Approach
David Rahr retired in 2003 after 16 years as the founding President of The Vermont Community Foundation, which he led from its inception to an organization making $6 million in grants annually. Rahr originally wrote this article for the Permanent Fund’s Spring 2003 newsletter.
Several years ago, Rick Davis, a Vermonter I respected highly, told me he wanted to start a foundation. He wanted it to focus on the needs of kids, and he wanted other people to contribute to it. For an array of good reasons, I urged Rick to set up this foundation as a supporting organization attached to the VCF. Why? First, for credibility and impact. Private foundations are usually captives of individuals — and unless that individual has very high visibility and enormous resources, that foundation will have trouble attracting support. In contrast, a foundation linked to a public charity like The Vermont Community Foundation has immediate presence and credibility.
Second, a number of tax advantages come with creating a foundation as a support organization of a public charity. By law, the new foundation’s creators must agree to support the public charity’s purposes. Their foundation is then free-standing; but the “supported” charity keeps its books and elects three of its five trustees, with recommendations from the foundation’s original funders.
Third, there are tremendous cost-efficiencies here. By setting up their foundation as a support organization, people of means can have their own charitable identity, their own tax ID number, whatever name they wish to give the enterprise, and all the rewards of shaping and guiding a philanthropic organization. But they bear none of the carrying charges, the overhead, and the administrative costs — all of which are handled by the public charity. Common estimates are that a person needs from $10 million to $20 million to justify setting up a private foundation. At the VCF, our minimum asset level for creating a support organization is $2 million.
But our compatibility with the Permanent Fund — which Rick Davis set up with co-founders Carl and Judy Ferenbach — goes far beyond these advantages. We like very, very much the way this group does its work. Far from treating grant applicants as supplicants who must approach on bended knee, representatives of the Permanent Fund organize site visits in which they go on the road. They’ll spend a day in one region or community meeting with non-profit organizations and local leaders. The Permanent Fund does not ask, “Why don’t you do things our way?” Instead, they say: “What are your needs? What are you trying to do? Is it sustainable? How can we work with you to make the difference you’re seeking to make?” The Permanent Fund then works with the organizations it chooses to support, and with promising leaders in building long-term, collaborative relationships. After all, it’s the grant seekers who know kids. They are the ones delivering the services. They are the ones who know the realities of trying to put together a mentoring program, or to move the needle on drug abuse in a struggling community.
To me, the Permanent Fund’s approach is an ideal example of good grantmaking. It is respectful, engaged, interactive, and non-intrusive. It is modest in size and nimble enough to test ideas, scout solutions, and change course when outcomes point in some new way. We at The VCF are proud to be associated with the Permanent Fund — and I, personally, believe they are setting an example that many more in the foundation community would be wise to heed.