Within the next four months, nonprofit organizations in the Milwaukee area will lose a major source of funding when the Elizabeth A. Brinn Foundation, which works to improve the lives of disadvantaged children in the Milwaukee area, will sunset.
The closure of the Brinn Foundation will begin a cascade of sunsets for several of the most prominent sources of philanthropic foundations that serve southeastern Wisconsin.
By 2015, two more of Milwaukee’s major grant issuing foundations, the Faye McBeath Foundation and the Fleck Foundation, will sunset.
The loss of the Brinn, McBeath and Fleck foundations will mean that more than $8 million in annual grant contributions will no longer be available for area nonprofits.
Fast forward another five years, and the area faces the possibility of the Helen Bader Foundation, which contributes an average of $11.2 million annually, closing its doors.
Then in 2026, an additional $4 million annually will be lost when the Jane Bradley Pettit Foundation sunsets.
Collectively, the foundations due to sunset have supported a variety of causes and missions throughout the Milwaukee community and across the state.
“It is going to be a huge blow to the community,” said Deborah Fugenschuh, president of the Donors Forum of Wisconsin. “If you add up their grants over the last two years, it comes to something like $20 million that will no longer be in the community. That’s not to say that others won’t be created, but the community will definitely miss them.”
While sunset dates are not unusual, according to Fugenschuh and others in the nonprofit community, the losses will be felt on a deeper level beyond the financial aspect.
“These foundations certainly have an impact on our nonprofit sector,” said Patricia Wyzbinski, executive director of Milwaukee-based BoardStar Inc. and the Milwaukee-based Nonprofit Management Fund. “They are extremely engaged in this community, not just with financial resources but with time and wisdom as well.”
The board members and the president of the Brinn Foundation are extremely involved with not only the organizations that the foundation routinely contributes grant money to, but others in the Milwaukee community.
“We support (our) mission by, of course, grants but also by sitting on the board of directors of many of the organizations we support,” said Richard Wiederhold, president of the Brinn Foundation. “We see it as a positive. A constant site visit, but also because we can bring a business sense to their mission that isn’t always there.”
Other foundations, including the Faye McBeath Foundation and the Helen Bader Foundation, have used funds to create organizations such as the Nonprofit Management Fund and the Helen Bader Institute for Nonprofit Management at the University of Wisconsin-Milwaukee, which strive to improve the leadership and effectiveness of nonprofit organizations.
“Foundations like these play an even greater role in our community, which might not immediately be recognized,” said Julie Whelan Capell, board president of the Milwaukee chapter of the Association of Fundraising Professionals (AFP) and director of planning and development at The Planning Council for Health and Human Services. “Foundations like these can create a bigger agenda than individual donors sometimes can. They can push for things to happen on a broader basis because they are involved with multiple organizations and understand the deeper issues facing a community.”
While it is true that nonprofit organizations in the community receive the majority of their funding resources from individual donors and even governmental agencies, not every individual donor is going to have the same vision that foundations are able to bring due to their proximity to the nonprofit world, Whelan Capell said.
“Foundations are able to do more in terms of publicizing their causes in terms of presenting to the public what the issues facing this community actually are,” Whelan Capell said. “Nonprofit organizations often don’t have the resources, and individual donors may want to stay anonymous. Foundations play a critical role in informing the public about what many of the issues facing this community are.”
In addition, foundations often have a better report-back process, which holds many nonprofit organizations to a standard individual donors cannot, Whelan Capell said.
“The report-back process makes the nonprofit organizations in this community stronger,” she said. “It holds them accountable for the money they receive, and the community benefits from that process. It’s another thing individual donors don’t always do.”
According to Dan Bader, president of the Helen Bader Foundation, his family’s foundation also takes on the responsibility of connecting people within the community or across the state.
“We try to focus on not just grant making,” Bader said. “We try to connect people, get people together to spur ideas before the grants come in.”
The Helen Bader Foundation has organized a statewide speaker series to convene organizations and also has taken on smaller neighborhood projects, such as the development of the Holton Youth Center in Milwaukee, to bring people together.
“We’ve done quite a bit of that over the years,” Bader said. “That’s a role a foundation like ours can take on, even more so than offering financial support in some cases.”
The Helen Bader Foundation has a scheduled sunset date in the year 2020, Bader said. However, the foundation’s board of directors is currently in discussions about considering delaying that sunset, he said.
Meanwhile, the Patrick and Anna Cudahy Fund has decided to pause its giving to coincide with the retirement of its long-time executive director, Judith Borchers.
A statement on the foundation’s website indicates that new grant applications are not being accepted, and a foundation spokesperson indicated the website statement is the only comment the board of directors has at the moment.
The Patrick and Anna M. Cudahy Fund contributed an average of $1.2 million per year. It is not known when the organization will start accepting applications again.
Reasons for the sunsets
A variety of reasons could lead a foundation to choose to set a sunset date, said Chris Didier, wealth manager at Milwaukee-based Robert W. Baird and Co. Inc., and co-author of a company white paper that discusses philanthropic giving.
“There is plenty of research that indicates why it might be a good decision for foundations to spend down their funds in a given period of time,” Didier said.
One reason may be to try to make a larger impact on a specific issue in a shorter amount of time, he said.
“They might want the immediate family to the founder directly involved in day-to-day aspects of the foundation,” he said. “Despite the benefits, the majority of foundations often operate in perpetuity as a default mechanism because the founders didn’t think about the alternatives when the foundation was formed.”
The Brinn Foundation was formed in 1992 as an extension of the original for-profit insurance company, Managed Health Services, which Betty Brinn founded in 1984, said Richard Wiederhold, president of the foundation.
“We had a strategic planning meeting eight or nine years ago to discuss how we were going to replace ourselves,” he said. “Most of us have all been on the board since the beginning just before Betty died.”
The Brinn board decided to move up the sunset of the fund to June 2011 because of the urgent need to get more donations to local nonprofits struggling to survive the Great Recession, Wiederhold said.
“We wanted to be absolutely certain that the money in the foundation would be used exactly how Betty had intended it to be used. We wanted to avoid the ‘mission drift’ phenomenon,” he said. “The recession we had made us realize that more of the organizations we supported were in even greater need. We made the decision to increase our contributions to supplement where other individuals and foundations were cutting back in order to help satisfy the increased need in the community.”
When Faye McBeath started her foundation in 1964 with the funds she inherited from her uncle Lucius Niemen, founder of The Milwaukee Journal, she was very much ahead of her time by decreeing that all money in the foundation would be used by December 2014, Scott Gelzer, executive director of the foundation said.
“When she started the foundation, she clearly indicated her goals. She developed a formula that indicated we were to spend a specific amount of the principal and all of the interest,” Gelzer said. “Unlike most foundations, we never reinvested a portion of the interest in our own endowment. She had a very strategic plan, and we’ve stuck to it.”
The Faye McBeath Foundation, like the Brinn Foundation, supports education initiatives throughout the city of Milwaukee, but also supports health education initiatives and community civic projects, Gelzer said.
The Helen Bader Foundation was formed in 1991 to honor the life of Helen Bader, a Milwaukee social worker and former co-founder of the Aldrich Chemical Co. After her death, the foundation was set up to carry out her wish of helping people in need and was to be in existence for 30 years, according to her son, Dan Bader.
“The idea of setting the date was to be sure that the immediate generation was still directly involved in the organization,” Bader said.
After selling his company, Fleck Controls, Andy Fleckenstein formed the Fleck Foundation in 1996 with the intent of supporting people who are dedicated to improving the city of Milwaukee.
Fleckenstein said the foundation has been supported by initial funds from the sale price of the company, but also by his personal funds. The organization’s main goal is to support the education of children in the city of Milwaukee through brick and mortar projects and scholarships and secondly to help people recovering from drug and alcohol addiction with transitional living opportunities.
The funds of the foundation are to be spent during Fleckenstein’s lifetime.
“I want to be involved in the process,” Fleckenstein said. “But the board also decided three or four years ago that there is no reason to carry the foundation on perpetually when education in the city of Milwaukee is in need of help immediately. When you are losing the war, you put everything on the line and hope for the best.”
