The Twin Cities was already known as a generous place in 1997, when a retired priest began strong-arming some of the area’s richest residents into signing one of the country’s first giving pledges.
Joe Selvaggio turned first to Ken Dayton, a well-known businessman who, along with his three brothers, had turned Dayton Hudson (now Target Corporation) into a retail powerhouse. Mr. Dayton’s company was among the first to embrace generous corporate giving and join a group now known as the Keystone Club, whose members promised to give 5 percent of pre-tax profits to charity.
Mr. Selvaggio, who had founded and run a charity that helps people escape poverty, wanted Mr. Dayton to become the first member of a new club for individuals—the One Percent Club. Members would agree to donate 1 percent of their net worth or 5 percent of income each year. Mr. Dayton agreed to join and happily offered his Rolodex and agreed to help the irrepressible Mr. Selvaggio corral others.
‘No Big Rich People Stepped Up’
The club signed up 1,000 members, and in its first decade prodded the area’s wealthy to donate an additional $100-million to charity. A group in La Crosse, Wis., copied the concept, and for a time, there was talk of a national One Percent Club franchise.
But then membership growth stalled, Mr. Selvaggio went back to serving the poor, and the club became so quiet that no one bothered to schedule the annual banquet.
At the end of this year, the One Percent Club will merge into the Minneapolis Foundation. Never again will the club press the area’s wealthy to sign a commitment to give more generously. Its existing members will carry on the legacy by advising the Fourth Generation Fund, a giving circle of thirty-something professionals that donates about $33,000 a year.
“The times are different,” says Mr. Selvaggio, who now runs a charity focused on microfinance for the city’s poor. “No big rich people stepped up to the plate like Ken Dayton did.”
The rise and fall of the One Percent Club is just one indication that the generous giving tradition in the Twin Cities may be on the wane. Another sign of trouble comes in The Chronicle’s generosity ranking, which shows a sharp drop in the percentage of discretionary income that Twin Cities residents are giving to charity.
The metropolitan area ranked No. 30 in the percentage of income residents donate to charity, a far cry from earlier rankings, including a Chronicle study of 1997 data that said only two other metropolitan areas (Salt Lake City and Grand Rapids, Mich.) were more generous. In 2008, residents donated to charity 4.2 percent of the money they had left after paying taxes, housing costs, and other necessities, compared with 8.5 percent in 1997.
Sharing Stories and Advice
On the 8th floor of a downtown high-rise here, the nameplate outside an office lists only a set of initials: “J.M.D.” “I’m not advertising anything,” says Judson Dayton, Ken Dayton’s son and the current board chair of the One Percent Club.
Mr. Dayton, a self-employed venture capitalist, gives to a number of local causes—including the Nature Conservancy, the Science Museum of Minnesota, and Outward Bound—and he’s chaired more capital campaigns than he cares to remember. He describes the partnership with the Minneapolis Foundation and the Fourth Generation Fund as a “great fit” at a time when the energy level within the One Percent Club has ebbed. “What I don’t want to lose is the genuine heartfelt work that went into philanthropy from the earlier generation,” Mr. Dayton says. “We’ve got the stories, and we’re willing to share those stories with people and bring them along.”
But the cryptic nameplate on his office door may also hint at why the One Percent Club failed.
Wealthy people became wary that joining the club was the equivalent of “putting a target on your back,” Mr. Selvaggio says.
Rich people ducking for cover is probably just one explanation for why giving rates are dropping. The Minnesota Council on Foundations says that some of the decline might have been caused by the addition of some affluent suburbs to the metropolitan area since the 1997 study was conducted; wealthier people tend to donate a lower percentage of their income.
But the Twin Cities is unquestionably poorer since heirs to the metropolitan area’s great fortunes moved away.
Margaret Cargill, an heir to the Cargill Corporation who spent most of her life in Southern California, has left a fortune estimated at $9-billion to a set of philanthropies. None of its grant programs focus on the Twin Cities area, even though the foundation is based in a suburb of Minneapolis.
“I hate to say it, but five years from now, we’ll probably say the biggest benefit they are to our community is as an employer,” says William M. Sternberg, a vice president the Minneapolis Foundation.
Stock Wealth
From the 1970s through the 1990s, the Twin Cities economy hummed along, creating jobs at a faster rate than the rest of the county. But that came to a halt more than a decade ago. “It’s not that the economy is bad,” says Bruce Flessner, a Minneapolis fundraising consultant. “It’s just no longer in that top tier.”
The Keystone Club, the corporate-giving effort that Ken Dayton helped start, still spurs local companies to donate—they now can give either 2 percent or 5 percent of their pre-tax profits and can count product donations and employee volunteerism in the total. But the club’s growth has stalled. “It’s still a big deal,” Mr. Flessner says, “but it’s not as big a deal as it was 20 years ago.”
The Minneapolis Foundation saw contributions to donor-advised funds plummet during the two great stock-market crashes of the past decade; they’re now running at about $48-million a year, up only slightly from 1998 levels.
“For corporate executives, so much of their wealth is tied up in stock,” Mr. Sternberg says. “If they don’t have gains, they’re less inclined to carve off large pieces of it.”
Donor Complacency
But some say the biggest problem with local giving may simply be a sense of complacency among donors.
“There is a tendency in Minnesota for us to rest on our laurels,” says Brad Brown, executive director at Social Venture Partners Minnesota, a giving circle of about 90 people known for working closely with grantees. “We do have this long history and a lot of folklore about the old families—the Pillsburys, the Daytons—who helped create great art institutions and public spaces. We assume that’s going to go on forever. We haven’t stepped up and said, ‘Who’s going to keep this going?’”
Arts institutions have been among the hardest hit charities in the area.
The Minnesota Orchestra, which had been one of Ken Dayton’s favored charities, is facing a $2.9-million deficit and is working with its musicians to cut costs, citing “unsustainable fiscal practices.”
The Saint Paul Chamber Orchestra has already cut costs by $1.5-million since 2008, but it is considering cutting its musicians back to part-time to close a nearly $1-million deficit.
Still, some signs suggest that the philanthropic impulse remains strong. The Greater Twin Cities United Way raised $89-million in 2008, its best year ever, 22 percent more than it collected in 1997.
GiveMN, an online platform that raises money for charities throughout the state, has garnered $50-million since going live three years ago. That’s far more than similar efforts in other states have produced.
Paying for a ‘Big Vision’
Some local nonprofit institutions have thrived even amid the slowdown. The University of St. Thomas expects to wrap up a $500-million capital campaign on schedule in October.
Steve Hoeppner, the university’s development director, says its expansion into downtown Minneapolis appeals to local entrepreneurs, who make up the vast majority of the university’s big donors.
“People want to be associated with a place that’s willing to be entrepreneurial,” Mr. Hoeppner says. “We have a big vision of how good we want to be.”
For many charities that serve the poor, the recession spelled disaster, but for others it created opportunity.
Project for Pride in Living, the nonprofit Mr. Selvaggio ran for two decades, has acquired three other anti-poverty charities in the past three years.
Sara Garry, the charity’s fundraising director, says it quickly assembled groups made up of staff and board members from the newly acquired organizations to develop strategies to keep their former donors engaged. One big help, she says, has been finding a donor to the old charity who is willing to match gifts from people who had never donated to Project for Pride in Living previously.
“Fundraising is about relationship-building,” Ms. Garry says. “You have to figure out a way to reassure the donors that the things that they loved about the old organization still exist.”
As the One Percent Club looks to merge itself out of existence, its members are themselves planning a final gift to the Fourth Generation Fund.
Members of the giving club met this month to plot their grant-making focus. After settling on a topic, the group meets with experts, researches local charities, invites groups to apply for a grant, and then conducts site visits to help determine winners.
“We really follow the entire philanthropic process,” says Beth McGuire, a manager at Target’s corporate headquarters.
The size of the gift from the One Percent Club isn’t clear yet, says Robyn Schein, a Minneapolis Foundation director who advises Fourth Generation, but she expects it to be large enough to help sustain the giving club’s operations.
“If the One Percent Club is going to pass the torch to us,” Ms. Schein says, “they want to know that we’ll do the work.”
Emily Gipple contributed to this article.
Fundraising Lessons: Minneapolis
• Ask loyal donors to match money from new donors. When Project for Pride in Living, an antipoverty group, absorbed three other charities, it worried about how to maintain donations from those groups. One strategy: Enlist a former big donor to match the money that new supporters contribute to the organization.
• Groom the next generation. Some of Minnesota’s most-generous wealthy donors are making gifts to the Fourth Generation Fund, a group that seeks to stimulate giving by local residents in their 30s. Besides giving money, they have agreed to advise the fledgling donors.
• Run online competitions. Minnesota charities have received $50-million through an online giving platform that raises money for nonprofits across the state. A special Give to the Max day held every November gives people a sense of urgency about the need to make a donation.
