Post 2: So, You Give Money Away For a Living?
Posted By: Caroline Altman Smith
Posted: 4/9/2010
Most people have a general sense of the work of nonprofit organizations. They may have run in a charity 5K, attended a march, volunteered at a soup kitchen, mailed in or texted a donation, and are reminded of the critical work of these organizations when they enter a school or place of worship. But private foundations are a bit more mysterious, and some consider them the black box of the nonprofit sector. I frequently get a blank stare when chatting with an airplane seatmate (or close relative) when I say I work for one.
Foundations are nonprofit organizations that operate under a particular part of the tax code. They maintain endowments (big piles of money that hopefully generate interest) that grow tax-free, and by law have to give away at least 5% of the value of their assets each year. (So, a foundation with $1 million in assets has to spend at least $50,000 per year on charitable purposes. What those purposes are is up to the foundation's board. If the endowment grows by more than 5 percent in a given year, the more the better, and that means the payout pot will be larger the following year). Private foundations exist in an alternate nonprofit universe where the challenge is not to raise money, but to give it away.
Giving money away is easy; giving money away well is more challenging (but still easier than raising it). It is a big responsibility to be entrusted with the strategic distribution of taxpayer-subsidized dollars, and also a real privilege to have the opportunity to seek creative ways to use resources to promote social change. As a foundation staff member, I get to be both reactive and proactive in my work. Nonprofit organizations from all over the country fill the foundation's mailbox with ideas and proposals and I look for those that align with the foundation's strategic goals and plans. I also actively seek out organizations and committed leaders doing impressive and innovative work in the field and look for ways to support their efforts. This might be by recommending that the foundation board award grant funding, or by offering other types of support: sharing best practices, providing capacity-building consultants, convening groups of organizations in a learning network, or helping connect them with other potential sources of funding.
The Kresge Foundation is one of the three biggest foundations in Michigan (the others are the W.K. Kellogg and C.S Mott Foundations), and the largest in the metro area. It was founded in 1924 by Sebastian Kresge, the man who brought you Kresge's five-and-dime department stores (which much later became K-Mart), and has now grown to be a Troy-based $2.8 billion national foundation that awards approximately $150 million in grants annually to nonprofits.
I work on the education team, one of Kresge's six program teams (which include arts and culture, health, human services, the environment, and Detroit and community development). Throughout the foundation's history, its relationship with higher education institutions was mainly as a funder of bricks and mortar projects, e.g., building new campus libraries or renovating classroom buildings. But in the past two years, Kresge has begun to expand its education grantmaking to address an emerging national and regional imperative: the need to significantly increase the number of college graduates. The focus of Kresge's higher education agenda is helping more underserved students (those who are low-income students, students of color, or the first in their families to go to college) get into college and successfully graduate. Why is this so important, and how would Detroit benefit if we managed to make even a modest improvement in our region's college attainment rate? Stay tuned tomorrow to find out!