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| The Business Journal of Phoenix - Silver Anniversary Edition THE BIG PICTURE: Foundations rising Nonprofits proliferate to meet increasing social, community needs BY ANGELA GONZALES agonzales@bizjournals.com
Twenty-five years ago, corporations were the biggest donors to nonprofit organizations. But as large corporations moved their headquarters out of Arizona and others merged with out-of-state firms, the corporate giving base dwindled. That's where leaders such as Jerry Bisgrove, Jerry Hirsch and Don Budinger stepped in. They created foundations out of profits from their companies, while others — such as Nina Mason Pulliamand Virginia G. Piper — donated huge trusts upon their deaths.
FOUNDATIONS EMERGE “The corporate component of that gifting volume has now been augmented by the foundations,” says Budinger, who created The Rodel Charitable Foundation of Arizona and two other foundations with his brother after selling their company, Rodel Corp. The goal of the foundation is to create in Arizona one of the finest public education systems in the nation by 2020, Budinger says. In the 1 990s, before establishing the foundations, Budinger says his company, a manufacturer of computer chip-polishing systems, was having a difficult time finding top scientists who were American citizens. The top-notch educated people were coming from Asia and Europe, he says. “We felt the public education system in the U.S. had been declining, so we chose to step in and help,” he says. The Budingers chose Arizona and Delaware to establish the foundations because that is where their company had its major American presence. That foundation was getting established around the same time several others were forming, including Bisgrove's Stardust Foundation and Hirsch's Lodestar Foundation, as well as Pulliam and Piper's trusts. “From a philanthropy standpoint, we are really starting to grow and mature,” says Bisgrove. “The nonprofit world of Phoenix, Ariz., is really growing at a very wonderful pace. The philanthropy community is making huge difference here.”
Bisgrove started Stardust Foundation in 1993 when he moved to Phoenix from New Jersey after selling his transportation company. He had started Stardust Development Inc. two years earlier, which donates 100 percent of its profits to the Stardust Charitable Group, including the Stardust Foundation. “We've written checks for $52 million,” says Bisgrove. “If you added up all your new foundations coming into town in the past five years, it's a phenomenal number, to say nothing about the growing Arizona Community Foundation, which is now over $400 million in assets.” RISING NUMBERS In 1993, there were 436 public and private foundations operating in Arizona. That grew by 96 percent in 2002, when there were 855, according to “Profile of Charitable Foundations in Arizona,” a study published in May 2005 by the Arizona Center for Nonprofit Leadership & Management. The number of foundations reported in 2002 included 634 private foundations with total assets of $2.19 billion, and 221 public foundations with $873.1 million in assets, reveals the report, the most recent information available based on IRS 990 tax forms collected by Arizona State University researchers. Among the foundations contributing to that growth trend is Lodestar. Founded by Hirsch in 1999, Lodestar encourages others to become more philanthropic and calls for nonprofits to collaborate. The organization helped finance a human services campus near Seventh Avenue and Jackson Street in downtown Phoenix, where 10 nonprofit agencies are moving to one central campus in November. “It's a great example of when different groups come together what they can accomplish — what they couldn't have accomplished individually,” says Hirsch. Such collaboration, he says, is something that was not done 25 years ago, as nonprofits struggled on their own.
QUIET GIANT Keeping tabs on the total number of nonprofits operating in the state also was something that wasn't done 25 years ago. While it is known there are about 22,000 nonprofits in the state, it is difficult to determine how many there were 25 years ago, says Robert Ashcraft, director of ASU's Center for Nonprofit Leadership & Management. “There was not a lot of data collected 25 years ago,” says Ashcraft, who also is professor of nonprofit studies in the School of Community Resources and Development at ASU. “I'm not sure it's possible to get your arms around 25 years ago.” But today, it's clear nonprofits are growing at a rapid rate. According to filings with the Arizona Corporation Commission, 2,155 nonprofits were created in Arizona in 2004. That's more than eight nonprofits sprouting up a day last year, says Tim Delaney, founder of the Center for Leadership Ethics and Public Service. “No one really recognizes that a couple of years ago, nonprofits had revenue of more than $10 billion,” says Delaney. “That's tremendous buying power. Because we are invisible, and we live in separate, isolated silos, we have not been able to use our buying power collectively.” That's why Delaney helped create a new Alliance of Arizona Nonprofits, which not only will create huge buying power for nonprofits, but also will serve as a unified lobbying voice at the Arizona Legislature. “No one has been out there watching out for the entire sector as a whole,” he says. Arizona's nonprofit community is diverse in scope and size, says Delaney, drawing comparisons between a Little League organization in Nogales that has no employees to the Translational Genomics Research Institute, which uses state-of-the-art microscopes to look internally at DNA. “We all have a duty to view ourselves as community trustees,” he says. “We've inherited the community from the past, while we are holding it in trust for future generations. We have an obligation to make it better.” In 1980, the Phoenix Rotary 100 recognized the need for a pipeline of trained executives to work in the nonprofit sector. To achieve this, it founded the Center for Nonprofit Leadership & Management's American humanics undergraduate non-profits studies program at ASU. “Twenty-five years ago, it was probably not the exception, but the rule that people who would run nonprofits fell into those positions by accident,” says Ashcraft. “Today, it's much more of an intentional pursuit.” Ashcraft also has seen a stronger notion of “nonprofitness,” in the community. He says this is the realization that nonprofits have emerged as a contributor to the economic, social and cultural fabric of the community. With 1.7 million nonprofits operating in the United States, Ashcraft also points to what he calls “nonprofit velocity,” in which new nonprofits are being created at a rapid rate. CONTEMPORARY PHILANTHROPY Philanthropy also is becoming more ingrained in the social fabric of the community, he says. “Twenty-five years ago, there was no Piper Trust, Pulliam Trust, Baptist Hospital and Health System Legacy Foundation,” says Ashcraft. “Almost overnight, you saw the creation of some of the largest nonprofit foundations in Arizona.” One of the oldest foundations is the Flinn Foundation, formed as a trust in 1965 by Dr. and Mrs. Robert S. Flinn to focus on health care. That endowment now is valued at $180 million, with about $10 million distributed each year, says John Murphy, executive director of the Flinn Foundation. The focus of Flinn's donations shifted exclusively to biosciences in 2001. In 1978, the Arizona Community Foundation was created to pool resources from several philanthropists for the greater good of the community. When Stephen Mittenthal arrived as president and chief executive of the Arizona Community Foundation in 1983, the foundation had about $2.3 million in endowment and 22 funds. “Today, we have close to $450 million and over 800 funds,” says Mittenthal. “We've seen a growth in philanthropy within the Arizona Community Foundation.” The foundation has grown, thanks to the support of charitable funds such as Lodestar, Rodel and Stardust. “All three foundations have an umbilical cord tied to the Arizona Community Foundation. I think we're also seeing more hands-on involvement,” says Mittenthal, pointing to Social Venture Partners, a group of more than 125 individual donors who pool their gifts of at least $5,000 a year. Mittenthal calls this type of giving more contemporary philanthropy. “If you don't have enough money to set up your own individual foundation or fund, you can participate with others in a partnership,” he says. Social Venture Partners requires donors to contribute at least $5,000 a year, while the Arizona Community Foundation requires donors to make a minimum endowment of $25,000. “You're going to see more efforts at promoting pluralism in philanthropy among minority groups,” Mittenthal forecasts. “I think you're going to see some changes in the DNA of Arizona philanthropy.”
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