Foundation helping communities build their own future successes
South Dakotans are finding ways to express their generosity even in a tough economy, according to the South Dakota Community Foundation, which in turn is giving communities a method to strengthen their own future.
"Donations haven't slowed to the degree one might expect," said Noel Hamiel, of Mitchell, whose job with the South Dakota Community Foundation is to encourage giving at the personal and community levels through the development of community savings accounts.
The SDCF manages investments for communities statewide, and its efforts are becoming evident in the Mitchell area. Eleven counties in the immediate region include towns that have savings accounts through the SDCF.
"Last year (2008) was a struggle from the investment end, as far as the return on endowment investments went," said Hamiel, who also is a member of the Legislature, "but it was still a fantastic year. We raised $7.5 million in foundation investments, and 2009 has also been better than expected."
As organizations go, the South Dakota Community Foundation could be one of the state's least publicized successes. The fund was a favorite project of the late Gov. George Mickelson, who lived to see it established on Nov. 11, 1987, with a starting balance of $10 million.
Mickelson died in a 1993 plane crash at the age of 52, but the work of the SDCF was well established by that time.
The SDCF now manages more than $75 million in varied funds and has awarded more than $30 million in grants to communities and nonprofit organizations since it began.
It has become a possibility powerhouse, both for the state's metro centers and rural hamlets.
"The idea of the Community Foundation was to set up a public nonprofit that would help all of South Dakota," Hamiel said. "It has done this by establishing permanent funds. The money from those funds goes back to communities, scholarship programs, and various missions and causes."
As a new member of the state Legislature, one of the first bills he sponsored -- House Bill 1243 -- gives governing bodies within the state the power to create an endowment fund by resolution. It also lets the governing body retain ownership of the fund but hand over custody and management of the money to an endowment such as the South Dakota Community Fund.
Town and county governments aren't necessarily set up to handle such bequests, but the SDCF is.
"It allows local governmental entities to use endowments to manage the gifts they get," said South Dakota Community Fund President Bob Sutton.
Sutton says the United States is poised for one of the most dramatic transfers of wealth in the nation's history, and the Community Foundation is hoping South Dakota can take advantage of it for the benefit of all.
How big will the transfer of wealth be? Consider this: A Boston College study conservatively estimated that $41 trillion will be transferred from the current generation to the next in the coming 50 years. That equates to an average transfer of $389,000 per household.
In that same period, $38 billion to $44 billion will be transferred in South Dakota -- much of that wealth in land transfers -- according to a study on South Dakota by the Nebraska Community Foundation. In South Dakota, that amounts to an annual transfer of $760 million from older to younger generations.
The timing is crucial for South Dakota, said Sutton. Unless something is done, he said, "a lot of that transferred wealth will end up in places like New York and Omaha, rather than South Dakota."
It's a truly unique opportunity for a state whose rural communities are suffering from the loss of jobs and population, he said.
"If the Community Foundation can capture just 5 percent of that money, you're talking $1.9 billion to support charitable organizations in South Dakota," Sutton said.
Added Hamiel: "A lot of people get hung up when we start talking about endowed funds and foundations, but it doesn't have to be that way." They are simply the means, he said, of collecting and managing donations that can used to benefit any community.
Scholarship funds, for instance, can be endowed by people of modest means as well as millionaires. The interest from money in the fund grows annually, and a certain portion of the fund's accrued interest is used to fund the scholarship. The SDCF manages more than 500 different funds of different types established by organizations and individuals.
Among them are:
* Donor-advised funds, through which the donor reserves the right to recommend agencies to be considered for grants.
* Designated funds, which benefit specifically named charitable institutions.
* Agency endowment funds, which are grants given annually by the SDCF board.
* Scholarship funds, which benefit South Dakota students pursuing higher education.
* South Dakota Fund, which benefits a variety of organizations working to meet the state's most pressing needs.
* Community savings accounts, which are created by a specific community or region. The account earnings are awarded at the recommendation of a local board of directors.
* The Fairy Godmother Fund, which improves the health and well-being of South Dakota women.
Hamiel's area of expertise at the SDCF is the community savings account.
There are about 65 communities in South Dakota that have their own foundations. Their money is invested and managed by the SDCF, but the proceeds go back to those individual communities, and they use the money for any projects they want.
Hamiel said that practice upholds the original vision for the SDCF, which started in 1987 when the daughters of former 3M executive William McKnight offered the state a $5 million matching grant in memory of their father. McKnight, originally from White, was chairman of 3M's board of directors from 1949 to 1966. The McKnight Foundation was created in 1953 and has donated millions to private and civic groups throughout the country.
Then-Gov. Mickelson appointed a board that crisscrossed the state and raised about $3 million for the fledgling entity. The state Legislature kicked in another $2 million, and the SDCF was off and running.
"The key thing in my mind is the great work the foundation does throughout the state for organization communities and other good causes," Hamiel said.
These communities are all better places to live today because of the South Dakota Community Foundation, said Hamiel, who added "I really believe in it."
Apparently so do many South Dakotans, Sutton said, because they keep donating to their funds and foundations even in tough times.
"I'm amazed, and I feel positive about the way South Dakotans don't quit on philanthropy when the global economy is not doing well," Sutton said.
With six years on the job as SDCF president, Sutton said he still relies heavily on his former experience in banking. He served as executive vice president of the South Dakota Bankers Association and later as vice president of government and public affairs for CitiBank South Dakota.
Working in the philanthropic world doesn't have the urgency of a legislative session, said Sutton, but it can be more rewarding.
"It's a move away from worrying about shareholder profit to looking toward the things that can affect people and communities," Sutton said.
Towns invest in future
Community saving accounts are a way many South Dakota towns are investing in their futures.
When a community sets up a fund, it's guaranteeing that down the road, the community will have a revenue stream coming back to that city or town for whatever their needs might be, said Hamiel.
Local boards are totally in control of how they use their money in their town's saving's account.
Britton, the Marshall County seat, is a prime example of a town that's making the community fund program work. Before the recent downturn, Britton's fund was close to $1 million.
The Britton Area Foundation donated $100,000 --- $20,000 a year over five years --- to a swimming pool. The town's health care facility also benefited from the fund's largesse.
"When you earn $50,000 a year on a community savings account, you can do a lot of things," Hamiel said.
In Centerville, that town's community foundation committed to launching a daycare center, because residents wanted to keep young people in the community.
"The local foundation made a multi-year financial commitment not only to keep the young families they had but also to hopefully attract new families," Hamiel said.
Last year, Tyndall, Viborg, Montrose, Scotland and Langford all began their own community foundations.
Parkston's savings account now stands at more than $237,000, and the Freeman Community Foundation now has about $311,500.
Gale Walker, CEO of Avera St. Benedict Healthcare Center and a board member of the Parkston Area Foundation, said the community is already enjoying grants from the fund.
"The community savings idea really engages people," Walker said. "It's a gift that will keep giving in perpetuity."
It may be a lofty goal, said Walker, "but we want to grow our account to $1 million. Then we'll really be able to give some money back to the community."
The SDCF also is working to train community volunteers on how to develop savings accounts that can help their communities.
To that end, it has launched a two-year series of sessions throughout the state that will tutor communities on how to successfully operate nonprofit foundations.
The program was developed from a survey that asked nonprofit organizations about their training needs.
Said Sutton: "There are a lot of things in the nonprofit field that are equally important that haven't received a lot of attention over the years, and the SDCF brings together different issues that affect all non-profit organizations in the state."
Area counties and communities with community savings accounts and foundations managed by the SDCF include the following:
* Tyndall Community Foundation, $8,868.96
* Schoenhard Community Foundation, $867,882
* Clarence & Bettye Mason Family Fund, $7,280
* First Fidelity Bank & Platte Area Foundation, $89,522
* Ralph & Frances Mitchell Fund, $35,305
* Wagner Area Foundation, $94,781
* Armour Community Foundation, $97,764
* Corsica Area Foundation, $64,668
* Freeman Community Foundation, $364,030
* Parkston Area Foundation, $287,514.69
* Wessington Springs Area Community Foundation, $133,811
* Greater Lyman Foundation, $125,926
* Canistota Community Foundation, $98,998
* Salem Area Foundation, $27,901
* CorTrust Bank ALM Community Foundation, $103,570
* First Fidelity Bank & Tripp County Community Foundation, $212,408
* Grossenburg Family & Employees Fund, $33,840
* Matousek Family Fund, $35,226