Diane Kaplan, President, Rasmuson Foundation

May 13, 2010
Diane Kaplan, President, Rasmuson Foundation

In the nine years since Diane Kaplan became president of the Anchorage-based Rasmuson Foundation, the foundation has seen its assets increase more than fifty-fold and, more recently, has had to deal with a liquidity squeeze caused by the global financial crisis. Kaplan, who has a long history of service in Alaska's nonprofit community, including stints as the president and CEO of Alaska's twenty-eight-station public radio network, as an executive committee member of the Anchorage Schools Foundation, and as a trustee of the Anchorage Community Land Trust and the Alaska Children's Trust, has helped guide the foundation through the tumult of the last few years while continuing to advance its mission of working to promote a better life for all Alaskans.

Recently, Philanthropy News Digest spoke to Kaplan about the effects of the economic downturn on Alaska nonprofits, what the foundation is doing to address recession-related challenges in the state, and how it balances its fifty-year history as a small family foundation with its more recent role as the biggest private funder in the state.

Philanthropy News Digest: You joined Rasmuson as president in 2001. What were the challenges confronting the foundation at the time?

Diane Kaplan: Between 2000 and 2002, the Rasmuson Foundation's assets went from $9 million to $500 million, so the issue we were focused on most at that point was actually the fact that our annual giving was increasing from a few hundred thousand dollars a year to $20 million a year or more. We were really not focused on the dot-com bust or the recession that followed. Almost all of our assets were in Wells Fargo stock at the time because the Rasmuson family had owned National Bank of Alaska, which was sold to Wells Fargo. And since Wells Fargo was not much affected by the last economic downturn, the value of the corpus was not an issue for us.

PND: How has the so-called Great Recession changed things?

DK: Even though we're a fifty-five-year-old foundation, this is the first time we have had to deal with liquidity issues. Just two years ago, we were still trying to catch up with the increase in our assets and were trying to build a portfolio that was in line with the value of those assets. This past year was very different for us.

PND: In what way?

Even though we're a fifty-five-year-old foundation, this is the first time we have had to deal with liquidity issues....

DK: Over a number of years, we had gone from having the endowment fully invested in Wells Fargo stock to a much more diversified portfolio, although one without a large fixed income component. So going into this recession, we had very little money in fixed income and very little liquidity in our portfolio, and that created some real issues for us in 2009, in that we had to manage our cash flow carefully so we didn't have to sell assets at unfavorable prices in order to make grant payments.

PND: How have your grantees and other nonprofits in the state fared during the economic downturn?

DK: For our grantees, 2008 was the perfect storm. In addition to falling financial markets, Sen. Ted Stevens was defeated in his Senate re-election bid. As chairman of the Senate Appropriations Committee for six years, Senator Stevens directed unprecedented amounts of federal funding to Alaska. Our now-senior senator, Lisa Murkowski, was recently appointed to the Appropriations Committee, but she's still a very junior member of the committee, while our new senator, Mark Begich, does not sit on the Appropriations Committee and is one of the most junior members of the Senate. In other words, the clout and influence Ted Stevens wielded on behalf of his Alaska constituents for so many years disappeared overnight. Luckily, Senator Stevens was close to Sen. Dan Inouye (D-HI), who is the new chair of the Appropriations Committee and has a great love for Alaska. That has mitigated the impact of Senator Stevens' loss to some extent.

Around the same time that Ted Stevens was getting ready to leave Washington in late 2007 and early 2008, we also saw cuts in funding for the Denali Commission, which Sen. Stevens helped create in 1998 after the model of the Appalachian and Delta commissions — programs that were designed to funnel federal funding in an efficient way to support infrastructure in some of the poorest rural regions of the country. Further, with oil prices high and generating 85 percent of Alaska's budget, the state was flush with money for capital projects as well.

Those factors, in combination with the economic impact of the recession and reduced grantmaking by Rasmuson and other funders in the state, all came together at the same time to create a perfect storm for our grantees. Frankly, back in 2007, if an Alaska nonprofit came up with a good idea, there was very little chance that it wouldn't be able to find the funds to implement it. But that assurance disappeared almost overnight.

PND: Did groups in Alaska start feeling the impact of the recession before or after the rest of the United States?

DK: We generally lag the rest of the country, and this downturn was no exception. Unemployment in Alaska is still ticking up. We have not yet seen the dramatic decline in real estate prices that many markets in the lower forty-eight have, although we think we could yet see a decline in prices. And we are just beginning to see dramatic increases in the number of people showing up at foodbanks for the first time and needing assistance from various social service organizations. In other words, I don't believe we've hit bottom here in Alaska.

PND: How are nonprofits in the state responding?

DK: We work with a consulting group called the Foraker Group, and what they are recommending — which we endorse — is that organizations focus on their core mission during tough times like this. We're also hearing a lot about discussions taking place around mergers and closings, although there haven't been many of either yet. I also think it's fair to say that many capital projects that had been on the drawing board in 2006, 2007, even 2008 and 2009 have been delayed. Very few major capital or endowment campaigns are going on.

PND: What is Rasmuson doing to help nonprofits in the state address the recession-related challenges they face?

[W]e believe individual giving is absolutely critical to the sustainability of the nonprofit sector over the long term....

DK: For starters, we have become much more directly involved in public policy. That's a focus area we've been building up over the years, but we've been doing even more of it recently in response to the economic situation.

Let me give you an example of why we think it's important. Our nonprofits get a relatively small percentage of their funding from individual donors and a much larger percentage from government, corporations, and foundations than nonprofits in the rest of the lower forty-eight. But we believe individual giving is absolutely critical to the sustainability of the nonprofit sector over the long term, so with our partners we've promoted legislation to allow individual Alaskans to donate all or part of their annual permanent fund dividend to nonprofits. For your readers who may not be familiar with it, Alaska's permanent fund is a pool of funds derived from oil tax money, a certain percentage of which is distributed to every Alaskan, in the form of a check, in October each year. The value of the permanent fund currently stands at $25 billion, which is a lot of money. Thanks to relatively recent legislation, when people file for their permanent fund dividend at the beginning of the year, they see a list of charities and nonprofit organizations to which they can contribute. Last year was the first year the program was in place, and the checks went out at the end of the year to recipient organizations. Some of our staff here did a great job connecting some of those organizations with local media and social media outlets, so the whole effort got great coverage. All told, about fifty-five hundred Alaskans gave a total of about $550,000, with the average gift a little over $100, which is a great start. In 2010, we expect to roughly double that, although the average size of gifts is down by a third.

In addition, we've supported the Alaska Community Foundation in its efforts to help communities in the state create their own local funds as affiliates of ACF. And though we didn't award any new, large grants during 2009, we made an exception for a special grant to address basic needs of Alaskans. We didn't publicize the grant, but it was a $500,000 allocation to the United Way to support about forty basic needs organizations around the state — foodbanks, women's shelters, and the like.

PND: What do you see ahead for Alaska's nonprofit economy?

DK: I think organizations that took advantage of good economic times to expand, build new facilities, and so on may be finding themselves stretched, which may cause nonprofit trustees to be a bit more cautious going forward. There's good and bad in that. Fortunately, before a lot of our grantees take on big capital projects, many go through a pre-development program that we support in partnership with the Denali Commission, the Alaska Mental Health Trust Authority, and the Mat-Su Health Foundation. The program provides organizations with intensive technical assistance that's designed to help them right-size any new capital projects and make sure they'll be able to afford to operate them after they've been built. Still, it's hard to predict revenue streams right now, so I wouldn't be surprised if organizations are thinking a little bit more about sustainability than maybe they had in the recent past.

In some ways, I feel like we've re-set the clock to 2004, which was a more normal revenue picture for Alaska's nonprofits than the wild ride we took in 2005, 2006, and 2007. Oil prices rose throughout 2006 and 2007 and they hit an all-time high in the summer of 2008, and that helped to create an environment in which we had a large budget surplus in Alaska. And because Conoco and BP, the two largest corporate funders in the state, had their giving tied to oil prices under a compact they had signed years ago, their giving quadrupled during that period. Where they might normally give $3 million or so a year each, that jumped to $10 million to $12 million a year.

I'm not sure we'll ever see that level of giving in Alaska again. But being at 2004 levels is still pretty darn good. The nonprofit economy in Alaska was in much better shape in 2004 than it was in 2000, and things were much better in 2000 than they were in 1995. The last few years were just really unrealistic in terms of sustainability.

PND: Rasmuson is the largest foundation in Alaska — both in terms of assets and grants awarded. How, if at all, does that status affect your funding decisions?

We try to make sure to not let our status as the biggest private foundation in the state go to our heads....

DK: Even though we're the largest private foundation in Alaska, that's really not saying much because we have such a small foundation community here in the state. And because the state has so little private organized philanthropy, it puts pressure on us to be thoughtful. We also try to make sure to not let our status as the biggest private foundation in the state go to our heads. Because virtually everything we do, we do with other funding partners, it's important for them to know and feel that that they are truly a partner and not just an "add-on."

I think we also have an obligation to be ambassadors for Alaska. We try and educate our peers nationally and regionally about Alaska issues and needs. And we are mindful about not abusing our position and the power imbalance our status as the biggest foundation in the state creates between us and our grantees. We try to keep in mind that they depend on us for funding, but that our contribution to the relationship — writing the check — is the easy part. The grantees are the ones doing the hard, important work.

PND: What are the unique challenges faced by nonprofits in Alaska?

DK: As I mentioned before, individual giving rates are extremely low in Alaska. Compared to other states in the nation, Alaska ranks dead last in the percentage of money that wealthy people give to charity. Poorer people give to charity here, but the wealthier people in Alaska do not give what they could, which is a challenge for our grantees. Also, the cost of living in rural Alaska is astronomical, which makes it difficult for nonprofits to afford even basic goods and services. For example, local water is often non-potable, but buying water is very expensive. Even a box of laundry detergent can cost $35 or $40.

Staffing issues are also a problem for Alaska nonprofits. Last summer I asked a group of nonprofit CEOs from around the state, "If you find yourself unable to sleep at night because of a work-related issue, what are you most likely to be worrying about?" I thought they would all say expenses, but most of them said that their toughest challenge is finding qualified staff for key positions, especially in the areas of development and finance. Nonprofits just can't compete salary-wise with the private sector here.

PND: Are the low giving rates in the state offset at all by philanthropic dollars and investments flowing into Alaska from elsewhere in the country?

DK: We rank very low among all states in terms of money flows from national foundations. Issues of geography are partly to blame, but it's also a function of national foundations being unfamiliar with Alaska organizations and issues. If the leaders of a foundation in some other part of the country have never been to Alaska and don't know anybody in Alaska, they're unlikely to fund organizations here. There are too many things that they are familiar with.

To address these issues, we started a program thirteen years ago called the Educational Tour of Alaska for Grantmakers. Every August, we invite seven or eight national or regional foundation executives to spend a week in our state traveling, meeting policy makers, visiting nonprofits, and learning about Alaska issues and history. Even though there's no quid pro quo, actual or implied, the program has generated an estimated $60 million in investments from foundations based outside Alaska.

PND: How does the large indigenous population in Alaska impact Rasmuson's overall grantmaking?

DK: About 20 percent of Alaska's population is comprised of Native peoples — a larger percentage than in any other state in the country. As a result, we have structures in place that are different from other places in the United States. For example, if you're an Alaska Native living in Anchorage, you have access to excellent free health care at the Alaska Native Medical Center, a world-class hospital and primary care center at the Southcentral Foundation. However, if you live in a remote area, you may not have that same opportunity, in part because transportation within the state is extremely expensive. That's something that isn't much of an issue in other parts of the country, and therefore may not be a focus area for other funders. We also have tribal organizations that are fairly unique to Alaska — for instance, regional Native housing authorities that build housing for both Native and non-Native peoples in their communities but are actually instruments of the state of Alaska.

In terms of our grantmaking, our founder Elmer Rasmuson grew up in the Native village of Yakutat, where he was delivered by a Tlingit midwife. Elmer, and later his foundation, always supported Alaska Natives, and that support has grown over time. We have five grantmaking target geographic areas at Rasmuson, and each of those areas in some way includes Native populations. In addition, we are a statewide funder, and if we didn't support a lot of programs for Alaska Natives we would be ignoring a large swath of our state. Sometimes we don't get a lot of applications from some Native villages in the state, so we do outreach to try and address that.

PND: In addition to being the largest private funder in the state, Rasmuson is very much a family foundation, with several family members on the board, including your chair. How strong is the family's influence on the direction of the foundation?

The intent of our founder and primary donor is always on our minds and comes up in our meetings all the time....

DK: Although we're a bit of a mix of independent and family foundation, we think of ourselves as a family foundation. From talking with my colleagues, I get the sense that in some ways we're similar to other family foundations and in other ways we're quite unique. The intent of our founder and primary donor is always on our minds and comes up in our meetings all the time. There's rarely a board meeting in which someone doesn't bring up something Elmer believed in or wished, and his wishes are just as likely to be brought up by a non-family member as a family member. One unique thing about Rasmuson is that half our board is made up of Rasmuson family members and the other half is made up of non-family members, and the non-family members are not the people who usually seem to end up on family foundation boards — the family lawyer, for instance. We generally conduct a search process to find board members and select individuals because they add diversity to the board either through their field of experience, their age, their geographic location, or their ethnicity.

The original Rasmusons were missionaries and were involved in education, health care, and many other things we still fund today. The family roots are still a huge part of what we do on a daily basis.

PND: How does the family prepare younger generations to be involved in giving?

DK: We only began discussing succession issues for the first time in about 2001. Luckily for us, it's been a smooth process. The Rasmuson family is relatively small — there are three children and four grandchildren of Elmer Rasmuson — and they all get along well. Many of the family members have been successful in their own right, and even though they live in different places and lead busy lives they remain deeply committed to the foundation. In fact, we now have two board members who are fourth generation.

For the foundation's fiftieth anniversary, we brought together the entire Rasmuson family to participate in the celebration so family members who aren't involved in the foundation could learn a little bit about the foundation's work. We're considering doing something like that every five years just to keep the whole family — all generations — involved.

PND: Under your leadership, Rasmuson has significantly expanded its grantmaking levels. What changed to allow that shift to happen?

DK: The foundation was established in 1955 with a gift of $3,000 in Presbyterian Church bonds from Jenny Rasmuson, Elmer Rasmuson's mother. Between 1955 and 1999, a few million dollars were added here and there, causing the original $3,000 to inch up to $9 million. When I first became involved with the foundation in the mid-90s, the board would meet once a year to distribute around $250,000 to $300,000 in small grants — about a hundred grants in the $2,500 range — for small capital projects. We still do that today, though our small grants have become bigger.

The big change started in 1999, when, as I mentioned earlier, the family bank was sold to Wells Fargo, and Elmer Rasmuson decided, in consultation with his son, our chairman, Ed Rasmuson, that he was going to donate the majority of his estate to the foundation. When the bank deal was finalized in the summer of 2000, the foundation got $40 million, bringing its assets up to $49 million. Then Elmer passed away in December of that year, and between 2001 and 2002 his assets moved from his estate into the Rasmuson Foundation. The foundation ended up with about $500 million when that was all said and done — a dramatic increase over the original investment by Jenny Rasmuson!

PND: In light of those changes, how have the foundation's operations and grantmaking priorities changed over the last decade? What are the foundation's goals today?

DK: We still have a very broad mission statement; we're still all about improving the quality of life for Alaskans — that was as true in 1955 as it is today.

What's changed is how we carry out our mission. When our assets skyrocketed, we knew we could no longer just award grants of $2,500 — we would be awarding ten thousand grants a year, which would be unwieldy and not a very good strategy. Fortunately, before Elmer passed away he got to lead the decision-making process about what grantmaking direction to go in next, and everyone decided that the foundation would maintain its strong capital focus while also funding other projects. One of the first large, non-capital grants Elmer participated in reviewing went to the University of Alaska system, which, shockingly, at the time had no development system in place for alumni giving. Another of those initial non-capital grants went to the Anchorage Museum to support a permanent loan agreement with the Smithsonian that brought about six hundred Alaskan Native objects to the state. These were much-needed funding opportunities for both organizations.

The increase in our assets has allowed us to get involved in areas where in the past we felt we didn't have enough money to be a big player....

Today, there are not a lot of areas we do not fund. The increase in our assets has allowed us to get involved in areas where in the past we felt we didn't have enough money to be a big player. For instance, we've gotten involved in housing and community development, promoting philanthropy in the community, and some higher education work. Those are all areas in which we really couldn't have had a meaningful impact when we were distributing a total of $300,000 a year. It wasn't that we were uninterested in those areas, but we didn't have the capacity yet. In addition, we've added a robust public policy focus. We're very active with our congressional delegation, state legislature, mayors, and the administrators of various state departments.

PND: Why are arts and culture such an important program for the foundation?

DK: The Rasmuson family has always been involved in the art world, both making and collecting art. Jenny Rasmuson made a now-famous quilt from feathers of ducks she shot herself, and she also was a guitar player and singer. Elmer was always buying art wherever he went, and when people would come into the family bank from around the state they would bring in works of art that Elmer would often buy. There's actually a museum here in the Wells Fargo building, where the Rasmuson Foundation is located, with some of the art the family has collected over the years. Even today, Mary Louise Rasmuson, Elmer's 98-year-old widow, is still active with the Anchorage Museum. Although we have different strategies today than we did in the beginning, simply because we have more money to work with, arts and culture have been a part of what the foundation was involved in since day one, and we honor that legacy.

PND: Explain the foundation's unique "tier 1" and "tier 2" approach to grant applications. How do the two tiers differ, and why did the foundation take that approach?

DK: The tier system was something Elmer Rasmuson came up with when we were having meetings about the direction in which to take our grantmaking in light of our expanded assets. We agreed that our traditional small grants would be tier 1 grants. Today, our tier 1 grants fund capital projects of up to $25,000. Any non-capital projects of up to $25,000, plus all projects over that amount, capital or non-capital, are considered tier 2 grants. However, we have a lot of other grant designations as well — sabbatical grants, individual artist grants, and arts educator grants, for instance.

PND: Rasmuson provides support for both individuals and organizations. Why has the foundation taken that approach?

DK: When we were going through our expansion phase, we knew we wanted to maintain arts and culture as a significant grantmaking focus but we recognized that the needs of the arts community were not primarily capital needs — if you're the Anchorage Symphony, how many French horns do you really need? If we only funded capital projects, we would not be effectively responding to the needs of the arts community — and individual artists — here in Alaska. We had to come up with some new grantmaking strategies.

Here's an example of one of those strategies: When we moved the foundation into a new office space years ago, we had no art on the walls, so we came up with the idea of borrowing some art from the archives of the Anchorage Museum. However, when we approached the Anchorage Museum about that plan, we learned that they hadn't bought any artworks in ten or fifteen years. They had no money for acquisitions.

That hit a chord with me because of a meeting I once had with Senator Stevens in which I asked the senator, "What are some of the recurring federal funding requests you get from organizations — things you think are important, but that you can't help with?" He said immediately, without even having to think about it, that museums often come to him for money for acquisitions, but there's no source of federal support for that area. We found that out firsthand with the Anchorage Museum. In response to that need, our arts program officer, Helen Howard, came up with a great idea for an annual grant program to allow any museum in the state to get up to $30,000 a year for the purchase of art by living Alaskan artists.

That was our first way of trying to create a market for works by individual artists, because all that money goes to artists who sell works directly to the museum. However, we knew we wanted to do more. So at the board's request, we hosted a two-day gathering of about twenty people, both artists and arts organizations, to explore how else we could maintain a vigorous involvement with the arts as we got bigger. The message we got from that gathering was: To promote a vital arts community in Alaska, the foundation needed to provide support for individual artists and make Alaska a place where they can thrive. And that's where our individual artist program came from.

PND: Well, thank you for your time, Diane.

DK: Thank you. It was my pleasure.

Staff writer Lauren Kelley conducted this interview for PND. For more information on the Newsmakers series, contact Mitch Nauffts at mfn@foundationcenter.org.