Strategic Giving

Simply Put: Celebration Helps Define a Legacy

It’s amazing how the simplest things can be so powerful.

About a year ago, we had a crazy idea to throw a birthday party for the late Ella C. McFadden, a longtime Fort Worth philanthropist.

Mrs. McFadden (right) passed away in 1965, but she made sure that her legacy lived forever. In 1985, assets from her trust were distributed among 35 charities and institutions, including $12.6 million to the Community Foundation to benefit 13 local charities.

This fund continues to support these 13 organizations, and we wanted to recognize Mrs. McFadden on what would have been her 127^th birthday.

We would have cake, say a few words and simply celebrate Mrs. McFadden’s tremendous generosity.

The event turned into so much more.

It captured the heart of a generous woman, it focused on the lives she continues to impact and it put an emphasis on the power of endowed philanthropy.

Fort Worth Star-Telegram columnist J.R. Labbe did a tremendous job capturing the essence and message of the party.

Here is her column:

The Power of Endowed Philanthropy

By J.R. LABBE
jrlabbe@ star-telegram.com

A celebration took place Wednesday on the 12th floor of the Fort Worth Club that had nothing to do with political power and everything to do with the power of one person to change lives generations after she passed from this earthly veil.

Forty-five years after the death of Fort Worth philanthropist Ella C. McFadden, her generosity continues to touch some of our community's most fragile members as well as those with the potential for greatness. That legacy was made possible in part by the smart stewardship of a local organization that takes seriously its mission to administer charitable funds from a variety of donors.

The Community Foundation of North Texas has been around since 1981, when it was organized as a division of the United Way of Tarrant County known as the Community Trust. In 1989, the trust became an independent public charity; the name change followed 10 years later. But arguably the most important day in its early history came in 1985, when a woman named Ella C. McFadden helped plot the foundation's future.

Ella C. McFadden was the wife of W.H. McFadden, who accumulated millions in the oil business after founding Southland Royalty Co. When the widow McFadden died in 1965, nine years after her husband, her will stipulated that a portion of the family fortune be used to set up a charitable trust to benefit the community.

The trust was structured in such a way that assets built up for 20 years before they were dispersed. Trust managers were instructed to distribute income and a small portion of the principal to nonprofit organizations and institutions in Texas in the intervening years. According to a 1985 Star-Telegram news clip, almost 100 organizations benefited during that time.

In 1980, five years before the 20-year clock ran out, trust administrators, including CPA Cliff Taylor and Bill Weaver, the great-nephew of W.H. McFadden, began investigating how to disperse the Ella C. McFadden Charitable Trust of Fort Worth. Trust managers made some of those selections based on the hospitals, universities, museums and numerous other nonprofit organizations that had been beneficiaries of Mrs. McFadden's largesse when she was alive.

Assets totaling $73.5 million were distributed among 35 Texas charities and institutions, with Texas Wesleyan University receiving the largest single contribution of $14.7 million in cash and securities.

About $12.6 million went into an endowment at the Community Trust of Metropolitan Tarrant County, the predecessor of today's Community Foundation of North Texas. The earnings were split among 13 educational and human service agencies that are still receiving annual contributions made possible by Mrs. McFadden's legacy.

Today, the McFadden Fund at the Community Foundation is valued at about $26 million. It has paid out $19.75 million to those 13 local charities, which still receive annual donations.

At Wednesday's gathering to honor McFadden's legacy, Weaver explained that her trust was made up solely of Southland Royalty stock. Coincidentally, the company was sold in 1985, the same year the trust was terminated.

"The hard work people did at Southland years ago to create wealth is still benefiting people in this community," Weaver said. "It's amazing what can happen when people don't spend all the money they have."

Nancy Jones, the Community Foundation's executive director, said community trusts bring added value for both the donors and the recipients.

"Community foundations serve as the underpinning for important charitable services to have support that's constant," Jones said. "There's also an accountability factor. An external foundation holding the funds means external accountability and a constant focus on the original intent of the donor."

There's no mission morph at a community foundation. The donors' explicit wishes for the funds' use are always respected. But that isn't as limiting as it may sound. Todd Landry, executive director of the Lena Pope Home, said how his agency uses the money has evolved as the needs of the community have changed.

"Twenty five years ago, Lena Pope used the money to separate children from home situations that were dangerous or abusive," Landry said. "Today, while still helping children, we have learned that the best way to help the children and their families is to keep them together in the home."

Ella C. McFadden's money helps the Lena Pope Home do just that. And the Community Foundation of North Texas will make sure that children and families a generation from now will have the same opportunity.

 

 

 

OVERVIEW: Donor Advised Funds

NOTE: This is the first of a five-part series, breaking down the different types of funds available through the Community Foundation of North Texas.

Donor advised funds are convenient, flexible tools for individuals, families and businesses that want to be personally involved in suggesting grant recipients. (Click here to see all fund types)

These funds are a flexible, efficient and personal way to give with confidence to the charitable organizations you care about.

Here are some of the services and support offered by The Community Foundation of North Texas for these funds:

• We complete all necessary paperwork for grants administration and provide you with statements summarizing your fund’s contributions, earnings and grants.

• Our community expertise can lead you to effective, innovative organizations and strategies you wish to support – locally, nationally and internationally.

• We conduct due diligence on all grantees, verifying their tax-exempt status and charitable missions.

• We are happy to work not only with you, but also with your spouse, children and grandchildren to foster family philanthropy.

To see how you can get started right away, click here.

PLEDGE: Change Philanthropy

There is a difference between giving with your head and giving with your heart.

But it’s not a battle or rivalry – head vs. heart – it’s simply two philanthropic philosophies that can be just as impactful as the other.

There are some instances where these catalysts for giving actually work in concert.

The Giving Pledge is a great example of that.

What is The Giving Pledge?

It is an effort to invite the wealthiest individuals and families in America to commit to giving the majority of their wealth to the philanthropic causes and charitable organizations of their choice either during their lifetime or after their death.

Warren Buffett, along with Bill and Melinda Gates, started the phenomena, with 40 superwealthy families and individuals promising to donate at least half of their fortunes to charity.

"We're hoping that America, which is already the most generous society on Earth, becomes even more generous over time," Buffett said. "More philanthropy and smarter philanthropy in the future is the goal."

Head AND heart.

Want to learn more?

• The Giving Pledge

• How the campaign can be impactful

• Goals of The Giving Pledge

Question: 'How Much is Enough?'

Marketing expert Seth Godin recently wrote a blog post entitled: “Fear of Philanthropy (avert your eyes).”

He starts out by sharing an interesting question posed by Peter Singer:

"If you are walking by a pond and you see a child drowning, do you save her? What if it means ruining a very fancy pair of Italian shoes?"

Godin’s commentary: “If we assume the answer is yes, then why not spend the cost of those shoes to save 20 kids who are starving to death across town or the world? There's really no difference. Or, by extension, invest in research or development that solves a problem forever...”

Godin does a great job focusing on the question: “How much is enough?”

It’s a question that can help non-profits with its communication and marketing. It’s also a question that can help a company or individual understand their own giving strategy.

Godin closes the blog post by writing: “if people can't figure out what 'enough' is – where the end lies – they may decide it's not worth starting.”

The entire post is definitely worth a read. (Click here to read)

Capturing the Essence of Endowed Philanthropy

We love the phrase, “Never stop giving back” –
especially the “never” part.

It captures the essence of endowed philanthropy, creating a mechanism of giving that lasts forever – even after a person dies.

This made national news recently when reports surfaced about Johnny Carson and the $156 million he left to charity after his death.

After he passed away in 2005, the $156 million contribution was transferred from Carson's estate to his foundation, where the money is being used to support dozens of nonprofit organizations – like Children's Hospital of Los Angeles and the Los Angeles Free Clinic and Planned Parenthood.

Carson never publicly announced the donation, letting his good deed slip by quietly until its recent revelation. (Story here)

This same type of philanthropy has hit closer to home as well.

Ella McFadden – a local philanthropist (above) – instructed that her estate should be endowed to benefit 13 non-profits in Greater Tarrant County.  The Community Foundation of North Texas has stewarded these funds for more than 25 years.   Those organizations still benefit from Mrs. McFadden’s generosity, receiving a check annually for earnings on these funds.  The funds have grown to keep pace with inflation. 

To help raise awareness about endowed philanthropy – and celebrate endowed giving – the Community Foundation of North Texas will throw a party to commemorate Mrs. McFadden’s birthday.

The date of the event is scheduled for Wednesday, November 3.

“Mrs. McFadden is a wonderful example of endowed philanthropy in our community,” said Nancy E. Jones, president of the Community Foundation. “Mrs. McFadden’s birthday is an opportunity to spotlight the importance of endowed philanthropy.  Endowments allow you to permanently assist the causes you most care about.“

Here are the 13 organizations that benefit from the Ella C. McFadden Fund at the Community Foundation of North Texas:

Boy Scouts - Longhorn Council

Camp Fire USA -First Texas Council

Cassata Learning Center

Child Study Center

Fort Worth Country Day School

Girl Scouts - Circle T

Meals on Wheels 

Nolan Catholic High School

Lena Pope Home

Salvation Army

Tarrant Area Food Bank

Trinity Valley School

Union Gospel Mission of Fort Worth

Focus: The 'Invisible' and 'Underfunded'

When the Community Foundation of North Texas launched its ToolBox grant cycle last month, we entered uncharted – but exciting – waters. 

We’re calling these our ToolBox Grants because we asked nonprofits for a list of organizational “tools” that would enable them to work smarter and more effectively. 

For some people, these projects sound “boring.” 

They’re not – we know that overburdened staff members are overjoyed when they have the tools they need to build their organization’s success. 

Here is a thread of quotes to help explain these grants, define capacity building, and explain why non-profit infrastructure is important to the Foundation: 


   

 

“The purpose of capacity-building grants is to help organizations make good operations better, not to rescue organizations from bad planning or to rehabilitate bad management ... Capacity-building grants are a recognition that organizations need to build management systems as well as programs.” 

 

 

– Susan Chandler, trainer for The Grantsmanship Center 

 

 

“These new toolbox grants will help nonprofits build and repair their operating and administrative systems – those parts of the agency that are largely invisible and often underfunded, but very important to effective services.” 

 

 

– Nancy E. Jones, Community Foundation President 

 

 

“A vicious cycle is leaving nonprofits so hungry for decent infrastructure that they can barely function as organizations—let alone serve their beneficiaries. To break the nonprofit starvation cycle, funders must take the lead.” 

 

 – Ann Goggins Gregory & Don Howard, Stanford Review 

 

 

 

“Organizations with a commitment to mission value also commit to organizational development work when they see that it directly affects their ability to make a positive difference in their communities.”

 

 

 – Mary Reynolds Babcock Foundation 

 

If you are interested in more information about our ToolBox Grants,
 visit our web site by clicking here.

5 Straight: CFNTx Receives Highest Rating Again

The Community Foundation of North Texas is standing atop the
 philanthropic mountain, according to America’s premiere charity
 evaluator.  

The Foundation recently received a 4-star rating from Charity Navigator. It was the fifth consecutive year that CFNTx was given this distinction, which is based on sound fiscal management.

Only 5 percent of non-profits rated by Charity Navigator have received five consecutive 4-star ratings.

Charity Navigator: “This indicates that Community Foundation of North Texas consistently executes its mission in a fiscally responsible way, and outperforms most other charities in America.

“This ‘exceptional’ designation from Charity Navigator differentiates Community Foundation of North Texas from its peers and demonstrates to the public it is worthy of their trust.”

CFNTx President Nancy Jones was honored by the designation.

“It helps validate what we stand for at the Community Foundation,” Jones said. “The  potential trust that comes along with a distinction like this is more important than the rating itself.”

Charity Navigator, which is considered the leading charity evaluator in America, has been profiled in Forbes, Business Week, and Kiplinger's Financial Magazine.

“Our irrefutable data shows that users of our site gave more than they planned to before viewing our findings,” president Ken Berger stated in a letter to the Foundation.

It is estimated that last year Charity Navigator influenced over $10 billion in charitable gifts.

 

Helping Non-Profits from the Inside Out

 

"I don’t think I am the only one who has decided
I want to ride a pony that I don’t have to feed.”

We love that quote by Fred Smith, founder of The Gathering. We love it because it captures the essence of our recently launched ToolBox grant cycle.

We feel like we have identified a specific need within the non-profit sector -- capacity building -- and we’re excited about supporting the infrastructure of mid-sized agencies in Tarrant County.

An article in the Stanford Social Innovation Review poetically compliments Mr. Smith’s statement:

“A vicious cycle is leaving nonprofits so hungry for decent infrastructure  that they can barely function as organizations—let alone serve their beneficiaries. The cycle starts with funders’ unrealistic expectations about how much running a nonprofit costs, and results in nonprofits’ misrepresenting their costs while skimping on vital systems—acts that feed funders’ skewed beliefs. To break the nonprofit starvation cycle, funders must take the lead.”

We agree and we’re excited that our ToolBox grant cycle is under way.

To help kick things off, we held and information session at the Downtown Public Library on June 22. (Session notes)

We wanted to answer any and all questions surrounding this new initiative.

Attending the event was not mandatory to submit a Letter of Intent, but we still had a tremendous response from local agencies. (Thank you to those that attended.)

They provided poignant and relevant perspective, and we wanted to share some of the frequently asked questions surrounding this grant cycle - most of them revolving around our criteria and the focus of the grant cycle.

QUESTION:
Why did the Community Foundation decide on capacity building grants?

ANSWER:
The Community Foundation wants to help nonprofits succeed.  We are excited that these funds will help build up infrastructure for the long term benefit of our grantees. 

Unlike program grants, capacity building grants are internal and often one-time expenditures.  We don’t want to award grants to programs that we cannot later support, nor do we want to burden other foundations with support for programs that are started under our grant cycle.

To read all the frequently asked questions, click here.

The June 22 orientation also gave the Community Foundation a great opportunity to recognize our funding  partners in this endeavor.

It all began when Nick and Louella Martin agreed to issue a challenge grant of $100,000 to kick off the Foundation’s ToolBox Grants Cycle.  Private foundations from our region recognized our mission and showed support as well. To complete the funding stream, the Community Foundation had several small unrestricted or broad interest area endowment funds.  (Click here for list of all our funding partners)

All parties involved believe in this statement from Stanford Social Innovation:

“Organizations that build robust infrastructure—which includes sturdy information technology systems, financial systems, skills training, fundraising processes, and other essential overhead—are more likely to succeed than those that do not.”

Stages of Giving: Advising Young Donors on their Philanthropy

Young donors can be passionate philanthropists, but they often need guidance. Advisors can better serve this segment by offering age-appropriate advice.

Many young donors confront charitable giving-related issues for which they have little or no preparation. Richard Ditizio, a managing director at The Citigroup Private Bank, compares the experience to jumping on a ten-speed bike without ever having been taught to ride.

Still, research by the United Way of America underscores that young investors—those between the ages of 18 and 34—are often more receptive to charitable messages than the older Baby Boomer generation. The problem is that most have simply never been asked to give, and advisors are often reluctant to teach them about philanthropy.

Increasingly, though, advisors will need to be prepared for the conversation. 

In 2003, Paul Schervish, Professor of Sociology and Director of the Social Welfare Research Institute at Boston College, reconfirmed his 1999 prediction that a wealth transfer of at least $41 trillion will take place in the United States by the year 2052, with $25 trillion going directly to heirs. 

That’s assuming economic growth of just two percent a year—higher growth will mean an even greater wealth transfer. The upshot is that 120 million members of Generations X and Y will become the primary investor pool as the first Baby Boomers reach retirement age. 

Advisors must learn how to help members of this important demographic meet their philanthropic objectives.

How to Help Young Donors Give

Advisors can encourage and shape their young clients’ philanthropic drive while looking out for their broader financial interests. Indeed, those that make a point of raising the subject with their clients report that it is often the most interesting and rewarding discussion they have. 

“Their enthusiasm is unbridled,” reports Eileen M. Wilhem, head of charitable services for Wachovia Wealth Management. “They have big plans and they want to make a difference.” 

Lynne Pantalena, a wealth advisor at the Fleet Private Client Group, says she helps define her clients’ interests and develop a strategic approach that enables them to make meaningful and lasting commitments, without jeopardizing their own financial futures. She encourages them to make direct gifts and, depending on their level of wealth, to consider establishing a donor advised fund or a family foundation. 

“They haven’t yet saved enough in an IRA account to gift from there, and they aren’t really good candidates for other planned giving vehicles, such as charitable remainder trusts, because their life expectancy is so long,” she says. “But they are eager to give and deserve to be encouraged.”

Different Approaches For Different Sources of Wealth

Advisors say the source of a clients’ wealth should determine the optimal approach to encouraging and channeling all this youthful ambition. Those just coming into an inheritance have different motivations and concerns than those starting to think about how to allocate money that they have earned. So, for that matter, do the increasing number of young people who have both earned and inherited wealth. 

Young people with inherited wealth often have some exposure to philanthropy through their families, but are eager to define their own interests. 

As Stephen Johnson, a senior advisor at The Philanthropic Initiative puts it, their youth and energy means that are less likely than their parents or grandparents to write a check for the local hospital’s oncology ward, and far more likely to become involved in a hands-on way in environmental and educational causes. It’s important to respect and encourage their individualism, advisors say, without fretting about the impact on the extended family. (Besides, a lasting conflict of charitable interests is very rare, advisors add).

Young people who have earned their own money are also a potentially powerful force in the philanthropic world. As a group, they need a lot of guidance, both in defining their philanthropic interests, developing strategies and incorporating them into a holistic wealth management strategy. Often, that means advisors have to teach young donors to exercise restraint.

 “Young donors want to make a big impact; to give back to the community very quickly,” says Fleet’s Pantalena. “They are very different from the 60-year old who has worked hard all his life and has just sold his business. A 30-year old thinks he or she can give it all away and make it all over again.” 

There are many rewards for effectively encouraging and guiding young clients who feel a sense of gratitude for what they have received and a strong desire to give back. Advisors who make it a point to raise the subject say it creates a lasting bond with the clients and helps get them off to a good start on their philanthropic journey.

 

Aline Sullivan is a freelance writer based in Westport, Connecticut.

Copyright HNW, 2003

Used with permission

What is the Future of Philanthropy?

The future of philanthropy is always an interesting topic within charitable circles. It doesn’t matter if you are a executive director, volunteer, donor, board member, or one of the countless other entities associated with a non-profit...this conversation is relevant.

 If you have a heart for giving, the future of philanthropy should interest you. Time magazine recently addressed this issue with one of its “100 Roundtables.”

Sub-text from the online article:

From food pantries in New York City to cell-phone networks in Africa, panelists J.J. Abrams, Matt Berg, David Chang, Liya Kebede and Sanjit "Bunker" Roy prove you can give back wherever you work and in whatever you do.

One thought from film producer J.J. Abrams, entitled “The Time is Now”: "Philanthropy is often something you do when it comes time to deal with your estate.
But when I started to make a living, my wife and I decided we didn't want to wait and that being part of the philanthropic community was important to us. So the question became really focusing, choosing where and how to spend our time, money and energy in a way that was authentic to us." Click here to read additional thoughts and watch Roundtable video