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The Cleveland Foundation at Seventy-Five An Evolving Community Resource RICHARD

W.

POGUE


"Were American N ewcomen to do naught else, our work is well done if we succeed in sharing with America a strengthened inspiration to continue the struggle towards a nobler Civilizationthrough wider knowledge and understanding of the hopes, ambitions, and deeds of leaders in the past who have upheld Civilization's material progress. As we look backward, let us look forward. )) -CHARLES PENROSE ( 1886-1958) Senior Vice-President for North America The Newcomen Society for the study of the history of Engineering and Technology (1923-1957) Chairman for North America (1958)

This statement, crystallizing a broad purpose of the Sodety, was first. read at the Newcomen Meeting at New York World's Fair on August 5,1939, when American Newcomen were guests of The British Government.

HActorum Memores simul affectamus Agenda"


This address, dealing with the history of The Cleveland Foundation, was delivered at a "I989 Cleveland Meeting" of The Newcomen Society of the United States held in Cleveland, when Richard W. Pogue was the guest of honor and speaker on June 8th, I989路


"Any group with a realistic vision of a way to enhance some significant aspect of Greater Cleveland can approach the foundation for assistance in realizing its dreams, whether they be of mounting a world premiere opera ...

or land-

banking abandoned lots to establish a midtown industrial park." -RICHARD

W.

POGUE


The Cleveland Foundation at Seventy-Five An Evolving

Community Resource

RICHARD

W.

POGUE

MEMBER OF THE NEWCOMEN

SOCIETY

CHAIRPERSON THE CLEVELAND FOUNDATION CLEVELAND,

THE

NEWCOM

NEW

YORK

EN

SOCIETY

EXTON

OF

OHIO

THE

PRINCETON

UNITED

STATES PORTLAND


Newcomen Publication Number 1326

Copyright, 1989 THE CLEVELAND FOUNDATION

Library of Congress Catalog Card Number 89-61717

Permission to abstract is granted provided proper credit is allowed

The Newcomen Society, as a body

is

not

responsible for

OpinIOns

expressed in the following

pages

First Printing: June 1989

SET UP. PRINTED OF AMERICA UNITED

AND BOUND

FOR THE

STATES

IN THE UNITED

NEWCOMEN

BY PRINCETON

SOCIETY UNIVERSITY

STATES OF THE PRESS


INTRODUCTION OF MR. POGUE IN CLEVELAND, ON JUNE 8TH, DIRECTOR

OF

1989,

BY MR. STEVEN A. MINTER,

THE

CLEVELAND

FOUNDATION

Members of Newcomen and guests:

oorganization can be better than its governing board. Whatever prestige The Cleveland Foundation has attained in the philanthropic field it owes in no small measure to the dedicated, imaginative and, frequently, daring men and women who have served on its Distribution Committee over its seventy-five-year history.

N

Reflecting on what sets nonprofit trusteeship apart from service on a corporate board, Brian O'Connell, president of Independent Sector, has observed: "Perhaps even more important [than financial contributions and community outreach] is the degree to which voluntary organizations look to individual trustees for leadership. Beyond all the essential procedures and participation to ensure accountability, the board of the nonprofit organization has a substantial but rarely defined responsibility for leadership." The present members of our Distribution Committee-the Rev. Elmo A. Bean, James M. Delaney, John J. Dwyer, Henry J. Goodman, Jerry V. Jarrett, Adrienne Lash Jones, E. Bradley Jones, Lindsay J. Morgenthaler, Harvey G. Oppmann and Alfred M. Rankinare leaders all, leaders in business, academia, religion, the arts and volunteerism. Richard W. Pogue is a leader among leaders. It has been a pleasure and a revelation to work with Dick these past ten years, the last four as chairperson of the Foundation's Distribution Committee. The words that come to mind are passion and discipline. It is a potent combination. Like many a transplant to Cleveland, he is passionate in his enthusiasm for the community's assets and passionate in his concern about its deficits. Yet there is always a dispassionate evaluative process, an attempt to master an issue from a factual base. When Dick cares deeply about something-be it his law firm, his family, the public schools, his church, or downtown development-he sets about finding a way to make it work, to make it happen, to make it excel. And he succeeds.

[ 5 ]


Reviewing Dick's professional and civic accomplishments brings to mind a wonderful Hebrew word that figures prominently in the family Passover observance: dayenu. Recurring throughout a long recitation of the wonderful things God did for the Jews, dayenu means "It wouldhave been enough." Born in Cambridge, Massachusetts, Dick received his bachelor's degree from Cornell University and his juris doctor in 1953 from the University of Michigan. After service in the Army's Patents Division, he joined the Cleveland law firm of Jones, Day, Cockley & Reavis in 1957, and in only four years became a partner. He has served as managing partner since February 29, 1984, leading an aggressive expansion program that has taken Jones, Day from 335 lawyers nationwide to almost 1,000 worldwide, making it the second-largest law firm in the United States. Among other professional honors, he has served as chairman of the American Bar Association's antitrust section. Dayenu. For most people, it would have been enough. But in the early sixties, Dick began an equally distinguished career as a volunteer in Greater Cleveland, acting as a sort of "big brother" to fatherless youths from an inner-city settlement house. Although he is now much more likely to be at the head of a volunteer organization than one of its footsoldiers, the personal commitment and the personal touch remain.

Many civic projects have benefited from his formidable talents and energy. A partial list of his current commitments, in addition to his service as our chairperson, includes: president of the 50 Club; chairman of the advisory council of Cleveland Ballet (of which he is a past trustee and chairman); a trustee (and former chairman) of the Greater Cleveland Roundtable; a trustee of the Kulas Foundation, University Hospitals, campaign chairman of the United Way, and, in his constant quest to be a well-rounded person, a trustee of the Rock 'n' Roll Hall of Fame and Museum. Each of these organizations, I am sure, has profited from the integrity and vigor Dick brings to every task he tackles. At The Cleveland Foundation, he has brought us to an unprecedented level of cooperation and collaboration with government and the business community, helping to forge the public-private partnership that has contributed so much to the city's recent progress. On his watch, we made the lead grant-the largest in our history-to an ambitious but untried Scholarship-in-Escrow program to help motivate students in Cleveland's be[ 6 ]


RICHARD W. POGUE (L),

CHAIRPERSON,

DISTRIBUTION

COMMITTEE,

AND STEVEN A.

MINTER, DIRECTOR, THE CLEVELAND FOUNDATION

leaguered public schools. Under his tireless leadership the foundation embarked on a new economic development strategy that is widely acknowledged as a model for other community foundations. To be sure, it took major efforts by many people to achieve these feats, but I can say with certainty that without Dick Pogue they wouldn't be as far along as they are today. Dayenu. It would have been enough. But for Dick Pogue, there is no such thing as enough, and all of us in Greater Cleveland are witnesses. It is a pleasure to introduce to you RICHARD W. POGUE.


Fellow members of Newcomen and guests: Tis

indeed a great honor to be asked to share with such a distinguished audience the story of The Cleveland Foundation, which celebrated its seventy-fifth birthday this past January.

I

The Cleveland Foundation was the world's first community foundation. For seventy-five years it has been a generally quiet but nonetheless potent force for good in Greater Cleveland. Tonight I would like to organize my remarks around five subjectsfirst, a thumbnail sketch of the foundation and its mission; second, a brief "in-house" evaluation of its role; third, mention of a bit of its history; fourth, notation of some of the foundation's recent significant accomplishments; and finally, a few observations about the future.

T he Foundation First, what is The Cleveland Foundation? Technically it is a conglomeration of more than 650 trusts created by various donors over the decades. The trust assets are held by five area banks: Ameritrust, Bank One, Huntington National Bank, National City Bank and Society National Bank. The income from the investment of these assets is distributed in accordance with the intent of the donors. The distribution decisions are made by an eleven-member Distribution Committee, whose members serve without compensation for staggered five-year terms (subject in the case of each individual to a ten-year overall limit). Backing up the work of the Distribution Committee is the finest professional staff I have ever encountered in a nonprofit organization. Steve Minter, the director, is a truly outstanding leader who deeply cares about people and the community and at the same time manages the foundation in an efficient, businesslike manner. He is highly regarded throughout the United States as a leader of community foundation executives. He is supported by Assistant Director Dr. Susan Lajoie and nine other program staff members who are also remarkably fine professionals-dedicated, fair-minded and effective. The quality of the staff overall is, in my opinion, matchless. Much of the technical excellence of the institution is attributable to the special expertise in the tax and trust law fields of our long-time counsel, Malvin E. Bank of Thompson, Hine and Flory. The foundation's assets, while modest in comparison with those of [ 8 ]


the largest private foundations in the United States, are nonetheless impressive. At latest count, the market value of our endowment was in excess of $500 million, making The Cleveland Foundation the second largest community foundation in the country. (The New York Community Trust, a very fine organization with which we have much intellectual commerce, is first, with assets valued at more than $635 million.) And where does the approximately $25 million in income generated each year by our endowment go? Disbursements are made to many grantees in six principal areas of need-education, arts and culture, health care, social welfare, civic improvement and economic development. The Cleveland Foundation is fortunate in that 40 percent of the income it disburses is completely unrestricted as to purpose, another 40 percent is broadly restricted to general fields such as higher education, and only 20 percent is specifically designated by the donor. Thus, as a result of our donors' wishes, The Cleveland Foundation can use the income from assets of about $ roo million for designated community programs, while the income from $400 million, or 80 percent of the total assets, can be used for a combination of unrestricted and only broadly restricted purposes. This configuration allows us great flexibility in pursuing our stated mission: to improve the quality- of life for all citizens of Greater Cleveland. An Internal Assessment Second, let's turn to an in-house assessment of the role of The Cleveland Foundation in a community whose time of greatness effectively peaked shortly after World War II. How has the foundation helped in rebuilding a city which endured a serious economic decline in the I 960s and 197os, but which since 1980 has scored a remarkable comeback that Fortune magazine recently characterized as an "impressive, oddly moving experience"? Please forgive our lack of humility in stating our conviction that The Cleveland Foundation's role has been pivotal in Cleveland's resurgence. Those who live and work in the Cleveland area are extremely fortunate that this great institution is located here, because it serves as a preeminent source of social venture capital. For example, our unwavering support of the Playhouse Square theater restoration project from its humble beginnings, our early leadership of lakefront redevelop-


ment, our dogged collaboration with neighborhood rehabilitation groups, and our recent championship of the unique Scholarship-inEscrow program to help the city's public schools-to name but a few of our many major grant programs over the last two decades-have all contributed to the reemergence of Cleveland from the shadow of economic dislocation and municipal default. I believe that the eleven concerned members of the Distribution Committee and our staff have been fortunate to be able to playa marvelously catalytic role in Cleveland's rebirth, although credit obviously must also be given to our many, many partners-such as the Gund Foundation, BP America and TRW, and various governmental units-with whom we have leveraged funds many times over for these and other revitalization projects. Indeed, The Cleveland Foundation is a total community effort. Clevelanders established it and endowed it. Clevelanders run it. And, most importantly, all Clevelanders benefit from it. Any group with a realistic vision of a way to enhance some significant aspect of Greater Cleveland can approach the foundation for assistance in realizing its dreams, whether they be of, for example, mounting a world premiere opera, converting an old building into independent-living quarters for the disabled, or landbanking abandoned lots to establish a midtown industrial park.

A Bit of History Third, let's look at a bit of history. The responsiveness to pressing community needs such as those which I have just mentioned would, frankly, not have been possible at the start of this century, when charitable trusts often exerted a stranglehold on vast amounts of capital because there was no way to break their outmoded provisions. Frederick Harris Goff, the father of The Cleveland Foundation, was deeply troubled by the fact that so much wealth was uselessly held in the icy grip of irrevocable wills-a phenomenon that came to be characterized as "the dead hand of the past." According to his wife, Fred Goff spoke so incessantly about the unfortunate reign of the dead hand that "it had a depressing effect upon the youngest member of the family, who asked in a frightened tone to be told where it was and what it did." Goffs biography was recited at a Newcomen Society dinner here in [

10 ]


Cleveland back in 195 I, and I will not repeat it this evening. Suffice it to say that his law firm, Kline, Tolles, Goff & Morley (which, incidentally, was a predecessor of my present firm) was a leading corporate firm in Cleveland around the turn of the century, and Goff was regarded as a "super trouble shooter" within that firm. Goff left his law practice in 1908 to serve as president of the Cleveland Trust Company (today known as Ameritrust). As a lawyer and a banker Goff had been the administrator of many large bequests, and in that connection he had observed firsthand how quickly posthumous gifts made to charity could become obsolete or even harmful. The problem was not his clients' lack of sagacity. The problem was the lack of a speedy, sure and convenient way by which the living could override the outmoded provisions of any bequest, no matter how large or small. When Goff pondered the question of how the assets of his own estate could be used to benefit the community which had been so good to him, he found himself coming back to one compelling thought, which he later expressed to Collier's magazine as follows: How fine it would be if a man about to make a will could go to a permanently enduring organization-what Chief Justice Uohn] Marshall called an "artificial immortal being"-and say: "Here is a large sum of money that I shall presently no longer need. I want to leave it to be used for the good of the community, but I have no way of knowing what will be the greatest need of the community fifty years from now, or even ten years from now. Therefore, I place it in your hands, because you will be here, you and your successors, throughout the years, to determine what should be done with this sum to make it most useful for people of each succeeding generation." Not surprisingly, Goff came to the conclusion that the ideal "immortal being" which he sought was his own bank. Couldn't Cleveland Trust administer a trust set up for local charitable purposes as effectively as any other kind of bequest? Couldn't the Board of Directors be the living hand needed to ensure that the community always received the maximum benefit from such an endowment? In the fall of 19 I 3 Goff decided to propose to his fellow bank directors that the bank become the trustee for a single great endowment, created from the union [

II

]


CLEVELAND ATTORNEY

AND BANKER FREDERICK

HARRIS GOFF, WHO INVENTED THE COMMUNITY FOUNDATION CONCEPT IN 1914

of many gifts, that would have the broadest possible charitable purposes but would be limited in geographical scope to serving the residents of the Cleveland area. They would call it a community trust. The income from the trust's combined bequests would be made available for "such charitable purposes as will best make for the mental, moral and physical improvement of the inhabitants of the City of Clevelaad." While donors to the foundation would have the option of designating a more specific use for the income from their bequests, their wishes would continue to be observed "only insofar as the purposes indicated shall seem to the trustee wise and most widely beneficial." With this provision, Goff had finally conquered the dead hand. Once his plan was drafted, Goff sent copies to dozens of people, asking them to comment. One who responded was Livy S. Richard, an editorial writer at the Cleveland Press. Richard suggested that money intended for the use of the community should be controlled by community leaders, rather than the bank. Goff eventually accepted this suggestion and revised his plan to incorporate a new entity with the [

12 ]


power to determine how the foundation's income should be distributed: a "committee to distribute," Goff called it. The five-member committee was to consist of "residents of Cleveland, men or women interested in welfare work, possessing a knowledge of the civic, educational, physical and moral needs of the community." While two members were to be chosen by the directors of Cleveland Trust, Goff provided that a majority would be named by public officials, with the mayor of Cleveland, the presiding judge of the Probate Court of Cuyahoga County and the chief justice of the United States District Court each having one appointment. I would like to note parenthetically that when the Distribution Committee was increased to eleven members in the late sixties, the number of public or quasi-public officials with appointing authority was expanded to five, so as to add to the original three public members the chief justice of the Court of Appeals, Eighth Judicial District of Ohio, and the president of the Board of Trustees of the Federation for Community Planning. The five public authorities now appoint five members of the Distribution Committee, and we colloquially refer to the latter five as the "public members." Another five members are appointed by the trustee banks. The eleventh member of the Distribution Committee is selected by the five so-called "public members." In actual practice, once any of the eleven members is appointed, he or she acts totally independently as a collegial member of the Distribution Committee, without regard to the original source of appointment. The foundation recently amended its governing instruments to require that henceforth any appointments must be acceptable to the Distribution Committee; the purpose of that change is to help ensure that the calibre of the persons appointed will never be compromised and to encourage diversity of background in the members of the committee. Having ensured this measure of public accountability, Goff presented his Resolution and Declaration of Trust Creating the Foundation to the bank Board in late December 19 13. On January 2, 19 14, The Cleveland Foundation was established by a vote of Cleveland Trust's directors. The foundation was barely six weeks old when Goff informed the Cleveland Press that "a great social and economic survey of Cleveland,

[ 13 ]


to uncover the causes of poverty and crime and point out the cure," was to be its first work. With this public announcement, made when the concept of a charitable trust held for the benefit of an entire city was still nothing more than words on paper, Fred Goff revealed his considerable expectations for the role that such a trust could play in the life of its community. As events would have it, The Cleveland Foundation never undertook the comprehensive municipal survey which Goff had envisioned. Once the founder's plans for the new community trust were publicized, the foundation was approached from all quarters with requests that it conduct specific studies of a multitude of social evils. From the menu of problems which were presented, the foundation decided to select, over the course of its first decade in existence, eight topics which it deemed sufficiently weighty to engage the spirited public debate required to prompt reform. Each of these eight independent and largely unrelated surveys was carried out by a team of national experts. All told, they cost more than $200,00o--a princely sum in those days that Goff, his friends and Cleveland Trust itself underwrote with apparent good cheer. Several of the surveys yielded only modest fruit. But the three largest led to much-needed reforms in Cleveland's systems of public education, recreation and the administration of justice. Within ten years of the education survey's completion, more than ninety of its one hundred recommendations were implemented in the schools. The major accomplishment of the recreation survey was the creation of the "Emerald Necklace," the enviable system of greensward and parkways that encircles Cleveland today. The Cleveland Foundation's crime survey, conducted by Harvard Law School Dean Roscoe Pound and a promising young faculty member by the name of Felix Frankfurter, resulted in a complete overhaul of the city's Dickensian law enforcement, justice and penal systems that won praise as far away as England. Interestingly, two of the eight surveys could have changed, dramatically and favorably, the course of Cleveland's economic development, but unfortunately, both came to naught at the time. A study of Cleveland's lakefront aimed at turning it into a major recreational resource in the midwest was proposed by the foundation's first full-time director, Raymond Moley, but it was shelved when he accepted a job as a Political Science professor at Columbia U niversity-a position that later led, incidentally, to his becoming a member of FDR's "brain [ 14 ]


THE CLEVELAND FOUNDATION'S EARLY SURVEY OF PUBLIC EDUCATION RESULTED IN THE TRANSFORMATION

OF THE CITY'S ANTIQUATED SCHOOLS INTO A MODEL SYSTEM

trust." The second was a survey of higher education; its principal recommendation, that Western Reserve College and Case School of Applied Science be merged into a great municipal university to rival those in New York, Boston and Chicago, went unheeded. It would be left to later generations of Cleveland Foundation leaders to undertake the lakefront's redevelopment and to assist in strengthening the finally merged Case Western Reserve University. Nonetheless, the survey decade, which ended in the mid-twenties, was critical in establishing a precedent for the foundation to act as a civic agenda-setter and problem-solver. Fred Goff died in 1923. Bereft of the founder's vision and encouragement, The Cleveland Foundation nearly went under. At the time, the foundation's endowment was generating less than $25,000 annually, and its subsidy from Cleveland Trust, with Goff gone, would soon be limited to $5,000 a year. There was little room in such an austere budget for exhaustive, expensive studies, and the higher education survey, which was completed in the fall of 1924, was the last of the surveys which had been contemplated originally. [ IS ]


So while the concept of a community foundation had been announced with great promise in 1914, in Cleveland the institution itself languished in the late 1920S. Two events saved it. The first was set in motion in late 1930, when the Board of Directors of Cleveland Trust Company approved an amended charter for the foundation with the rather imposing title of the Resolution and Declaration of Trust Creating the Multiple Trusteeship. That document allowed a prospective donor to name as trustee of his or her bequest to the foundation the trust company with which he or she was accustomed to doing business. This development did not change the internal operation of the foundation in any major way, but it did result in a new Trustees Committee composed of the presidents of the participating banks, who assumed the duties of managing the foundation's assets that had previously been Cleveland Trust's alone. The second providential event occurred in 193 I, when the foundation received its largest bequest up to that time. The donor was the late Harry Coulby, a partner in the firm of Pickands Mather & Company, a major supplier of raw materials to the steel industry. Upon his death at age sixty-four, the childless "Czar of the Great Lakes," as he was then known, left $3 million to the foundation, a godsend that skyrocketed its income in 193 I to $250,000. I was amazed to learn that The Cleveland Foundation's endowment did not reach the $lo-million level until 1946, and that it did not exceed the $20-million mark until 1956. But during the last three decades, the foundation's assets have grown steadily. And with this increase in corpus came a change in the foundation's focus toward flexible service to donors. During this period The Cleveland Foundation pioneered in creating several innovative programs for donors that are now industry standards. The Combined Fund was established to encourage small gifts and bequests, which could be administered more inexpensively as a single account. That particular fund now exceeds $23 million-a testament to the widespread appeal of the community foundation concept and the generosity of many non-affluent Clevelanders. And in the seventies, former Distribution Committee Chairman John Sherwin, Sr. invented what is known today as a "supporting or[ 16 ]


DURING THE DEPRESSION,

THE FOUNDATION STAFF LED A MUNICIPAL SLUM-CLEARING

EFFORT THAT SAW THE COUNTRY'S FIRST PUBLIC HOUSING BUILT IN CLEVELAND IN

1937

ganization," when he and his wife Frances Wick Sherwin transformed their family's private foundation into the affiliated Sherwick Fund of The Cleveland Foundation. With assets of more than $ ro million, the Sherwick Fund is the largest of what are now the foundation's seven supporting organizations, each of which is allowed to maintain its own grantmaking identity while taking advantage of the unparalleled services offered by the foundation's thirty-eight-person staff. Some Recent Accomplishments Fourth, let us contemplate a few of the foundation's more recent major accomplishments. For the foundation's first five decades its staff consisted of two persons: a director and a secretary. As more and more of their time was consumed in paperwork generated by the foundation's growing list of annual grantees, the Distribution Committee had to leave to other hands direct action on the city's most pressing problems. (One notable exception was staff leadership of a municipal slum-clearing effort that built the country's first public housing in Cleveland in 1937.) But the [ 17 ]


PLAYHOUSE SQUARE CENTER, BY THE

FOUNDATION'S

A NEW PERFORMING ARTS COMPLEX,

UNWAVERING SUPPORT OF A DECADE-LONG

STORE THREE MAGNIFICENT

WAS MADE POSSIBLE CAMPAIGN TO RE-

OLD THEATERS

turbulent,sixties brought new challenges for Cleveland and the nation. In 196 I the Distribution Committee decided to undertake a demonstration project to strengthen the practice of philanthropy in Cleveland. In conjunction with the Ford Foundation and several local private philanthropies, it created the Greater Cleveland Associated Foundation to conduct research on inner-city problems and to make grants toward the solution of those problems. Chaired by retired Lubrizol Corporation founder Kent H. Smith and staffed by Dr. James A. ("Dolph") Norton and Barbara Haas Rawson, the Associated Foundation sought to remedy the lack of educational, employment and housing opportunities which were fueling unrest in the low-income areas of the city. When Dolph Norton became director of The Cleveland Foundation after the two organizations merged in 1967, less than a year after riots devastated the black neighborhood of Hough, he encouraged the Distribution Committee to continue the work of the Associated Foundation. The Committee did so, and its courage in taking on the most inflammatory problems of the day helped to confirm The Cleveland Foundation as an institution directly involved in civic affairs. [ 18 ]


In the seventies and early eighties the foundation solidified its renewed commitment to community leadership. Under the guidance of my immediate predecessor, TRW President Stanley C. Pace, and the foundation's sixth director, Homer C. Wadsworth, The Cleveland Foundation demonstrated what could be accomplished by providing consistent direction and sustained financial support to a carefully chosen group of important civic ventures. Among them was a $30-million capital campaign to restore three abandoned theaters in downtown Cleveland's once-thriving entertainment district, Playhouse Square. In addition to nurturing the decade-long restoration project with a series of capital and operating grants totalling nearly $3 million, the foundation helped to persuade the city's fledgling ballet, opera and classical theater companies and its modern dance concert promoters to take a chance on locating there. The Playhouse Square theaters have now been transformed into a magnificent performing arts center and a major regional tourist attraction, luring hundreds of thousands of entertainment seekers downtown annually. In 1982, the foundation's Playhouse Square Development Subcommittee, which I chaired, recommended that the Distribution Committee take an extraordinary step. To ensure that the entertainment district's further redevelopment proceed as envisioned, we suggested that the foundation buy a strategically placed property-a run-down officeretail complex adjacent to the theaters which we feared was about to fall into the wrong hands. With its $3. 8-million purchase of the BulkleySelzer buildings, The Cleveland Foundation became one of the first community trusts in the country to invest a portion of its assets in a manner that directly advanced a program objective. This type of sophisticated philanthropic maneuver is referred to as a "program-related investment," or by the acronym "PRI." The investment was a good one-the foundation stabilized the area and spruced up the building, thereby enhancing redevelopment in the area. Five years later we sold it to a responsible buyer at a profit. In the early eighties The Cleveland Foundation undertook another landmark civic venture. It decided to assist Famicos, a housing rehabilitation organization begun by the late Sister Henrietta, with a plan to construct 183 rental apartments in Hough. Because no private developer was eager to invest in one of the most devastated neighborhoods in Cleveland, the foundation lined up the $ 14. I million required from [ 19 ]


twenty-eight separate public and private funders, including the City of Cleveland, various Cleveland banks and the Ford Foundation. The complicated financing package was the masterwork of then-civic affairs program officer Steven A. Minter. That project, known as Lexington Village, was the first market-rate housing to be built in Hough in fifty years. Ground has since been broken for an additional ninety-three units, bringing the total to 276. Shortly after his appointment as the foundation's seventh director in January 1984, Steve Minter initiated the foundation's first formal strategic plan. It allowed for further fine tuning of the organization's role and mission. Now the foundation has a written description of a set of strategic concerns to guide its grantmaking, which permits the Distribution Committee to target financial resources and staff time accordingly. The strategic plan made explicit a commitment to a new program area of particular concern to me-economic development-while at the same time reinforcing the foundation's continuing interest in the traditional program areas of education, health, social services, the arts and civic affairs. Among the priorities that the strategic plan identified as most important were four related to encouraging the city's economic revitalization: (I) helping to improve the competitiveness of the city's manufacturing sector; (2) promoting the development of new small businesses and growth industries; (3) fostering economic opportunities for minorities and women; and (4) providing a supportive environment for economic development. For reasons of time I will cite only one program as an example of those which we funded pursuant to those four priorities: the Center for Regional Economic Issues, or REI, which is now located at Case Western Reserve University's Weatherhead School of Management. The foundation helped to establish REI and kept it alive until it grew to a point where it could effectively provide the public and private sectors with qualitative data and analysis about the region's economy. The REI Center has developed one of the most comprehensive regional economic databases in the nation. That database has been used by a number of vital community projects, including Civic Vision, the City of Cleveland's master development plan; Cleveland Tomorrow's strategic plan; and the evaluation of Cleveland's science and engineering base that led to the creation of Cleveland's new Technology Leadership Council. [ 20 ]


Recently, the Distribution Committee and staff decided that we had to step up dramatically the scale-and, for that matter, the pacing-of the foundation's involvement in certain vital endeavors, which were taking place at a critical time in Cleveland's history. Our community faced many problems-how could we help to prioritize them? After months of thoughtful discussion and deliberation, the Distribution Committee decided to commit up to $ 10 million, over and above normal grantmaking, to two new "Special Initiatives," which were announced in the spring of 1987. This action required a rare request for a principal distribution, which I am pleased to say the trustee banks unanimously granted. The first of the Special Initiatives resulted in the foundation's decision to champion the Cleveland Initiative for Education, a campaign of the Greater Cleveland Roundtable to revitalize the Cleveland Public Schools by means of student scholarship and employment programs. The now well-known "Scholarship-in-Escrow" component of that campaign, proposed by Cleveland School Superintendent Alfred Tutela, is based on the theory that a sense of hopefulness about the future can be engendered in disaffected students by rewarding them with money set aside for college education or post-secondary technical training for each passing grade earned in core academic courses-${0 for an A, $30 for a Band $20 for a C. The foundation's lead grant of $3 million to the unique Cleveland Initiative for Education program has attracted more than $ ro million in additional funding to date, and so far the enthusiastic response of the students, teachers, principals, parents and higher education providers have exceeded our wildest expectations. Still in its formative stages, the foundation's second Special Initiative focuses on rebuilding Cleveland's deteriorating neighborhoods. One component that the foundation has funded is the new Neighborhood Progress, Incorporated (NPI), a coalition of corporate, financial, public and philanthropic funders headed by James Ross, chairman of BP America which is interested in helping community development groups maximize their ability to produce low- and middle-income housing and resuscitate commercial development in their neighborhoods. Last year the Distribution Committee expanded its commitment to projects of scale by announcing a third Special Initiative. To help com[ 2I

]


plete the city's transformation into a regional convention center and tourist destination, the foundation will invest over the next three to five years approximately $ 5 million on the recreational redevelopment of Cleveland's underutilized lakefront. As the funder of a 1976 study of Cleveland's lakefront parks, which the city had unfortunately allowed to fall into disrepair, the foundation helped to pave the way for their takeover by the State of Ohio, which has since expended $40 million to fix them up. Edgewater, Gordon and Wildwood are now the most heavily used parks in the state, with attendance averaging eight million annually. Encouraged by this success, the foundation next commissioned a master redevelopment plan for the critical lake front property adjoining downtown Cleveland. Planning has already resulted in the creation of a new inner lake near Cleveland's Municipal Stadium called North Coast Harbor, which will be home to such future amenities as an aquarium, a maritime center, a hotel and related retail and residential facilities. The thrust of the foundation's third Initiative will be to ensure completion of the master plan, which could result in up to $ I billion in new development. The name "Cleveland" Foundation perhaps belies the fact that the foundation's geographic reach extends beyond the municipal boundaries of the city of Cleveland. The foundation's activities and grants extend throughout greater Cleveland, and last year we attempted to underscore this outreach by establishing a Lake-Geauga Fund within the foundation's assets; the income from that fund is devoted exclusively to community needs in those two sister counties. I leave to my successors the question of whether our name should be changed to The Greater Cleveland Foundation, which would more genuinely reflect the scope of our endeavors.

The Future Fifth, and finally, what about the future? In my mind the potential future contribution of The Cleveland Foundation to this community is tremendous. Fred Goffs original concept took decades to reach meaningful proportions, but today many would agree with Goffs assistant, Ralph A. Hayes, who went on to become the founding director of the New York Community Trust, when he predicted more than six decades ago in a speech to the City Club of Cleveland that the community foundation concept would come to be regarded as this city's most im[ 22 ]


THE CLEVELAND FOUNDATION PLAYED A CATALYTIC ROLE IN THE CREATION OF NORTH COAST HARBOR,

A NEW RECREATIONAL

AMENITY WHICH OPENED TO THE PUBLIC ON

CLEVELAND'S UNDER UTILIZED LAKEFRONT IN

1988

portant contribution to the ideas of the world. Since its establishment in 1914, The Cleveland Foundation has served as a model for some 320 community foundations in the United States, twenty-seven in Canada and twelve in England, and more are being started every year. The concept of a community foundation has proved to be popular, I believe, because it is as simple as it is ingenious. A community foundation is the means by which those with a common commitment to a community's well being can contribute to building a permanent and substantial pool of funds, the income from which is used exclusively for local charitable purposes. Yet, because it is governed by a board of volunteers who have the independence to determine the best use of the income, a community foundation is also highly flexible, able to respond quickly to a community's ever-changing needs. Realizing that there is a new generation of potential philanthropists who may be unfamiliar with the success of the community foundation concept, The Cleveland Foundation has recently stepped up its activities in the area of asset development. We asked a member of the Dis[ 23 ]


tribution Committee to chair a new development effort, appointed a full-time development officer, composed needed documents, and spoke to groups of prospective donors or their lawyers, accountants or financial advisors. Our marketing campaign has been low-key and dignified, but we now recognize that it is essential if The Cleveland Foundation is to retain its ability to respond effectively to the tremendous challenges and diverse opportunities that will face our community in the years ahead. In the process of our development effort, we believe we have educated many Clevelanders about what wonderful creatures community foundations are. As I try to envision the new directions in which The Cleveland Foundation will evolve over the course of the next quarter-century, I am reminded of how far it has come. It took fifty years for the foundation's assets to reach the $20-million mark, during which time it disbursed $20 million in total. Today our assets are twenty-five times that size and are growing steadily, and our grants far exceed $20 million every single year. I am also reminded that the key to the great success and value of the foundation is the fact that its future directions will be determined not by me and my contemporaries but by future Distribution Committees. In the words of our founder, it is they and their successors who "will be here. . . throughout the years, to determine what should be done with this sum to make it most useful for people of each succeeding generation." What a fabulous future the foundation, which it sustains, have in store!

and the Cleveland area

It has been a great privilege to tell you the story of The Cleveland Foundation this evening. We thank and salute The Newcomen Society for affording us this opportunity. THE END

"Actorum Memores simul affectamus Agenda!"

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THE NEWCOMEN SOCIETY OF THE UNITED STATES

I

NAPRIL 1923, the late L. F. Loree (1858-194째) of New York, then dean of American railroad presidents, establisheda group now known as "American Newcomen" and interested in Business History, as distinguishedfrom political history. Its objectives center in the beginnings, growth, development, contributions, and influence of Industry, Transportation, Communication, the Utilities, Mining, Agriculture, Banking, Finance, Economics, Insurance, Education, Invention, and the Law--these and correlated historical fields. In short, the background of thosefactors which have contributed or are contributing to the progress of Mankind. The Newcomen Society of the United States is a nonprofit membership corp,oration chartered in I96I under the Charitable Law of the State of Maine, with headquarters at 412 Newcomen Road, Exton, Pennsylvania 19341, some five miles east of Downingtown, Pennsylvania, and 32 miles west of the City of Philadelphia. Here also is located The Thomas Newcomen Memorial Library and Museum in Steam Technology and Industrial History, a reference collection, including microfilm, open to the public for research and dealing with the subjects to which the Society devotes attention. Meetings are held throughout the United States of America and across Canada at which N ewcomen Addresses are presented by leaders in their respective fields. The approach in most cases has been a life-story of corporate organizations, interpreted through the ambitions, the successesand failures, and the ultimate achievements of those pioneers whose efforts laid the foundations of the particular enterprise. The Society's name perpetuates the life and work of Thomas Newcomen (1663I729), the British pioneer, whose valuable contributions in improvements to the newly invented Steam Engine brought him lastingfame in thefield of the Mechanic Arts. The Newcomen Engines, whose period of use was from 1712 to 1775, paved a way for the Industrial Revolution, Newcomen's inventive genius preceded by more than 50 years the brilliant work in Steam by the worldjamous James Watt. The Newcomen Society of the United States is affiliated with The Newcomen Society for the Study of the History of Engineering and Technology, with offices at The Science Museum, South Kensington, London, S.W. 7, England. The Society is also associated in union with the Royal Society for the Encouragement of Arts, Manufactures and Commerce, whose offices are at 6 John Adam Street, London, W.C. 2, England. Members of American Newcomen, when in Europe, are invited to visit the home of Thomas Newcomen at Dartmouth in South Devonshire, England, and to see the Dartmouth Newcomen Engine working.


"The roads you travel so briskly lead out of dim antiquity, and you study the past chiefly because of its bearing on the living present and its promise for the future. " -LIEUTENANT K.C.M.G.,

GENERAL JAMES G. HARBORD,

D.S.M.,

LL.D.,

U.S. ARMY (RET.)

(I866-I947) Late American Member of Council at London The Newcomen Society for the study of the history of Engineering and Technology


The Cleveland Foundation at Seventy-Five