2005 Annual Letter to Alaskans
Like most people, I maintain a healthy skepticism about statistics. When encountering them, I can't help but think about the statement popularized by Mark Twain, who said, "There are three kinds of lies: lies, damn lies, and statistics." Despite my skepticism, there is one statistic that never fails to pleasantly surprise me each time I see it: individuals give over 80% of all money donated to U.S. nonprofits each year. For example, according to Giving USA, in 2003 individuals accounted for 83% of the $241 billion contributed nationwide to the nonprofit sector. That equates to slightly more than $200 billion in individual giving versus, according to the Foundation Center, the $30 billion contributed by approximately 65,000 U.S. foundations. While many believe that foundations like ours power modern philanthropy, my father Elmer felt strongly that individuals hold the key to improving society. In summarizing his personal philosophy about public service, he concluded, "Actually, what material wealth we have is merely ours on loan and impossible to keep." This was but one of the many ways in which he expressed his belief about the importance of service above self. In thinking about it, I'm not sure why the statistics on individual giving would or should be so surprising. They offer a compelling confirmation of the observation by anthropologist Margaret Mead that "…thoughtful, committed citizens can change the world; indeed it's the only thing that ever has." The statistics tell a story of individual Americans who, as evidenced by their giving, collectively agree with both Margaret Mead and my father.
On behalf of the Board of Directors, it is my pleasure to present the Rasmuson Foundation's second annual letter to Alaskans. As I look back at 2004, the Foundation's forty-ninth year, my father's words remind me of the important role that individuals, families, and society play in creating a culture of giving. Because our state is relatively young, one might guess that our culture of giving is less established than that of our peers nationwide. Again, statistics tell the story as Alaskans give 30% less of their annual incomes to nonprofits than do their peers nationwide. Because we understand that individuals power our nation's philanthropy, the Rasmuson Foundation is typically not the first, the largest or the only donor to projects we support. Therefore, we look for positive, creative ways to serve as a catalyst to stimulate Alaska's culture of giving by structuring our awards so that individual Alaskans, through financial support of projects important to their communities, realize a return on their social investment. How do individual Alaskan donors get this return? Known as "leverage", or the "multiplier effect", it is the practice of giving a small amount of money with the express purpose of attracting funding from other sources. Typically, the Foundation positions its awards as "challenges" which require organizations and communities to secure relatively significant support from their individual supporters and citizens in order to secure the Foundation's contribution. The result is that the impact of each individual donation or community commitment is "multiplied" when matched by institutional funders. This ultimately strengthens our state's culture of giving and enhances the long-term sustainability of organizations we support.
In 2004, the Foundation continued its strategy of creating opportunities for Alaskans to see a return on their individual giving as we awarded $20,897,000 for 274 grants across the state, and paid out $22,562,526. As mentioned, we employed "challenge" for a majority of our awards. The new $7.7 million Homer Library serves as a good example of a challenge grant in practice. In perhaps the strongest statement about the new library's importance to the community, Homer citizens, with a 62% majority, passed a $2.2 million revenue bond to support 29% of the project's cost. Local fundraising and city contributions added another $2 million or 26%. A coalition of public and private institutional funders provided $950,000 or 12% of the cost. The Rasmuson Foundation awarded $1.2 million (15% of the project) contingent upon Homer committing to obtaining the balance through its fundraising efforts, including additional applications to private funders who, at the time of our award, were considering another $1.1 million (about 13%) in awards. As you can see, each dollar invested attracted additional investment, multiplying that dollar's impact.
We used this same challenge approach with Tagiugmiullu Nunamiullu Development Corporation in Barrow for construction of much needed senior housing in 5 North Slope communities; the City of Palmer (citizens there passed a general obligation bond for 50% of the project's cost) for a new indoor ice rink facility; Iliuliuk Family and Health Service in Unalaska for a health clinic renovation and expansion; Senior Citizens of Kodiak for a facility renovation; and for construction of health clinics in Deering, Kobuk and the Native Village of Minto. We partnered with the Alaska Community Foundation and the Municipality of Anchorage to stimulate individual support for our park system through a lead gift to the newly established Anchorage Park Foundation. The Alaska Community Foundation is emerging as an excellent partner through which individual Alaskans can work to direct personal giving.
While our awards have historically been made solely to well-managed nonprofit organizations providing unique public services to Alaskans, in 2004 we continued to develop the programs associated with our 10-year, $20 million commitment to the arts and named 17 Alaskan artists from various disciplines as our first Individual Artist Award recipients. We are increasingly developing programs, such as those associated with the Arts & Culture Initiative, to both meet unmet needs and spur innovation. In 2004, we announced the Sabbatical Program to provide health and human service leaders, who typically suffer from high rates of burnout, with up to 6-months of paid leave. For a sector which experiences abnormally high rates of leadership turnover, we believe that this is a first step towards increasing the average tenure of our best executives, who must commit to staying at the organization for a minimum of one year after the sabbatical's completion.
At the same time, we continue to take great pride in awarding small capital grants to organizations such as Cross Road Medical Center in Glennallen for technology; the City of Hooper Bay Police Department for defibrillators; the Juneau Symphony for instruments; the North Pole Rotary Club Foundation for a community skateboard / BMX park; Talkeetna Community Radio for automation and recording equipment; and the City of Unalaska for bilingual children's materials for its library collection. Since 1955, the Foundation has awarded approximately $86 million for over 1,250 projects across the state, in the areas of health and human services, arts and culture, organizational capacity-building, community and economic development, and education.
Our ability to both continue and strengthen our commitment to Alaska relies on well-managed resources. In 2004, our assets grew to approximately $508 million as the final assets from my father's estate were transferred to the Foundation. The main objective of the endowment, which is managed according to a percent of market value (POMV) approach, is to enhance its real value in perpetuity. A POMV approach means that the Foundation is committed to spend no more than a set percent of the annual average market value of its endowment. This set percent, which is slightly more than 5%, is based on a combination of IRS regulation and the expected difference between the total annual return and the rate of inflation. The Foundation continues to diversify its equity-oriented portfolio which produced a 10.45% return last year. Our investment strategy, which balances growth with risk minimization, lays the groundwork for stable, long-term growth consistent with our planned grantmaking activities.
When my father and I chose, through the Foundation, to reinvest our family's material wealth in Alaska, we knew that this commitment alone could never meet our state's growing needs. We understood that the Foundation could help strengthen Alaska's culture of giving by structuring awards in a manner that challenged individuals and communities to collectively give to make a difference. Ask the communities and citizens of Bethel, Haines, Homer, Palmer, and Wrangell about the "multiplier effect". It works. The level of giving by local citizens to projects of community importance is perhaps the strongest indication of commitment that any institutional funder can receive. As we look forward to the Foundation's fiftieth year, we remain committed to strengthening the culture of giving in our state by working in partnership to improve the quality of life for all Alaskans. Over the course of a lifetime, my father came to "appreciate that the "currency of value" is really not money but the impact of a generous spirit." This is really what a culture of giving is all about. It's something that statistics will never be able to fully describe.
Edward B. Rasmuson
March 14, 2005
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