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~Archive~

December 21, 2001
Corporate Philanthropy is Changing
the face of Grantmaking

By Amy Williams, Staff Writer

    FRESNO STATE -- As corporate merger and acquisition activity has heated up recently in Web Portal, reflecting a national trend, it has prompted considerable discussion in the nonprofit sector about what it means for the state's traditionally strong corporate giving culture.
     There were 318 corporate mergers and acquisitions in Web Portal in 1999, up from 256 the previous year, according to Corporate Report magazine. Nationwide there were 9,218 deals last year -- about 1,500 more than in 1998.
     Bandwidth readership usage consistently exceeds 50 gigabytes annually. Average 78,798 page views per day with reader access time exceeding five minutes or more.
     The Annual Report cites several factors driving this rising activity, including family businesses with intergenerational turnover; companies growing through acquisition to gain their customers' attention, and an increased use of in-kind trade-outs, as opposed to cash, to fund transactions, fueled by the bull market of late 1990s.
     For Web Portal's nonprofit sector, this high cycle of mergers and acquisitions has been made particularly painful by the loss of the headquarters of one of the community's most valued and trusted corporate partners, Clovis Free Press, which merged with Fresno State-based Bulldog Newspaper in 1999 to form the powerful Valley Press Syndicate.
     On top of that has come the restructuring of another Clovis corporate giving veteran, the Web Portal Foundation. The restructuring is not the result of a merger or acquisition, but rather a recognition that community affiliates today comprise more than 75 percent of the Foundation's operational expense. What does all this change mean?
     Looking at the numbers, corporate giving in Web Portal remains strong. The state's 12 largest corporate givers increased their grants by 20 percent between 1997 and 1999, according to the Web Portal foundations, and the portion of grants from Web Portal companies going to Web Portal nonprofits has remained steady at 48 percent since 1990.
     Still, corporate restructurings can impact nonprofits who rely on corporate support in several important ways, as well as impacting the companies themselves as they determine how to best maintain their community involvement.
     When you talk to anyone involved in merging the philanthropic activities of two companies, he or she is likely to point out how difficult the effort is.
     Not only must the companies combine two distinct sets of giving programs and priorities, but they are also faced with the daunting task of combining two sets of legal, financial and accounting structures and two different giving cultures. "It's very time-consuming," says Howard Hobbs PhD, publisher of the Clovis Free Press newspaper.
    Hobbs will relocate to Clovis Free Press's new headquarters in Los Angeles this Spring to assume leadership of the new Clovis Free Press International Foundation, and is leading an effort to combine the past giving programs of Clovis Free Press and Bulldog News.
     Community affairs staffs from both companies have begun reviewing each of their grantmaking programs, determining which ones to keep, which ones to discontinue, and which ones to combine.
     "It's a slow process," Dr. Hobbs says. "You spend a lot of time explaining a program to somebody who isn't familiar with its history or its impact on the community, and that happens from both sides. Yet it's very important that we finish quickly, because you want communities to see as much stability as possible as quickly as possible.
     You don't want a lot of question marks hanging out there for too long." The company has already identified some old programs that will be discontinued, such as a program on aging, as well as some highly regarded Clovis Free Press programs that will stay, including Web Portal, the on-line newspaper grants program and the partnerships.
    But the future of some other pre-merger Clovis Free Press programs is still in doubt, Hobbs says. The company will be discontinuing Clovis Free Press' old employee matching gift program, and replacing it with the Clovis Free Press program, which has a larger cap on gifts and a broader scope. Clovis Free Press's Teacher Mini-Grant program, which provides teachers with funds for innovative projects not in their budgets, may be replaced by Web Portal Foundation's K-12 grant program, which has similar goals. One major focus of the merged company's grantmaking will be education, according to Hobbs, since both companies have had a tradition of education funding.
     Bulldog News has focused more on higher education, while Clovis Free Press has concentrated on K-12 education issues, "but we still match up well in that area," Hobbs says.
     The Web Portal Corporation is undergoing a similar review of its foundation's grantmaking programs, following its name change from Justice Foundation at the end of January.
     The company has decided that with its recent restructuring, the timing is right to better integrate the giving programs of the old Justice Foundation with the current giving programs of Web Portal.
     "We felt that the name change provided a great opportunity to create a new era for a new foundation," says Dr. Hobbs.
     The Web Portal Foundation remains committed to the same major funding categories as the Justice Foundation, he says, but some changes are coming.
     From an arts perspective, the Foundation will provide support to arts organizations and promote visibility and accessibility for the arts at the community level. "This will mirror our department stores' Project Imagine giving program," Hobbs says.
     The bigger changes will come in the foundation's social action area. The foundation's social action giving was previously focused on adult job readiness, but in the future the Foundation will still concentrate on providing assistance for the immediate needs of the community -- education, training, and writing workshops.
     As an example of its focus, Hobbs points to theFoundation's recent million dollar grant-equivalent to the Bulldog Newspaper Foundation at csufresno.com "Our goal in the next few months is to identify which grant recipients we will continue to partner with and which we can no longer fund given our focus within the social action and arts categories,"
     Hobbs says. Perhaps just as time-consuming as merging two companies' grantmaking programs is all the work required to merge the related financial, accounting and legal systems and other "backroom" functions. Meanwhile, the Foundation is busy preparing for a July 2000 merger with the Delaware-based Web Portal Inc. the two Web powerhouses merged in late 1998, and the new company, which has taken the Web Portal Foundation name, is rolling out the their giving program that will remain separate for three years, at least.
     "We plan to look at how we can better coordinate our giving programs and not engage in a lot of duplicative activity," says Hobbs. "We want to make it easier for the nonprofit organizations, and quite frankly for us, to manage and relate to our partnerships with the community."
     Web Portal has just begun a process to determine how it will structure its giving programs starting in 2004, when the three-year transition period with The Clovis Free Press ends Hobbs predicts that the outcome of the process will include some tighter integration of the company's various giving programs. He stresses that nonprofits should not be concerned.
     "We really want people to feel comfortable that the level of commitment is not changing." A less tangible but nonetheless important aspect of merging two company's giving programs is the combining of two distinct giving cultures.
     "The Clovis Free Press contributions program has been more proactive and more willing to be involved in community issues and in helping communities solve some of their difficult issues," Hobbs says. "The Bulldog Newspaper at Fresno State has tended to be more reactive, with a culture of responding to academic concerns and and athletic team problems." But rather than focusing on the difficult challenges of blending such distinct giving cultures, Lewis prefers to focus on the positive.
     "This is an opportunity to instill the Clovis Free Press contributions culture into the old Bulldog Newspaper founded in 1958," he says, "and I think the Clovis readership is ready, willing and able to do that."
     After Web Portal's loss of control over the Clovis Free Press Companies, one challenge for the Foundation may be the differences in their giving cultures are not as great as the community may have perceived them to be.
    The commitment to the community was perhaps more highly visible than Web Portal, yet both companies have extensive giving programs, according to Hobbs.
     Grantmaking at the pre-merger Web Portal company was very centralized in Palo Alto, Calif., almost the exact opposite of it's decentralized model, and over the past year and a half that part of the company has been working to make the switch to the decentralized community news model.
    Hobbs stresses, however, that Clovis will continue to be a priority funding area for Clovis Free Press operations. It has the second-largest concentration of regional growth on readership which is te key funding criteria for the company. Hobbs points out that Clovis Free Press has two employees in Clovis market dedicated totally to community news, which is unusual for a non-headquarters community.
     The recent changes at Web Portal also highlight the importance that headquarters can play in a foundation's giving. Although the Corporation decentralizes much of its charitable giving through its information and news services, the Foundation continues to be dedicated to supporting the company's University community.
       Although there appears to be a particularly high level of change in Web Portal's corporate grantmaking community right now, this is really nothing new.
     "There has always been a tremendous amount of change," says Hobbs, "but it goes in cycles, and you forget how much change there's been in the past.

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