Des Moines Register 05-20-07 Elbert: Group quietly drives change in D.M. Money from more than 400 accounts flows into local projects through a community foundation. By DAVID ELBERT DOWN TO BUSINESS The Greater Des Moines Community Foundation may be the most significant, least understood nonprofit in central Iowa. The foundation raised more than $50 million last year and distributed more than $20 million in grants and gifts. That compares with a record $22 million pledged this year to the United Way of Central Iowa, which generally is considered to be the area's premier charity. Money that flows through foundation accounts is being used for the Principal Riverwalk, to make the Des Moines Art Center more accessible and to beautify Fleur Drive. The group also provides money to help AIDS victims, for early childhood education and for help for the homeless. "A lot of our grants are directed toward opening up public amenities, arts and cultural things, health and human services so that more people in our community can benefit from them," said foundation President Johnny Danos. When businesswoman Connie Wimer wanted to start Winefest in 2003 but couldn't attract enough sponsors to launch the event, the foundation provided a $20,000 grant. Since then, the annual festival has raised about $240,000 for other central Iowa nonprofits. When Blank Park Zoo wasn't sure whether it should fold its tent or begin raising money to replace outdated facilities, a foundation grant was used to develop the imaginative strategic plan that is now the basis for an ambitious expansion. When public officials wrung their hands over the scandal that decimated the board of the former Central Iowa Employment and Training Consortium, known as CIETC, the foundation took action, setting up classes to teach individuals how to be effective members of nonprofit boards and providing training for directors of nonprofits. Next month, the foundation will handle the distribution of a half-million dollars that the Principal Charity Classic golf tournament expects to raise for youth charities. The simple fact is that the Greater Des Moines Community Foundation has become the go-to group for organizations and individuals who want to have an impact, whether it's a brick-and-mortar project, or a cultural, social or educational effort. The foundation's influence has grown to the point where many local leaders now tell people with new ideas to "run it by the foundation first," Danos said. But, he added, "in no way are we planning to become the policeman" for community projects. Danos is an easygoing, story-telling 67-year-old accountant with a Louisiana drawl who is on a first-name basis with practically everybody of stature in the metro area. Most business leaders know him from his days as the head of the Des Moines office of the national accounting firm of KPMG, when he helped to advise many of the area's larger businesses on tax and regulatory matters. The political community has gotten to know him well, too, since he left KPMG to take over leadership of the foundation a decade ago. Since 1996, the size of the foundation has increased more than 12-fold from managing assets of $13 million to overseeing $165 million today. Much of the growth has come in the past two years to three years, when assets have more than doubled. That growth is likely to continue for some time, because one of the things the foundation has been doing in recent years is signing up testamentary gifts from the estates of many of the area's wealthiest families. In most cases, those gifts won't come in until the givers die. The foundation's growing role in central Iowa coincides with a national movement in which community foundations have become one of the fastest-growing forms of philanthropy. The Columbus Foundation, which tracks the activity of 641 community foundations nationwide, reported last year that total donations in 2005 increased $5.7 billion, or 35 percent, boosting total assets 13 percent for a second year in a row, to a total of $44.9 billion. To understand what's happening, it helps to go back to the beginning. The community foundation concept originated in Cleveland in 1914, when bankers in the Ohio city decided it was more efficient to create a foundation to handle assets that had been placed in charitable trust accounts. Other cities in the Northeast and Midwest adopted the idea. By the 1920s, the American Bankers Association as well as chambers of commerce were promoting the idea, according to the book "Philanthropy in America." The Great Depression was a setback, wiping out more than one-quarter of the 90-some foundations that had been established and undoing much of the community building that had been done by others. Tax law changes in 1969 prompted a number of cities, including Des Moines, to get into the game. The original Des Moines foundation had no staff and was under the auspices of the chamber of commerce, Danos said. By the early 1990s, it had less than $2 million in assets and was distributing only about $100,000 a year in gifts. That's when businessmen Fred Weitz, Jim Hubbell Jr. and others decided Des Moines was missing out on a good development tool, Danos said. By then, similar foundations in Omaha and Kansas City had grown to $100 million and $200 million in assets, he said. Monroe Colston, a chamber of commerce executive, was hired as the first fulltime employee of the Greater Des Moines Community Foundation. Colston expanded the foundation to about $18 million in assets. When Danos took over, a new goal of $100 million in assets was set. About the same time, community leaders began to realize that a massive generational transfer of wealth had begun, and unless something was done, the estates of older Iowans were going to follow their children, many of whom had moved out of state. Danos, along with Iowa State University Extension economist Mark Edelman and others, persuaded the Legislature to create tax incentives for a program called Endow Iowa. It was designed to pull assets into community foundations across the state. Another law distributes gambling taxes each year to community foundations in each of the 85 counties that do not have a licensed gambling operation. As a result, most of the state's counties now have some form of community foundation, most of which are affiliated with either with Greater Des Moines Community Foundation or one of 11 other community foundations in the state. Danos hired a handful of key people who helped bring in new donors to the metro foundation. Since he took over, the foundation has tripled to more than 400 the number of relationships it has with individuals or groups whose money the group handles. One reason so many individuals and groups have placed money with the foundation is investment success. "We have an average return over the last 10 years of 10.5 percent a year," Danos said. While the foundation has been largely a behind-the-scenes player in the past, it will be taking on more visible roles in the future. One such role is the result of a new "leadership circle" announced last week. Membership in the circle requires a pledge of at least $2 million to be paid over several years. Eight families are initial members of the circle. Money from their pledges will be used in coming years to strategically drive cultural and economic development, much the way a corporate nonprofit, Des Moines Development Corp., did 20 years ago, said founding member Jim Cownie, a Des Moines investor and philanthropist. Business Editor David Elbert can be reached at (515) 284-8533 or delbert@dmreg.com