Cleveland Foundation - 2013 Goff on the National Stage

Goff on the National Stage by Eleanor Woodward Sacks

Goff on the National Stage Eleanor Woodward Sacks

As the Cleveland Foundation reaches its 100th anniversary it is time to take a close look at its founder, Frederick Harris Goff. The foundation itself and its impact in Cleveland constitute a living memorial to a remarkable man and the enduring power of an idea. The idea has made a similar impact in communities across the nation and around the world. Fred Goff—all who knew him called him Fred—thought big and would no doubt be pleased. It was what he planned and worked hard to achieve.

Fred Goff is characterized in the literature as the “local lawyer and banker” who developed the first community foundation, an organization designed to gather the gifts of many into one community philanthropy fund, in order to meet local needs. The Cleveland Foundation was formed just one year after the Rockefeller Foundation. It also followed closely on the 1913 formation of the Federation for Charity and Philanthropy, Cleveland’s other great innovation in philanthropy and the model for the modern United Way. Goff’s focus was both local and national. First, he wanted to build a foundation in Cleveland that could replicate, both in size and impact, what the Rockefeller Foundation was doing to address the needs of mankind in the United States and around the world. Second, convinced of the concept’s utility, he also wanted to spread his idea across the nation.

The purposes and structure of a community foundation are generally well known. It would be governed by a board of local citizens responsible for setting priorities and making grants. Furthermore, the board would have the power to alter the terms of the gifts if they could no longer be carried out, either because the cause was no longer relevant or the institution to receive the benefit no longer existed. In this way Goff was able to conquer the so-called “dead hand of the law,” a long-standing problem with permanently endowed charities, which, because the terms of their gifts could not easily be changed without long and involved court proceedings, left millions of dollars meant for charitable uses unavailable for solving the problems of the day.

Calling Fred Goff a “local banker,” while accurate, has led many commentators to underestimate his life and accomplishments. It is easy to think of Goff as a parochial figure. And given the recent economic downturn caused by failures of the banking industry, it is easy to be cynical about banks and bankers, and to think that, as a banker, Goff’s main concern in starting the Cleveland Foundation was to ensure permanent assets under management for his bank. His life tells us otherwise.

One of the first things to know about Goff is that he did not want to be a banker. Coming off the triumph of working with Mayor Tom Johnson to solve the city’s street railway crisis, which made Goff’s name a household word in Cleveland, in mid-1908 he was asked to become president of the Cleveland Trust Company.

This was in the wake of the Panic of 1907, a banking crisis not unlike the one in the last decade, characterized by overextension of credit by the banks and insufficient reserves to weather downturns. Many banks failed. It was only the intervention of John D. Rockefeller and J. P. Morgan, pledging their vast personal wealth to shore up New York banks, that averted an even greater disaster. The Panic was so severe that it led directly to the formation of the Federal Reserve System, a government-led effort to prevent future crises in the money supply.

The Panic had greatly damaged the Cleveland Trust Company’s reputation, even though it was in no risk of failing. The bank also faced other difficulties. Its pioneering work in establishing a branch banking network, which brought full-service banks to the people in local neighborhoods, was straining the existing corporate structure and needed to be revamped. Goff sat on the bank’s board and, as an expert in corporate restructuring, was the natural choice to be the new president. He made it clear to the board at their first meeting that his acceptance of the presidency was only temporary. He saw his service as a short-term rescue mis-

sion, perhaps lasting a year or less. This did not prevent Goff from decisively issuing new policies and procedures at that first meeting, all designed to improve the management of the Cleveland Trust and instill confidence in it as an institution. Goff then developed an innovative marketing campaign, highlighting the reforms, in order to sell the soundness of his bank to a nervous public.

Goff soon changed his mind about being a banker. He had served his individual and corporate clients as a lawyer. After working with Mayor Johnson to solve the streetcar controversy and provide lower fares for riders, Goff saw that, as Cleveland Trust’s president, he had another opportunity to serve the wider public and help better the lives of ordinary people.

Trust banks were at a critical juncture in their development. They were in the process of defining themselves as different from the other types of chartered banks: national, state and savings. The banking reforms and the innovative products and practices that Goff developed at the Cleveland Trust Company got the attention of trust bankers nationally, and soon became the norm. They made Goff one of the acknowledged pioneers of trust banking nationwide.

His rise on the national stage was meteoric. He was first elected to the executive committee of the Trust Bank Section of the American Bankers Association in the fall of 1909. In October 1913, a little more than five years after becoming the head of Cleveland Trust, he was elected president of the Trust Bank Section, the highest honor his fellow bankers could bestow.

While on the executive committee he served as a member of the trust bankers’ special committee reviewing and commenting on the proposed legislation creating the Federal Reserve System. His first national publication was an article that explained the workings and impact of the legislation to his fellow trust bankers.

There was some disagreement among these bankers about whether trust banks should join the Federal Reserve, but Goff was instrumental in leading them in. He also served in 1914 on Mayor Newton Baker’s committee that persuaded the Federal Reserve to locate the Fourth District headquarters in Cleveland. His stature in the banking world no doubt affected the decision.

Goff made the community foundation concept and the role of trust banks in helping to establish community foundations the cornerstone of his presidency of the Trust Bank Section in 1913–14. He believed that banks had a duty to serve their communities, and community foundations provided trust banks with a perfect opportunity to do just that.

Goff was tireless in promoting the concept around the country. His advocacy for community foundations on the national level began even before Cleveland Trust’s board resolution creating the Cleveland Foundation was signed on January 2, 1914, and continued until he died in 1923. He wrote articles and gave speeches to bankers and lawyers around the country. He met with individuals who came to Cleveland to talk with him and visited cities with newly formed community foundations to speak at their annual meetings and to their board members. He followed closely the formation of new community foundations and kept the first official list of community foundations and their dates of formation. His unfailing belief in and promotion of the community foundation concept helped Fred Goff build one local community foundation into a national movement.

Eleanor Woodward Sacks is an author and researcher on community foundations in the United States and around the world. She has worked with community foundations at the local, national and international level as a volunteer, practitioner and consultant. Her current book-length project is Community Foundations in the United States: Their Origins, Growth and Development from 1914 to the Present—A Centennial History.