Charities’ gold mine: ‘giving while living’;

Original Source by Meredith May Several times a year, Heidi Hess and James Rucker of San Francisco go online, PayPal style, and redirect their wealth to their favorite charities. They are tactical philanthropists – part of a growing group of socially conscious givers in the Bay Area whose generosity accounts for more than half the $1 billion in assets at the San Francisco Foundation. Otherwise known as “charitable checking,” or “giving while living,” donor-advised funds are quickly becoming the most popular way to invest social capital. Targeted philanthropy enabled the San Francisco Foundation to pump almost $90 million into Bay Area civic life in 2007, funding everything from marine mammal rescue to yoga for homeless moms. Donor-advised funding marks a sea change in the power paradigm of community foundations, where a board of trustees has traditionally decided how to disburse the charity of the Bay Area’s wealthiest families. “You click and send to specific groups that are doing what you like, instead of sending it to a charitable clearinghouse where you can’t see the impact of your dollars,” said San Francisco Foundation spokeswoman Sara Ying Rounsaville. Donor-advised funds appeal to more modest investors, who, with as little as $10,000, can open an account. Such funds help put the San Francisco Foundation among the top 10 richest community foundations among the 717 nationwide. Traditional endowments The rest of the foundation’s endowment comes from more traditional sources: wealthy families bequeath money in their wills or give enormous gifts to the foundation, with no strings attached. “We live at the crossroads of extraordinary wealth and goodwill,” said San Francisco Foundation CEO Sandra Hernández, the former public health director for San Francisco who started two national firsts in the city: universal health care and needle exchange. The foundation has become a vital funding source that’s responsible for keeping the region’s most vulnerable out of poverty, ensuring its artists are able to work, and promoting the social and environmental ideas that make the Bay Area one of the most forward-thinking places to live. Tactical philanthropy is part of the personality of the Bay Area, and the state as a whole. Four of the nation’s 10 largest community foundations call California home – those in San Francisco, Marin County, Silicon Valley and Los Angeles – accounting for one-third of the combined $16 billion in assets on the national top 10 list. Aiding Bay Area institutions As one of the nation’s oldest community foundations, the San Francisco Foundation has been responsible for fostering the growth in the past 60 years of fledgling nonprofits that have since become Bay Area institutions – including KQED, the Berkeley Repertory Theatre, the Trust for Public Land and the world-renowned Oberlin Dance Collective in San Francisco. Hernández has doubled the foundation’s endowment in 11 years while maintaining a medical practice on Fridays in the AIDS ward at San Francisco General Hospital. She’s done that, in part, by developing a group of “living donors” and encouraging them to think about leaving their legacies to local nonprofits during their lifetime. Part of larger trends Giving donors more say in where their money goes dovetails with trends in philanthropy of targeted giving and micro lending, where the donor can concentrate on helping one village with simple solutions such as buying a cow or installing a well. Donor-advised funds at the San Francisco Foundation are local versions of that, allowing investors to contribute to the shelter or school down the street. “You have relatively younger donors choosing to set up funds this way, so they can be more engaged with their local community,” said Steven Lawrence, senior director of research for the Foundation Center, the New York-based philanthropy research center. “It represents a cultural and generational shift from the tradition of older donors setting up funds simply for estate planning,” he said. Point-and-click giving The San Francisco Foundation created its donor-advised Web portal in 1999, at a time when only five other community foundations had point-and-click giving. Since then, Web-based giving has become ubiquitous, and San Francisco donors have used the site to send $152 million to Bay Area nonprofits. “Technology has helped keep donors philanthropically informed,” Hernández said. “If there’s a hurricane, they can go on our site, see the places we researched to give and – boom! – make a grant.” Account holders can go online to check their balances and transfer funds to their favorite nonprofits. Each request is vetted by the foundation, to ensure the chosen charity is a legitimate 501(3)c that qualifies for tax exemption. Matching donors to charities The foundation serves as a catalyst by researching and mentoring promising nonprofits and then investing philanthropic money and helping donors decide which local charities match their social values. The donors get the tax deduction of their entire contribution up front, but can disburse it over years to as many different charities as they want. In 2007, the foundation granted almost $90 million. It developed almost 5,000 units of Bay Area affordable housing; gave grants to 70 local poets, writers, photographers and videographers; started a free program to help struggling homeowners avoid foreclosure; sent nearly $175,000 to help clean up the Cosco Busan oil spill; and funded food banks and meditation centers. In all, nearly 800 nonprofits were funded in San Francisco, San Mateo, Alameda, Santa Clara and Marin counties. A growing number of donations is coming from the newest philanthropists – the socially conscious dot-com riche. Tech millionaires are coming of age and are now ready to give back, but they want the same control over their giving as they had with their startups, said Sean Stannard-Stockton, director of tactical philanthropy for Ensemble Capital Management in Burlingame. “You look at Warren Buffett and Bill Gates – the big story is not how much they gave, but that Gates, at 50, decided he had something more important to do than run Microsoft,” Stannard-Stockton said. “Philanthropy is a higher calling.” Top 10 community foundations by size of assets: • 1. Tulsa Community Foundation Oklahoma $3.1 billion • 2. New York Community Trust $2.0 billion • 3. Silicon Valley Community Foundation $1.9 billion • 4. Cleveland Foundation $1.89 billion • 5. Chicago Community Trust $1.6 billion • 6. California Community Foundation Los Angeles $1.3 billion • 7. Marin Community Foundation $1.1 billion • 8. Greater Kansas City Community Foundation $1.05 billion • 9. San Francisco Foundation $1.03 billion • 10. Oregon Community Foundation $996 million Source: Foundation Center, New York. Data as of June 26, 2008 David Friedman: The earthquake engineer is a member of the San Francisco Foundation’s board of trustees and sits on its investment committee. Together with his wife, he has directed up to $3 million over the past two decades to fight poverty through donor-advised funds. The Friedmans steer their wealth to anti-poverty programs, such as the Global Fund for Women and the Homeless Prenatal Program in San Francisco, continuing the legacy of Friedman’s grandfather Dan Koshland, who created the San Francisco Foundation. “They don’t just take your money and say, ‘Thank you,’ ” Friedman said. “They partner with me in my philanthropy.” Homeless Prenatal Program: Martha Ryan started the Homeless Prenatal Program 19 years ago with a $52,000 grant from the San Francisco Foundation. She used it to enroll women in prenatal classes, dispense baby supplies, and help women find homes and jobs. Today, the Homeless Prenatal Program has a $5 million annual budget, 53 employees and city funding, and it serves 2,600 families a year. Almost 500 families have been moved into permanent housing throughout the Bay Area with Ryan’s help. “The San Francisco Foundation didn’t just give me money,” said Ryan, shown standing at right helping students in a yoga class. “They helped me develop relationships with other foundations so I could increase my funding base.” James Rucker and Heidi Hess: The San Francisco couple started the Pomegranate Fund at the San Francisco Foundation in 1998 to support the schools and social justice nonprofits they believe in. They have donated to the Downtown College Prep in San Jose, the Gay-Straight Alliance and San Francisco’s YouthSpeaks. After Hurricane Katrina, they donated to the Gulf Coast Civic Works Project, a student movement that sought to hire African Americans for the rebuilding effort. “That feeling of helping other people means I gain something every time I give,” Rucker said. Oberlin Dance Collective: Artistic Director Brenda Way took a chance in the mid-1970s when she and a dozen dancers, actors and photographers boarded a school bus in Ohio and headed for San Francisco instead of the artistic hub of New York. After a few years of performing inside a rented Potrero Hill studio, ODC was noticed by the San Francisco Foundation, which sent Way $180,000. “That was the beginning of life for us,” Way said. Today, ODC has a $5 million annual budget and 33,000 square feet of studio and performing space in the Mission District.