PERSPECTIVES ON THE
by William H. George
Chairman and CEO, Medtronic, Inc.
PHILANTHROPY IN AMERICA
Of all the revolutions taking place in America
as we enter the 21st century, none will have a greater impact
on our society than the estimated $100 trillion in equity
capital that will flow into the nonprofit world over the next
Over the last 20 years we have witnessed the greatest creation
of wealth in history as the direct result of the high-technology
revolution and the incredible gains it has created in equity
values of publicly traded companies. Now it is time for those
of us who have benefited from these gains to give back to
society - in ways that will help address society's ills and
the economic distortions these gains have created.
In the year 2000 charitable giving in the U.S. will top
$200 billion for the first time ever. This equates to 33%
of the federal budget for domestic spending and 2.1% of the
GDP! Bill Gates' incredible $22 billion in gifts to his family
foundation and Ted Turner's $1 billion gift to the United
Nations have set the example, but let's not forget that 73%
of all Americans give money to charitable organizations and
nearly 50% report volunteering for civic activities.
This is in sharp contrast to other wealthy countries. In
the early 1980s when I was living in Brussels, I chaired the
national United Way campaign for Belgium. Although we reported
better than a 100% increase that year, our total campaign
was less than 3% of what the Minneapolis United Way raised.
Fewer than 10% of the funds raised came from Belgians. As
Count Solvay said in a meeting with our fund-raising team,
"You Americans raise the money, and we Belgians give
it away." Indeed, most Europeans and most Japanese believe
that it is their governments' job to fund education, the arts,
health care and the needy.
In contrast, we Americans believe that the independent sector
is "the engine of social change in our country,"
and that "foundations have frequently been society's
passing gear." Instead of relying on government spending
to correct society's ills, we see charitable giving as an
alternative to government intervention and a way to fill in
the gaps left by government, such as private training programs
to facilitate the Clinton administration's "welfare to
To accomplish our goals we need to be wise, we need to be
effective, and most importantly, we should give based on our
most deeply held values. The measure of our success, or "our
ROI" if you will, is not measured in dollars but in lives
changed, in values buttressed, in justice achieved, and in
faith and healing.
Today's givers, in contrast to our forebears, are different:
we want to target our giving to the objectives and programs
we value the most, we want to be involved in the organizations
we support, and we want to measure the results of our giving.
Most of all, we want to have an impact now, not after we die!
Some call this venture philanthropy, some call it targeted
giving, but what is not is writing a big check to an endowment
and turning responsibility over to a general fund to manage
PHILANTHROPY IN MINNESOTA
Here in Minnesota we have a philanthropic tradition
of which we are deeply proud. It began with the families who
built our great corporations: the Daytons, the McKnights,
the Pillsburys, the Crosbys, the Hills, and many, many more.
Today this tradition is being carried on by the major corporations
based here and the people who work for them. It is being amplified
in most important ways by a new generation of entrepreneurs
who are building the great corporations of the 21st century.
We currently have 4,176 nonprofit corporations in Minnesota.
Perhaps that's too many, but they have helped create a health
care system, an education system, a job training and creation
system, and a social justice system that ranks at the top
of all the states in the U.S. and is the envy of the nation.
The combined United Ways of Minneapolis and St.Paul this year
will raise over $90 million, placing us third among all United
Ways in the U. S., yet we are only the 14th largest metropolitan
area! These giving levels have enabled us to create model
programs for the nation like "Success by Six" and
our "Welfare to Work Training Programs." When I
was chairing the United Way campaign for Greater Minneapolis
in 1997, Dr. Glen and Marilyn Nelson and Penny and I created
the Century Legacy program by each giving $1 million to the
United Way. There are currently 14 Century Legacy members
who have given $1 million or more.
No one exemplifies this commitment to community better than
the Dayton family, led by Ken Dayton and his brothers Bruce,
Wally, Doug, and Don. For decades Ken himself has set the
standard for giving in his personal gifts, and he has personally
implored CEO's and other corporate leaders, whether they are
Minnesota natives or itinerant executives from the east coast,
to get behind community efforts and to give generously. He
has led the way by giving tens of millions to build the Minnesota
Orchestral Association while Bruce has done likewise in creating
a great art center at the Minneapolis Institute of Arts.
Ken led Dayton Hudson (now Target Corporation) to set the
standard of giving 5% of its pre-tax profits to the community,
a standard which Target, now the most profitable corporation
in Minnesota, carries on to this day across the United States!
Ken then created the 5% Club and the 2% Club along with other
civic and corporate leaders and implored every local company
to sign up to one of these levels of giving. Currently there
are 250 Minnesota companies committed to these levels of giving!
More recently, low-income housing pioneer and former Catholic
priest Joe Selvaggio created the 1% Club, comprised of individuals
and families who have committed to give a minimum of 1% of
their total equity (not their income) to charity! The 1% Club
now has 325 local members and will be over 1,000 in two more
My own company, Medtronic, has committed to give 2% of our
pre-tax profits through the Medtronic Foundation. When I joined
the company in 1989, that amounted to only $1.5 million. Thanks
to our profit growth of 23% per annum over the last eleven
years, last year we made grants totaling $17 million and were
awarded the Keystone Award for our charitable programs.
We target our giving to health care, K-12 education, healthy
countries, and our local communities. For example, in 1999
we launched a $15-million, 5-year health care initiative called
the "Full Life Patient Partnership." This initiative
is aimed at augmenting our corporate mission of "restoring
people to full life and health." Its programs include
Patient Link to support 24 patient associations, Health Center
Leadership Grants for integrated health care to such leading
medical institutions as Harvard, Stanford, Scripps, and Duke,
and a community-based Heart Rescue program to enable people
to survive sudden cardiac arrest. In education we have given
over $6 million in K-12 grants to support unique teaching
programs in science and math through our STAR program.
GEORGE FAMILY FOUNDATION
What about giving on an individual level? I certainly
would not presume to speak for others, especially those who
are giving far more than my family is, but let me share some
of the giving philosophy that my wife Penny and I have established.
I should really credit Penny for these ideas as she is the
one who is president of the George Family Foundation and who
is pioneering new forms of venture philanthropy in our targeted
believes that a key to successful giving is "putting
in your personal time to the giving process."
Is it easier for you to give money or time? What
do you think does more good?
in the Forum
Our shared philosophy is drawn from the words of the Episcopal
funeral service, "We brought nothing into this world,
and surely we can take nothing from it." So why not give
it all away? After all, how much do we benefit from our efforts
to consume our wealth? Do we really help our children and
grandchildren by setting them up with trusts and estates so
they don't have to work to earn a living as we and our parents
did? I don't think so!
Unfortunately, we are all influenced by estate planners and
estate lawyers with endless ideas to avoid estate taxes. For
many wealthy people these plans only protect a small fraction
of their estates and subject the remainder to the 55% tax.
For those of us trying to build our equity base, these plans
tie up our funds and limit our flexibility to give as we wish
and when we wish. Besides, there is no more tax-efficient
way to manage your funds than giving them away in your lifetime!
I'm finding many more people are planning to give it all away,
as we are, after their children's education is secured. This
past week I heard this precise philosophy articulated by the
founders of EDS, Home Depot, and MiniMed.
There are three basic ways to do so, other than complex
estate plans: 1) direct gifts, 2) community foundations, and
3) family foundations. Penny and I chose a family foundation
because it gives us the greatest degree of control over our
giving and is the most tax efficient. That's not meant to
overlook the other two options, as they may suit others better.
We set up the George Family Foundation in 1994, starting
with $1 million. We have built the foundation up to just under
$30 million through a combination of gifts of Medtronic stock
and aggressive investing in equities. Our goal is to build
the corpus to $100 million within five years, and to give
away a minimum of $5 million per year.
George plans to give all of his wealth away and
leave nothing to his children - what do you think
of this approach?
in the Forum
We believe the key to making a family foundation work is
being prepared to putting in your personal time to the giving
process and having an executive director. As one friend warned
me, "It's a lot harder to give your money away thoughtfully
than it was to earn it." Our foundation really got going
in 1998 when Penny gave up her practice of psychology to focus
on the running the foundation as president and when we engaged
Diane Niemann of Family Philanthropy Advisors as our executive
director. Together they make an awesome team!
The first thing Diane asked us to do was to write a mission
statement for our foundation. It reads:
Our mission is to foster human development - spiritual,
intellectual, physical and psychological - and to enhance
the work of people and organizations devoted to exemplary
service in the community.
Next we drafted "Our Guiding Philosophy" which
To invest in values, ethics and character formation to
support the efforts of those who are successfully making
a difference in people's lives; and to help build the communities
in which we live. We believe in sharing the blessing that
have been bestowed on us and in celebrating the spiritual
reciprocity between donors and receivers working collaboratively
to make the world a better place.
Admittedly, neither our mission nor our guiding philosophy
is typical of most foundations, especially with our emphasis
on spirituality. But this is what we believe and are attempting
to put into practice through our giving programs. We believe
we are but mere stewards of these funds, largely earned through
restoring people to full life and health, and now distributing
them back to those areas where our passion is the greatest
to help contribute to building a new generation.
We believe in trying to build the communities in which we
live, and by working collaboratively with our recipients,
donating both our time and our money, and by bringing them
together to collaborate with each other toward common objectives.
At a deep level, we believe in the spiritual reciprocity between
the giver and the receiver, and in investing in people who
are making a difference.
We are attempting to make a difference in five areas:
- Integrated healing, by changing the paradigm of
- Educational opportunities for local AND
especially international students
- The practice of spirituality in everyday life
- Youth leadership development
- Overcoming barriers for women and minorities
Let me illustrate each of these five areas by citing a current
program we are working on: Approximately half of our grants
go to integrated healing - the integration of conventional
medicine with complementary therapies - to treat the whole
person, mind, body, heart, and spirit. We believe integrated
healing is vital to changing the paradigm of today's medicine.
Penny adopted this approach in her successful recovery from
her 1996 battle with breast cancer. Now we are supporting
programs at the Virginia Piper Cancer Institute and the Minneapolis
Heart Institute, both here locally associated with Abbott
Northwestern Hospital, at the Center for Spirituality and
Healing at the University of Minnesota, Dean Ornish's Preventive
Medicine Research Institute, Duke University, and Jim Gordon's
Center for Mind Body Medicine, to name just a few.
Penny and Diane are taking these efforts one giant step
further by creating "A Conversation" next April
which will bring together the nation's leading practitioners
of integrative medicine and the philanthropists who are funding
these programs to build a national agenda to change the paradigm
of medicine. Dr. Claire Gaudiani, president of Connecticut
College, will facilitate the conference. Their hope is that
it will put these efforts "into the passing gear."
In education, we have funded George Fellows, drawn from
people of color, women and international students, at Georgia
Tech, Harvard, Amherst College, and locally at Macalester,
St. Thomas, Carleton and the Hamm Clinic. We are also supporting
a very innovative English acquisition program at the Abraham
Lincoln School for New Americans.
In the area of spirituality we are funding creative programs
at the United Theological Seminary to extend its spirituality
offerings to the entire Twin Cities community. A breakthrough
program in youth leadership development called "Horizons"
for college sophomores created by the Sigma Chi National Fraternity.
And, finally, a unique training program targeted at enabling
men of color to reach economic self-sufficiency called "Twin
In nearly every case we are backing people we believe in
to help them reach their goals - - people like Dr. Greg Plotnikoff
at the University of Minnesota, Louis King of Summit Academy
OIC, Murisiku Raifu, a young medical student from Ghana, Linda
Carole, creator of "Healing the Heart" at Minneapolis
Heart, President Wilson Yates at United Seminary, Steve Rothschild,
founder of Twin Cities Rise! and Renato Westby, a former soccer
player of mine who is creating an entire new village in Guatemala
City for 200 families to replace homes they lost in Hurricane
To reach our giving goals, we have set very strict fiscal
ground rules. Since we want to make an impact today yet build
the size of our foundation, we do not make grants to other
foundations, nor do we make endowment gifts. Instead, we prefer
multiyear gifts, with commitments up to 10 years, so the recipients
can count on the funds being there in future years and collaborate
with us in building their programs. This approach enables
us to invest the funds in our foundation in high-growth equities
so we can build the corpus of the fund at a much faster rate.
Hopefully, these approaches will enable to expand our areas
of impact over the next several years.
I hope this thumbnail sketch of Minnesota philanthropy
and our family foundation has provided you with some "food
for thought" as you engage this vital topic over the
next 24 hours. I'm quite sure we haven't yet got it right,
but that through idea sharing and dialogue we can make the
revolution in giving the most effective tool in creating societal
change to create healthier communities and a better world
in which to live.