August 20, 2005
By GINNY WRAY
Bulletin Staff Writer
A community foundation is being created with $3.5 million in seed money from The Harvest Foundation and, over time, expected endowments from local families to support non-profit organizations.
The Martinsville Area Community Foundation (MACF) "will help many donors who otherwise could not afford to create private foundations or who do not want to handle the administrative requirements associated with them," said Douglas I. Payne, president of The Harvest Foundation board.
"Most community foundations begin with no money and must spend several years raising funds before donations can be used in a community. By providing a grant of $3.5 million, we provide a strong base for this initiative and allow the foundation to quickly begin contributing to the quality of life here," he added.
The $3.5 million, consisting of six funds, is expected to make grants totaling more than $100,000 a year. It is expected that over time, the foundation will hold and administer dozens of additional endowment funds set up by local families, which will support non-profit organizations, a Harvest release states.
With community foundations, donors endow funds with a minimum of about $10,000 or up to millions of dollars, according to the release. The foundations hold, administer and invest revenues in these funds and make grants from them.
A donor can name the fund and designate how it will be used, such as for scholarships in a particular field of study or for an issue, such as battered women, said Harry Cerino, executive director of The Harvest Foundation. It also can be anonymous and contributed for the general benefit of the community, with the board deciding how it will be used.
For example, Cerino said a high school could set up a scholarship fund for its graduate with the highest grade point average to attend college in Virginia and others could contribute to it, building up the fund over the years.
Also, funds could be designated for the Free Medical Clinic of Martinsville and Henry County or more generally, for health services in the community and the foundation board would decide on actual grants, he said.
That board -- independent of The Harvest Foundation board -- will oversee the new foundation, set its guidelines and policies and decide how to use its assets. Its initial members are Harvest board member Dr. W.D. Prince III; Eliza Severt, a former member of Memorial Hospital's board; and J. Smith Chaney and Gwendolyn Hermes Smith, representing families who had donated to the hospital and whose funds now will be in the community foundation.
The board may decide to increase its membership, Cerino said, adding that they will not be paid.
The Harvest Foundation was created from the proceeds of the sale of Memorial Health Systems to Province Healthcare in 2002. Harvest uses revenues from its investment of approximately $202 million, as of the end of 2004, to support charitable activities in the area, Cerino said.
Cerino explained that along with the hospital sale proceeds, The Harvest Foundation also "inherited" some other assets, including about $3.5 million in restricted funds, such as a mammography fund, cancer fund and Hospice fund that could be used only for projects at the hospital. It is this money that will be used to start the community foundation.
By law, Harvest cannot give money to the hospital because it now is a for-profit institution and Harvest funds only non-profits. So Harvest got approval from the state attorney general and court to lift the restrictions, Cerino said.
"We decided this would be a great vehicle (for a community foundation) since the restrictions were lifted and instead of having it (the new foundation) administered by The Harvest Foundation, it will be administered by a new entity. That will bring additional decision-makers" into philanthropy and bring other charitable assets together as well, he added.
The community foundation is different from The Harvest Foundation in that Harvest's endowment is in place -- from the hospital sale proceeds -- and it is not seeking additional funding, Cerino said. The community foundation will be built on endowments from area residents and families.
"A community foundation not only supports local non-profits but also serves high-worth individuals interested in tax advantages and philanthropy, not necessarily in that order," he said.
"It's a great thing because we have a new vehicle in our community that didn't exist before for individuals to make charitable contributions to in order to pursue their own personal philanthropic interests. In other areas, existing foundations that felt they were operating inefficiently turned their assets over to community foundations. They saved the administrative costs and kept all the advantages," Cerino added.
Martinsville Area Community Foundation has become affiliated with the Foundation for Roanoke Valley Inc. (FRV), which will handle its routine administrative and managerial tasks. That will allow MACF to begin serving local families immediately, make grants effectively and efficiently, and take advantage of the Roanoke organization's experienced staff, practices and procedures, the Harvest release states.
FRV will do due diligence on grant requests, making sure they are eligible for funding, Cerino said. He is not sure when grant approval will begin.
"This eliminates a 'learning curve' for our new foundation and allows it to get to work quickly," Payne added.
FRV was established in 1988, serves families from Franklin County to Rockbridge County, administers more than 150 endowment funds and makes annual grants to hundreds of non-profits.
Also, a local part-time staff member will be hired locally for the foundation. That cost and other start-up costs will be covered by a three-year, $60,000 administrative support grant from The Harvest Foundation.
There are more than 700 community foundations nationwide, the release states.
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