progressive justice movement, and our opportunity exists at the intersection of these multiple issues. That's where our supporters are and where our funding and programmatic work will have the greatest impact. We may be a relatively small foundation, but investing our resources at this intersection magnifies our impact.
PFund provides grant support to organizations that have limited access to funding. While most of our donations come from the Twin Cities metro area, the majority of our grants are made to organizations outside this area. PFund's board and community grant review committee has always recognized that organizations in small cities and rural communities have a tough time raising money — particularly for LGBT programs and organizations.
Commitment to Diversity
PFund has been very intentional about our commitment to communities of color. We established the Communities of Color Endowment in 2004 — the first fund of its kind in the nation to support LGBT people of color.
Last year we launched the Racial Equity Initiative, which fosters individual leadership in LGBT communities of color and supports stand-alone LGBT organizations of color such as Shades of Yellow (SOY), a LGBT Hmong group based in the Twin Cities.
We recognize that LGBT people of color have often been left out of the gains the mainstream white community has seen in recent years, and this initiative is working to repair the disparity of financial investment by funding at the intersection of race and sexual orientation.
Being Nimble with Unrestricted Support
Who would have thought that marriage equality would be an issue to come to light so abruptly? I use that example when I visit with donors about unrestricted support and estate planning. Donors often find a particular program — such as scholarships — very compelling. But to be dedicated to LGBT equality in a broad social justice environment, PFund must be nimble and ready to face what comes.
Advancing equality will take new forms in the coming decades, and having unrestricted funds to do that work will be critical. This is particularly true for planned givers — they have invested in PFund's ability to address issues unforeseen from today's perspective.
Partnering with Other Foundations
PFund is working more closely with other foundations that share our commitment to social justice. We know that our donors are interested in multiple issues and that other foundations have unique ways to do their work. We are partnering with Women's Foundation of Minnesota and Headwaters Foundation for Justice to offer donor education.
We've also established closer relationships between staff at these and other terrific foundations. Alfonso Wenker, our programs manager, has met with Headwaters staff to share best practices around grantmaking, programs and internal processes and procedures. John Brentnall, PFund treasurer, and I met with Women's Foundation staff to learn more about their donor-advised funds and some other donor programs. These relationships are further strengthened through the Minnesota Council on Foundations' working groups.
Challenges and Environment
Jane Hetland Stevenson, President,
St. Croix Valley Community Foundation
Only 13 years old, the St. Croix Valley Community Foundation was begun by visionary community leaders who were and still are passionate about this unique place called the St. Croix Valley. Growing about 20 percent annually, our foundation is poised to double in five years. We are now at $16 million in assets and provide over $2 million in grants each year. We serve three counties in Wisconsin, from St. Croix Falls to Prescott, and two counties in Minnesota, from North Branch to Hastings. We have five affiliate foundations with active and committed advisory boards, as well as an enormously dedicated 20-member board of directors.
Our major challenge is common: we are at the stage of ramped-up donor development, but maintain a lean staff of just 3.5 FTEs. Each staff member works long and hard and there are never enough hours in the day. Everything is a priority.
A second challenge is volatility in the stock market. Our donors — sophisticated investors themselves — understand it, but our staff is impatient to grow the foundation and is chagrined that we're not growing earnings as fast as we would like. But we're thinking ahead to when things are on a positive trajectory once again. That's what is so good about being a perpetual organization: we have the luxury of taking the long view.
Another challenge for the field as a whole is the level of detail we have to attend to because of federal requirements. Community foundations have always had a lot of detail work with donor funds, legalities and the IRS. But today it has gone to a higher level because of the Pension Protection Act and the new 990 rules.
Unrestricted Funds
Like most community foundations established in the mid-1990s, we are heavy in donor-advised and agency funds and light on unrestricted funds. But we must increase our unrestricted fund in order to make a more significant impact in our communities. We're focusing heavily on our Legacy Society and on our relationships with professional financial advisors as two immediate strategies. We have begun asking new advised-fund donors to contribute a percentage of their gifts to our unrestricted fund.
Competition for Resources
My belief is that, if you're in the community foundation field, you need to focus on the concept of abundance rather than on scarcity. To quote the title of one of our programs, "everything we need is here." The donors are right here in our five-county territory; our challenge is to find them and show them the benefit of partnering with the St. Croix Valley Community Foundation.
But one unusual challenge we face is that our counties in Wisconsin (St. Croix, Polk and Pierce), while considered statistically part of the metropolitan area, are often not fundable by private foundations in the Twin Cities. At the same time, western Wisconsin is also overlooked by private foundations in the Milwaukee and Madison areas because they think we're taken care of by Twin Cities foundations. It's a problem we have to solve by educating Wisconsin foundations.
Programs and Initiatives
We have a number of very exciting things going on at the St. Croix Valley Community Foundation. We have a three-year initiative called Partners for the Future, where we match endowment dollars one-for-one for 19 nonprofit organizations throughout our region. We are also conducting a comprehensive training program for the advisory boards of our five affiliates and a series of professional financial advisor events throughout the region. This is an exciting time for our foundation!
Donors Supporting Social Change
Trista Harris, Executive Director, Headwaters Foundation for Justice
Since the Headwaters Foundation for Justice began its work 25 years ago, the community foundation landscape has changed dramatically. When Headwaters opened its doors, the agency was on the cutting edge of a new trend to democratize philanthropy by having community activists serve on the grantmaking committees.
The idea of funding "Change, Not Charity" was outside of the mainstream of organized philanthropy. Today, Headwaters partners with many traditional foundations that are interested in funding social justice and draws attention to the many ways individual donors can support social change.
Donors More Diverse, Savvy
We are entering another era of great change in the community foundation field. We are in the midst of the much-heralded generational transfer of wealth and have begun working with new generations of donors who are more diverse and often more savvy about the inner workings of nonprofits than their predecessors.
These new donors are fueling some important trends that will improve the way that we do business:
- Donors want to be connected to the work of the nonprofits that they fund. These donors want more than an annual report and a thank you letter; they want information on how their gift made an impact in the community.
- Donors are asking for accountability in how their gifts are used. Fundraisers often say that donors don't want to fund the light bill and the executive director's salary. This isn't necessarily the case. Donors want information on how their gift will impact the issue that they care about. Community foundations and nonprofits are learning how to better tell the story of how overhead expenses are vital to the success of an organization's work.
- New donors want to be reached. Community foundations need to engage more than the "usual suspects" as they fundraise in the community. Foundations often miss donors who are young, or of color, or not inheriting wealth. We need to spend time cultivating new donors who will be the backbone of our future community impact.
By marshalling all of our resources to ride this wave of donor change we have the opportunity to magnify our impact in the community by connecting new donors to the community-changing work of our nonprofit partners. Community foundations have the opportunity to once again be trend setters that will strengthen the work of the social sector.
Evolution of a Community Foundation
Alisa Rabin Bell, Executive Director,
Woodbury Community Foundation
Woodbury is a very high-growth suburb that has its own distinct challenges as a unique community. Some perceive Woodbury as primarily a wealthy suburb. But the reality is that Woodbury is very diverse, with residents and workers across the socio-economic spectrum who carry out their daily activities in Woodbury and surrounding communities.
Only in its fifth year of operation, the Woodbury Community Foundation (WCF) hired me as its first executive director earlier this year. We recently completed an extensive planning process to identify appropriate goals for the foundation, based on the needs of our community. We also established our grantmaking priorities and developed our grant guidelines. The board has chosen to focus our efforts in three main areas: human services, arts/culture and the environment. We believe that these areas reflect the greatest unmet needs that can have the greatest impact in Woodbury.
As we move into our next phase, we are reminded that the mature evolution of any organization takes time. The WCF board is well-represented and truly understands what Woodbury needs to further its development. The next five to ten years will prove to be a positive time of building and growth for the WCF.
A community foundation has the unique role of serving a very specific area. Many donors know where they want to put their charitable dollars and we want to encourage contributions to those worthy nonprofit organizations within our community. We hope to raise unrestricted funds in order to provide for organizations that are lesser known but provide needed services to our citizens. Unrestricted dollars tend to be more difficult to raise, especially in today's economic environment. We believe, however, that as the WCF becomes better known in the community and begins to demonstrate its impact, those concerned about the well-being of this wonderful city will consider us for their charitable investments and contributions.
The WCF will be hosting informational events for advisors, community members, and others; creating a speaker series to raise awareness and encourage discussion around issues pertinent to our city; and holding a fundraising event at the end of October. We are also planning a campaign to expand our endowment and allow us to increase our grants to nonprofits serving Woodbury citizens.
In my seven-month tenure at WCF, I have met with leaders from the nonprofit community and other small community foundations. Because collaboration is central to our vision of "connecting people with causes that matter," I look forward to working in conjunction with others to strengthen our community.
© Copyright 2008 Minnesota Council on Foundations
Reproduction in any form without the written permission of the publisher
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