An Interview with George Kreiss
Tell us briefly about your background. How did you move from the food brokerage business to community foundation work?
Our family moved to the Peoria area in 1963. After spending a few years here, we decided this would be a great place to raise our family. By then we had four children, so we were very please to be able to stay here with Proctor & Gamble. Then in 1974, I went to work for Chris Hoerr & Son where I stayed for two and a half years. In 1977, along with two partners, I started a new food brokerage business, P.F. Sales Inc. We ran the company successfully and sold it in 1989. I stayed on to manage the company here but as in many industries in the early 90s, the food distribution system began to change and the office here closed. I was, in effect, asked to retire but I just wasn’t ready to do that. So when the opportunity came to work for the Community Foundation I was attracted to the idea. I worked from March 1994 until March 1995 as director of development for PACF, and when the executive director, Donna Haerr, retired, I was fortunate enough to take over her job.
There is quite a difference between managing a food brokerage business and a community foundation. What was the transition like?
There’s really not that much difference between for-profit and non-profit when you consider the skills necessary to develop a business. Business is interacting with people; it’s working with budgets and having a quota or sales goal. Not-for-profit translates into a little different terminology, but all the elements are still there. One of the biggest differences I have faced is moving from the setting of a rather small partnership to an executive director reporting to an 18-member board. Though that has been a very pleasant transition, it’s been a transition nonetheless.
How and when was the Peoria Area Community Foundation formed?
The Peoria Chamber of Commerce became aware of the concept of a community foundation in the mid-1980s, and determined that such a foundation could be a real asset for this area. The Peoria Area Community Foundation incorporated and actually began operation in 1988, after a lot of work by some very dedicated people and a sizeable grant from Caterpillar. The Foundation was able to make grants to various organizations almost immediately because of the size of the Caterpillar gift.
What is the purpose of the PACF? What was the driving force behind it and why is it so important for the Peoria area?
Community foundations are all different in terms of the direction they go, but they are basically dedicated to building an endowment that can be used within the geographic area of the foundation to supplement not-for-profit organizations’ other funding sources. A community foundation such as the PACF will be there for non-profit organizations over the long haul.
The PACF has been set up to make a financial impact on an endowed basis, meaning that the funds contributed to the Foundation will be there forever. Only the income on the contributions to PACF is spent, so the larger the endowment the more of an impact the Foundation can have in the community. The Foundation is a public charity that gets every tax advantage the federal government allows. We can help determine whether money accumulated through a donor’s lifetime stays here in this area or is sent to Washington via taxes. We can make a real difference in that area.
What advantages exist to a business by designating the PACF as a channel for its corporate giving?
First of all, a community foundation can accomplish all the goals of a private foundation. Private foundations are set up across the county, by people of some wealth, in order to magnify the results of charitable giving by taking advantage of the breaks allowed by the tax laws. The Peoria Area Community Foundation can do the same thing for local corporations or individuals without the necessity of them going through the expense and headaches of setting up a foundation.
For example, RLI Corp. has the PACF handle its charitable giving. The company determines how much money they want to give each year; they then give that money to the Community Foundation and we decide how that money will best serve community needs. They are very please with the program.
Bank One basically does the same thing. We handle their charitable giving, with some advice from the company. We’re approaching several other companies about doing the same thing. We collect a very small fee for our services.
The PACF is an alternative to a private foundation, and I would encourage anyone thinking about a private foundation to consider a community foundation before doing so.
Why would a local company want PACF to help it decide where to make contributions rather than keeping the whole process inside the company?
There are some safe things that any institution can support, but we feel that our distribution committee is in touch with some of the real, hidden charitable needs in this community. There are some grants that can really make a difference in a smaller setting, in a neighborhood, for example. We do the legwork to find what some of these needs are.
What about a case where a company of individual wants to give a gift to a specific charitable organization? Why shouldn’t they just give it to the charity of their choice rather than contributing to the Foundation?
If there’s a single charitable institution a donor wants to benefit, they ought to give their money to that particular organization. If you’re interested in a field of interest such as literacy, or children’s heath, or assisting the blind – then you should consider the Community Foundation. We can find out where your dollars can be used in the best possible way.
One of the purposes of community foundations, when they were created back in 1914, was to handle funds that had been established for causes that were no longer relevant. An example frequently cited is a fund established to help people who were traveling from the East Coast to St. Louis. At the time the fund was established, it was a fairly hazardous journey and travelers often needed assistance to make the trip. Obviously, that particular need has passed, and the fund is now used for a relevant purpose.
An endowment fund, of course, makes grants from the interest off the money originally contributed by an individual or company. Doesn’t PACF also accommodate a person or organization which wants to contribute a lump sum of money to be immediately distributed?
The Foundation can serve both purposes. For example, we will be working with the Riverfront Development Corporations, dealing with two types of monies. The first will be the endowment funds people give to help maintain Peoria’s riverfront for the future. The second kind of money, and perhaps the largest part initially, will be what we call “pass-through money.” These contributions will be made to help pat for the cost of buildings, landscaping, and other elements of riverfront development. We will be working with the Chamber of Commerce to make sure all contributed money flows through to the proper area.
The Community Foundation can be very flexible in handling donations. I can scarcely imagine a charitable financial arrangement that we couldn’t set up or augment, taking advantage of the public charity aspect of the Foundation.
There are many ways of giving to charity, other than cash gifts. What are the other alternatives?
Cash is by far the largest part of the donations we receive. We can, however, handle closely held stock or art and real estate, although there are some restrictions on how that much be handled and reported. We’ve not done a lot of that, but the alternative exists.
In 1991, the Community Foundation Depository was chartered as a separate corporation. The Depository enables us to receive appreciated, publicly traded stock from a donor, sell the stock, and open an account for that donor. The donor then directs us to make contributions to designated non-profit organizations such as the United Way, American Red Cross, Salvation Army, or a church, college or university. The real advantage to the donor is we are able to give a charitable deduction at full market value, so there is no capital gains tax liability. This is proving to be a very popular took for the Community Foundation as well as a real service to donors.
We are currently managing close to a half-million dollars of Depository money that will be paid out as the donors give us direction.
A number of people have designated the Community Foundation as the beneficiary of life insurance policies; and that’s another way to make a contribution.
We are working on a program through the Acorn Society which encourages younger people to become involved in philanthropy for as little as $50 a month, by leveraging that $50 into a life insurance policy, making the Community Foundation or another non-profit organization the beneficiary. It’s important to understand that you don’t have to be a millionaire to be a philanthropist.
What kinds of funds are available to donors through PACF?
We have four basic types of funds. The fist type is unrestricted, which means our own distribution committee makes the decision on where the money should go. We accept grant applications each year and pay grants, averaging $2,000 in size, to 25-50 non-profit organizations during the course of a year.
We also have field of interest funds that apply to a particular field of interest such as literacy, children’s health, the arts, etc.
We have what we call donor-advised funds in which the donors tell us exactly where they want their money to go, subject to approval of the board of directors of the Community Foundation.
Finally, we have designated funds which are set up to support a specific institution or group of institutions. For example, we manage monies for Crittenton Care and Counseling Center, Youth Farm, Peoria Youth Symphony, and City Beautiful.
There are many charitable organizations soliciting funds from area businesses and individuals on a regular basis. Is PACF in competition with other charities for dollars?
We are not trying to compete with anyone for the charitable dollar; we offer an alternative approach to increasing and diversifying charitable giving.
Let’s contrast the Community Foundation with the United Way. The United Way raises dollars for area non-profit organizations, operating on a sort of checkbook basis, determined by what they will need to fund their non-profit organizations over the year. The Community Foundation, on the other hand, is really a “savings account,” because we handle money that could be granted to any one of these United Way institutions and pay that money to them forever, through the endowment.
A classic example occurred a few weeks ago when a donor died and left the Foundation $250,000 in her will. We will be investing that $250,000, splitting the income among three organizations she designated – Peoria Rescue Mission, Southside Mission, and the Center for the Blind. These three organizations will be receiving $3,000-$6,000 every year, forever. That is an effective use of a donor’s hard-accumulated assets.
What is your relationship with other charitable organizations in town?
It’s changing, and very much for the better. In the future, I see the United Way building an endowment; I see the possibility of the Community Foundation managing and helping raise endowment dollars for the United Way.
In addition to managing funds for Youth Farm, Crittenton, etc., we also consult with non-profit organizations about building an endowment.
I will be meeting with organizations of all types in the next several months, talking with them about tailoring specific programs to the needs of their organizations.
Are there specific areas of need in our community that PACF has targeted for special emphasis?
While other community foundations have done that, we have not – primarily because we don’t have the ability, at this point, to make the strong impact with our granting that we hope to make in the coming years. So we have chosen to respond to programs which we encounter during each six-month granting period.
Aside from strictly raising money and giving grants, the Community Foundation, along with the Tri-County Community Partnership, convened the Homeless Youth Coalition. Forty care providers are meeting once a month to talk about eliminating areas of duplication in the services they provide and filling the gaps to address the problem of child homelessness in our community. We are told there are over 600 kids who don’t have a place to go on any given night. So that’s one of the areas where we have chosen to become involved, not so much on a financial basis, but on a convening basis.
Who receives the grant money from PACF? What is involved in determining where the contributions will go?
This year, we have given grants to the Red Cross for classroom equipment, and money to Habitat for Humanity in Knox County.
We have supported the Junior League’s Christmas in April project and given grant money to the Girl Scouts.
We gave a grant to Kingman School to improve reading skills, to Lakeview Museum for a historical photos exhibit, to Rolling Acres school for a program to assist autistic kids, to Salvation Army for child care, and to Spoon River College for a literacy program.
By encouraging non-profit organizations to apply, we try to find the best use for the dollars we do grant.
We currently have a 15-member distribution committee to make those determinations. We are in the process now of finalizing September grants.
How much money was brought into the Community Foundation in the last fiscal year and how much grant money was expanded?
The granting we’ve done, if you add up all the sources, amounted to $100,000 last year. When I began with the foundation in 1994, the endowment was $1.5 million. As of the close of business, June 1995, we were slightly over $2 million.
We have seen indications that by the end of this year, or in early 1996, we will be at $2.5 million. Our immediate goal is to increase the endowment to $5 million. In the community foundation “industry,” everyone agrees that $5 million if the plateau you need to get to – the critical mass. Then there’s not question about your viability or your future. You can get on with business at hand – making grants and becoming a financial help to the community.
Getting to that critical mass of $5 million is the watchword among the board of directors at PACF. Our president, Ross Canterbury, has established a “Critical Mass Club,” made up of supporters of the Foundation who are committed to helping achieve our $5 million endowment target. The club is closing in on 100 members.
What is the source of PACF operating funds?
When the Foundation began, we were fortunate to have a five-year grant from the Charles Stuart Mott Foundation of Flint, Michigan. They gave us $20,000 a year for the first five years, as a challenge grants; we had to raise $4 for every $1 they gave us. So each year we raised $80,000 in endowment, and they gave us $20,000 in operating expenses. We’ve grown beyond that now and our current operating support of $140,000 a year comes from the Caterpillar Foundation, the Bielfeldt Foundation, the fees the Community Foundation charges for the services it provides, and contributions from interested donors and board members.
How does PACF determine where to invest funds?
We have an Investment Committee made up of people who make their living investing money to decide where and how we invest. Right now we have a ratio of 60 percent in equities and 40 percent in bonds.
How does Peoria rank in philanthropy compared to other areas of the country?
I don’t have a long history in the non-profit arena, but my feeling is that this area is very supportive of charitable organizations. Of course there are never enough charitable dollars to go around, and more and more people are looking to an organization like the Community Foundation for leadership in selecting organizations and causes that are worthy of support.
Have you faced situations where you had to make decisions about funding causes or organizations which might be controversial?
That has not been the case thus far. Our charter says we may contribute to any non-profit, 501(c)(3) organization. We’ve stayed pretty much in the middle of the road, although I’m sure as time goes by we will be faced with more controversial issues.
Are there any particular programs or goals at PACF you want to talk about?
We are excited about our Women’s Fund, which is tailored after similar funds sponsored by community foundations in large cities across the country. PACF’s Women’s Fund is in the process of being organized by a group of influential, committed women who will make a real difference in Central Illinois. They have worked diligently on a mission statement, and I have no doubt that they will be a multi-million dollar organization in a very few years. Their goal is to support women’s causes, advance philanthropy among women, and “remove obstacles for women through leadership, education and targeted funding.”
Another area of involvement is a grant from the PEW foundation of Philadelphia. They are a $6 billion private foundation that has given us $400,000 over three years to be the educational component of a program called Build Peoria. The program began as a way to give unemployable youths some vocational training. Our part of the PEW grant is to help these young people ear a GED and acquire life skills so they know how to apply for a job. The project will continue for another yeah and a half. It is our hope it will be the starting point for significant future civic change.
What is your vision for the future?
We want to be a voice for philanthropy in Central Illinois. It’s my job to talk to estate planners: attorneys, accountants, and stock brokers, so they may assist clients with their charitable giving. We are also here to help non-profit organizations, and to communicate to donors the many ways they can use their charitable dollars to help them. In the coming years the Community Foundation will have a large impact on what goes on charitably within the Tri-County area. IBI
