Venturing Forward.

W.K. Kellogg brokering change

In the face of rapid philanthropic change driven by entrepreneurs and technology, the W.K. Kellogg Foundation has quietly emerged as a champion to strengthen donors, volunteers and nonprofits and to help change the way they do business.

Kellogg-backed ventures range from boosting philanthropic assets for ethnic groups and women to hatching an incubator for startup foundations and a startup kit for small foundations.

Through its philanthropy and volunteerism program, one of four at the $5 billion-asset foundation in Battle Creek, Mich., Kellogg hands out about $12 million a year to strengthen and connect key underserved and emerging philanthropic and nonprofit constituencies.

The philanthropic-sector strategy, which has evolved over several years, is rooted in Kellogg's belief that change depends on taking chances, learning from experience and helping people and groups get access to the resources they need.

"We're an action-tank, not a think-tank," said Tom Reis, a program director in the foundation's philanthropy and volunteerism division.

Action at Kellogg takes the form of initiatives that mix support for mainstream programs such as continuing education in nonprofit management with more innovative efforts to identify, support and connect new donors and risk-taking nonprofits.

Kellogg focuses its philanthropy and volunteerism energy on six groups it believes are critical to philanthropy's future - young people, ethnic groups, women, creators of wealth, social entrepreneurs and corporate social innovators.

Kellogg works to team those groups with one another and with established organizations, build their leadership, equip them internally to be effective organizations and help them develop and manage their philanthropic know-how.

Since 1996, for example, Kellogg has backed a series of projects focusing on blacks, Latinos and Hispanics, Native-Americans and Asian-Americans. Projects it has funded include:

* Two national conferences -- plus a third last month in Detroit - sponsored by the National Center for Black Philanthropy;

* A new national coalition of six Latino funds spearheaded by the Hispanic Fund of New York City;

* A new Coalition for New Philanthropy, a collaborative effort to build ethnic philanthropy in New York City that includes the Hispanic Fund, Asian American Fund, 21st Century Foundation, N.Y. Regional Association of Grantmakers and City University of New York.

Also in the works is $1 million in funding for Women and Philanthropy in Washington, D.C., and the Women's Funding Network in San Francisco, to help local women's funds, corporations and individual women increase their assets and their support of women and girls.

In addition to equipping emerging philanthropic groups to be effective, Kellogg aims to connect them to one another. "Philanthropy can benefit by having these groups talk more together, learn from each other and do more together," Reis said.

Venture philanthropists, he said, have tended to focus on improving education and on equipping the next generation to succeed in the digital economy.

So Kellogg wants to broaden the philanthropic horizon for emerging philanthropists, hooking them up with young people, minorities and women - and helping to bridge some of the cultural gaps that separate groups from one other.

In partnership with 15 other foundations, Kellogg is helping to create the Philanthropy Incubator, which will support emerging philanthropists and connect them with one another and with traditional foundations.

The foundation also has teamed up with the David and Lucile Packard Foundation in Los Altos, Calif., to help the Association for Small Foundations in Bethesda, Md., create a one-stop online shop. To be launched in January 2002, "Foundation in a Box" will feature tools for setting up and running a foundation.

Helping emerging groups better manage and make sense of their philanthropic know-how is a critical challenge, said Reis, who tracks venture philanthropy and e-philanthropy for Kellogg.

"Infrastructure is not just technology," he said. "We need new infrastructure for these audiences."

Kellogg, for example, has given $1 million to Business for Social Responsibility in San Francisco to develop a Web-based knowledge resource focusing on effective practices for businesses that want to be socially responsible.

At its core, Reis said, Kellogg has a "bias for action" that is rooted in making sense of, expanding and sharing knowledge about philanthropic innovation -- and then putting it into practice by helping nonprofits and donors make deals and work together.

Harnessing "Great Society" goals to digital tools, high-tech entrepreneurs are backing a charitable effort to plug residents of government-supported housing into the New Economy.

Former top officials of a philanthropy created by developer Jim Rouse have formed a nonprofit to help wire affordable housing units and connect their residents to Web-based financial services and educational and job-training tools.

One Economy, based in Washington, D.C., is the brainchild of Rey Remsey and Ben Hecht, two former top executives at The Enterprise Foundation in Columbia, Md.

Created by Rouse in 1982, the foundation helps nonprofit and commercial developers trade tax credits to build affordable housing. The pair concluded that affordable housing alone was not enough to help low-income people tap into the jobs and wealth being created by the digital economy.

"We have found that the home is the place of culture and learning where families are strengthened," said Hecht, One Economy's president and chief operating officer, "and we wanted to give them the tools to make that job easier."

One Economy has negotiated a deal with AOL Time Warner and is in talks with other Internet-access and hardware firms to give residents of the 5.5 million affordable housing units in the United States discounted access to computers and the Web.

The group also is working with neighborhood-based nonprofits in Washington, D.C., and Portland, Ore., and plans to expand to other cities, to help residents of affordable housing use technology to build personal wealth.

One Economy also is building The Beehive, a Web site that will give affordable-housing residents access to financial services and feature online learning and job-training tools as well as information on health care and home ownership.

"For someone to be able to truly benefit from access to services that might be online, they need to be able to get them at home," said Cathy Clark, president of the Flatiron Foundation.

Launched in 2000 by Flatiron Partners, a venture-capital firm in New York that focuses on early-stage tech initiatives, the foundation has given One Economy $100,000. Other funders include the Ford Foundation; the family foundation of high-tech investor Avram Miller, a former Intel senior executive; and Wired magazine co-founder Jane Metcalfe.

North Carolina entrepreneurs have combined their business and philanthropic interests by creating a foundation to recycle contaminated property. Owners of polluted real estate can donate sites to the new Cherokee Property Foundation, which will clean and resell the sites.

Donors can deduct the sites' full market value as charitable contributions, and will advise the foundation on contributing the net proceeds from the resale, after cleanup costs and foundation handling fees, to support charitable causes.

The foundation was created by Tom Darden, managing partner of Cherokee Investment Partners, a $250 million private equity fund in Raleigh, N.C., that recycles polluted sites. Cherokee Partners is providing office space and staff for the foundation, which will hire Cherokee Partners' environmental arm to do the cleanup work and will indemnify donors.

The foundation initially will focus on sites in North Carolina but likely will expand.

"We think it could be a national entity ultimately," said Jim Anthony, chief executive officer of Anthony Allenton Commercial Real Estate in Raleigh and Darden's philanthropic partner at the foundation.

Anthony, who will help the foundation identify potential donors and assess the resale prospects of sites, estimated that the market value of contaminated sites in North Carolina alone totals hundreds of millions of dollars -- and billions of dollars throughout the United States.

The ability to deduct the full market value of dirty sites deeded to the foundation offers property owners an incentive to donate sites that otherwise probably would remain abandoned, he said.

In addition to cleaning up and reselling those sites, he said, the foundation will generate new philanthropic dollars and keep projects in the pipeline for Cherokee Partners, which is launching a new fund that could double the size of its current one.

Todd Cohen is editor and publisher of Nonprofitxpress, an online newspaper at www.npxpress.com.