Kalamazoo Community Foundation To Receive $23 Million

Tuesday, July 2, 2013

Mike Gallagher, CMF Editorial Correspondent
Posted 7/2/13

The Kalamazoo Community Foundation will soon have $810,000 more each year to help address the needs of the greater Kalamazoo area, thanks to a recent court settlement agreement with Pharmacia & Upjohn Company. LLC, a subsidiary of Pfizer Inc.

The $810,000 represents the expected interest that will accrue annually from the $23 million the foundation will receive from the estate of the Dr. William E. Upjohn, founder of the former Kalamazoo-based The Upjohn Company.

Carrie Pickett-ErwayCarrie Pickett-Erway, president/CEO of the Kalamazoo Community Foundation (photo left), said the majority of the multi-million dollar settlement will be used to launch the W.E. Upjohn Fund, an unrestricted fund that will “provide us with the flexibility that is crucial to meeting community needs now and in the future.”

Both sides – Pfizer and the foundation – have characterized the settlement as a “win-win” for everyone. The settlement is the culmination of a lawsuit between the Kalamazoo Community Foundation and Pharmacia & Upjohn Company. LLC which began in 1995. The $23 million is the largest, single gift in the history of the foundation.

In 1932, Dr. William Upjohn signed his will which set aside 2,000 shares of his company’s stock to generate money for a special prize to be awarded to at least two Upjohn Company employees for significant accomplishments they made on behalf of the company and society. The company founder stated in his will that the prize fund would continue as long as The Upjohn Company remained in existence.

Per his wishes, Dr. Upjohn stated that if his company became defunct, the remaining money was to be given to the community foundation which he helped establish in 1925 through an initial donation. In the ensuing decades, there were no disputes about the money. However, in 1995, The Upjohn Company merged with Pharmacia- a Swedish drug maker - forming Pharmacia & Upjohn. In 1999, the company again underwent a merger, this time with the Monsanto Coorporation to form Pharmacia Corporation.

In 2003, the New York-based Pfizer Inc. acquired Pharmacia Corporation. Questions then arose whether those mergers meant that The Upjohn Company no longer existed and, if true, should the special prize fund established by Dr. Upjohn be turned over to the foundation. Up until mid-June 2013, the W.E. Upjohn Prizes Trust Fund had accumulated almost $44 million. Both sides went to court over the issue.

In 2003, the Kalamazoo County Probate Court ruled that The Upjohn Company, no longer existed. However, that ruling was appealed and in 2010 the Michigan Court of Appeals reversed the lower court decision saying the company did still exist.

Last week, both Pfizer and Kalamazoo Community Foundation leaders agreed to a settlement to end the lawsuit which was approved by the Kalamazoo County Probate Court. The agreement stipulated the foundation was to receive $23 million of the fund, while Pfizer was to receive the balance of the $44 million which would continue to be used for a company prize fund.

Pickett-Erway said the new financial windfall will be used to set up the new unrestricted fund that will allow the foundation flexibility in dealing with community needs.

“We have restricted funds established by individuals, donors and corporations where they have restricted the use of the funds around a specific area,” she said. “Unrestricted funds are contributions a foundation can use as it sees fit to help its community.”

During the past several years, the foundation has utilized unrestricted funds to provide support for such things as workforce development programs, area economic development efforts, along with addressing health issues such as diabetes and infant mortality.

“Those are things that we can respond to quickly because we have unrestricted contributions,” noted Pickett-Erway.

Pfizer officials also said they were glad the issue has been resolved.

“Pfizer is pleased to resolve this matter, which benefits both the Kalamazoo Community Foundation and the company in our longstanding efforts to recognize the special accomplishments of our colleagues,” the company said in a prepared statement.

“Pharmacia & Upjohn still exists as a Pfizer subsidiary even after a series of mergers and acquisitions over the years. The Upjohn Award and its founder, Dr. W.E. Upjohn, are valued chapters of this history. With this agreement, we can restore Dr. Upjohn’s intent for the trust to honor the outstanding work of our colleagues.”

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