The Download Archive

The Download

June 1, 2020

Monday, June 1, 2020
 

The Importance of Leaning in While Preserving Choice 

A Message from Kyle Caldwell, President and CEO of CMF

Michigan philanthropy is leaning in to and leading through the COVID-19 crisis at remarkable speed and depth. Funders around the state have adapted their grantmaking, policies and procedures and leveraged new partnerships to meet the needs of communities through this pandemic. The commitment of Michigan philanthropy is indeed exceptional, not only in times of crisis, but beyond.

Many of you signed on to the pledge, which was spearheaded by the Ford Foundation, informed by conversations with the Trust-Based Philanthropy Project and in partnership with the Council on Foundations (COF), that calls on philanthropy to do even more, provide greater flexibility to grantees and find new ways to streamline and adjust grantmaking practices amid the COVID-19 crisis. 

And still, there are some in our global community of philanthropy who are calling on peers to do more not as a commitment or suggested practice but as a legal requirement. In a recent letter to lawmakers, a group is seeking legislation to double the mandated annual private foundation payout from 5% to 10% over the next three years and to mandate a 10% payout requirement for Donor Advised Funds (DAFs). 

CMF continues to be a strong proponent of maintaining the current 5% payout requirement. Our own Government Relations Goals make that clear. Many of our members are able to exceed this rate and do. For some, endowed philanthropy is not the vehicle they choose to express their philanthropy, while others are still working to discover what works best for them. 

The debate around increased payouts is an important one but it’s not new. With the growth of philanthropy and the market conditions leading to the growth of endowment values, there are periodic calls from inside and outside the sector for a re-examination of the 5% spending requirement. What is new is the overwhelming burden the pandemic is placing on all of society’s institutions and the many new gaps forming that philanthropy is being asked to fill. Some will argue that philanthropy has a moral responsibility to “sacrifice” more by radically increasing grantmaking in difficult times and shedding the traditional long view of patient capital. Others will note that philanthropy is a highly personal and individual right, born of the belief in philanthropic liberty and that the current IRS regulations are sufficient to serve as a guardrail against “parked wealth.” The debate wanders somewhere in between both poles with all of our tools engaged in the debate, including DAFs. These debates are now gaining momentum and exposure as dual challenges of a public health and economic crisis continue without a clear end in sight. 

This debate is good and the continual re-evaluation of the way our field operates is important to our future success and sustainability. At the same time, we do need to be cautious about how we call others into our deliberations and extremely judicious on the remedies we put forward. The quick push for legislation is probably the most concerning part of the recent call to increase the payout requirements. The debate between perpetuity philanthropy and “giving while living” or spend down foundations has been growing and amplified with the flexible funding pledge mentioned above.

However, the assumptions of creating wealth then giving back in later years is no longer necessarily the only way to engage in philanthropy. 

The Atlantic Philanthropies’ $8 billion investment over 34 years is a good example of this philosophy. There are foundations close to home that utilize a similar approach, including the Dyer Ives Foundation in Grand Rapids and the Ralph C. Wilson, Jr. Foundation which serves Southeast Michigan and Western New York.

Michigan is also home to some of the larger private endowed philanthropies with both local and global reach, including the W.K. Kellogg Foundation, Charles Stewart Mott Foundation and The Kresge Foundation. These foundations alone represent more than $619 million in annual grantmaking. In the case of each of these foundations, we can point to long-term strategies to impact the lives of our global citizens. These same foundations and their benefactors have worked their philanthropy through several different crises including the Great Depression and Great Recession. They have done so using many different tools at their disposal. 

They also adapted to the changes in regulation, especially the Tax Reform Act of 1969 that gave us the basic regulatory framework we have today, including the 5% mandatory payout for private foundations. What may be forgotten in the recent calls for increased regulations on ourselves to increase this payout is that the data shows that foundations can, and in many cases do exceed the 5% payout requirement. Most importantly, they have done so without a change in federal regulation.

CMF retained Cambridge Associates to evaluate the private foundation payout rate required by the federal government based on the real returns in 2000, 2004, 2013 and again in 2016 – covering a 42-year period. The average annualized return, adjusted for inflation, for the sample foundations for the period 1973-2015 was 5.28%, slightly above the IRS mandated payout rate of 5%. The data also suggested that foundations as a whole have been willing to spend in excess of the federally-funded mandated 5% during the time period, highlighting that many foundations consider the 5% legal required payout a minimum not maximum when establishing spending practices.

Foundations may choose to exceed their 5% minimum perhaps even through the current financial crisis. Some believe they can do so and maintain their future spending power. 

Jeff Williams, director of the Community Data and Research Lab (CDRL) at the Dorothy A. Johnson Center for Philanthropy, shared a review of S&P 500 and 10-year U.S. Treasury annual returns to help endowment stewards make their own decisions on the payout and understand the potential consequences. Williams provides the critical questions that nonprofit charities and foundations should consider before making the key decision to exceed the 5% payout rate. Considerations include organizational mission, risk comfort, willingness to constrain future flexibility and understanding of traditional market returns including those during and after the Great Recession. This data provides critical context about the choice around an increased payout.

It is about leaning in to have the choice. While perhaps the right decision for some, a mandatory 10% (or more) payout for private foundations and DAFs is a crude instrument to a highly sophisticated concern—the mission, method and duration of a philanthropic interest. 

 

 

 

 

 

Great Lakes Bay Region’s Dual Coordinated Crisis Response

After more than two months of rapid response efforts connected to the COVID-19 crisis, historic flooding has created a dual crisis situation for the Great Lakes Bay region. Midland and Gladwin Counties remain under a federal emergency declaration and Arenac, Saginaw and Iosco Counties were all included along with Midland and Gladwin in the governor’s state of emergency declaration.

“A global pandemic and a historic flood are truly serving as the one-two punch to our wonderful community,” Holly Miller, executive director of United Way of Midland County said in a press release. “These two hurdles have left, and continue to leave, an impact for those in the ALICE (Asset Limited, Income Constrained, Employed) population, along with those in poverty and an emerging group who are facing situational financial crisis.”

In response to the urgent needs from both COVID-19 and the flooding, The Herbert H. and Grace A. Dow Foundation announced that it is providing two grants totaling $1 million to the United Way of Midland County to support residents. The foundation has provided $500,000 as an outright grant to support coronavirus pandemic recovery and a $500,000 matching grant to support flooding crisis recovery, helping to establish the Rise Together Fund. The foundation will provide a dollar for dollar match for the first $500,000 donated to the flooding crisis recovery.

“One out of three families in our community are ALICE or below—that was before this crisis. We will be seeing numerous families asking for help for the first time. They have never had to navigate finding resources before, and now they won’t have to do it alone,” the foundation shared in a press release. “This fund will help provide resources to help people stand up in the wake of devastation, making a difference in people's lives by meeting their diverse basic needs and providing long-term solutions and a hand up with equal parts accountability, support and hope.”

The Midland Area Community Foundation (MACF) has also partnered with the United Way of Midland County to develop a joint website that points to two response funds and volunteer alerts for both COVID-19 and the flooding situation.

MACF seeded the Flood Relief Project Fund with an initial $250,000 in contributions and an additional $250,000 in matching funds. The fund is providing flood relief throughout Midland County, including those in Sanford, Bullock Creek and the city of Midland.

The Rollin M. Gerstacker Foundation announced $750,000 in support, contributing to both the Rise Together Fund and the Flood Relief Project Fund and other efforts underway.

Gladwin County Community Foundation is also hosting a relief fund.

The Saginaw Community Foundation (SGF) has established an Emergency Relief Fund that is supporting both COVID-19 and flood-related needs. SCF used social impact investment funds to create a loan program for small businesses impacted by COVID-19 and is looking to do the same for businesses impacted by the flood.

SCF is in conversation with Menards and The Home Depot to fund vouchers for flood victims in need of new household appliances.

“It has been truly amazing to see how a community can and wants to help and support,” Reneé Johnston, president and CEO of SCF and CMF Trustee said. “In one day, minutes apart, SCF received notification from a group and a separate individual who were planning fundraising activities to support SCF's Emergency Relief Fund. And, to have local banks, organizations and family foundations contact SCF with an approved set amount willing to contribute without really asking any questions, has been so comforting.”

Want more?

Learn more about the Rise Together Fund.

Connect with MACF’s Flood Relief Project Fund.

Check out SCF’s Emergency Relief Fund.

Learn more about Gladwin County Community Foundation's fund.

 

 

 

 

 

Leveraging Partnerships in Crises and Beyond

Michigan’s philanthropic sector continues to develop new collaborations and leverage existing partnerships to support communities in the pandemic.

Michigan foundations have partnered with United Ways across the state to establish local COVID-19 relief funds. When it comes to rapid crisis response, as we have seen with the flooding in the Great Lakes Bay region, United Ways are well-positioned to move quickly since they are on the front lines with nonprofit service providers.

“Local United Ways have always been at the core of understanding and collaborating to solve the needs of their communities, day to day and in times of crisis,” Mike Larson, president and CEO, Michigan Association of United Ways (MAUW) said. “Throughout the COVID-19 pandemic, local United Ways have illustrated their ability to nimbly respond to the evolving needs of their communities, while rapidly deploying much-needed resources to their most vulnerable populations.”

MAUW lists 24 local emergency funds to aid individuals and nonprofits in continuing their work during the pandemic. For funders who are interested in plugging into these efforts, MAUW has a complete list of all their localized funds and information on how donors can contribute.

CMF member, the Consumers Energy Foundation, contributed $250,000 to the Michigan Association of United Ways and has included United Ways in matching gifts from employee donations.

Nearly 40 localized COVID-19 relief funds have been established across the state with support from CMF members. Some examples include:

  • The Kent County Coronavirus Relief Fund, supported by the Grand Rapids Community Foundation, the Consumers Energy Foundation, the Daniel and Pamela DeVos Foundation, the Dick and Betsy DeVos Family Foundation, the Doug and Maria DeVos Foundation, the DTE Energy Foundation, the Frey Foundation, General Motors, the Jandernoa Foundation, Steelcase Foundation and Wege Foundation.

  • The Southeast Michigan Arts and Creative Community Assistance Fund, supported by the Community Foundation for Southeast Michigan, the DeRoy Testamentary Foundation, the John S. and James L. Knight Foundation, the Kresge Foundation and the Peck Foundation.

  • The Southwest Michigan Cares Fund, supported by the Hanson Family Foundation, Spectrum Health Lakeland, Whirlpool Corp., the American Electric Power Foundation, the Frederick S. Upton Foundation, Meijer and individual donors.

Beyond these partnerships, some funders have unique relationships with their local chambers of commerce that also have a charitable function.

Michigan has over 30 active chamber of commerce foundations that serve as the fundraising organizations for local chambers of commerce. Chamber of commerce foundations are 501(c)(3) organizations that can receive grant dollars from funders and donors.

The Charles Stewart Mott Foundation granted $262,500 to the Genesee Chamber Foundation—a supporting organization of the Flint & Genesee Chamber of Commerce—to support African American-owned businesses in Flint that closed because of the pandemic. Business owners can apply to grants for up to $5,000 to help them safely re-open their businesses.

“As the Mott Foundation responds to the pandemic, our top priority is helping our hometown—especially the African American community, which has been hardest hit by the virus,” Ridgway White, president and CEO of the Mott Foundation said in a press release. “We know businesses want to protect their staff and customers as they reopen, and the changes they’ll need to make will require money at a time when their revenues are way down. We hope this grant will help them get up and running the way they want to.”

These are just some of the ways these foundations and others across the state are leveraging partnerships to support communities. 

We encourage you to share your organization’s COVID-19 response with us via this online form to help foster continued learning, connections and shared understanding about Michigan philanthropy’s response, relief, recovery and reform efforts connected to COVID-19. All information submitted from our members will be populated on our COVID-19 Resource Central site for you to quickly access the latest approaches, strategies and collaborations underway around the state to address issues related to the pandemic. 

Want more?

See the full list of COVID-19 relief and response funds in Michigan.

 

 

 

 

 

Final Call for Applicants: Michigan’s Independent Citizens Redistricting Commission

Today, June 1 is the final day to apply for Michigan’s Independent Citizens Redistricting Commission.

The commission will be tasked with drawing district lines for the Michigan Legislature and Michigan’s members of Congress for the 2022 election.

As CMF has reported, applications are being processed virtually due to the pandemic. Registered voters can apply online to serve on the commission and several e-notaries are waiving their fees to help this process continue during the pandemic.

The latest data from the state shows it has processed 5,761 applications.

“The response during this application period has been tremendous,” Jocelyn Benson, Michigan secretary of state said. “Michigan is now leading the way in a new age of democratic engagement. The same momentum that sent people to the polls to vote in favor of this commission in 2018 has compelled thousands across the state to apply to serve on it.”

As CMF reported in April, there are concerns whether the pool of applicants is reflective of the state’s demographics and includes diverse representation.

The state is tracking detailed information on the applicant pool. The data from the 5,761 applications received to date shows that:

  • 84% (4,809) of applicants are white, compared to 10% or (562) of applicants who are African American and less than 390 applicants who identify as another race.

  • 59% of the applicants are men.

  • 68% of applicants are over 55 years old, while only 18% fall in the 18 – 34 age range.

  • Geographically, the large majority of applicants reside in Southeast or Western Michigan with many counties, especially in Northern Michigan and the Upper Peninsula experiencing single-digit participation rates.

To ensure diverse representation serving on the commission and broad participation in developing inclusive maps, CMF encourages members to share the online application with their networks today as a final reminder.

Following today’s deadline, the state says that Rehmann LLC, an independent accounting firm, will randomly select 200 semifinalist applicants from the total processed notarized applications, using statistical weighting methods to mirror the geographic and demographic makeup of the state.

The applications of the 200 semifinalists will be posted online and their applications delivered to legislative leaders who may reject up to 20 applications, as allowed by the Michigan Constitution.

In August, Rehmann LLC will do a final random drawing of 13 commissioners on behalf of the Secretary of State’s Office.

Want more?

Apply to serve on the commission.

Share the application with your networks.

 

 

 

 

MEMBER SPOTLIGHT

CMF Members Join Together to Launch Detroit COVID-19 Therapy Collaborative

Content excerpted and adapted from a news release.

The Detroit COVID-19 Therapy Collaborative led by CMF members The Ethel and James Flinn Foundation, The Skillman Foundation, Community Foundation for Southeast Michigan and Michigan Health Endowment Fund, and the Detroit Wayne Integrated Health Network (DWIHN), has launched.

This telehealth platform provides access to a safe and private network of behavioral health resources and therapy by trained counselors for children and families ages 14 years and older.

Participants struggling with anxiety, depression, suicidal thoughts, hopelessness and substance use disorders can receive up to 12 free therapy sessions by phone, tablet or computer.

“We’ve never experienced this before, we’re facing so much uncertainty, and we shouldn’t have to do it alone,” Andrea Cole, executive director and CEO of the Ethel and James Flinn Foundation said. “This is a trying time for all of us, but especially for young people who may already be struggling with mental health issues.”

The CMF members leading this effort and DWIHN believe that whole-child care and development is vital to ensure a bright future and recognize that the missed milestones and events this spring can negatively impact children’s mental health. The organizations’ primary focus is to instill hope while focusing on identifying strengths and resiliency in individuals who are often overlooked and underrepresented. 

Want more?

Learn about the Detroit COVID-19 Therapy Collaborative.

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