Giving Away Money Can Be A Real Headache
Giving away money is not as easy as it looks.
Ask John H. “Sam” Leuthold, a Spokane businessman whose family earned its fortune in timber.
As a trustee in a family foundation since 1948, Leuthold has given $6.5 million to the YMCA, the Spokane Symphony, Spokane Food Bank, St. George’s School, Girl Scouts and numerous other social, cultural and religious groups.
Like trustees of the Comstock Foundation, Leuthold decided to go out of the foundation business. Unlike them, he’s decided to continue his giving in perpetuity by donating foundation assets, about $5.5 million, to Foundation Northwest, Spokane’s only community foundation.
“That’s the only place we can put it to be sure the capital would be preserved into perpetuity,” Leuthold said.
“The non-profit community has come to depend on this money and we felt it was important that a pool of capital be maintained,” said Allan Toole, a Leuthold trustee and the family’s attorney.
From investment and stock-market planning to accounting, audits and annual reports, the burden on family foundations is time-consuming and expensive.
“It’s a constant little drumbeat of questions and inquiries that need to be answered,” said Toole.
Harriet Fix, the manager of one Spokane family foundation, said she’s received handwritten letters from students in Africa asking for college assistance. For her, managing the family’s Johnston-Fix Foundation is almost a full-time job. With $3 million in assets, the family grants about $150,000 a year to Spokane non-profits.
It’s increasingly important to review requests thoroughly in an era where anyone can call themselves a charity, Toole said.
Both Comstock and Leuthold contributed money to QUESTS, a children’s charity that turned out to be a scam. Its founders are awaiting sentencing.
“There’s a difference between good intentions and charitable activity,” said Peter Jackson, director of Foundation Northwest.
Unlike private foundations, Foundation Northwest is given a special status by the IRS, which makes it more affordable to establish endowments. Investments can be pooled and only one annual report is required.
With assets expected to reach $14 million, Foundation Northwest could distribute $500,000 next year depending on investment return.
It has a staff trained to examine organizations and even help them grow.
“We really look for opportunities to increase the ability of an organization to expand its commitment,” Jackson said.
Foundation Northwest also manages 120 endowment funds, each with a specific purpose or charitable intent.
Another feature of community foundations is the power to, with court approval, alter the restrictions on an endowment fund. That allows the trustees to address changes and new needs in a community.
One example is the William and Flossy Sanborn Scholarship Fund, which was established in 1983 for a graduating senior of Sprague High School going on to major in English at a state-supported college.
There hasn’t been one for five years.
So Jackson and his staff are in the process of documenting the reasons for that and may file a request in court to expand the pool of eligible scholarship applicants.
“We actually had a discussion about humanities versus liberal arts,” said Jackson. “We decided liberal arts was too broad a category to start with. Our obligation is to find a charitable purpose as close as possible to the donor’s intent.”
Jackson hopes the Leuthold gift will prompt others to look at Foundation Northwest as a way to help the community.
“This consolidation of American business hurts places like Spokane because the leaders aren’t here,” said Jackson.
“What would the long-term future of Spokane look like if the $5.5 million were parceled out. What a loss that would be to future generations,” he said.
“One of the things we hope happens is that it gets other people thinking. We all have an opportunity to be Sam Leuthold on whatever scale we can.”
, DataTimes