Gateway rebuilds assets to $6 millionPublished 9:55am Friday, November 20, 2009
By JOHN EBY
Dowagiac Daily News
CASSOPOLIS – Berrien is the only Michigan county with two community foundations, Gateway, which started in Buchanan in 1978, and another in St. Joseph.
Cass County commissioners learned about Gateway Thursday night from Rob Habicht, of Jefferson Township, during a 20-minute presentation.
A community foundation is a partnership of endowed funds established by individuals, organizations and sometimes businesses to improve the quality of life in a particular geographic location.
Michigan is “blessed” in that all 83 counties receive some sort of services from a community foundation.
“As far as I know,” Habicht said, “we’re probably the only state that can say that. There are 650 community foundations in the United States, 68 of them in Michigan. About 65 percent of all community foundations are in Ohio, Illinois, Michigan and Wisconsin. In the Midwest, we’re truly blessed. There are a lot of states that have one community foundation for the entire state.”
Community leaders compose Gateway’s governing board. Dowagiac accountant Diane Skibbe is a member, for example.
“We are a non-profit charitable organization,” Habicht said. “Beyond the trustees, we also have geographic boards. Our chairman in Cass County is John Norton,” former fair association president. “We also have a Buchanan area board and a Niles area board. These are the eyes and ears for me in the communities we serve. I couldn’t do my job without them.”
Gateway makes grants to improve the quality of life, convenes groups around a common goal related to improving those communities and serves as a catalyst for action for underserved needs in the community, which are determined through periodic needs assessments.
Gateway provides services to donors who desire favorable tax and income outcomes in their charitable giving.
“I probably spend 75 percent of my time on the latter,” Habicht said, “helping individual donors with their charitable desires.”
He condenses a lengthy formal mission statement to its essence: “We improve the quality of life in the communities we serve.”
Gateway launched 31 years ago as the Buchanan Area Foundation.
As a Buchanan native, Habicht “knows all the players. Friends of my parents, basically.”
In 1996, when the state decided all counties would have community foundation services, Gateway, with help from the Kellogg Foundation, grew into Niles and Cass County.
Gateway maintains 80 different funds and $6 million in assets. By comparison, Southeast Michigan Community Foundation for the four counties around Detroit has $480 million in assets.
There is a statewide association, the Council of Michigan Foundations and includes corporate, private and family foundations as well as community foundations.
Gateway does not belong to the national Council of Foundations, but receives some services through the state association, one of which is accreditation.
Habicht is “just glad to get back to that level” of $6 million. “We were about $80,000 shy of $8 million two years ago. We lost 40 to 42 percent of our assets in the last market downturn. They’re coming back. We had a very good six months. We made $250,000 in charitable grants in 2008.”
Gateway’s variety of funds includes unrestricted, designated to a particular pet charity, a broader field of interest, such as the arts and 33 scholarship funds serving seven high schools in the two counties, a majority in Niles and Buchanan.
“Scholarships that help our young people seem to be a particular donor interest,” said Habicht, who ran Niles United Way in the 1990s.
“I established an endowment fund I now manage,” he said about agency funds.
Cass County’s community mental health agency is an example of a non-endowed fund.
“It’s funded on an annual basis,” Habicht said, “and we pass-through those dollars for mental health and substance abuse services in Cass County. We spend every penny every year at their request.”
By contrast, an endowed fund maintains the principal while spending only income generated.
An advantage to a donor is that Gateway, while fond of cash and checks, can accept any kind of asset, including stock, a house and vehicles, which the community foundation converts to cash assets and makes them into funds following the donor’s charitable desires.
Donors can receive a tax deduction and a Michigan tax credit for contributions.
“That’s something that isn’t available to other charities – only community foundations, soup kitchens and universities get that designation in Michigan,” Habicht said. “We offer pool investment to lower our fees. We operate as efficiently as we can, so our costs are small,” with only one part-timer besides himself.
Gateway’s funds are permanent, as indicated by the tag line, “For good. For ever.”
“I talk to donors about keeping in mind that when they’re no longer here, and neither am I, so when we write up the agreements, we have to try think about what things are going to be like 50 or 100 years from now because their fund is still going to be here.”
Outside managers oversee funds, including Chemical Bank Trust Department, 1st Source Bank Trust Department, Edward Jones and Keenan and Walters, a firm in Niles which only invests YMCA funds.
“They all agree with and believe in what we do,” Habicht said, “and they refer people to us for our services, so we have a good working arrangement.”
In the last 18 months, every two weeks Habicht seems to answer a call sniffing around about managing its $6 million.
He replies, “Open an office in my community and we’ll talk. That’s usually the end of the conversation.”
Besides making grants and working with donors, “We partner with the tax, legal and financial professionals that they chose to assist them with their planned giving and estate planning. We don’t charge for our services. Our goal is to provide information, which leads to an optimal tax and income outcome for donors. We listen to them talk about what their goals are, then we show them different things they could implement and tell them to do what works best for them. We don’t have any dog in the hunt, so it’s up to them to make the choices.”
An agency fund in Cass County is the Council on Aging based in Cassopolis.
It started in 2000 with a $5,000 gift, which has grown thanks to 187 different contributors of $111,137. The current balance is $129,419.
“This is a nice start for 9-year-old fund,” according to Habicht. “The real impact is their estate gift potential of more than $2 million.
“The (COA) has done itself a favor by establishing an endowment fund that offers a choice to people in the county to support their mission forever. They will have a very substantial fund eventually.”
Habicht told Commissioner Robert Ziliak, R-Niles, “the minimum amount depends on the kind of fund it is. We’re really flexible in certain areas. We will actually open a fund for $1,000, but we won’t grant from it until it reaches $10,000. We will work with a donor and get the agreement done. Over time, we ask them to increase it. When it reaches the $10,000 threshold, we will make it active.
“Scholarships, we ask for $25,000. Ten thousands dollars would generate a scholarship of $500 or less. In today’s money, that isn’t enough to make an impact on the student, so we try to establish those at a higher level.”
Donors determine how individual scholarships operate, he told Commissioner Cathy Goodenough, R-Marcellus, using the Helen and Dale Cropsey Scholarship as an example.
To be eligible, recipients must belong to Volinia Baptist Church. Due to a lack of qualifying seniors in some classes, it is not always given every year, Habicht said.
“Eligibility requirements are up to the donor. Donors can serve on the selection committee, but they cannot control it. We have to have an established committee that awards scholarships through interviews. It’s a lengthy, time-consuming process, but it’s the right way to do it. I don’t have a vote, but I go to almost every interview.”
Students learn of available scholarships through application forms Gateway transmits to the seven schools in January that are due back in March.
“We only have one out of the 33 that is for non-traditional graduating seniors,” he said.