Video: See leaders discuss the process of implementing an idea.[videocluster tag="project-management"] A common pattern was to move from a “white paper” outlining an idea to engaging key stakeholders, to the development and funding of a one- to three-year test of an idea. What was learned during the first three years, if successful, was then applied and expanded in subsequent cycles of grants that helped to grow the idea and organization. The Michigan Community Foundations’ Youth Project began with a three-year pilot project grant to the Council of Michigan Foundations (CMF). The grantee then re-granted the challenge money to the community foundations once the terms of the project (raising matching funds on a 2:1 basis) were fulfilled. The questions to be answered by the pilot project were the following:
Historical Document: Read notes from a 1991 Council of Michigan Foundation’s board meeting when trustees discussed the W.K. Kellogg Foundation's Youth Project.Cultural anthropologists were hired as evaluators because the emphasis for the grant was on learning what worked and what didn’t. While there were some bright-line numerical goals, the main purpose was to understand and assess whether these ideas, in this form, had ongoing merit.
Video: See Jim McHale discuss the value of project evaluation.[videocluster tag="evaluation"] Similar “seed money” grants were used to launch other projects in Michigan, such as the funding for Campus Compact; Volunteer Center development; endowed funds for the environment; and the Michigan Community Foundation Tax Credit.
Historical Document: Michigan Campus Compact
Historical Document: Volunteer Centers of Michigan
Historical Document: Michigan Community Foundation Tax CreditAlong with this proof of product, some seed money grants resulted in decisions not to continue with a project. For a relatively small amount of money, the stakeholders and funders realized that there were structural, intellectual, or outcome obstacles that would be too difficult to overcome. An example was the Direction Center, a collaboration among the Heart of West Michigan United Way, the Grand Rapids Community Foundation, and Grand Valley State University. The Direction Center was a management service organization, first funded by the W.K. Kellogg Foundation with a mission of providing technical assistance to Kent County nonprofit organizations. Although the services of the Direction Center were well regarded, it encountered a dilemma: most of the smaller nonprofits that needed its services were unable to pay for them, while larger nonprofits (that could afford to pay) had less need for the services. Consequently, the Direction Center could not find a path to sustainability and eventually went defunct. The Direction Center folded into the Dorothy A. Johnson Center for Philanthropy and its intellectual assets became a part of subsequent nonprofit support programs such as the online Nonprofit Good Practice Guide and the current Herbert H. and Grace A. Dow Foundation Nonprofit Services, which are offered by the Johnson Center. Michigan’s philanthropic infrastructure was built through grantmakers who responded affirmatively to creative requests from passionate grantseekers with good ideas. Then, they assisted the grantseeker in creating the strongest model possible. Next, seed money was granted to try out the idea and to learn from the experience – the kind of learning that can only come through implementation.
Historical Document: Read the Council of Michigan Foundation’s Annual Report from 1994-1995 to see how many organizations were affected by the tax credit.For the community foundation, there was a reason to talk with current and prospective donors about gifts to the endowment. In addition, local nonprofits realized they could interest their donors in giving to an endowment fund for their organization, placed at the community foundation, and use the tax credit as an incentive. This generated additional interest in giving and also started the process of smaller nonprofits creating permanent resources for the ongoing support of their missions. Note that the Kellogg challenge grant to community foundations did not match these restricted gifts. Over the past 20 years of MCFYP, just the Kellogg investment in permanent field-of-interest youth funds has resulted in grants returned to Michigan communities that equal the value of the original gift, and the value of the youth funds held in Michigan community foundations now exceed the value of the original gift… such is the power of endowment. More impressive, these results were obtained during the worst economic climate since the Great Depression. Another example of leveraging assets was the formula used by the Kresge Foundation in their capital giving programs. Typically, Kresge made a challenge grant in which they required that 80% of the building cost be raised before their grant (equal to 10% of the building cost) could be activated – and that 10% was conditional upon the grantee matching it 1:1. Thus, if an organization raised 80% of the needed funds, Kresge would use leverage to put the campaign “over the top” by challenging with half of the balance still needed. Thus, the match obtained through Kresge’s leveraging completed the project.
Video: See leaders discuss the development of community foundations in Michigan.[videocluster tag="growing-community-foundations"] Strong community foundations are committed to solving local problems and therefore reduce some of the grantmaking burden on larger private foundations that have a grantmaking interest across the entire state. The community foundation can also serve as a vehicle to assure that grant initiatives of major private foundations go to responsible and effective community organizations to do the work “on the ground.” The network of Michigan community foundations worked in collaboration with their major private foundation partners to create local endowed funds that were used to accomplish great things. Two examples follow: 1) the Great Lakes Environmental Collaborative, which supported the health of the Great Lakes; and 2) the W.K. Kellogg Foundation’s Access to Recreation project, which built playgrounds that are accessible to children with disabilities.
During the period described, the Kresge Foundation focused its grantmaking mostly upon capital (erecting buildings) investments such as challenge grants to help nonprofits complete their capital fundraising campaigns. This specific focus made it more difficult for Kresge to fully participate in the grant partnerships that were designed to advance program goals.To their credit, the major funders valued the investment of others and treated them as equal contributors to the effort. These were not considered to be “Kellogg” or “Mott” or “Dow” initiatives that others were helping them fund. These were Michigan philanthropy initiatives and each of the funders contributed as appropriate to their mission and scale. The lack of size distinction was critical to each shared initiative’s success.
Video: See leaders discuss the movement to value all philanthropy.[videocluster tag="value-all-philanthropy"] In 2014, Michigan had more than 60 community foundations, serving every community in the state, with total assets of over $3,000,000, according to the Council of Michigan Foundation’s 2014 Community Foundation Databook. Some of Michigan’s community foundations serving smaller communities are in the top 100 of community foundations in the nation, based on total assets. See this CF Insights report to see the full list. If the measurement of quality is assets per capita, the number of noteworthy community foundations in the state would be even higher. What often goes unrecognized is that there are surprisingly large amounts of philanthropic capital in small and rural communities – the independent business owner; farmers; local licensed professionals such as bankers, lawyers, doctors, and accountants; the financially careful school teacher; or the independently wealthy outdoorsman, for example. While these individuals have chosen to live and work in a smaller or rural community, many have the means to become significant philanthropists/donors, and the love of their community can provide strong motivations for giving and service.
“It doesn’t have to be a $1 million grant to make a difference in someone’s life.” - Sandy Dobbins, Executive Director, Marshall Community Foundation and YAC AdvisorMichigan Community Foundations’ Youth Project (MCFYP) encouraged local gifts for youth. The Michigan Community Foundation Tax Credit had a cap on gifts set at $500 per year, per couple. Local family foundations, businesses, and individuals stepped forward with gifts to meet the $1 million W.K. Kellogg Foundation challenge by raising $2 million in matching funds locally. Often the challenge was taken in small “bites” in order to build confidence and reach out to new donors. A challenge of $100,000 successfully matched, was then followed by a challenge of $200,000, and so on… until the full $1 million (or, in some cases, less) was brought into the home community. The W.K. Kellogg Foundation remained flexible in how the challenge was implemented, focusing the design on how to achieve the desired goals – all the while, listening to what local leaders had to say about the most effective way to succeed. The funders were committed to provide local communities with enough time to introduce the community foundation idea, to organize, and to prove its viability. Most of the state of Michigan is composed of townships, villages, and mid-sized cities. Michigan is known for its manufacturing (especially its auto industry), but its second largest economic sector is agriculture. There are vast areas of state forests, national forests, and recreational areas – areas with more deer than people. Yet, philanthropy thrives because of leverage and the power of many small gifts, all concentrated on common results. When people consider the philanthropic environment in Michigan, the focus is often on its largest and international-grantmaking foundations. These are, indeed, very important to Michigan’s philanthropic ecology. While their financial ability to make grants to the state is significant, it has also been critically important that the foundations have leveraged additional financial resources toward common philanthropic agendas. Seed money has launched almost all of the significant philanthropic projects. Challenge grants, and their matching funds, have leveraged local donations, as well as other foundation and government dollars. A statewide network of locally-based funding and program partners were created. Private philanthropic dollars were given from unlikely places. Perhaps most importantly, the philanthropic “community” of foundations, corporations, individual donors, and government have each contributed to common efforts to the extent appropriate for their resources – they have made “stone soup.” Much of this common effort has been focused on investments that created permanent institutions and resources that will serve Michigan citizens well into the future.
Video: See leaders discuss permanent endowments.[videocluster tag="permanent-endowments"] Money is an important ingredient of philanthropy. Michigan – through leverage, contributions, participation, and working together – has multiplied the benefit of the gifts provided.