Charity's Middleman in Middlebury

In his Gettysburg Address of 1863, Abraham Lincoln eloquently expressed the hope “that government of the people, by the people, for the people, shall not perish from the earth.” During the 1991 recession, former Vermont Governor Richard Snelling told the legislature that a government “for the people” isn’t enough — the people need to be for the people, too. “The ultimate humanity we seek is not the task of government alone,” Snelling said, “but is the goal of a society in which both public and private efforts must go hand in hand.” With state budget deficits stretching into the hundreds of millions, and deep cuts on the way, his warning is perhaps even more pertinent today than it was 18 years ago.

So the question becomes, how can Vermont effectively encourage private philanthropists to give? Here’s one answer: an organization that educates people about the challenges facing Vermonters and their environment, connects philanthropists to nonprofit organizations, and manages charitable funds created by individuals, families, groups, organizations and institutions.

That’s a fair description of the Vermont Community Foundation [1], a philanthropic organization located in the former Masonic Temple in downtown Middlebury. With a staff of 25, it’s Vermont’s largest foundation in terms of asset size, ranking nationally among the top 10 percent of community foundations for total assets and gifts received. The VCF was founded in 1986; it gave out $12.6 million in grants in 2007, and ended that year with $140 million in invested assets. Local Motion [2] founder Chapin Spencer calls it “Vermont’s secret weapon” and the place “where the horsepower is to create change and community in Vermont.”

Perhaps the easiest way to think of the VCF is as an umbrella organization covering 500 charitable funds dedicated to a wide range of issues, from Western classical music in Chittenden County to global warming and affordable housing. It’s the only community foundation in Vermont; the one source of guidance for Vermont-focused philanthropists who want to learn about local issues and maximize the impact of their giving.

In that way, the VCF repeats the pattern set by the first community foundation, which was founded in Cleveland in 1914 by Frederick H. Goff. Goff was a banker and a lawyer and the president of the Cleveland Trust Company. He had an idea to make philanthropy something more than an individual bequest in somebody’s will, to take that act of charity and combine it with others into a more powerful and permanent endowment for the city. Goff’s brainchild, the Cleveland Foundation [3], allowed community leaders to direct the interest from the trust to “such charitable purposes as will best make for the mental, moral, and physical improvement of the inhabitants of Cleveland.”

Today, there are 700 community foundations in the U.S., managing more than $40 billion in assets. They function on the same principle as the communities they serve: that more can be accomplished together than separately, and that the whole is greater than the sum of its parts.

Such a technocratic conception of community doesn’t appeal particularly to Peter Espenshade, vice president of community philanthropy at the VCF. To him, “community is an emotion you feel.”

Espenshade, 45, joined the VCF in 2007 after working for the Lake Champlain Land Trust [4] for 12 years. In his kind, sonorous and slightly raspy voice, he points out that rural philanthropy has three hallmarks: It’s profoundly local (“You need to know what Isle La Motte is like,” he says); there’s a lot of anonymous giving, because people don’t want to be tagged in their community as overly wealthy; and there’s a “philanthropic divide,” meaning that, while Vermonters are certainly generous, the state doesn’t have the charitable capital of a metropolitan area.

When Espenshade talks about a direct experience of community — for instance, bringing his daughters to Cochran’s Ski Area [5] in Richmond — his eyes gleam, and he nods enthusiastically. Cochran’s, a nonprofit ski area, epitomizes the benefits of a community spirit for Espenshade. It’s a place where his family knows other families, where he feels safe letting his daughters ski unsupervised for a couple of hours, and where people of all income levels can afford to recreate. In 2007, in fact, Cochran’s received a $10,000 Sustainable Communities Grant from one of VCF’s fundholders.

Part of Espenshade’s job involves helping others, including newcomers, get that same feeling of community. Not long ago, a cattle farmer from southern Vermont moved to Wake Robin, a retirement community in Shelburne. The farmer had been active in the sustainable agriculture movement and wanted to donate locally, but he didn’t know anyone in northern Vermont. Espenshade recalls him calling and asking, “What can you tell me about Chittenden County? What about the Visiting Nurses Association?” Espenshade worked with the farmer, met him in person, and got him connected.

Knowledge gathering and transmission is a big part of what the VCF does — and when information isn’t readily available, the organization seeks it out. Another donor called Espenshade to say she was interested in access to post-secondary education in Vermont. She started a fund for that purpose, and the VCF commissioned a study on the topic. Its researchers found that foster kids are at a distinct disadvantage when they reach college age, because they’re no longer wards of the state and have nowhere to go during holiday breaks. So the VCF used the donor’s money to create grants for foster kids going to college. It provides the students with a “portfolio of support services,” Espenshade says.

The VCF’s study got national press and the attention of the Lumina Foundation [6], an Indianapolis-based organization with a mission to increase access to higher education. The Lumina Foundation was so impressed by the research that it provided the VCF with a grant for a similar purpose.

Espenshade makes sure to ask out-of-state donors about their philanthropic motives, because they give him clues to why people see Vermont as a special place. He recently met with a representative from the Surdna Foundation [7], which is based in New York City and makes grants for, among other things, community revitalization and effective citizenry. It gave money to CCTV [8] in Burlington for its Common Good program [9], which provides technical assistance and tools to Vermont nonprofits that want to reach more people. “Vermont,” the representative told Espenshade, “is an incubator.” In other words, Vermont is a small enough state that organizations can experiment with ideas and projects to see if they hold promise for broader applications.

Whether they come from in-state or abroad, assets passing through the VCF to Vermont nonprofits are pooled to maximize the return, and invested in low-risk equities and bonds. Donors can choose socially responsible investments if they wish, but all are set up for long-term gains. “We have perpetuity in mind,” says Faith Brown, executive vice president for finance and operations.

Brown is petite and outgoing, with short brown hair and enough energy to go from one meeting to another all day long, yet still appear refreshed and patient. She’ll remain the acting chief executive officer until Stuart Comstock-Gay takes the office in February. He’s currently working on increasing voter participation for a New York-based advocacy organization called Demos.

An important component of the VCF’s overall strategy is “mission investing,” which is defined as investing in funds and companies that don’t cross purposes with an organization’s mission — and in communities where it can serve that mission. The VCF accomplishes the first goal with socially responsible investments and shareholder activism (“proxy voting”), and the second by investing five percent of its total assets in Vermont organizations. Typical Green Mountain investments include community and housing loans, deposits with local banks and credit unions, and venture capital targeted at Vermont businesses. “This is a way to give back,” Brown says, “and it shows people they can come to us because of our knowledge of and connections to Vermont.” She adds that, even in this economy, the VCF’s in-state investments are up 2.6 percent over 2007.

By making prudent investments since its founding, the VCF has attained a reputation for trustworthiness. That’s why Chapin Spencer, founder and executive director of Burlington-based, human-powered-transportation promoter Local Motion, sought out the VCF more than a decade ago, when his nonprofit was just getting started. And that’s why Local Motion asked the VCF to manage its endowment, the Local Motion ACTIVE Fund. “They were the technical experts and hosts,” Spencer says of the VCF. “We never could have been as sophisticated about this without their help, since we’re a small organization.”

The VCF takes a lot of the administrative, financial and accounting burdens from individual nonprofits, freeing them up to focus on their missions. It also acts as a philanthropic advisor and networker for certain nonprofits. For example, VCF staff helped pick board members for the Permanent Fund [10], which was started by Stowe resident Rick Davis to improve the well-being of children and families in Vermont, by seeking out individuals with connections to the fund’s purpose. After operating for 10 years, the Permanent Fund can give some of its knowledge back to the VCF, which can then pass it on to others in the same field.

Brian T. Byrnes, former president and CEO of the VCF, has a name for this cycle of giving, networking and community building: In a message to the VCF’s mailing list last year, he called it “deep philanthropy.” Whether the philanthropy is deep enough to withstand an economic assault remains to be seen. Comstock-Gay, in any event, is optimistic. “Every institution has to assess the tidal wave of this economy,” he says. “I’m not worried about it; I look at it as a great opportunity.”