Give Or Take A Billion: The Culture of Philanthropy

Where are all the billionaires when you need ‘em? Grand Rapids has several, as does Kalamazoo. That's a key difference between philanthropic giving here and there.

By most accounts, Ann Arbor people give generously to the 1,400 or so nonprofits in Washtenaw County, say fundraisers and prominent donors. (By contrast, there are 12,000 nonprofits in Wayne County, which is five times our population)

"Ann Arbor is a high socially-conscious-IQ community," says fundraising consultant Cedric Richner, principal and co-founder of Richner and Richner. "[It] is a terrific place for non-profits. There's lots of appreciation (and) something for everyone from trans-gender issues to University of Michigan. "

Trouble is we lack those billionaires that Grand Rapids and Kalamazoo have in plentitude.

What's the difference between having millionaires or billionaires in your community? Impactful leadership. The billionaires in Grand Rapids are actively shaping their community, from Art Prize to the city's LEED-certified art museum to the development of public transportation. Kalamazoo's ultra-wealthy have promised a free college education to any graduate of a Kalamazoo high school who wants to go on.

Philanthropists in Grand Rapids "are absolutely marvelous at connecting every single resource on their table and making things happen," says Ann Arbor donor Albert Berriz, CEO of McKinley Inc. "We need to work harder to connect business community efforts and (individual) philanthropists in moving our community forward. There's a stigma historically with business in Ann Arbor."

"We have wonderful businesses in Ann Arbor -- like Domino's, Conway Trucking, huge global businesses -- doing great philanthropy. They just don't get the credit that you see in Grand Rapids."

Developing a culture of giving

Nor do businesses set the pace and character of giving. In strongly philanthropic communities, a culture and tradition develops among civic leaders, says Dr. Michael Moody, who studies philanthropy and philanthropists from his Grand Rapids base. He holds the Frey Chair for Family Philanthropy at the Johnson Center for Philanthropy of Grand Valley State University.

"The level of engagement is not tied to net worth. It is not because you become a billionaire. All [income] levels engage in giving. They define their community as a philanthropic community. That's the dynamic that has happened in Grand Rapids and Kalamazoo," Moody says.

"In such an effective vibrant culture of giving, they hold each other to very high standards. It's unique -- a really impactful philanthropic  culture -- and makes people give more than they would otherwise. It's a very collaborative approach."

In Grand Rapids, the primary goal is to be more strategic about giving, Moody explains. The approach gives people a feeling of ownership in the solutions and projects they're supporting.

"It's the same principle as bringing somebody onto your board -- they'll be more generous. Take that approach to a community level. Don't just ask people to write checks, ask them to serve on an ad hoc committee to solve a community problem," Moody suggests.

Ann Arbor has a few people who are very active in their own family foundations; they and others give very generously to the university, of course, Moody says.

The character of local giving

While two Ann Arborites are the offspring of billionaire William Ford, Sr., 86: sister and brother Sheila Hamp and Bill Ford Jr., Forbes Magazine's list of the world's billionaires holds no Ann Arbor residents. Washtenaw County's wealthiest are mere millionaires. And, according to some, lower profile ones at that.

"There's immense wealth in the Detroit area. Detroit area (people are) much flashier about their wealth than Ann Arborites. We are the quintessential 'millionaires next door,' " claims Wendy Lawson, associate vice president of development, grants and government relations for Washtenaw Community College.

Another fundraiser, who wishes to remain anonymous, says: "In Ann Arbor, we're a university community. You might see somebody shuffling down Main Street -- they could be homeless, they could be shortlisted for a Nobel Prize in physics, they could be a tech person who's made a boatload of money and still drives the car they bought in 1999."

Millionaires-next-door or middle class, Ann Arborites of a certain age vote for their favorite causes with their dollar. And that dollar tends to go to higher education. But when the cause is the University of Michigan, there may be crossover with other categories of giving, says Albert Berriz, CEO of McKinley Inc. He is both a fundraiser and a donor.

In Ann Arbor, many dollars donated to the university can be double-counted in the health care column as well, Berriz says. "[U-M President] Mary Sue Coleman has made a fabulous investment in the hospital system that's moved the community forward. Mary Sue's global reach to raise money allowed our community to build world-class hospitals. We don't see it as philanthropy," Berriz points out.

Nationally -- and locally -- religion garners the biggest share of donations, around 40%, followed by education and health care. Social services, the arts, and other causes have to fight it out for the scraps.

Fortunately, there are enough local arts supporters to keep the established nonprofit groups in business. Marianne James, executive director of The Ark, says the music venue earns 70 percent of its $2 million-plus annual operating budget through ticket sales and another big chunk from memberships and special events such as the Ann Arbor Folk Festival.

"The challenge to come is how the fundraising landscape is changing," James says. "What are the next generations going to do to support organizations they see as important?"

To get those important dollar votes, fundraisers must make a strong business case for their mission, says Bob Guenzel, retired Washtenaw County administrator and community volunteer. Among other agencies, he has twice chaired the United Way annual drive and serves on the board of The Ark. "Folks in Washtenaw are tremendously generous, they're forthcoming, but they need to be convinced of not only a humane case but a business case, that what folks are doing will make a difference," he says.

"The Delonis Center raised close to $1 million through private donations. [Its parent] the Shelter Association of Washtenaw County has a great brand. When a nonprofit establishes that brand credibility, it makes a difference to folks in Washtenaw County."

As for how best to groom future donors, Guenzel says, "We don't have many of the big manufacturers and other big companies that are well known in the community. It's part of the switch in the Michigan economy -- smaller businesses and entrepreneurs."

Nonprofits would be making a mistake if they target only the ultra rich, says Gary Dembs, president of the Association of Fundraising Professionals of Greater Detroit. "The giving patterns of wealthier donors are different. A lot of people think it's for tax reasons. That's probably 8th or 9th among reasons. People who make $25,000 or less give a greater percentage of their income than people who make $100,000 or more. Cumulatively the amount is not the same, of course."

The impact of community foundations

Dr. Moody says a good community foundation can smooth the bell curve of donations and help philanthropy continue and grow as people's wealth grows. "The amount of wealth in a community certainly translates, not simply into large gifts, but also to engaging in different ways with nonprofits. There is also small-scale family giving -- and volunteering," he says.

"It's complicated from a statistical point of view -- a U-shaped curve. At the bottom end of the income spectrum, people give a high percent of income and people with high net worth give a percentage -- but the middle class doesn't."

Looking at the income distribution for Ann Arbor in 2009, nearly 19 percent of earners made between $100,000 and $200,000.

A community foundation encourages giving and provides a source of leadership and community problem solving, Moody says. "High, high, high-end givers are going to give on their own but there's a whole bunch of people at the $1 million-to-$10 million segment of net worth. They often find their giving opportunities through the community foundation," he observes.

"An effective community foundation establishes great connections with them so that when they become billionaires, the ultra wealthy, their patterns and habits have already been established."

Dembs points out that individuals make up more than 80-85 percent of all giving, nationwide. That's why agencies cultivate existing donors and work hard to make new "friends."

How to cultivate that support in the next generation of donors-to-be (those who are 20-to-40 years old) is a hot topic among fundraisers.

"For most people, it's not a philanthropy gene you're born with... you're taught around the dinner table, at church or synagogue. It needs to be learned. The younger generation volunteers differently and gives differently but it would be wrong to say we have a crisis," Richner says.

Becca Keating, development manager for the Ann Arbor Film Festival, is a member of the 20-to-40-year-old coterie. She sees her generation looking for the fruits of its earnings. "Especially in the last half-decade, [young] people are more thoughtful about where they're putting their money. We want to make sure things fit to a 'T'", she says.

"Nonprofits have a lot more work to do with the younger generation when it comes to developing a philanthropy culture with them. Everybody is far busier. We have to do more to get on their radar."

Richner doesn't disagree, but he notes, "It's hard to herd donors. The most critical thing in my business is to establish capacity and inclination. You've got to have both. The job of a nonprofit organization is to boldly and audaciously ask for money, to make the strongest case to donors."

Constance Crump is Concentrate's Senior Writer. She's also an Ann Arbor-based writer whose work has appeared in Crain's Detroit Business, The Ann Arbor News, The Detroit Free Press, and Billboard Magazine


All photos by Doug Coombe

Albert Berriz
Cedric Richner
Marianne James
Becca Keating
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