Closing the Gaps

Closing the Gaps

Following a year of record donations, The Minneapolis Foundation leverages its resources to address economic and racial gaps.

The Minneapolis Foundation (TMF) recently achieved a record fund-raising year, surpassing $100 million for the first time in its 102-year history and marking a 33 percent revenue increase over the previous year.

Curious about the reasons driving the increase and the causes this largesse will support, Twin Cities Business spoke with R.T. Rybak, president and CEO, about the foundation’s work. We wanted to know what’s changed since he joined the foundation two years ago.

First, some background. The Minneapolis Foundation is a community foundation, which both raises and grants money. Community foundations provide a way for individual donors, families, and businesses to pool their resources to share back-end investment services and grants administration, and to inform and coordinate giving. There are more than 700 community foundations in the U.S. including 18 in Minnesota, according to the Council on Foundations. Among Minnesota’s community foundations, The Saint Paul and Minnesota Community Foundations have the largest asset base, at $1.1 billion in 2016. The Minneapolis Foundation is second, at $762 million.

Donors have varying reasons for making a charitable gift to a community foundation rather than directly to a charity. For example, a business founder or an investor who has a liquidity event may give a significant chunk of money to a community foundation the year of the event (possibly helpful for tax purposes), then designate recipients of the funds over a longer period. Donors seeking anonymity can give money to a nonprofit via a community foundation. Or donors interested in providing endowment or working capital for a nonprofit may want to rely on the experience of community foundation fund managers to invest and manage the dollars on the nonprofit’s behalf. Still other donors may want to tap into staff expertise at a community foundation to help select and vet grant recipients.

The majority of donors to community foundations also direct the charitable gifts that the foundation makes on their behalf—hence the label “donor-advised” funds. About 91 percent of grants from The Minneapolis Foundation are donor-directed compared with about 9 percent that are awarded by the foundation, typically through an open, competitive application process.

Rybak’s perspective is that TMF’s recent success “is an indicator of the community’s intent to do more.” The increase in giving did not come from a single large contribution; rather, it reflects an expanding contributor base that this past year topped 1,800 donors. More than 60 percent of TMF’s fund-raising leads come from financial advisors, which Rybak cites as evidence of TMF’s pursuit of strong relationships with financial services firms.

R.T. Rybak

We asked Rybak about the impact of the new federal tax law on year-end gifts. The tax act raises the individual exemption level so that some donors will no longer need to itemize their deductions. Nonprofits believe this may hinder charitable giving, but “the strong market was for us a bigger factor than the tax bill,” Rybak says.

Asked about his accomplishments and priorities, Rybak points to experienced new leaders helming key areas of practice. For example, Ellen Goldberg Luger, who formerly was executive director of the General Mills Foundation, joined TMF in May 2017 as senior vice president of philanthropic services, working with donors to support their grantmaking. She is responsible for TMF’s donor relationships and services. Rybak also hired Chanda Smith Baker, who joined TMF as senior vice president for community impact last September. The former head of Pillsbury United Communities, Baker directs TMF’s competitive grants programs as well as its community partnerships and initiatives.

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In May, TMF rolled out its OneMinneapolis Fund, a new effort to encourage donors to fund high-performing organizations and proven initiatives that address social, economic, and racial gaps in education, economic vitality, and civic engagement in the city. Despite the community’s investments to help bridge these gaps, they persist. “We don’t lack compassion, but we lack alignment,” says Rybak about solutions that could effectively reduce these gaps.

The OneMinneapolis Fund will direct 100 percent of its grant dollars toward evidence-based programs and practices that aim to reduce persistent gaps. TMF staff also will encourage donors to designate all or some of their grants to the new effort. TMF will direct $1 million in new funding to OneMinneapolis, aiming to stimulate comparable new gifts from other donors.

“We respect donors’ choices,” Rybak says, “and for more than 100 years we have been a trusted partner for the community’s largesse.” Now, the goal is to help donors inspire each other to do even more to make Minneapolis a great place to grow up and to thrive. OneMinneapolis represents only one such effort. TMF also is convening donors over dinner, at seminars, and in giving circles, providing forums for sharing stories and inspiring each other to support the greater good.

Sarah Lutman is a St. Paul-based independent consultant and writer for clients in the cultural, media and philanthropic sectors.

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