Phil Knight's huge OHSU grant shocks philanthropy world

by: TRIBUNE PHOTO: JAIME VALDEZ - Fundraising experts are divided on how Phil Knight's grant challenge will affect other nonprofits such as the BodyVox dancers, who are dependent on local philanthropy to remain solvent.For about three minutes, Keith Todd was caught up in pure enthusiasm. The new president of the Oregon Health & Science Foundation was at a banquet three weeks ago listening to Nike co-founder and chairman Phil Knight announce that he was making a $500 million challenge grant to Oregon Health & Science University’s Knight Cancer Institute. That’s half a billion dollars.

Todd immediately rose to his feet and started applauding along with others at the banquet.

“The first thing that came to my mind was, ‘Absolutely brilliant,’ ” Todd says.

But after a few minutes of applauding, Todd, who is in charge of fundraising for OHSU, looked to his side and caught the eye of OHSU President Joe Robertson. And he thought about what else he had just heard. Knight said he would give the cancer clinic $500 million only if OHSU raised the same amount within two years — something that had not been discussed with OHSU officials.

Nobody in the history of U.S. philanthropy has ever dared to offer a matching grant that large with such a short period of time to raise the match.

“That’s when I thought it was daunting,” Todd says.

It’s more than that. It’s unprecedented, according to authorities in the world of philanthropy. For the sake of comparison, the largest matching grant ever given to the University of Washington, a huge one by national standards, was $40 million, and it came with a five-year matching period.

Some say that they don’t believe Todd and his team at the OHSU Foundation will be able to raise the sum in time. Others say he can do it, or that if OHSU gets close Knight will extend the deadline. All agree that if OHSU can pull this off, it won’t simply mean $1 billion is available to push its cancer institute into the top rank of cancer research centers in the country.

If OHSU can raise $500 million in two years, they say, it could change the face of philanthropy nationwide. It will raise the stakes in a game where even those whose job it is to ask for more have never thought they could ask for this much.

Greg Chaille, who serves on the OHSU Foundation board and is writing a book about philanthropy in Oregon, says he took a call from the OHSU Foundation the Saturday after Knight’s Friday night announcement. By Monday, development staff at the foundation were sitting down with Chaille to go over prospects he might know for major contributions, in or out of state.

Chaille’s take is that with an already ticking clock, OHSU can’t afford to go after the $1,000 donors. He likes the idea of finding 100 people willing to pledge or gift $5 million each. They’ll be like a club. A club that includes Phil Knight.

“You’re not meeting Knight’s match,” Chaille says. “You’re joining together to attain a billion dollars. The more communal you can make this the easier the fundraising will be.”

Fundraisers hit ground running

by: COURTESY OF OHSU - Nike co-founder Phil Knight (with Columbia Sportswear president Tim Boyle) has offered OHSU a billion dollar challenge grant that requires the university to raise $500 million in two years.The OHSU Foundation has about 125 employees. Roughly a third of them directly raise funds. The rest are support staff. Often when organizations take on major fundraising campaigns they hire outside fundraisers to help, but Todd says the two-year deadline doesn’t give him time to train new hires and familiarize them with Oregon and OHSU’s cancer institute.

Instead, Todd says, most of the foundation staff will focus on the Knight matching grant during the next two years, and he will hire new employees to take over other work the current employees won’t get to.

New campaigns, especially large ones like this, can take a year just to strategize, according to Todd. Not this time.

“What I thought we’d do in a year we’re now going to try to do in 90 days,” he says.

Todd says he expects to raise about half the $500 million within Oregon and half from outside, though most Oregon authorities interviewed by the Tribune say they don’t think there is close to $250 million available for philanthropy within the state.

The outside money, Todd says, will likely start with people who have given large sums to cancer centers in other states, many of whom have never been approached by OHSU before. Todd says with some of those major philanthropists, OHSU has never been able to get so much as a foot in the door. But with Knight’s matching grant in his pocket, Todd expects most of those doors will at least be open to a pitch. And he knows that money flowing into Oregon from outside provides the biggest economic boost to the city.

“I’ve had a few people say, ‘Gosh, think if any business showed up yesterday and said we’re going to pump a billion dollars into your city,’ ” Todd says.

In the first week and a half after Knight’s announcement, Todd says, the OHSU Foundation received about a dozen emails and calls from philanthropists wanting to jump on board — unasked. One came from a woman with no previous connection to the foundation offering a $100,000 pledge.

In philanthropy circles the woman’s offer is known as pre-emptive striking, according to Todd.

“If somebody that you’ve never met will send you an email to say they’re going to give you $100,000, it probably means they have the passion to give you even more,” he says.

Devil is in the details

Securing $500 million in two years raises some interesting questions for Todd. For instance, if Knight was sincere when he said at the banquet that anything less than a full match means OHSU won’t see a dime of his half, what happens if OHSU raises $400 million? Some of that money will be in the form of gifts and some in the form of pledges contingent on OHSU making the match. The gifts OHSU gets to keep, the pledges would have to be returned, unless the donors could be persuaded otherwise.

Multimillion-dollar fundraising campaigns depend in part on raising money from pledges people put in their wills. OHSU officials are still figuring out if they can count those toward the match or not. Todd says it is likely that pledges made by people under 65 won’t count toward the Knight match, because OHSU might not see that money for decades. On the other hand, donors who pledge $100,000 for each of five years can have the entire $500,000 count toward the two-year matching period.

The whole philanthropic world is watching.

“This is exciting for philanthropy,” says Oliver McGee, a long-time adviser to nonprofits and a senior policy analyst for the White House Office of Science and Technology Policy. McGee is among those convinced that there is a lot more money out there that nonprofits could get, if only they were daring enough to ask for it. And that holds especially true for scientific research, he says.

According to McGee, more than one-third of charitable giving in this country goes to religious institutions. Education gets 13 percent, human services another 13 percent, and health-related institutions only 9 percent. If OHSU successfully meets the match and gains $1 billion, McGee thinks it could change the landscape of philanthropy worldwide.

Match-grant proposal unusual

by: TRIBUNE PHOTO: JAIME VALDEZ - Vanessa Bojorquez reads to children at Latino Networks Juntos Aprendemos program at Glenfair Elementary School. The program is supported by a grant from the Oregon Community Foundation, which received its own surprise $170 million gift through a bequest at the end of 2011.Most large matching grants offer five- to seven-year match periods, according to Steven Lawrence, director of research at the Foundation Center in New York. Lawrence says the Knight grant, especially its surprise element, is unlike anything he’s heard before. Typically, he says, matching grants are announced late in capital campaigns, “when you’re trying to close it out.” Major donors, he says, know about an upcoming match up to a year before it is announced so they can plan ahead.

“You would want to have at least half of that fundraising match committed before you ever mentioned a word about the match publicly,” Lawrence says.

Without that advantage and with the short timeline, Lawrence says, OHSU is probably going to need Knight’s help shaking hands or taking major donors to dinner if they are going to meet the deadline. OHSU Foundation officials say they have no idea if Knight will make himself available or not.

“I wish them the best of luck, but this is going to be a hill to climb,” Lawrence says.

Kevin Johnson, who consults for Oregon philanthropists and foundations as owner of Retriever Development Counsel, says if OHSU is going to meet the match it has to think bigger than just the United States.

“It’s going to force them to play on the national and world stage,” Johnson says.

Johnson says that in 2009 and 2010 a number of Oregon nonprofits postponed fundraising campaigns because money was too tight. Now many of those nonprofits, including the Oregon Museum of Science and Industry are starting capital campaigns again, in some cases seeking money from the same people and foundations OHSU will be hitting up.

Classic Knight competitiveness

The surprise grant announcement, in the view of Brian Crimmins, CEO of New York-based philanthropic consulting firm Changing Our World, is classic Phil Knight — a man used to playing in the world of sports, where winners and losers are clearly delineated.

“Knowing who he is, what jumps out at me is there’s an element of competition that could be driving this,” Crimmins says. “To me, it’s that competitiveness, it’s that shocking the system. Who cares if we’re out here, why can’t we be No. 1 or No. 2?”

Michigan-based fundraising consultant Michael Montgomery says if he were OHSU, he’d start right in on people who have a business connection with Knight or Nike.

“The first place I’d go is to the (Nike) supplier base,” Montgomery says. “To some degree there will be a sincere desire to honor (Knight). He’s been the goose who has laid a single golden egg for us.”

Add the world’s wealthiest athletes to that list, says Carol Van Natta, president of the Oregon and Southwest Washington Association of Fundraising Professionals. “They stood by Tiger Woods,” Van Natta says. “Think of all the athletes (Nike) has helped over the years who are now multimillionaires. I would think some of those chips can be called in.”

Crimmins agrees with Montgomery that one of OHSU’s best pitches will be to philanthropists who want to join the Phil Knight team, but he says even that approach is fraught with difficulty. People who donate millions of dollars to charity generally have large egos, he says, and most of those people are used to being headliners.

“There’s a very fine line of not alienating those who can come to the table with philanthropic support,” Crimmins says. “If someone can give $50 million they would have to feel ownership. If it’s all Knight all the time, it becomes a little bit hard to make both folks happy.”

Crimmins says the Knight matching grant, because of its audacity, rewrites some of the fundraising rules.

“Did he go so big, so bold, for such a short time period that it tipped the scales in terms of alienating people?” Crimmins asks. “But if you can find that sweet spot, then you create the ultimate win/win.”

Other nonprofits fret

Consultant Montgomery says other Oregon nonprofits could suffer as the Knight challenge grant dominates fundraising in Oregon.

“Somebody’s going to be worried, I can guarantee you that,” Montgomery says.

Todd says he’s already heard from OHSU researchers not involved with cancer who are worried they won’t see much philanthropic funding in the next few years because everything will go toward the Knight match. But Montgomery and others think that long-run, new donors will be identified by OHSU, and the pool of potential giving for all Oregon nonprofits is likely to grow as a result.

“I’m sure a lot of nonprofits in Portland are wringing their hands right now, woe is us,” says Larry Johnson, author of “The Eight Principles of Sustainable Fundraising.”

“My response to them is that $500 million was never going to be available to them. People give what they want to give. This is actually going to grow philanthropy in Oregon if it’s done right,” he says.

Van Natta says the insular world of philanthropy will have its eyes not only on the fundraising, but also on the fundraisers over the next two years.

“If they do this successfully, it will make everybody’s career,” she says.

Joyce White, executive director of Portland-based Grantmakers, isn’t convinced that Knight means it when he says it’s all or nothing on his matching grant.

“Do you think Phil Knight would have made that challenge if he didn’t intend to follow through?” she asks. “This is him investing in his own team. I have a hard time believing he would walk away from his own teammates.”

But others aren’t so sure. “He wants to find out, ‘Are these people serious?’ “ Johnson says. And a failed campaign, he says, “will cast a pall over an organization for decades. It’s a disaster. You don’t want to lose this.”

Community education grant came as a surprise

Sometimes, major fundraising gifts just come out of nowhere. Phil and Penny Knight's $500 million matching pledge shocked members of Portland's elite philanthropic community. But another recent announcement surprised nearly as many.

Last year the Oregon Community Foundation, which dispenses money to a variety of nonprofits around the state, received a $170 million grant from the estate of Fred Fields, who owned Tigard's Coe Manufacturing Co., and who died in 2011. According to foundation director Jeff Anderson, the gift was a total surprise — nobody had approached Fields about a donation.

According to the national Journal of Philanthropy, the gift was the fourth largest in the country from an individual to a separate nonprofit. Facebook co-founder Mark Zuckerberg gave $498 million to a Silicon Valley community health foundation, Microsoft co-founder and Trail Blazers owner Paul Allen pledged $300 million to his own Seattle-based science institute, publisher Mort Zuckerman pledged $200 million to Columbia University's brain and behavior institute, and then comes Fields' bequest to the relatively unknown Oregon Community Foundation.

Anderson says that Fields and his wife, Sue, previously had given major gifts to Lewis & Clark College, the University of Portland, the Portland Art Museum and others, but not to the Oregon Community Foundation.

“He wasn’t even on our mailing list,” Anderson says. In fact, Anderson adds, when a call came in to tell the foundation about the Fields bequest, the employee who answered the phone didn't even know who Fields was.

Anderson says the gift was “mind-boggling” not only for its size, but because it stipulates only that it be used for arts and education in Oregon. Beyond that, the community foundation gets to choose. So far, according to Anderson, the money has allowed the foundation to make grants for early childhood education, parenting education programs, mentoring programs for struggling students, support for arts organizations that fund new creative work, and establishing scholarships at all 17 community colleges in the state.

The Fields grant gives the community foundation an extra $7 million to $8 million a year with which to make grants in Oregon, while still leaving enough so the overall endowment continues to grow. The total annual grant-making ability of the community foundation nearly doubled because of the gift.

Local giving grows step by step

There are 15 to 20 Oregonians giving $10 million a year, says Greg Chaille, past executive director of the Oregon Community Foundation, who is writing a book about philanthropy in Oregon.

Chaille says there probably are another 20 or 30 who could afford to give that much annually, but don't. Most are elderly, and their philanthropy could show up as bequests after they die.

But those top-tier Oregon philanthropists won't likely drop their other philanthropic commitments and pledge all their annual giving to meet the new Knight matching grant, according to Chaille. Last week, for example, Chaille met with a Portland woman who last year donated about $9 million to charity. She told him that she had no money this year for new campaigns because she wanted to keep helping the organizations she's supported in the past. When the hard sell comes for the Knight matching grant, Chaille says, the best she is likely to do is make a pledge for a few years out, once her current favorite organizations have become more self-sufficient.

And that, according to Chaille, means much of the Knight matching grant money will have to come from outside Oregon — a new breakthrough for local philanthropy.

OHSU's $500 million pledge from Phil and Penny Knight — if successfully matched — would represent a third breakthrough moment in the steadily ascending story of Oregon philanthropy, according to Chaille.

The first occurred in the early 1980s, when Arlene Schnitzer donated $1 million toward turning the old downtown Paramount Theater into the performing arts center that bears her family's name. Previously, $500,000 was considered a top-level gift in Portland, according to Chaille. Schnitzer's gift “set a new bar,” Chaille says.

Next came the campaign to remake the Portland Art Museum. The museum hired out of state fundraiser John Buchanan and collected $125 million in 11 years, starting in the mid-'90s. Until then, Chaille says, a campaign for $100 million seemed beyond reach in Oregon. Nearly 20 years later, raising $500 million appears possible.