Speaking of Rochester; 117; Jennifer Leonard

How do you do ladies and gentlemen I am Barber Conable and the program is Speaking of Rochester. In this program we talk about the a greater Rochester community's past and present and hopefully future. And we've had a number of different people talking about a range of subjects on the program previously. But we haven't really dealt with the overall issue of philanthropy here in Rochester. Now Rochester is is a well known as one of the more philanthropic communities in the country. And we have an expert on philanthropy with us today, it's Jennifer Leonard. Jennifer came here in 1993 to become the President and Executive Director of the Rochester Community Foundation the Rochester Area Community Foundation. A She ah, originally, uh born in suburban Washington went to Wellesley where she was a fine student and got her Master's Degree at Occidental College in Louisiana - Is that?

[Jenn] in Los Angeles in Los Angeles. [Host]Yes, I'm sorry. I a I'm thinking of another college maybe. Um, but But a since then she's been a professional in the, in the fundraising and and consulting area for nonprofits that includes both 501(c)(3)s the general charity and the foundations. And now you're the head of a foundation which is doing very well here. Many people don't know a great deal about the Rochester Foundation, but it passes out a great deal of money for the quality of life here in Rochester. It's a a a it has it has an endowment now thanks to Jennifer and to the prosperity of the country generally, of 80 80 million dollars. And as you can imagine there's quite a bit of income on that 80 million dollars a which does make a difference in terms of the quality of life. Jennifer, I've said enough. Welcome to our program. Thank you for being on it.

And let's talk about philanthropy generally in this country to start with and then we'll come down to particulars as to how it affects Rochester. Um I was interested in philanthropy and in in the tax laws which provide incentives for giving to a charities when I was in Congress. And a and so it's a particular interest of mine. It does seem to me that it's important to understand that one of the things that makes America different is the tremendous pluralism that comes from having a charitable problem solvers contributing to the quality of life in this country. Diversity and and pluralism a provide alternatives for the resolution of problems of of 1 sort or another. And a and I guess charity has, contributions to charity have been going up in this country haven't they? [Jenn] That's right. They have been going up

because we have a good economy. We have the confidence that we can make a difference in tomorrow. People have more in their pockets to share with those less fortunate. And a last year contributions rose 7%. Most of them always from individuals [Host]in the whole United State [Jenn] in the whole United States. It rose 7% - A boom year. And as always, individual giving represented the lion's share of that, Barber people sometimes think foundations and corporations provide most of the grants. But it's not so it's you and me and other individual Americans providing 87% of all private giving in America. [Host] Actually corporate contributions have gone down some while individual corporate contributions were going up. Isn't that right? [Jenn] That's right. They've stayed pretty level almost for 10 years. There's been a leveling out effect. It was - it it was considered the corporate thing to do in the early 80s to give to your community. But some

stockholder challenges and the increasing acquisitions of local companies by national companies [Host] and downsizing [Jenn] and downsizing have all led to far more targeted and reduced giving by companies. Now tell us the difference between what's known as a 501(c)(3) or a general charity and a foundation. [Jenn] Well, there are - I'm really going to talk about 3 groups Barber because the large pot is the 501(c)(3) designation which means that the organization is operated exclusively for charitable purposes and that can include a wide variety of charities from the American Heart Association to the local... [Host] Which you used to work for. [Jenn]Which I used to work for - Exactly. - To the local organization that's helping drug addicts. Or to a university, hospital, or private school. [Host] Well universities themselves are nonprofit for the most part, are they not? [Jenn] That's correct.

That's why when you give to your university, you can get a deduction on your tax law. That's right. On your tax a contribution. [Jenn] Section 501(c)(3) of the tax code that you worked so hard on provides for a deduction from taxes of gifts to organizations that are educational, literary, scientific, charitable, test for public safety, prevent cruelty to children or animals and also help develop communities and neighborhoods a particularly low income areas. [Host] Now the the a government is concerned that charitable giving actually go for charitable purposes are 501(c)(3)s like the Boy Scouts or the Heart Association regulated differently from foundations? [Jenn] Yes they are Barber. Ah Foundations... [Host] And tell us what the difference between the 2 is that we can see why they would be regulated differently. [Jenn] Ok, I said there were 3 types of organizations worth looking at. They are all part of Section 501(c)(3). But the law makes a difference between a publicly supported charity like the Boy Scouts and a

private foundation which it has a very narrow source of support generally an individual or a family. [Host] In other words there are likely to be a very few contributors to a foundation.[Jenn] Correct.[Host] That's not so here in Rochester. [Jenn]Well, there are private foundations in Rochester that have few contributors. In between a private foundation and a public charity is a special kind of public charity called a Community Foundation with many different individuals and families. [Host] That's why you're talking about 3. [Jenn] Exactly. [Host] I see. [Jenn] I think it's helpful to think of those because private foundations are very closely regulated by the Internal Revenue Service. [Host] They that's because they've been abused at times in the past [Jenn] Correct. because people have set them up for purposes of control of a small business or something of that sort. [Host] Rather than for primarily a charitable purpose. [Jenn]Exactly Barber and in the case of a community foundation we are an umbrella for many many different charitable funds and we exercise the kind of oversight that IRS has to oversee has to exercise for private foundations. [Host] Now I understand there are about 500 community

foundations in the United States. Ah so every community doesn't have one [Jenn] but every large city has one. Houston finally came on board in the early '90s [Laughter] [Host] Houston's been slow to play hasn't it? [Laughter][Jenn]Yes but all the major metropolitan areas and many states and substate regions have community foundations and they're now spreading worldwide.[Host] And in effect then you administer a lot of separate funds. Some of them named and earmarked a but but you administer them as part of an overall community effort. Is that right? [Jenn] That's correct, Barber we're really providing an efficient and effective vehicle for every person or family to become like the Fords, Rockefellers or Carnegie's to carry out their charitable vision for how to make this community better for their kids and grandkids and the future of upstate New York. [Host] Now that reminds me of the United Way which, of course, as administers a number of different funds. It doesn't actually

administer the funds, well it decides how to split the funds up within the community and a how, tell me how the United Way would differ from a community foundation. [Jenn] Absolutely. What we do is dependent as the community is dependent on a successful United Way and we're fortunate to have one of the most successful ones in the country. United Way principally raises current funds through workplace fundraising and those current funds support health and human service needs that provide a basic safety shelter for our community. [Host] In other words, United Ways don't go for big endowments, but for transferring current contributions into into current benevolence of some sort and [Jenn] and in general that's true across the country Barber although our local United Way has also raised a very substantial endowment that supports its annual campaign for health and human service needs. And we're cooperating

to encourage all Rochesterians to plan future gifts to the community through their wills. It's called, "Willpower" and both the United Way and the Community Foundation working together with the Jewish Federation, the Catholic Diocese and the gran- Rochester Grant Makers Forum are using the Ad Council's marketing resources to get that word out because it's good to endow the future of the community. The difference is that the community foundation really has individual funds that have individual names carry out individual charitable purposes, some of them very broad. Some of them very specific like our Gansonhauser Fund for dairy farming education named after the farmer from Brighton. Ah We also are very... [Host] You used to be a cattle salesman.[Laughs] [Jenn] There you go. [Host] I know I remember Mr. Gansonhauser. [Jenn] You would remember most of the people who created our funds Barber because they really represent the economy of this this region going back for decades. And the funds that we hold

carry on in those names. [Host] You must have to be very well organized to administer all these separate funds a according to the wish of the people who set them up. [Jenn]That's correct. We we are well organized and we still managed to do it all for 1.2% of the assets. [Host] You must have a fairly small staff then. [Jenn] We have a fairly small staff. staff about 13 paid people equivalent. And and [Host] That's remarkable given the size of your fund [Jenn]and over 100 devoted volunteers. [Host] One of the things you have to be careful for in charitable giving is to see how much actually is given to the beneficiaries and how much goes into administration. Can you and you said what was the figure you gave [Jenn] 1.2% of the assets. [Host] That's remarkably low. Yes. [Jenn] We're very proud and we benchmark our costs against other community foundations nationwide. [Host] That means That means that even if you are still relatively small compared to let's say a New York City community foundation you're able to make more grants for the amount

of money you've got because you kept your administrative costs low. [Jenn] That's correct, Barber. Last year we made a record $5.2 million in grants to Greater Rochester. [Host] And and they went now. Now is there some particular emphasis in the kind of grants you make for improving the quality of life here? [Jenn] We are fortunate in that many donors have given us the flexibility to respond to the changing needs of the community. [Host] Ah yes things do change. [Jenn] That's right. [Host] People leave these funds and die and then if they've got it too tightly held, why then the money becomes irrelevant doesn't it? [Jenn] Well that's right. But the whole notion of a community foundation was to keep those desires fresh through the years, so we can apply all of our funds to to the nearest use that is compatible with what the donor originally wanted. And my favorite example was the the fund created in the late 1800's to feed needy cart horses [Laughter] [Host] Oh! [Jenn] Christmas dinner [indistinct] Christmas dinner. I think I figure that the the donor [Host] That's a very narrow Charity. [Jenn]A very narrow charity, I

I think the donor must have read Black Beauty which came out in 1877.[Laughter] But then Henry Ford came along and there were no more needy cart horses. So that fund became a fund for animal welfare in the Kansas City community foundation. [Host] I see. [Jenn] So we are really set- up to carry on through the generations. You asked about our priorities today for those funds that for which our board has given broad discretion to meet changing needs. We focus on 4 areas 1 of them quality of life which really includes the arts, education and the environment. Uh we also have worked for 10 years in the area of early childhood education and have a terrific track record in the community working with many other places. [Host] That means you're working for the future.[Jenn] That's absolutely everything we do is an investment in tomorrow. And I have some I have some great a a statistics. Let me just finish-up the other 2 priorities and we can

explore those together because they're very impressive. The third area is the area of healthy options for young people and their families also future oriented ensuring that good choices are made as young people develop into successful adults. And finally, in an area that you would be particularly interested in with your interest in charitable giving and volunteerism and that is the area of promoting community responsibility and leadership ensuring that every citizen takes a hand in building the neighborhood, building the community, volunteering.[Host] What kind of activities are you using to do that? [Jenn] Well, 1 of our programs is called the Neighbor Good Initiative. It provides small grants to block clubs and neighborhood [Host] Oh oh. [Jenn] associations that are trying to improve their neighborhoods.[Host] Area groups that have a particular concern about the environment in which they live. [Jenn] Correct. That's right. They want we've helped to start farmers markets so that they deliver affordable fresh produce in the neighborhood. We've helped by banners to

establish a sense of neighborhood identity. We've helped a with neighborhood newsletters so that people can communicate about what's going on [Host] [indistinct] and work about what's happening in their [Jenn] Absolutely. [Host] Very good. [Jenn] Help them work to get out drug houses in their neighborhoods. We don't impose what they want to do. We help them carry out their vision. [Host] You really have a a an opportunity for a fairly broad program then don't you? [Jenn] Yes, we do. [Host] And the more funds you administer the the broader the program. It it is not limited to Rochester is it? [Jenn] No, no it is not limited to Rochester, in fact, we serve the 6 counties of Greater Rochester and a few upstate communities that are even further distributed where the donors have wanted to have the funds held by us and watched over time. A we have a we do quite a bit of grant making in Wayne and Ontario counties. We also support Genesee, Livingston, and Ontario counties. You're a Genesee resident we have a wonderful new fund a for the

needs of seniors in Genesee County, specifically keeping them independent in their homes through transportation, housekeeping assistance. Oh even trips to the veterinarian for their pets ensuring they can live comfortably where they are happiest. [Host] So that's why it's called the Rochester Area Community Foundation. [Jenn] That's Correct.[Host] RACF is the is the initials for it. [Jenn] That's correct. [Host] And and when you refer to that that's what you're talking about. Absolutely. We serve the whole Rochester area. [Host] Well a let's talk about Rochester. Ah It has a special a interest in philanthropy. It always has had as you mentioned the United Way is one of the best in the country. And and some years has been clearly the per capita the best United Way in the country. Um a Why is Rochester a so a bound up in in the in the community a philanthropy of

of various sorts? [Jenn] I I really credit George Eastman as we can for so many things. He left an enormous amount of money to charity. He helped create the community chest. He created the Center for Governmental Research to make sure we kept up on what how best to run our community. He ah endowed the Eastman Dental Center and the Eastman School of Music. He created the incentive and the role model for others to give to institutions in our community. [Host] In other words he kind of set up a framework here that people have been building and adding to ever since. Is that right? [Jenn] That's correct. And, in fact, for years Kodak led other corporate good citizens in investing in the health of this community. We have some of the best institutions for a city of our size that any other community could boast of. What we don't have is as many foundations because he didn't create the Eastman Foundation. He created institutions.

And so one of the reasons for our willpower initiative and for the community foundation and its growth is to ensure the community has some available resources as times change to invest in new ideas and basically provide venture capital to the non-profit sector on an ongoing basis. [Host] Well you must be deeply involved in this work. On the other hand, you've done some writing nationally. Your your husband is a is a journalist for the The New York Times and ah the 2 of you apparently have collaborated on some investigations and some some a conclusions about charity in the country ah that that's kind of icing on the cake is it? [Jenn] Yeah, it it's nice to be able to express your views after you've spent a career in a certain field, Barber, and I, I loved writing. But what it didn't give me was a sense of connection with a group of caring people who are moving an idea forward.

And that's really what we have here in Rochester. [Host] The Rochester Area Foundation was originally the idea of Joe Posner, wasn't it? An insurance man here in town. [Jenn] Yes it was. [Host] I remember when I was a young congressman his trying to interest me in this and I was of course busy with my work and I don't think I helped him very much, but I was sympathetic to his efforts. And a and a it started growing slowly. [Jenn] hm mm. [Host] Um, How much was in the foundation when you came here in 1993? [Jenn] $32 million [Host] And now it's $80 million. [Jenn] Yes. [Host] Well there must be a little good management there, as well as, as the increasing prosperity of the country and the increasing pride in the community that Rochester has shown as it's become a self-contained a oasis here in western New York. [Jenn] You're kind to say so it's it's been thrilling to help it develop and to see how many people are excited to find that there is a way to give back to the community where they have flourished.

[Host] Do you have special fund raising efforts of various sorts? [Jenn] Actually Actually the IRS requires that community foundations make their services be known. Ah you can call them fundraising; we really look at them as services because we provide support for charitable giving. In many special ways. And the tax law gives us certain advantages in helping people time their giving, so that it is good both for the community and for their family finances. [Host] What's the future of philanthropy here in the United States, not just in Rochester, but generally? [Jenn] The immediate future is very rosy, Barber. There is a large [Host] because of the growth in contributions? [Jenn] The growth in contributions reflects a healthy economy, a very um a rising stock market that makes it less advantageous to sell stocks even with a reduced capital gains tax than to donate them. So there are lots of donations of stock going on. We have

the largest intergenerational transfer of wealth ever in the history of this nation going on right now. [Host] As the baby boomers mature, mature is that it? [Jenn] Well, actually as their parents pass on because the World War II generation is the richest generation ever to live in America. We don't know [Host] And they're tough [indistinct] [Jenn]if that will ever [Host] inheritance laws too.[Jenn] [indistinct] There are tough inheritance laws if they don't give it to philanthropy and create a fund that maybe even their kids can help participate in. Then it will go to the Government. [Host] The Government takes a very substantial amount. As I recall, a total a for the upper economic levels the total amount of the of the inheritance tax is something like 57%. [Jenn] That's- That's correct. And if you once you get now now we've raised, but minimally the amount that can be left in an estate to your children without taxes. And that's a good thing.[Host] It's indexed now so it is gradually going up.[Jenn] It's gradually going up to a million dollars per spouse if you do the planning ahead of time. It can actually shelter a $2 million estate. But not until the 20-

2004, or something like that. [Jenn] Good count. Yeah that's correct. So it's gradually going up to that level. But as we've seen there are not only increasing millionaires they're increasing billionaires in the country and those estates are increasingly being discussed in terms of how much value they're returning to the community. We have Ted Turner stepping-up and saying I'll give $100 million to the United Nations and I'll give a billion [Host] He gave a billion [Laughs] [Jenn] Yes and $100 million a year. And and so his billion dollar challenge is being eyed by Bill Gates and others and we're suddenly seeing competition that we haven't seen since Andrew Carnegie and John Rockefeller squared off. [Host] But, it's important for our listeners to understand that you really can't count on the wealthy to take care of all the needs the charitable needs of the country. They have a tendency to give money for very special occasions for very special institutions like their alma mater. A there was 100 million dollar contribution just recently to the Cornell Medical School. A but a

but there is a difference in how the different economic classes contribute to charity, isn't there? And there's even a difference in the level. Barber, proportionately the poor give more. [Host] Poor give more. [Jenn] Absolutely, proportionately. [Host] Even though most of them are on the standard deduction and can't get a deduction therefore for their charitable contribution. [Jenn] That's right you and I both worked in our own areas on the creation of deduction for people who don't itemize. So there'd be an incentive for poor people to give to charity too. [Jenn] That's right. That's right. [Host] After all they're the beneficiaries of charity and [Jenn] That's correct.[Host] Yes. [Jenn] But the tax law doesn't recognize them. And whenever you simplify the tax law fewer people itemize fewer people can access the charitable deduction. [Host] Now, now Jennifer nobody's going to simplify the tax law. [she laughs] It's a siren song that that is constantly being used to bring about tax reform, but the tax law gets more complicated all the time. And that's one of the interesting things though about the idea of a flat tax; there would be no deduction for charity. [Jenn] And that's

certainly something that is of concern to charities. But, but I think in the long run generosity will always be there. Our tradition in this country of giving and volunteering will always be there. Dislocation in the economy is going to happen if you change taxes and it will hit charities, as well as, other groups. [Host] And a and so a the the future appears bright now we could have a tough times ahead. And it's important that you husband your resources and not ah pass them all out willy nilly during a time of prosperity because they'll be needed later on, won't they? [Jenn] Barber, that's correct. Occasionally, people say that foundation should spend down their assets and give them away because times are so difficult. But if you look at it, a foundation can give away its assets through its grantmaking from income in a decade and still have the same assets to produce the same income stream in the future.

So that's [Host] By using capital gains and income primarily for its benefit benefices. [Jenn] Exactly. Exactly. And you said that the rich give differently and it's very true. Ah, the major gifts area is positioned to grow enormously those gifts benefit foundations, universities, hospitals and charities that benefit moderate middle class and wealthy families, um including some of the bigger charities like the YMCA where there is a fitness aspect and a family aspect and I'm sure that your grandchildren have gone to birthday parties at the local Y as mine have. The urban charity which was traditionally supported by people who lived in the City increasingly grew dependent on government spending as the middle class moved out of the cities. And once government spending started being restrained has had, they've had a very tough time replacing those supporters. So you're absolutely right that the real squeeze comes on charities serving the disadvantaged located

in cities where there has been suburban flight and those charities aren't the ones that the well-to-do and the millionaires and billionaires tend to support. [Host] Hm mm. [Jenn] And so you put your finger on it. [Host] Well, ah government spending is important, but it's also somewhat unpredictable. A people who get into the the concern about fiscal deficit and things of that sort and ah they're likely to cut the things that are not absolutely necessary and Charity is not always absolutely necessary. So the important message that you've got to constantly hold up to the people is that that the quality of life in your community depends on you to a substantial extent. [Jenn] That's correct, Barber and [Host] And that's the message of the Rochester Foundation Rochester Area Foundation, isn't it? [Jenn]That's right. We are about people giving back to their own community and ensuring its future. [Host] Well, thank you so much for explaining these things to us. It's a rather complicated area but it's terribly important for the future quality of life

in America. I'd like to ask you more about the environment; but we don't have time for that. I think environmental contributions are going up. [Jenn] Yes. [Host] And that's good, but but also I think, it's terribly important that we have concerned citizens like you carrying the message to the Concerned Citizens of Rochester. And thank you very much for being on our program here today. Jennifer Leonard has been our guest. Thank you for being with us, Jennifer. Thank you for listening, Ladies and Gentlemen. This is Barber Conable and the program is "Speaking of Rochester". [Music] If you'd like a copy of this program send $19.95 to WXXI. Post Office Box 21, Rochester, New York 1 4 6 0 1 silent