10 • Philanthropy Journal of North Carolina
Opinion
April 1994
Cultural lifelines
Museums, symphmy have obligatim to serve dtizeus
1 spate of departures has given three
/I of the state’s major cultural institu-
X-M tions a collective opportunity to
^ renew and strengthen the lifelines
between North Carolinians arid the caretakers
of our cultural resources.
Cultiu'e can be a tool with which to engage
each of us in the life of our state and enrich our
individual lives by connecting us to one anoth
er.
That’s the promise that can be fulfilled by
three search committees now looking for new
executives for the state museums of art and
histoiy, and for the state symphony.
Betty McCain, the state secretary of cultural
resources, hopes the searches will produce
leaders who will rejuvenate
the museums and symphony,
and make them matter to state
residents.
Making a cultural institution a vital part of
its community is an important and difficult job.
Museums and symphonies can become musty
and disengaged — attentive oniy to their loc^
metropolitan audience and awed by a sense of
their own self-importance.
Public employees — if not inspired by their
jobs — can tend to treat the institutions they
help run as if they were private clubs. And they
can treat the citizens who are their bosses and
customers as if they were an annoyance at
best.
EDITORIAL
Times are tough for
the arts. Organizations
tliat are thriving are
doing so because they understand the need to
balance hard-headed business strategies with
exhibits and performances that bring more cus
tomers throu^ the door. They also recognize a
need to develop programs that reach out to
people who lack access to what’s inside the
institution’s four walls.
The symphony and the museums will need
leaders who understand their respective sub
jects of music, art, and history. But that’s not
all.
Each leader also must understand market
ing. Each must appreciate the need to plug his
or her institution into the state’s education net
work. Each must be keenly aware of the role of
culture in North Carolina’s economic develop
ment.
Perhaps most of all, each must be a manag
er who is accountable to his or her direct boss
es and, ultimately, to the people of North
Carolina.
Rather than serving up successive portions
of uninspired fare, the ^ardians of culture
must work hard to attract new customers.
Whether it’s high, low or middle, true culture is
alive, and can-enliven those it touches. The
challenge for our new leaders is to make our
state museums and symphony true lifelines to
our people.
Swimming against the tide
Women prisoners
search for a voice
“T ~r 'T' hen 1 first walked onto the
I ^ / grounds at the North Carolina
\/ \/ Correctional Institute for
f r Women in Ralei^, I saw bull
dozers shifting piles of red dirt around, and
small one- and two-story brick buildings
spread across several acres of thin grass. It
looked like a small, run-down college that had
found a generous donor and was anxious to
expand.
Broken-down picnic tables were scattered
around and women in blue jeans stood in long
Unes at the canteens, waiting to buy snacks. On
the other side of the razor-wire fence, trees
were being cut down and the noise of construc
tion surronnded us all.
1 had expected to see more bars, more
anger, more open hostility. 1 had
seen that on TV. But as 1 began my
once-a-week visits to the prison as
the creative writing instructor for
a family literacy program, 1 real
ized that what 1 sensed was a
thick aura of depression that hung
over us and infected everyone.
Each class, we swim against its
tide and bargain for a brief
reprieve so the students can
experiment with words, teU their
stories and find their voices. The
Stephanie Smith is a media-
tionjconftict resolution consul
tant in Raleigh who has
worked for three years with a
nonprofit literacy program for
women inmates^
Sb|.ike frustrated
parents who have lost
the upper hand, the
public hopes tougher
is better and that a
punishing attitude will
somehow help us
subdue what appears
to be the enemy in a
irony of discover
ing a voice that the
outside world is
loudly campaign
ing to shut down is
not lost on the
class.
They know of the public forums filled with
angry people. They read of measures being
considered by the legislature to remove parole
options and create prisons in which overcrowd
ing is handled by having inmates sleep in shifts
in bunks stacked to the ceiling.
Of proposals for television sets to be
removed from the prison common rooms and
educational programs sent packing as well.
Like frustrated parents who have lost the
upper hand, the public hopes
tougher is better and that a pun
ishing attitude will somehow help
us subdue what appears to be the
enemy in a war on crime.
The students in the literacy
classes are all targets in this war.
Most of them are mothers with
very real families, whose stories
and concerns aren’t considered by
those holding public forums on
crime.
When 1 was in graduate school
studying for my master’s in social
work, 1 had a family systems pro
fessor who likened families to
complex mobiles. What affects one
member of the mobile will be felt
war on crime.
Look for SMITH, page 11
Allocating assets
Strike balance
between stocks, bonds
oday’s foundation trustees face
^ ' increasingly complex challenges
# in honoring the donor’s original
_Jl intent of perpetual support. In
today’s low interest-rate environment, private
foundations are increasingly challenged to
meet the annual 5 percent payout rule from
income alone.
The decade of the 1980’s, with its high
returns on stocks and bonds, obscured this
issue. However, today’s lower interest-rate
environment has bronght it back into clear
focus. Foundation managers can meet the chal
lenge in the 1990’s by carefully considering
asset allocation and adopting a “total rate of
return” spending policy.
Foundation funds are established for the
perpetual support of their dedicated programs,
and trustees cannot lose si^t of this long-term
responsibility while meeting today’s income
needs.
The first operating principle of
any foundation is to preserve the
value of the endowment. However,
becanse foundations fund future
programs, trustees must enhance
their funds’ purchasing power for
future needs. This means that a
portion of the endowment should
be invested in assets that will grow
in value at a rate that outpaces
Kenneth R. Brown is vice
president and manager for chari
table funds services for First
Union National Rank of North
Carolina in Charlotte.
A
total return
approach to
spending would
allow for spending
not only income, but
also capital gains.
inflation.
Thus they need
to carefully con
sider proper asset
allocation of foun
dation funds. It is
generally acknowledged that the single most
important investment decision affecting the
long-range performance of foundation fnnds is
the asset allocation — how much money to
have invested in stocks and how much invested
in bonds. This decision is more significant than
the investment discipline or track record of any
single money manager.
In considering an asset allocation decision,
it is important to know the risk-reward charac
teristics of stocks and bonds. When examining
capital assets in any rolling 20-year period
back to 1900, equities are the only Uquid capital
assets that have consistently ou^aced the rate
of inflation 100 percent of the time. In contrast,
long bonds have outperformed
inflation only abont 40 percent of
the time. This speaks clearly to the
long-term need for stock invest
ments, even though their income
yield is not commensurate with
bonds.
When stocks typically yield 2.5
percent to 3 percent, how does a
foundation accommodate a 5 per
cent spending rule? The answer
may be found in adopting a “total
rate of return” approach to spend
ing.
Look for BROWN, page 11
Philanthropy Journal
of North Carolina
The Philanthropy Journal
of North Carolina
is a monthly pubhcation of
The News and Observer Foundation,
aSOlfCji (3) private foundation
flmded by The News and Observer
Publishing COi, Raleigh N,Gi
EDITOR AND PUBLISHER
TODD COHEN—(919) 829-8988
DIRMCTOROFMAimnNO
.m) DEVELOPMENT
MAR6DERITE LEBLANC — (919)®&«991
M STAFF WRITER
* BARBAIU SOLOW - (919) ^9-8921
Z. SMITH REYNOLDS-JOSEPHUS DANIELS
PHILANTHROPY NEWS FELLOW
KATHERINE NOBLE - (919) 829-8917
ADMINISTRATIVE ASSISTANT/DESIGNER
KENNY MONIEUp — (919) 829-8988
TOTERNET: tc^ieii@iiaiido.net
Community foundations plant roots for the future
E ighty years ago, a Cleveland banker
and lawyer named Frederick Goff cre
ated a new form of philanthropy. He
set up an entity known as a community founda
tion that would oversee trust funds established
by individuals and families, and hand out inter
est from the funds to support good works in the
local community.
Something of a hybrid between a nonprofit -
which raises money and provides services - and
a private foundation — which makes grants to
nonprofits — a community foundation does
some of both.
Goffs foundation was envisioned as a part
nership between local financial institutions,
which would manage its funds, and community
leaders, who would serve on the board and
decide how to spend the money.
With the Cleveland Foundation as a model,
and Goff as Johnny Appleseed, the community
foundation movement took root throu^out the
U.S. In 1991, the most recent year for which
data are available, 335 community foimdations
with $8 billion in assets made $545 million in
grants.
ABOUT CHANGE
North Carolina has at least 20 community
fonndations that have $194.5 million in assets
and make $24.2 million a year in grants. One of
them, the Triangle Community Foundation, is
10 years old this year, and it illustrates the
important role that community philanthropy
plays in our state.
The Trian^e foundation also had its vision
ary: Nobel laureate George Hitchings. Hitchings
saw a need for vehicle to marshal untapped
community resources and recycle them back
into the community.
His initial gift of $1,000 has sprouted into
$10.3 million. The Triangle foundation man
ages 128 funds and in its 10-year life has award
ed grants and scholarships of $3.8 million.
That philanthropy helps make change hap
pen throng the support of organizations that
meet basic human needs and work to attack the
causes of social ills. In the Trian^e, the founda
tion has the added job of trying to pull together
three separate communities in the name of
regional cooperation.
The community foundation also has created
programs to develop young leaders and to en
courage collaboration among nonprofits.
Now, the foundation is undertaking a new
tack. It is reaching out to financial advisers,
lawyers, accountants and other professionals to
educate them about the importance of investing
in charity.
Shannon St. John, execntive director of the
Triangle Community Foundation, likens the
foundation to a tree that will provide “fruit and
shade for the next generation.”
What will the foundation be doing 50 years
from now?
St. John provides the answer by quoting
John Stewart, one of the foundation’s foimders,
who said of the fund he himself had created: “I
don’t know. But it will be there.”
Thanks to the seeds planted by Goff,
Hitchings and their fellow pioneers, people in
need throu^out North Carolina are reaping the
fruit and shade of community philanthropy.
Todd Cohen