Banks and Corporate Philanthropy and Regional/National Banks and Banking & Finance and Gifts and Philanthropy

Chase donating gifts it hopes will be noticed

July 23, 2007

Not-for-profits that banked on consistent support from the banker down the street can no longer count on a tip of the top hat, thanks to ever-larger mergers among institutions that have changed the dynamic of their charitable giving.

Hundreds of charitable organizations around Indiana that grew accustomed to gifts from Bank One's foundation now find the odds of getting some cash more akin to picking the winning lottery ticket. The upside: a bigger prize if they win.

JPMorgan Chase & Co., the $1.4-trillion-asset Wall Street institution that assimilated Bank One in 2004, said it has reduced the number of grants its foundation makes in the state to about 100, from 300 under Bank One.

But its overall giving to not-for-profits and civic groups in Indiana remains between $2 million and $3 million. The difference is that Chase is making fewer-but-larger grants. Instead of a couple of thousand bucks a pop, grants now are $10,000 or--starting this year--up to $15,000 each.

And like an investment banker funding a commercial venture, the Chase foundation wants to see outcomes from which it and the community can benefit.

"We're very interested in that. We want success," said Tina Jo Walters, a Louisville-based vice president for the JP Morgan Chase Foundation's Indiana region. "As we've moved to make an impact, these grants have become increasingly larger."

Sure enough, the Near North Community Development Corp. was delighted to get $10,000 from Chase this year, instead of the $2,500 a year or so it used to pick up from Bank One on a fairly regular basis.

"It's quite a bit higher," said Amy Kotzbauer, president of the group that promotes public-private partnerships for residential and commercial development. Still, "they don't give to us annually, anymore, so there are the pros and cons."

Not that Kotzbauer isn't grateful to Chase--cognizant that this is charity, not a government entitlement program. It's just a matter of making adjustments.

One adjustment for groups that got money from Bank One is that they must now make grant requests to the Chase foundation via the Internet.

The bright side is that this method has the potential to speed things along, said Patrick M. Rooney, director of research at the Center on Philanthropy at Indiana University.

Of course, the downside for some organizations is that such a process is far removed from the days such requests were done on a personal, if not idiosyncratic, basis. Organizations whose missions tickled the fancy of the bank CEO's spouse had it made. Then again, that approach was not so good if your organization didn't appeal to the individuals holding the money bags, Rooney noted.

But some not-for-profits would at least like to be able to make the pitch to a human from a bank in their community, found a 2007 study by the National Committee for Responsive Philanthropy and the Rockefeller Foundation.

Mega-mergers in some cases have stripped away access to local bank leaders "who were community leaders in their own right," said the "Impact of Bank Mergers on Charitable Giving" study released last month.

Some of those leaders were community supporters. The study noted that former Bank One CEO Jamie Dimon and his wife, Judy, gave $1.2 million of their own money to Chicago-area fire stations to buy thermal imaging cameras, for example.

"There was a real change from what grantees had experienced previously, when there had been more negotiation and dialogue possible about what the community problem is, how the nonprofit can use its skills and resources to address it, and what role bank funds would play," the study said, reflecting on the impact of several big bank mergers around the country.

The Chase Foundation's Walters said her organization is being mindful of needs of the community, but that Chase can't be all things to all people. She said the foundation in Indiana focuses on issues involving education, affordable housing, job training, affordable child care and the arts.

The foundation is approached by more than 500 Indiana organizations each year, Walters estimated.

"Not-for-profits are getting more savvy, too," she said. "They realize not everyone is going to be a good fit."

Those that were a good fit for Chase last year include DonorsChoose Indiana, which provides financial assistance directly to classroom projects, College Mentors for Kids, Training Inc., Indianapolis Neighborhood Housing Partnership and The Children's Museum of Indianapolis.

Chase's gift to The Children's Museum helped fund "Moneyville," an exhibit exploring "the history, science, math and economics of money around the world," according to the foundation's annual report.

The company also is reaching out to not-for-profits. By the end of this year, Chase will have selected a neighborhood in Indianapolis for a "community renaissance" project. It likely will be similar to one of its previous projects in Ohio, where the bank gave $1 million to a not-for-profit involved in a Columbus neighborhood, for an education center.

Chase is close to selecting an Indianapolis neighborhood, which could receive help in any number of categories from affordable child care to after-school programs or a community center. A decision has yet to be made, but whatever it is, "what we'll see there is significant impact," Walters said.

Bigger bang for bank buck

Bank mergers and more giving appear to go hand-in-hand, according to the National Committee for Responsive Philanthropy. Of a constellation of seven major banking giants it studied, giving quadrupled to more than $400 million from the late 1980s to 2001.

The study found that community advocates were partly to credit for increased giving, reminding banks of their obligations under the Community Reinvestment Act to meet the credit needs of low-income residents.

On the downside, there was evidence funding shifted more to national organizations "with a corresponding drop in local giving."

And some of the giving appeared to be motivated by gaining favor of regulators to approve the torrent of mergers over the last decade. That might help explain the reaction researchers got from Chicago community leaders, who said they were unable to secure funding for general operating support.

"There was consistent frustration with what they expressed as a growing corporate emphasis on project funding, including expectations for positive public exposure and corporate visibility for the financial institutions," the report said.

But the impact of mergers isn't universal as far as charitable giving goes.

A couple of years ago, Rooney's team at IU began a case study asking not-for-profits about their perception of corporate giving following mergers. One of the common responses: "smaller gifts for which there are greater expectations."

The result is that not-for-profits often wind up conducting more fund raising to bridge the gap.

Impacts vary

But mergers of banks and other companies don't necessarily portend major changes for charitable groups.

Columbus, Ohio-based Huntington Bancshares--which this month bought Bowling Green, Ohio-based Sky Financial Corp., just after Sky bought Indianapolis-based Union Federal Bank--will leave giving decisions to local executives, said Mike Newbold, who heads Huntington's operations here.

"That's been a question a lot of folks have been asking," said Newbold, a former top executive at Bank One Indiana who left for Union Federal a few years ago. Huntington, he said, "believes the decisions are best delegated close to the front line. We're the ones who know this community best."

The change in control of Fishers-based Marsh Supermarkets doesn't appear to have much impact on its giving, either.

"It has not changed at all," said Connie Gardner, spokeswoman for the grocery chain acquired recently by Florida-based Sun Capital Partners.

She declined to elaborate on Marsh's community-giving budget, but noted that new CEO Frank Lazaran spoke at a recent Boy Scouts event, affirming support for that organization.

Some changes in control have meant the end of community support entirely.

British airport management firm BAA this month ended its contract with the Indianapolis Airport Authority, with airport management reverting back to the authority. BAA supported a number of local groups over the years, such as Young Audiences of Indiana, the Indianapolis Symphony Orchestra and The Christel House.

An airport authority executive said he couldn't immediately recount how much money BAA gave to local groups, but said the authority, as a government entity, could not perpetuate BAA giving.

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