The following article appeared in the Kansas City Star on Sunday January 9, 2005 and includes a quote from JB&A President, Jeffrey Byrne. If your organization or publication would like materials, quotes or information for your use, please contact us.

FOUNDATIONS TOUCH AREA IN BIG WAY
Generosity lifts KC, even in hard times

By JEFFREY SPIVAK The Kansas City Star

Almost any week, in often unnoticed ways, the life of just about every Kansas Citian is touched by the area's new form of wealth.

Drop off your toddler at an accredited day care, work out at a YMCA, attend a symphony concert, send your teenager to an urban school, seek medical care at a new hospital wing — all these organizations are partly underwritten by local charitable foundations.

These pots of philanthropic gold come from the estates of well-known families like the Halls and the Kauffmans, the fortunes of little-known widows and businessmen, and the coffers of top corporations like Sprint and H&R Block.

Quietly, without much fanfare, these foundations have made metropolitan Kansas City rich in a way few metropolises are, allowing the community to ride a wave of spending unlike any other time in its history.

But today, local foundations face increasingly difficult choices as their grants level off. That forces them to be more selective in what they fund.
Foundations do much of their work behind closed doors, and the increasingly important role they play often slips under the public's radar. So The Kansas City Star spent months tallying and categorizing grants from top local foundations as a way to analyze where their money has been going.

During the past decade, the analysis found, local foundations have invested nearly $2 billion in all sorts of building campaigns, social programs and civic initiatives.

The metropolitan area has been able to accomplish a number of high-profile projects that governments and public institutions could not fully do on their own — such as Children's Mercy Hospital's expansion, the Truman Museum's renovation, 18th and Vine's new businesses, downtown's relocated public library, even reStart's bigger homeless shelter.

“Only in Kansas City and a few other places do foundations have such a dominating role in what things get done,” said Curtis Johnson, who studies the leadership of metropolitan areas, including Kansas City's.

Indeed, Kansas City area foundations give out the sixth-highest amount of grant money on a per-capita basis among 25 large metropolitan areas, according to The Star's analysis.

It's like having a big new government in town — foundations' total annual giving roughly equals the combined budgets of Overland Park and Lee's Summit, or the combined spending of the Shawnee Mission and Liberty school districts.

“We are a community truly blessed with foundations,” said Jeffrey Byrne, president of a firm bearing his name that specializes in nonprofit fund raising. “They are a powerful force.”

That force, however, is increasingly at the center of a debate in the community: What should philanthropy's primary role be here? To build up the metropolitan area or to help out the less fortunate?

Foundations are in transition. They used to sprinkle their money across the area like a metropolitanwide drizzle, hitting just about every organization and project with a hand out.

Now, in this decade's economy, they cannot fund everything they used to. So they are trying to collaborate and concentrate their money on major building projects, from downtown redevelopment to medical research laboratories in the burgeoning life sciences field.

“Our responsibility is community improvement,” said David Miles, president of the H&R Block Foundation. “That is our job.”

But there's a flip side to that. Social service agencies ranging from food pantries to rehabilitation centers feel left out. In some cases, fund-raising campaigns have stalled with less foundation help. These leaders believe foundations should do more to follow philanthropy's traditional role of aiding the disadvantaged.

“More of these resources are needed in the urban community, to help those most in need,” said the Rev. Nelson Thompson, a prominent voice in this debate as a local civil rights leader. “These foundations can make a huge difference, and we have to keep challenging them.”

Ultimately, though, many top leaders believe foundations' emphasis on a few selected causes is in the best interests of the metropolitan area.

Rapid rise

Not so long ago, Kansas City was poor, at least when it came to major philanthropists.

In the 1980s, its philanthropic nest egg was, in the words of one foundation executive, “less than that of every other comparable Midwestern city.” Local leaders still referred to William Volker as the city's greatest philanthropist — even though his charitable fund had moved out of town.

Then in a matter of a few years, the area hit the jackpot.

Hallmark founder Joyce Hall's estate was resolved, pumping up the Hall Family Foundation. Royals owner Ewing Kauffman and his wife committed much of their wealth to separate foundations. Banker William T. Kemper left a legacy of two philanthropic funds. The estates of other prominent local businessmen, such as Miller Nichols and Parker Francis, also emerged as significant philanthropies.

The Greater Kansas City Community Foundation expanded its base of smaller donor funds, growing into one of the top philanthropies of its kind in the country.

All this ushered in a new era of charity in Kansas City. As the Hall foundation's Bill Hall observed: “We have won the lottery.”

Total grants from area foundations doubled from 1985 to 1990. They doubled again in the next five years. Then they doubled again in the next five years, according to records compiled by the national Foundation Center in Washington and the local Clearinghouse for Midcontinent Foundations.

Overall, foundation grants in Kansas City soared almost tenfold, from $37 million in 1985 to more than $300 million a year in this decade.

That sets Kansas City apart from its peers.

The Star analyzed foundation data for 25 metropolitan areas in 2002, the latest year such statistics were available. While Kansas City ranked below the middle in total grants and assets, it ranked near the top on a per-capita basis.

Foundation spending in the area amounted to $174 for every area resident. That far outdistanced most similar-sized metropolitan areas — Cincinnati gave out $105 per resident, Denver $102 and St. Louis $96.
In Kansas City, look where some of that money went between 1998 and 2002, according to the Foundation Center's sampling of grants:

Half the costs of that program are underwritten by foundations every year.

“Without their support, one of the premier honors programs in the country wouldn't exist,” said Chad Jolly, William Jewell's vice president for advancement.

During this growth period, local foundations were increasingly called upon to fill vacuums left by tightening government budgets.

Kansas City and the federal government, for instance, gradually got out of the business of building lower-income housing. So in 2000 a consortium of foundations helped establish the Kansas City Community Development Initiative, the largest-ever local funding effort to rebuild designated neighborhoods. One result: rehabilitated homes along the Paseo corridor.

“We were able to do something that a lot of other cities can't do,” said Julie Porter, one of the initiative's directors.

Along the way, however, local foundations ended up with different funding priorities than foundations nationally.

The Star categorized grants from 2001 by the top 20 local foundations, accounting for four-fifths of the area's total grants. The analysis found Kansas City devoted proportionately more money to arts and culture than foundations across the country — 17 percent compared with 11 percent. Kansas City also gave significantly more to adult and youth services — 21 percent compared with 13 percent.

Kansas City gave an equal proportion to education, as foundations did nationally.

But local foundations dedicated less to environmental causes. They also put far less money into health and medical research — 13 percent compared with 22 percent nationally.

Why has Kansas City been so different? Basically because of the predilections of the wealthy. Individual benefactors had special interests, like the Kemper family in the arts or the Francis family in child care. The foundations' directors had their own interests, too. John Laney came to the Hall foundation from City Hall and spearheaded the neighborhood housing initiative.

As a result, Kansas City's philanthropic spending was often scattershot. Some in the foundation field felt Kansas City was taking its golden opportunity and frittering it away.

“You can't do all things for all people and think you're going to make a difference,” said Jerry Kitzi, a longtime foundation executive on the board of the Greater Kansas City Council on Philanthropy.

A new day

This decade, foundations were forced to change.

The stock market's swoon took a big bite out of their portfolios. Local foundation assets dropped by $1.3 billion — roughly 20 percent — between 2000 and 2002. Gone were the days when foundations could take on new challenges every year with ever-expanding budgets.

The Community Foundation was the first to adjust. It narrowed its focus. It decided to align its giving more with community goals — those pursued by top business groups like the Civic Council and those identified by experts studying Kansas City's strengths and weaknesses. That meant topics like arts and culture, life sciences research, child care and downtown development.

“The funders are working much more collaboratively around some of the community's priorities,” said Jan Kreamer, longtime president of the Community Foundation.

All the top foundations still have differing missions and interests. But they are joining together to funnel money into the same projects when possible.

The Ewing Marion Kauffman Foundation, under a reconstituted board, created a new fund this year to benefit civic projects like the Liberty Memorial Museum.

Meanwhile, Bank of America, with a portfolio of charitable trusts in Kansas City, is changing its approach. David Ross, who oversaw those trusts for decades, liked to invest in technology systems for nonprofits. His replacement, Spence Heddens, wants to get more into children's issues.

“We need to refocus a lot of what we do,” Heddens said.

So the biggest foundations have been putting big bucks into a few projects.

In 2001, Children's Mercy Hospital's expansion was the top local beneficiary of foundation funds — and its $26.5 million was six times more than the next highest recipient, according to the Foundation Center. In 2002, the Nelson-Atkins Museum of Art's expansion was the top beneficiary — and its $18.3 million was three times more than the next highest recipient.

The Hall foundation has staked about $100 million in the Nelson. And Julia Irene Kauffman's family foundation has pledged more than $100 million for a downtown performing arts center.

Some in the community, however, see these projects sucking resources out of social services, the agencies helping the homeless, the disabled, the battered, the hungry — the groups not part of the civic progress agenda.

“It's a new world out there,” said Monica Meeks, who has heard a lot of grumbling as director of an umbrella organization for nonprofit business executives, based in Blue Springs.

Social service agencies and other nonprofits are seeing casualties. Some capital campaigns to expand space or services have hit snags because foundation funding has not been flowing like it used to. The Rainbow Center for Communicative Disorders, a school in Blue Springs for people with disabilities, is 80 percent of the way through its fund-raising timetable but has reached only 50 percent of its goal.

“There are a lot more popular causes out there than ours,” said Peggy Britton, the center's operations director.

Some organizations have closed , at least in part because foundation funding ended. Others that survived have been scrambling to diversify their funding and prove their worthiness.

“It's a real precarious time,” said Ann Jerome, executive director of Ronald McDonald House Charities, which has been able to stay on track with its campaign to add another house for families of children treated at hospitals. “It's a real awakening to a lot of organizations used to foundation support.”

Indeed, the urban community is fraught with tension over this.

“There's a battle going on about how philanthropy is going to organize itself in Kansas City,” said David Renz, director of the Midwest Center for Nonprofit Leadership at the University of Missouri-Kansas City and one of the few people locally who follow the industry.

When the sale of Health Midwest hospitals created two new pots of philanthropic money, the original idea was for them to fund life sciences research. But leaders like Thompson lobbied to have them favor indigent health care. Both foundations eventually went in that direction.

Foundation leaders feel they are not abandoning the poor. Several foundations, in fact, are working on a new multipurpose center for the homeless downtown, and the Kauffman Foundation has focused more on urban school programs.

Either way, it remains unclear whether foundations can pull off their attempts to be more focused. It hasn't always worked. Although child care became a priority in the 1990s, top foundations devoted proportionally less spending on youth development in 2001 than they did in 1991, The Star found.

Still, foundation and civic leaders remain convinced that better focus will lead to bigger impacts.

“If you have a large amount of money to give, you can give to the man on the corner or to the homeless. You would be wiser to give to something that will have a greater return in the future,” said Betsey Solberg, a longtime board member of the Community Foundation and chairwoman of the Civic Council of top business executives.

“If we all came together and focused on a few areas, imagine where we could be in 15 years.”