19: Closing the Doors
From its earliest days, when Amy decided to make it a spend-down foundation, Sandow and the staff had made it clear that the time would come when the nonprofits it had supported would have to find other ways to fund their vital work.
Originally, the plan was to close the foundation at the end of 2021. But the profound economic tsunami of 2008-2009, which came to be known as The Great Recession, seriously reduced the value of the foundation’s investments and sharply changed the closing schedule.
The foundation’s investment portfolio was in the hands of Bessemer Trust, because that was what Horace Hagedorn had written into his will. Bessemer had handled Horace’s money and his family’s money, and from the moment the foundation began, Bessemer was in control of its assets. “So this was pretty much a done deal when I came on board,” Sandow said. “I mean, it was written into how we’d operate.” The arrangement left him with no real say on the foundation’s investments.
When a Bessemer report brought him the stunningly bad news about the impact of The Great Recession, Sandow began to look at what was happening to other funders. “I reached out to my colleagues and said, ‘How much have you guys lost?’” he recalled. “They vaguely knew, and then I said, ‘Can I speak to your CFO?’ I was working with the CFOs from the major foundations in this country, and they gave me as much information as I needed.” Compared to the $12 million that the foundation had lost, he learned, other funders had not lost nearly as much.
As he tried to understand the calamity, Sandow learned that the losses had occurred in the foundation’s portfolio of large market capitalization stocks and a heavy investment in currencies, which crashed. In the wake of the crisis, he was able to take fuller control over investment strategies. But the harsh reality of the moment had not changed. The foundation had still lost $12 million of its assets. “For a small foundation, that’s a big loss,” Sandow said. “We lost more than most of the nationals, percentage-wise.” The question became: How should the foundation react?
“I asked Amy, ‘Listen, can we have one of the staff lunches be about the decision-making about how we handle this loss?’ ” Sandow said. “Do we do as some of the national foundations did, which is cut each program area by 20 percent? Or do we talk to staff and board, Amy being the board, and determine if we keep spending at the same levels? Because our grantees need the money more than we do. Amy said, ‘Yes, let’s have that conversation.’ And so we did. At the time, the crash was still unfolding. We did not know how much more money we were going to lose in the markets. I said to staff, ‘Listen, if we keep spending at the same levels, that means that you and I are going to be unemployed much earlier than we expected to be.’ And I said, ‘Do you want to make that choice?’ Everybody agreed: ‘Yeah, they need it more than us.’ It wound up costing us four years.”
That choice to keep funding at the same levels, but speed up the spend-down timetable, was consistent with the foundation’s concern about the viability of its grantees. That concern entailed letting them know from the outset that Hagedorn money wouldn’t always be there. Starting in 2014, three years before the foundation was to close its doors, the staff intensified the process of readying the grantees for the foundation’s end.
The first step was a two-day conference at Carlyle on the Green, at Bethpage State Park, home of the internationally known, famously difficult Bethpage Black golf course, site of the U. S. Open in 2002 and 2009. The task facing the foundation and its grantees at that May 2014 gathering seemed, in its own way, as monumental as the challenges facing golfers at Bethpage Black.
In keeping with the reality that the foundation would be closing its doors in three years, the staff referred to the Carlyle event as the “doors” conference. The title of the agenda for the two days was: “Closing Our Doors, Keeping Yours Open.” And the organizing question was: “How can we act together to ensure that your important work carries on as the Hagedorn Foundation closes its doors at the end of 2017?”
The doors conference challenged grantees to face the reality of that closing; to figure out how they needed to prepare for it, so they could continue their work; to explore the possibilities for collaboration among grantees, and to identify specific ways that the foundation could help them.
In those conversations, the foundation was careful to avoid the M-word: merger. But it was clear that grantees needed to think creatively about other organizations whose work was compatible with their own. In small group meetings throughout the Carlyle’s sunny ballroom, the attendees identified a variety of ways the foundation had been helpful to them. Among others, it had nurtured networks and coalitions, provided a vision for years into the future, brought local communities into contact with national players, and addressed issues at every level: local, regional, state, national.
The grantees acknowledged that some collaboration among them had begun to happen, but much more was necessary. They discussed ways of continuing whatever momentum the doors conference might develop. During the second day of the conference, the grantees split up into discussion groups on data and information sharing, strategic alliances, organizational capacity building, shared outcomes for children and families, fund-raising, social justice networks, and the shape of future convenings.
In fact, multiple large and small convenings happened in the months that followed. One of the first was a gathering at Cedarmere on July 11, 2014. The representatives from Hagedorn grantees who attended it formed the core of what became known as the Spend Down Working Group.
Sandow opened the meeting by pointing out that some spend-down foundations had regretted not being more effective in helping their grantees to replace their grant support. As a result, those foundations failed in the end to sustain the vital work of their philanthropy once they closed their doors. That was why the Hagedorn Foundation had started the final three years of the spend-down process with the two-day retreat at Carlyle on the Green and was continuing the conversation, taking it very seriously.
The goal of the Spend Down Working Group, Sandow explained, was to put together a comprehensive set of trainings, capacity-building efforts and networks, to strengthen and sustain Hagedorn grantees once the foundation closed its doors. “Today is the first conversation,” Sandow said, “and there will be others.”
The meetings of the group continued for the rest of 2014, and at a session in January 2015, Sandow discussed plans for another multiday gathering, this time at the historic Mohonk Mountain House resort on the Shawangunk Ridge in Ulster County, north of New York City. The foundation would pay the cost for all the participants, and the time away from the pressing daily business of their agencies would allow them to think strategically, enjoy the resort’s array of recreational activities, and do some serious team-building. Ideally, the two days of reflection would lead to action.
The two days in June at Mohonk revolved around this question: “Using social justice as a framework, what change would you most like to see on Long Island?” Deliberations around that question, along with the other questions that flowed from it, sowed some seeds of collaboration. Afterward, the foundation conducted an anonymous Survey Monkey poll of the retreat participants. Their answers showed that they understood the value of collaboration and thinking differently about how to carry out their work—and they appreciated the foundation’s role in helping them reach that understanding.
In that intensely busy year of spend-down work, even as planning for Mohonk proceeded, the foundation had begun work on another ambitious step forward for the grantees. Sandow hired consultants to take the pulse of Long Island donors. This research effort, led by Goodwin Simon Strategic Research and Wonder: Strategies for Good, became known as the Long Island Giving Project. It posed three core questions:
- How can Long Island nonprofits communicate with donors effectively?
- What is the profile of a typical Long Island donor?
- What motivates Long Island donors to give to particular issues?
The consultants sought answers to those questions through a series of focus groups in March, April and May of 2015, interviews with executive directors of Hagedorn grantees, an online survey of 492 Long Island donors, and “mystery” donations to Hagedorn grantees, designed to find out how the agencies interacted with their donors.
At a large gathering in August, the consultants met with Hagedorn grantees to explain some of their findings. Amy had intended to speak with the agencies at the start of the meeting, but she felt ill, and someone else had to deliver the talk in her place. Here’s how it began:
“I’m afraid some of you may be thinking that you are stuck in an endlessly replaying loop of Hagedorn Foundation gatherings that are distracting you from what Dr. King memorably called ‘the fierce urgency of now.’
“Let me say two things about that:
“First, the reason for these events is simply Darren Sandow’s unshakable determination not to turn you loose like orphans when our foundation spends down at the end of 2017. Darren is both influential and well informed about the work of foundations across this country, and what he has seen is that spend-down foundations usually do simply that: They spend down, without any real process to help their grantees get ready for a future without their grants. Darren refuses to let that happen to you. I admire that determination, and I completely agree.
“Second, please believe me: These conversations we’ve been having are in many ways as fiercely urgent as your day-to-day business. If you don’t feel that urgency now, it will be that much harder for you to adjust to the new reality of fewer foundation dollars.”
As Amy’s talk ended, it impressed on the grantees that the foundation had stood with them in this transition period, but now it was really up to them.
“We’ve spent a lot of time preparing for this series of meetings with you, and you’ve spent a lot of time attending them,” Amy’s speech said. “Now today needs to be a real pivot point. We’ll still be here to help if you need us, but the hard work ahead is yours. I urge you to get down to it. Only you can make the tough decisions about your future.”
At that gathering, the consultants took turns explaining some of their findings. Amy Simon gave a summary of focus-group findings.
“It’s so expensive to live here that people are struggling, and taxes are too high,” Simon said. “People want to improve things in their own backyard. They were stunningly unaware of any of the work that you guys are doing.” But there was some good news buried in the distressing finding that nobody really knew about Hagedorn grantees: an opportunity to get donors to look more closely at the work the agencies were doing, and perhaps to support it financially. “That’s a tremendous opportunity,” Simon said. “Virtually everybody said, ‘I’m going to go Google some of these groups.’ ” But she did caution: “Some thought, ‘If they are here and I’ve never heard of them, are they really doing anything?’ ”
A key problem facing the grantees is that Long Island donors tend to give to agencies such as soup kitchens and dog-rescue groups—not to those pushing for long-term social justice goals. “Direct services tend to elicit more support than process change, because direct service is seen as more measurable and impactful,” Simon said. “Mentioning political process and policy-makers ratchets up Long Island donors’ natural cynicism.” The way around that obstacle, she explained, was to “evoke shared values when you explain systems change. One way to do that is with short stories. Tie the system change to positive outcomes.”
Another key member of the consultant team, Robert Pérez, unveiled the results of the “mystery” donations to nine agencies. Three of the nine generated no further thanks than an automated reply to the donors. “For those three organizations, that is likely to be the end,” Pérez said. “Only four organizations sent out another form of thank you.” He did cite one agency that sent a handwritten note: “We are grateful for people like you.” It went on to say what the contribution had enabled the agency to do.
The donor has core needs, Pérez explained: feeling genuinely valued and respected, sensing reciprocity in the relationship, being seen as more than just an ATM. “Good fundraising communication makes the donor the star of the show,” he said. The best way to deal with donors is to explain to them the need and what the agency is doing to address it.
“What is the problem or challenge facing you?” Pérez said. “What is the best approach? What have you done that shows you know how to do it? How do I know that you will be efficient and wisely invest my money? Numbers numb, jargon jars, and no one ever marched on Washington because of a pie chart. How will the world be a better place if you succeed? How do I know that you share my values?”
At the same gathering, Ann Marie Thigpen of the Center for Nonprofit Leadership offered a four-word piece of advice for the care and handling of donors: “Thank before you bank.” In other words, before an agency even deposits in the bank a donation it has received, it must thank the donor meaningfully and personally.
In February 2016, the consultants published their advice to the grantees, based on all the research, an extensive compendium of advice on how to communicate with donors. They called it “Giving on Long Island: A Mindsets & Messages Map for Engaging Individual Donors on Long Island.” But that was far from the end of the foundation’s work in preparation for the spend-down.
For one thing, the “Giving on Long Island” report, while full of useful advice on how to cultivate relationships with donors, was not meant to provide advice on how to find donors in the first place. To help grantees with that, Sandow offered to pay for them to have subscriptions to a service called WealthEngine, which helps locate donors.
The foundation also reached out to other foundations that might be willing to fund the grantees’ work in the post-Hagedorn era. In a conference room made available by the law firm of Farrell Fritz in Uniondale, the foundation’s staff outlined for the other funders present some of the work the foundation had accomplished, what remained to be done, and what it might cost to sustain that work.
Dunn spoke about the immigration and civic engagement work and Parmely about the families, children, and youth program area. Sandow briefed the group about Lucero’s outreach work, about capacity-building, and about the foundation’s miscellaneous initiatives. Among the examples he cited were support for Residents for Effective Special Districts, toward the elusive governmental efficiency goal of reducing the staggering number of special taxing districts on Long Island, and $75,000 a year for the Shinnecock Indian Nation. “That little bit of money has helped them,” Sandow said. “They changed their constitution. It helped them open a child care center. They got federal recognition, and they expanded their museums.”
The keynote speaker for the funders’ briefing was Michael Dowling, CEO of Northwell Health, a vast network of hospitals on Long Island and beyond, with more than 60,000 employees. Amy had sat on its board and was a generous benefactor through the Horace and Amy Hagedorn Fund at New York Community Trust.
“The fund gives away $2 million in general support money to 120 grantees every year,” Sandow told the gathering. “It was the fund that brought us the privilege of getting to know Michael Dowling. Both Amy and Horace knew him. It was Amy’s idea to invite him.”
Dowling emigrated from Ireland as a young man. He still has a strong Irish brogue and powerful memories of his own experience, which makes him sensitive to the needs of immigrants—those who work for him and those who come to Northwell for health care. And he has vivid memories of his interactions over the years with Horace and Amy.
“It was a unique relationship you were able to develop with Horace and Amy,” Dowling said. “Amy and Horace, they saw life as not a place for personal gain, and Amy especially, I think, saw life as a service. How do I do something special so that my life means something, not just to me, but to others?” Horace came from wealth, Dowling reminded the gathering, but Amy did not. “They didn’t fall in love with their status,” he said. “What they did was fall in love with a cause.”
Then Dowling made an eloquent plea for the foundations around the table to honor Amy in the most practical way. “We at Northwell have benefited from Amy’s generosity,” he said. “We have benefited from her skill as a board member. You go to any one of our facilities, you’ll see names on buildings. You don’t see Amy’s name, because that’s not what she wanted. Amy’s name is engraved in people’s hearts. Make sure that the work that she started can continue. For those of us who knew her and Horace, the best gift we can give to them is to continue to do what they did.”
Whether other funders will rise to that challenge or not, the foundation’s grantees will need a reliable base of small donors. To get them off to the right start in the foundation’s final days, the staff expended significant energy on another project: a Long Island giving day. The idea arose from discussions about creating a website where Long Islanders could become donors to Hagedorn grantees. The question was: Who would host the website, and who could give it maximum visibility? That conversation turned toward the Association of Fundraising Professionals, Long Island Chapter. So the committee sought the advice of the association’s new president, Catherine Tully Muscente, executive director for development and alumni relations at Molloy College. She brought to the group’s attention a “Give Where You Live” online fund-raising campaign on Long Island’s East End. That led the foundation to research other regions that have held giving days, such as Colorado, the Silicon Valley in California, and Kearney County, Nebraska.
The sponsoring organization for these giving days was usually the local community foundation. So Sandow spoke with David Okorn, the executive director of the Long Island Community Foundation, a natural choice to run the giving day, especially because LICF would continue in existence after the Hagedorn Foundation had spent down. But Okorn told Sandow that LICF had other priorities in 2017 and could not handle the additional work of putting together a giving day. Sandow spoke with other organizations, such as Bethpage Federal Credit Union and Newsday, about possibly taking the lead, but they also had priorities of their own that stood in the way.
Despite that discouraging turn of events, Sandow kept the idea alive. Whatever it took, he insisted, the Hagedorn Foundation was going to spend the money and provide the leadership to launch a giving day in 2017. His strong belief was that Long Islanders really did want to give to local nonprofits, and if the islandwide “give where you live” effort produced the strong financial support from donors that he expected, the giving day would take hold and survive in the post-Hagedorn era, in 2018 and beyond.
In November 2016, a few days after the presidential election that seemed to threaten some core Hagedorn Foundation work, Sandow met at Cedarmere with a group of nonprofit agency leaders to discuss the way forward. “It’s a different world,” he said. “Everything we care about is on the table. Everything is on the cutting board right now or under attack.”
The key question for that day was whether those in attendance would agree to serve as a steering committee for the giving day project. A month later, most of the participants in that meeting joined in a webinar with Razoo, one of the organizations that help put together the websites and campaigns for one-day online giving events. The foundation also explored others, such as Kimbia and CiviCore, but eventually settled on Razoo.
In the webinar, Razoo explained the process, the features of its platform, and other details, including the need for Hagedorn to hire someone to coordinate the campaign. “Others have made the mistake of hiring part-time,” Jordan Brown of Razoo said. “Their job is to build momentum.”
Sandow took the hiring of a coordinator seriously. The giving day could not succeed without someone on the foundation’s staff who could work closely with Razoo and grantees of both the foundation and Amy’s fund, to develop the website and generate the excitement necessary to persuade individual donors to give. So Sandow hired Devon Giordano, whose resume included a rich array of technology, fundraising, and leadership skills at the national and international level.
Giordano’s energy, intelligence, and personality brought an immediate jolt of optimism to the process, as she visited a broad array of Hagedorn Foundation and Horace and Amy Hagedorn Fund grantees, to tell them about the initiative and begin developing their enthusiasm. Together, Giordano and the steering committee made key decisions on the logo and names submitted by a branding consultant for the giving day. They settled on a heart-shaped, blue-and-green, sea-and-sky logo and a simple name: One Island.
Launching a Long Island-wide giving day was complicated in many ways, including the need to schedule it at a time that would not conflict with other fund-raising events. Perhaps the biggest challenge was to guide the grantees in the process of developing excitement among individual donors, even though most of them did not have a significant existing base of donors to start with. But Giordano’s energy and hard work helped to generate real buzz for One Island Giving Day, October 26, 2017.
Like other efforts that the Hagedorn Foundation made in its final three years to help its grantees prepare for the loss of foundation funding, the giving-day event was not inexpensive. But that expense—and the time and energy that the foundation put into it—provided further evidence of its deep commitment to ensuring that the work of its grantees would continue.