Turning Ordinary Citizens Into Philanthropists By: Roland SalmiMBA

Roy Vaneliver was a simple man. He began as a high school teacher and eventually became a high school administrator; he lived with his mother his entire life and never owned a car. Roy didn’t dress in top quality clothes, and often had holes in the soles of his shoes, but he really wanted to make a difference in education. Sadly, Roy passed away in 2010.

Education was Roy’s whole life. Upon his passing, he established scholarship funds for students studying history and organ studies, as well as students attending the theological school his sister attended. His intent was to make a major difference in a student’s life so, on a revolving basis, one student concentrating in one of these fields of study receives an $80,000 scholarship. 

This scholarship and other philanthropic gifts are made possible by the Rochester Area Community Foundation (RACF). The RACF is nestled in the Historic East End, placing it central within the city it works hard to improve. Throughout the building, there are several plaques and pictures honoring past donors, founders, and activists at the Foundation. Focused on being an anchor for the Rochester area, the RACF provides a history of Rochester to donors, gives an in-depth look at current issues, and creates solutions to help the city thrive. 

“The purpose of the Community Foundation is [to be] a place for people to carry out their charitable interests in a way that allows the money to be available now and into the future,” explains Dana K. Miller, Vice President of Advancement for the RACF.

The Emergence of Community Foundations

For the past century, community foundations have cultivated community livelihoods by allowing them to carry out the charitable interests of donors. The first Community Foundation was established in Cleveland in 1914. The Rochester Community Foundation is a newer foundation—established in 1972. 
It was Joe Posner, an insurance salesman, who stressed the importance of having a community foundation. Posner’s strong beliefs drove his ambition to meet Rochestarians, explain what a community foundation is, and ultimately what it can do for the community. It was because of his dedication the Rochester Area Community Foundation was born. 

While some may think the United Way is similar in function to Community Foundations, they play two different roles. “The United Way is like the community’s checkbook and the Community Foundation is like the community’s savings account,” explains Miller. The money that comes into the foundation doesn’t get spent, but rather invested for the long-term. The principal stays intact, while the income from those investments is donated to charities. 
The RACF’s focus has been on individuals who would like to create a long-term fund with them. Essentially, donors create an endowment fund which lasts in perpetuity, giving to charity on an ongoing basis rather than a single donation. Miller explains most of the RACF’s gifts come from a will, a charitable remainder trust, or some other planned gift. 

Donor Intent and Education

The RACF is very active in the community, and is frequently in the public eye as a supporter of events and programs. Donors are obtained two main ways: directly and through their professional advisor network. Those who donate directly typically have a previous knowledge of the Foundation’s work within the community. These donors often have an idea of their goals, often needing minimal direction and guidance. For these types of donors, the RACF has an online system that donors can log into and make grants how they see fit. This online system also hosts a compilation of reports of charitable programs and their effectiveness. “That is a great resource for donors to decide where to designate funds” says Miller. 

In addition to the direct donors, the RACF has a professional advisor liaison committee. The committee members consisting of attorneys, tax planners, CPAs, and financial planners reach out to their colleagues. They host seminars and open houses a couple times a year and they send out quarterly e-blasts out to their network. This is essential for the RACF as their typical donor is already working with a business professional. 

Other times, donors come into the RACF with an idea of what charity they would like to give to, but had not narrowed down the intent of their giving. For example, an animal lover might want to donate all their money to Lollypop Farm (The Humane Society of Greater Rochester), but it is up to the RACF to dig a little deeper to find out exactly what their intentions are. “We talk to donors about really understanding what their charitable interests are.” Miller explains. 
The RACF tries to help donors understand needs are constantly changing over time. “If we were to look back 50 or 60 years ago and say, ‘What are the two biggest issues?’ it would have been polio and civil rights, if we went back to the 80s the issue would be AIDS, and if we went back 6 months ago, it would have been Ebola,” Miller said. “So issues continue to change over time …”

Therefore, for donors that want to give, but do not have a specific charity or idea they would like to contribute to, the RACF offers “Forever Funds”. These funds are unrestricted in use and are part of their competitive grant-making process. This is different from donor-advised funds (the donor directs where their money goes each year) and designated funds (funds that give to specific charities). 

Since unrestricted, the money in these funds goes towards the current needs of the community and towards the two main goals of the RACF: to create an equitable community and strengthen the region’s vitality.

Equitable community goals focus on raising awareness of poverty and how it affects our community economic development efforts, the academic achievement gap, and fostering racial and ethnic equality. This is what drove the RACF’s work in addressing the issue of poverty that is heavily concentrated in the city of Rochester, helped establish a universal Pre-K, and drives other programs like Dialogues Without Borders and the RACE: Are We Really So Different? exhibit.
Strengthening our region’s vitality focuses on diverse cultural offerings, improving the capacity of local arts organizations, preserving the region’s rich historical assets, and creating more successful age-friendly communities. The RACF hopes to ultimately promote systemic change and sustainable impact within the Rochester community.

With donor intent being the most important aspect of the foundation, donor education is a close second. Therefore, donor education events are integral to their initiatives. Such events include “Joe U” breakfasts—inspired by their founder Joe Posner, who was famous for holding breakfast meetings as an opportunity to inform others of his current charitable endeavors. According to Miller, the goal is for these events to be peer-led, “You have a donor who is talking about [a particular charity] to other donors, so at that point it’s more credible than a charity talking about themselves to other donors.”

Maintaining the Funds

The RACF‘s purpose is to maintain donor funds prudently for growth and donate the income through their investment structure. According to Miller, their investment structure started at 70% equity and 30% fixed income since 1972. However, just last year they changed their strategy to 70% equity, 20% fixed income, and 10% alternatives. The performance of their long-term strategy has been 9.6% return over a 22-year-period. 

As a foundation, they are required to distribute at least 5% of their corpus a year. In addition, the RACF charges a 1% fee on all of their funds for operational costs. Any return past the mandatory 5% and 1% operations fee, gets reinvested. “The organization ends up being three things: on one end, we’re a fund raiser in terms of getting donations, but we’re also a grant maker in terms of giving money away, but in the middle is where we are managing a pretty significant pool of investments,” Miller said. “If we were to describe ourselves as a three legged stool, the investment management is really the third leg of that stool. It is very important as the money comes in, it’s invested prudently for growth and we’re able to use the income for grants.” 

Measuring the Benefit of Funding

The RACF diligently collects data from their data arm, ACT Rochester, as well as the United Way, the Department of Governmental Research, and the Census Bureau. They use a qualitative and quantitative approach when assessing the effectiveness of donations. By collecting this data, the RACF can track the effectiveness of its funding. “In the case of early childhood education there are very specific standards in place. We can look at the results of the program we funded and compare results to national standards and say, ‘well it worked out pretty well’ or ‘it didn’t work out’,” Miller explained. 

The Foundation also requires grantees to provide a report when their project is completed. The RACF looks at the results to ensure projects have actually been accomplished. Program officers also make site visits to keep tabs on the grants that have been received.

Legacy Benefit

Community foundations are instrumental in contributing to a community’s success. They bring communities together in times of despair and foster change during times of struggle. The Rochester Area Community Foundation is no different. Led by a team of devoted and passionate staff, they continuously strive to make the area a better place to live by pairing those who have charitable interests with the needs of the community. 

“We tend to talk to people here about philanthropy and the first thing everyone says is, ‘Well no, I’m not a philanthropist, Tom Golisano is a philanthropist. Bill Gates is a philanthropist, I’m not a philanthropist,’ but you are,” Miller explains. “By making a gift that becomes a permanent commitment, you are really engaging in philanthropy in exactly the same way they are you are just doing it at a different level…”

The RACF continuously works towards their goals of creating a vital region and an equitable community within Rochester and its eight counties. “Hopefully it will not take 50 years, but in 50 years we should see a revitalized city” says Miller. 

The Rochester Area Community Foundation is located at 500 East Avenue, Rochester, NY 14607-1912.

... “If we were to look back 50 or 60 years ago and say, ‘What are the two biggest issues?’ it would have been polio and civil rights. If we went back to the 80s, the issue would be AIDS, and if we went back 6 months ago, it would have been Ebola,” Miller said. “So issues continue to change over time.”

... “We tend to talk to people here about philanthropy and the first thing everyone says is, ‘Well no, I’m not a philanthropist. Tom Golisano is a philanthropist, Bill Gates is a philanthropist, I’m not a philanthropist,’ but you actually are...”

 
Roland C. Salmi

Roland is an Associate Analyst at Westminster Consulting, where he executes performance analysis, client projects and investment support for senior consultants. Roland brings research knowledge, industry trends, and a commitment to client success to the Westminster team.

Prior to joining Westminster...

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