To some, The Baton Rouge Area Foundation’s finances can be confounding. To answer some of the questions about our finances, Currents sat down with John Davies, president and CEO, and Debbie Pickell, chief financial officer. They also took a measure of the accomplishments from last year.
Currents: The start of a new year is a time to measure the year that has passed and what’s to come. What are some of the Foundation’s 2019 accomplishments that fulfill the mission?
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John Davies: Reflecting on previous accomplishments is always challenging for us. We are institutionally focused on project execution and then moving on to the next challenge. Our foundation’s culture does not value individual celebration of community successes.
Having said that, our Civic Leadership work in 2019 resulted in significant community wins.
Such as?
Davies: Our projects were big in scope, and personal too. A grant from the MacArthur Foundation let us expand an existing program to divert people with mental illness from jail. People charged with misdemeanors but who could not make bail, even $100 in bail, would spend up to two months in jail before their case was heard by a judge.
Through our work, an expedited process was put in place so that people charged would appear before a judge within a week. A greater sense of justice has been introduced into the booking and charging function at our jail, which we call Parish Prison. As a result of the MacArthur—funded work, supported by City-Parish funding as well, the daily census at the jail has dropped dramatically, saving the parish significant money. Both projects will move forward at an accelerated pace in 2020, with the opening later this year of a crisis intervention center known as the Bridge Center for Hope.
Any other accomplishments?
Davies: I’m encouraged about two other projects that will also transform how we live in Baton Rouge and give us pride in what we can accomplish together. One is the preservation of the lakes, a project that started only five years ago. The other is a quiet story that you’ll read about more and more. New Schools for Baton Rouge, started by the Foundation but now a stand-alone organization, has recruited the best nonprofit schools in the U.S. to open and grow schools here. In less than five years, schools supported by NSBR will educate more than half the public school students in the parish.
Is it possible that Baton Rouge will have among the top performing public school systems in the country?
Davies: The smart money believes that’s the case. Successful businessmen that include the chairman of Netflix have contributed tens of millions to New Schools. They expect that the model will be so successful that it will be replicated around the country. To our parish’s benefit, superior schools will give every child an opportunity to succeed. We believe more parents will choose to raise their children here.
Education reform. It’s a very long-term project.
Davies: Yes, and that’s the strength of a place-based foundation like ours. We can persist with a project until it gets done. Our work is not limited by two- or four-year political terms.
Charter operators, nonprofit schools now, were a challenge. More than 15 years ago, we failed on our first try but gave it a second try with new ideas. The strategy created by New Schools—that is to identify and recruit the best nonprofit schools, support them and hold them accountable—will produce nonprofit schools that are graded A and B by Louisiana’s rigorous Department of Education.
NSBR and the lakes are among your civic projects. The other part of the Foundation’s work is managing philanthropic dollars. How does that work?
Debbie Pickell: It works much like an investment account for doing good. People open charitable accounts at the foundation. We manage the funds. Our donors ask us to make grants to nonprofits, and we fulfill the intent of our donors. The Foundation charges 1% of the fund’s value to manage the accounts, though the fee is lower for funds that surpass $1 million. The fees cover our costs—accounting, making and evaluating grants, managing investments and meeting federal rules. Most important, we offer what our national competitors cannot: intelligence about local issues and nonprofits to produce the greatest results for our community on behalf of donors.
How much does the Foundation grant each year?
Pickell: Our total grants since 1964, when the Foundation was started, are over $535 million. We are still tallying the final amounts for 2019 grants, but the total should surpass $35 million. Our donors make grants around the world, but about 90% of the total is issued to nonprofits in our region. We raised more than $39 million last year as well, which places us among the larger community foundations in the Southeast.
How does the Foundation measure its operating efficiency? What benchmarks are used in assessing operating efficiency?
Pickell: Assets are our benchmark. We compare our operating budget—our expenses—to 10 community foundations of our asset size, which was $657 million last year. We make the comparison to make sure that we are good stewards of our operating budget. Of community foundations with similar asset bases, our operating budget of $5.4 million was the third lowest of the 10 we surveyed. Our expenses include $1.4 million for staffing civic projects, such as the lakes and justice reform. Most community foundations don’t spend operating fund dollars to conduct civic projects, which we believe solve fundamental problems.
Are there other projects funded by the operating budget?
Pickell: Yes, the Foundation also provides another service, mostly for free. We help nonprofits with strategic plans and fundraising. As an example, last year, our Strategic Consulting staff created a fundraising strategy for Connections for Life, a nonprofit that helps formerly incarcerated women return to society and productive lives. The plan dovetails with our justice reform efforts.
Internal controls within nonprofits have been in the news. How does the Foundation make sure that someone on the inside does not abscond with money?
Pickell: We contracted external auditors to do a deep dive into our internal controls to ensure that nothing like that can happen at the Baton Rouge Area Foundation. We hired LaPorte to assess our internal controls. The assessment is being overseen by our Finance Committee. The Foundation also is transparent with finances. Our independent annual audits are posted on the Foundation website, along with our IRS 990 form.
One more. People in the community wonder why the Foundation doesn’t just, say, pay for the entire lakes project when it has nearly $700 million in assets? Why do you need outside funders?
Davies: The simplest way to answer this question is to note that the term “foundation” is a misnomer for our organization. We are really a donor services company with a think tank and leadership component attached. Most of the assets that we report are either in donor advised funds or they’re restricted assets that respond to the interest of our 800 donors. They can only be used for specific purposes. When we explore projects and ultimately provide our leadership energy to them, we need to make the case to our donor population that they should invest in those discreet projects. Because we get the emotional and intellectual commitment of our donors along with their financial investment, we end up with the human capital necessary to see projects through to a successful conclusion.