The French-American Charitable Trust (FACT) was set up in 1990 when Chuck Feeney gave a $40 million endowment to encourage his then wife and five children into the philanthropic arena. Several years ago, the trust’s board made the decision to spend down in the US by 2011 (although the French programme will carry on for one more year). As the curtains are drawn on the trust’s work, Caroline Hartnell spoke to the current director, Diane Feeney, about her experiences of running the trust and the decision to spend down.

Was it always your intention that the trust should spend down?

We actually didn’t start out thinking that we were going to spend down. We didn’t think about it very much until about three years into it, and then it took about a five-year timeframe to have the conversations and come to a decision within the family. I always tell people that there has to be an advocate within the family because it’s rare that people start out saying that they want to have this foundation last only 15 or 20 years. I think it’s something you arrive at progressively.

I played the role of advocate – I would bring it up at each board meeting and we would talk about pros and cons and people’s discomfort levels with it, and then finally I pushed everybody and said that to do this well, and in a way that was not disruptive I needed to have some years to prepare for it.

In the last three years I would say there has been almost an obsessiveness about how each of our decisions would affect our spend-down, our impact and our legacy. I did need about five years to do it in the right way, although it was only in the last two or three years that it was really real.

So in the last few years, how did the spend-out decision change the way you looked at things?

The main thing was that we started some new projects to ensure that our grantees would be in good shape after we exited the field. So we started a fundraising assistance project with two-year grants. It was a selective process, we couldn’t fund all of our groups, but the ones we selected got $75,000 over two years to hire consultants and think through their fundraising practices in order to try to take them to the next level of sophistication.

Some people needed to develop a stronger membership base, some needed to develop their online donating function, some worked on getting large donations. Whatever the need, we thought if we gave them money specifically to do this then they would be forced to think about it concretely – generally groups are very busy with all of the work they have to do day-to-day. Not so much after the first year, but certainly at the end of year two, the groups were creating much more sophisticated fundraising systems for themselves. So we feel pretty good that we at have least helped them strengthen that side of their operations, so some of them will have no problem with replacing us.

Do you feel most of them are in good shape to carry on without you?

I would say the majority will be able to carry on without us. It’s been difficult to tell because we’re not operating in a status quo situation. It’s a difficult environment and everybody’s slashing their grantmaking budget so it’s hard to tell. But I would say that the majority of our groups will probably be fine. Everybody’s probably had to cut budgets over the last two or three years anyway, but I feel good about leaving those systems in place.

We’ve also left them with strong internal management and operation systems through our Strengthening Organizations project, and I feel good about that too.

Is that separate from the fundraising project you mentioned?

It is. The fundraising was a brand-new project with new money. Our Strengthening Organizations project has been running for the last eight years. There’s a lot more information about it online but the central part of it is giving our grantees access tp consultants – worth up to $52,000 over 18 months and for 320 hours I think – to help them with a perceived need. It’s mostly internal management operations – budgeting, board practices, strategic planning, any issues that have come up for them. We have about 11 consultants and they work with the organizations over 18 months – there’s a lot of hand-holding and a lot of intensive work with the staff and the board.

I think one of the really special parts of this programme is that often organization need strategic planning help. If a consultant identifies that there are some issues at board level, she can pull in another of her colleagues to work with that organization on board development. So sometimes we’ve had two or three consultants working with each of our grantees in a variety of areas that they needed support with.

So if you finally made the decision to spend down perhaps only five years ago, were you spending through the first 15 years of FACT’s existence at a level to carry on permanently?

No, we didn’t restrict our budget to the accepted 5 per cent. We decided what we wanted to do and then figured out how much that was going to cost us and that’s how much we spent each year. We were very much overspending if we were going to stay in perpetuity. That was a decision that the board made as a whole. So when the time came to make the decision, it was really a question of how much more can we spend over the next X number of years that we have left to create new projects to help our groups, and then we basically used that amount of money to start the new project. It was clear from the beginning that we probably weren’t going to be around in perpetuity because we were overspending.

Having a perpetuity model would have meant cutting back on quite a bit of our programmes. As a small foundation with an endowment of $40 million, we were able to accomplish a lot more than our size would normally allow. Our annual budget including operations was in some years around $4 million.

And what do you see, looking back over the 20 years, as FACT’s principal legacy?

I think our principal legacy is to have taken a small group of organizations – between 30 and 40 – to the next level of effectiveness and operations. I think we’ve helped strengthen all aspects of their internal systems. We’ve also been there advocating on their behalf within the philanthropic community and drawing attention to the strategy of community-based organizing. We started with a small group of organizations with small victories and small budgets, and have ended up with some organizations having $4 million budgets and having tremendous impact, not just locally or even regionally, but at a state level and even some in Washington.

We feel good that we stuck with a small group of organizations and were able to see them gradually progress over a number of years to a point where they are seen as models for other community-based organizations in the US. That’s really our legacy in the end. Of course I don’t take credit for all of their work, because they work with other funders as well, but the consistent multi-year funding that we provided them and the internal strengthening assistance that we offered was really critical.

Is there any particular achievement or victory of one of your groups that you’re personally particularly proud of?

Although I certainly wouldn’t take credit for any of this on our own, some of our groups in Kentucky who have been fighting mountain-top removal in Appalachia are getting to the point where they have been able to convince the Environmental Protection Agency not to give permits because of the environmental impact that this practice has. They have also convinced one of these large operators to look at investing in alternative technology instead. The idea of actually being able to take on big coal was not even a dream 20 years ago, but our groups are slowly making some inroads.

The issue of green jobs is another one that was just a small idea about six or seven years ago, and we funded one of the first organizations that started working on this. They got some money appropriated by Congress to start a pilot project in California to start working out how to create green jobs by retrofitting buildings, and that is now something that of course everyone talks about, including President Obama. I think we recognize that as an issue that has a lot of merit, so we put quite a bit of money into it.

Finally, getting the civil society groups that we fund involved in voter education and registration. This is something that’s allowed under US law but none of the groups had thought of doing it. It’s very much part of what some of our stronger groups do now. They reach out to their members and educate them about various issues, and about upcoming elections. They help people to register to vote if they have not already, then on election day they help people with no transportation get to polling stations. Most of our groups now have a voter engagement strategy that never existed before, and we think that this is a key part of creating a more just society.

Disenfranchised people need to have their voices heard, so our groups need to be looking at this strategy.

Looking back over the 20 years, do you have any regrets?

I don’t have many regrets, because as a very flexible foundation we were able to make changes along the way, so every time we thought we were heading in the wrong direction we were able to get back on track. I think it’s always sad to see something that you’ve worked on for 20 years disappear, and I’ll certainly miss the relationship with our groups, but I don’t have too many other regrets.

That’s good to hear! I see you’ve signed up to Philanthropy’s Promise – which celebrates foundations that make reaching underserved communities their priority – what do you think will be achieved by that?

We thought that if we were able to speak out about how we target our giving towards disadvantaged communities, and show what our groups have achieved, it might encourage other people to look at that as a strategy for giving. Community-based organizing is something that’s quite tangible but sometimes difficult to understand so we figured that if we showed the impact it can have, then maybe others would be interested in taking a look and doing the same kind of funding.

How did you and the family come to the initial decision that you wanted to support community-based organizing?

When I was doing some research I went to a group in Baton Rouge, Louisiana, where uneducated, disadvantaged people were taking on oil refineries. I was really impressed that they had the energy, passion and courage to do this. So I thought to myself this is what we should be funding – organizations that help people get involved and figure out how to speak up and defend their interests. We’d be doing something concrete to help real people take care of the issues that affect them, and in the process educate them about all sorts of things.

I presented this to my family and they agreed; they thought it was a good strategy. They liked the idea that they could see it, almost touch it. Over the years I tried as much as possible to get them to visit the organizations and see the kind of people that our grantmaking was helping. That’s what helped me continue to be passionate about this strategy – for me, after a couple of years, it would be a bit harder to get excited about something less concrete like university funding or arts funding. But seeing real people in action having real victories in their communities is something that really makes you feel good.

What would be the single key message you’d like to give to people considering whether or not to spend down?

It would be that they should have a conversation about it, because they might be surprised what they learn. It forces you to make hard decisions about your objectives and how best to achieve them. It brings an incredible amount of energy, excitement and passion to what you’re doing, and an urgency that you don’t always have when you’re a perpetuity foundation. So have the conversation, think about it in your family, and you might be very surprised at what you discover.

You were spending large amounts of money throughout the life of the trust, so do you think you had that sense of energy and excitement all the way through or did the fact that you had finally decided to spend down heighten it?

I think the energy was heightened by the urgency. We knew that every single decision we made would have an impact because we only had two more years left, and if we funded one organization we couldn’t fund another because that was the end of our money. So it was really challenging and exciting in a lot of ways. Normally you’re not challenged so much in the philanthropic sector, but we had an urgency that felt more energizing.

For more information
http://www.factservices.org

To download Giving More, Making Change: http://www.factservices.org/DLs/FACT_Giving_More_Making_Change.pdf