• July 29, 2014

Strong Year for Community Funds Included Megagifts From Young Donors

Donors provided more than $1-billion to community funds

A Strong Year for Community Funds Includes Mega Gifts From Young Donors</B> 1

Anila Preston/Help a Child Trust Foundation

Guy David Gundlach was a world traveler, but last year he left a $140-million bequest to the community fund in his Indiana hometown.

Mark Zuckerberg’s announcement that he would donate nearly $500-million to the Silicon Valley Community Foundation gave leaders of community funds some measure of hope that their organizations wouldn’t go the way of the buggy whip.

Troubled for years by worries that baby boomers—and their children and grandchildren—move around the country so much that they don’t develop the strong neighborly ties that have helped keep community-fund coffers filled for nearly a century, fund leaders have been aggressively taking steps to court people born elsewhere who retire in their areas.

They have also reached out to young people to finance programs in places where they are building their fortunes.

Those efforts are paying off so well that last year donors on the Philanthropy 50 provided more than $1-billion to community funds—a sum equal to the total that top donors provided in the previous decade.

Over all, preliminary estimates say local and regional grant makers will likely top the $4.2-billion they raised in 2011 and in the flat few years before it. Major donors are the reason. Eight of the 50 most generous donors in America last year gave to community foundations, according to The Chronicle’s data; that’s more than in the previous 10 years put together.

Still, the fundraising picture isn’t equally rosy for all community foundations. Rural grant makers in particular say they are working hard to help keep family wealth in the place where it was earned.

'A Good Place’

Some of 2012’s big gifts show that the lure of hometown pride can be stronger than expected, even for younger, more mobile donors.

Take the case of Guy David Gundlach, says Pete McCown, president of the Elkhart County Community Foundation. The donor left Indiana decades ago, eventually setting up an online car-insurance company in England, selling it for more than $220-million, and producing a Hollywood film, “Get Low,” in 2010.

Yet he chose to leave his entire estate—around $140-million—to his hometown foundation, which makes around $3-million in grants annually in a region of 200,000 people.

A high-school classmate who serves as a board member at the fund helped connect Mr. Gundlach to the nonprofit.

However, says Mr. McCown, “Dave’s gift is really a story about a boy’s love for his mother, Marge Swift, who still lives independently at age 94 in Elkhart County. He knew this was a good place where his mother had good friends, and he wanted to help the community.”

Mr. Gundlach’s gift spurred several others to the foundation late in the year, including one for $8-million. A handful of gifts, each worth $100,000 or more, were made by couples in their 40s, Mr. McCown says.

Beyond Bequests

Community foundations did well last year not just because they have been reaching out to the mobile donors but also because of what might happen in the nation’s capital this year. Many donors fear Congress might limit charitable deductions, so they put lots of money into community funds and other organizations where they could get an immediate tax break but dole the money out to nonprofits over several years.

“It’s been a strong year for community foundations because donors were unsure of what would happen in Congress [in 2013] regarding laws on charitable giving and because of a greater sense of the needs of communities due to federal cutbacks,” says Teri Hansen, chairwoman of the community foundations leadership team at the Council on Foundations, a nationwide association of grant makers.

“There were an unusually large number of gifts from living donors—more than we’ve come to expect,” adds Ms. Hansen, who also serves as president of the Gulf Coast Community Foundation, in Venice, Fla. “Traditionally, deferred gifts and legacy gifts have been the bread and butter of community foundations.”

Large gifts in 2012 were particularly plentiful in areas with many successful businesses or large numbers of retired people—and harder to find in rural regions.

Some of the largest gifts of 2012, foundation leaders say, demonstrate that donors are willing to support causes that benefit their neighbors, even if not necessarily those in the cities and towns where they were born and raised. For example, the plywood manufacturing pioneer Fred Fields left $166-million to the Oregon Community Foundation after building up a company in Tigard, Ore.

Others are helping the places where they retire, such as Mary Porter, who inherited a fortune from her father and grew up in Pottstown, Pa., but left $43.9-million to the Community Foundation of Broward, which serves Fort Lauderdale, Fla., where she retired.

The growing number of donors making those choices are a key reason community foundations aren’t as concerned about donor mobility as they once were, says John Zell, vice president of development at the Community Foundation in Jacksonville: “It’s often about the relationships donors have with an area and with a foundation.”

Attracting Boomers

Many grant makers have spent considerable time and effort devising ways to create relationships with potential younger donors.

They have started programs in recent years to get baby boomers and younger people to volunteer, with an eye toward encouraging them to give as well.

“We see boomers as an entirely different kind of generation,” says Barbara Witte, vice president for philanthropic services at the Community Foundation of Broward.

“We’ve tried to get them involved in doing things that tap their special talents, like helping us devise financial reports for small charities,” she says. “We’re not talking about licking stamps. We have a responsibility to educate them all so we can capitalize on their energy and their talent.”

And still other community foundations have encouraged longtime donors to include younger family members in their philanthropy in hopes that the young folks will see themselves as part of a giving tradition.

“One family has a donor-advised fund with us that they are using to pass on the value of giving back to their children,” says Nancy Straw, president of the West Central Initiative, a community foundation in Fergus Falls, Minn., which serves nine counties in Minnesota. “That’s something we actively promote.”

Says Ms. Witte, “The new generation of parents wants their children to receive more than just money and property. Philanthropy allows them to pass along something more. We’re talking much more often with the children of our donors.”

Keep It Local

But Ms. Straw and others say there is some reason for alarm about generational differences among community-foundation donors. Gifts from people who grew up in the Lake region of Minnesota are fading, while many retired people who just moved there “don’t want to be bothered” with giving to their new communities, she says.

A fear that wealth—and the donations that come from it—will disappear from an area has led some grant makers, including the West Central Initiative, to seek out bequests from the older generation.

Inspired by the example set by the Nebraska Community Foundation, a few rural community foundations have gone so far as to project a region’s available wealth several decades ahead, publicize the data, and then encourage longtime residents to leave a small percentage of their assets to them in their wills—lest their children and grandchildren inherit it all and take it out of the area.

Boosting Economies

The loss of potential donations can further weaken rural community foundations’ often-poor hometowns and forces grant makers to scramble for the cash needed to support local charities.

Too often, notes Ms. Straw, “what we hear from bankers is that upon the death of a parent, kids come in, cash out all the CDs, clear out all the other assets, and take it all back to places like Minneapolis or New York. We’d like to capture 5 percent of the available wealth here so we can help the region prosper.”

The Nebraska Community Foundation has tried to do that by focusing on the wealth that remains in the mostly rural state. It has formed 230 affiliated funds statewide, attracting 36,000 gifts worth several millions of dollars in the past five years. That money is used to help reinvigorate local economies.

“We’re trying to make these places the kinds of places where younger generations want to settle down,” says Jeff Yost, president.

Urban Optimism

Meanwhile, community foundations along the coasts and in large cities are optimistic they will be able to keep attracting donors no matter how much people move around.

“I really have no worries at all about differences in generational mobility,” says Ms. Hansen, of the Gulf Coast Community Foundation. “We see people who are attached to a community because they grew up there or they attended college there or they spent the last 30 years of their lives there during retirement. All of them might have reason to give to us.”

Adds Mr. Zell, of the Community Foundation in Jacksonville: “People who are inclined to be generous will give. The family business is sold or its owner dies and the assets will become available to us. That will happen over and over again, whether the potential donors are mobile or not.”


Community foundations share tips after windfall in 2012

  • Don’t ignore donors who aren’t native to the area. They may still be interested in local giving.
  • Try to forge relationships with wealthy people who have moved away but still have local family or other connections.
  • Make an effort to get baby boomers and younger people involved in volunteering.
  • Design those volunteer projects to make the most of their skills.
  • Encourage older donors to get their younger family members involved in philanthropy.
  • Estimate how much wealth the region will have in the future; share the data with older supporters and open a discussion about making a planned gift.
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