Paving the Way for Philanthropic and Public Policy Partnerships

This year’s Paul Ylvisaker Public Policy Award winner, Linda Reed, president and CEO of the Montana Community Foundation, delivered a formal talk on the relationship of rural philanthropy and public policy. Given that Reed was talking about Montana, where there are only three communities with populations above 50,000, almost anything she might have addressed could be given a rural cast. But everything she talked about could have just as easily been a model or perhaps a prescription for any philanthropic leader or institution interested in addressing public policy issues.

According to Reed, “Montana is a place of high social capital,” a place of “big hearts” where people will go to great distances—in the fourth largest state in the nation, great distances are de rigeur—to help people in need. Nonetheless, Montanans may be generous and caring, but Reed says that they haven’t been all that philanthropic. The state is low on philanthropic assets, usually ranking 49th among the states, with only four foundations possessing assets over $25 million.

Reed and the Montana Community Foundation have been working assiduously to capture wealth in the state for the creation of new endowments. The foundation now has $60 million in assets, 500 funds, and grants of about $2 million a year, a big number for a sparsely populated state and a not-all-that-old community foundation.

Part of the foundation’s success may be attributable to an almost unique public policy in Montana, modeled on Michigan, where the state provides a tax credit for contributions to community foundations. Actually, the program is a tax credit for donations to nonprofit endowments in general. Reed gave a very interesting analysis of why the original version of the law didn’t move in 1995, in part because the proposed credit would have been restricted to community foundations and was perceived by the state’s nonprofit sector, MCF’s “primary customers,” as a threat. Expansion of the bill to allow for tax credits for planned gifts to any nonprofit endowments won the bill—and the community foundation support—though the tax credits are now up for renewal because the law is expiring.

Reed ticked off a number of public policy initiatives that the community foundation helped lead and frequently galvanized, notably an impressive, successful ballot initiative to cap payday lending interest rates at 36 percent (compared to the multiples of that that some lenders charged), saving Montanans millions of dollars. Next on the community foundation’s agenda may be an effort to get K–12 school systems to mandate financial literacy training.

Particularly interesting, however, was a distinctive public policy advocacy proposal Reed offered her audience. She noted that part of the success of the payday lending cap, for which the foundation spent a half million in its advocacy efforts, was its receipt of a million dollar endowment from a regional foundation. Public foundations such as community foundations can lobby, private foundations generally can’t, but private foundations can fund nonprofits (like a community foundation) to pursue work, including lobbying, on issues they are concerned with. Reed proposed that private foundations partner and establish endowments  with community foundations, entrusting them with the advocacy and lobbying agendas that private foundations might not be able to pursue on their own.

Reed’s public policy work at the community foundation occurred against a rural backdrop, but the lessons she shared on her policy advocacy experience and her proposed link-up of private foundations and community foundations are just as applicable to more urban communities and states. If Reed’s proposal makes some foundations uncomfortable, calling for them to get as close to lobbying as they possibly can, that’s exactly what Paul Ylvisaker himself might have proposed—and then enjoyed watching as foundations figure out how to respond.