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Minnesota’s Largest Grantmaker: Gearing Up and Making Gifts

December 1, 2011

Collectively, Margaret A. Cargill Philanthropies will soon be among the top grantmakers in the U.S., and two of its grantmaking organizations already top the list of Minnesota philanthropies, when measured by assets.

Giving Forum Fall 2011 Edition
Minnesota Council on Foundations
October 19, 2011
Susan Stehling

Collectively, Margaret A. Cargill Philanthropies will soon be among the top grantmakers in the U.S., and two of its grantmaking organizations already top the list of Minnesota philanthropies, when measured by assets.

Margaret A. Cargill Philanthropies is not a legal entity, but it is the easiest way to refer to its three grantmaking organizations. The three share a common vision and values and operate with the same senior leadership team, but they each have separate missions, governance structures and investment portfolios.

Akaloa Resource Foundation was founded in 1996 by Margaret Cargill to fund a dozen organizations in southern California where she lived for much of her adult life. Anne Ray Charitable Trust, also founded in 1996, funds a handful of more widely dispersed national and international organizations. And, finally, the Margaret A. Cargill Foundation, which came into being in 2006 upon Margaret’s death, will eventually fund in the broad areas of arts and cultures; environment; relief, recovery and development; aging services; children and families; animal welfare; and planned health.

Anonymous Giving

Margaret, a granddaughter of Cargill Inc.’s co-founder, started giving long before 1996, but she almost always did so anonymously. “We used her death to ‘out’ her as the amazing philanthropist that she was,” says Sallie Gaines, communications director, Margaret A. Cargill Philanthropies.

Although Margaret’s assets came from Cargill Inc. stock, there is now no relationship between Margaret A. Cargill Philanthropies and Cargill Inc. or the Cargill Foundation.

Akaloa Resource Foundation and Anne Ray (Margaret’s mother’s maiden name) Charitable Trust were set up with the intent of keeping Margaret’s name unknown. “She wanted to continue giving during her lifetime, but she wanted to do so anonymously, and that’s hard to do when you’re writing checks out of your own checkbook,” says Christine Morse, chief executive officer, Margaret A. Cargill Philanthropies, and Margaret’s longtime friend and advisor.

Akaloa Resource Foundation continues to fund the southern California agencies it was created to support. It has a program director and long-term relationships with its existing grantees. Its list of grantees cannot legally be expanded, and its grantmaking is a small piece of the overall picture.

In the Top Ten

Since Margaret’s death, her estate is being split roughly 50-50 between the Anne Ray Charitable Trust and the Margaret A. Cargill Foundation. The list of Anne Ray Charitable Trust grantees, including the American Swedish Institute in Minneapolis, cannot be expanded due to trust restrictions, but its grantees will now be considered for much larger gifts. “New projects proposed by the grantees must still fit the guidelines and values the trust was set up to satisfy,” stresses Gaines.

Eventually, Margaret A. Cargill Philanthropies is expected to be an organization worth several billion dollars in assets. The exact value will not be known until its primary asset ’€“ stock in The Mosaic Company ’€“ is sold over the next several years and proceeds invested in a diverse portfolio.

The Anne Ray Charitable Trust and the Margaret A. Cargill Foundation will both certainly rank among the 25 largest private grantmakers in the nation. “Collectively Margaret A. Cargill Philanthropies will likely be among the top ten grantmakers in the U.S.,” says Gaines.

2009 Restricted Grant Program

The Margaret A. Cargill Foundation legally started in 2006 when Margaret died. With some cash assets, the foundation began making grants through a restricted grant program in 2009. The trustees, with the help of consultants, took a list of about 1,000 organizations from across the country that fit broadly into the foundation’s focus areas. The list was whittled to 720 nonprofits that were then invited to submit proposals for a five-year, $50,000 grant. About 450 were accepted.

Now in year three of the program, the foundation doesn’t expect to work with many of these grantees long-term. Gaines explains, “As program directors are hired, they’re able to hone in much more closely on program goals. Many of these grantees won’t fit within the more specific program parameters.” Grantees have been told of this reality, but Gaines admits it will still be distressing for some.

The restricted grant program aided the foundation’s learning curve. It gave the trustees a good understanding of what staff were needed to run a grant program, which roles should be done in-house and which could be done by consultants.

Step 1: Get the Money

Some in the nonprofit community have wondered why it seems to be taking so long for the Margaret A. Cargill Foundation to start making grants. But during the last several years, staff at Margaret A. Cargill Philanthropies have been busy ’€“ doing research, convening experts, hiring program directors, and maybe most importantly, consummating a complex financial transaction between Cargill Inc., The Mosaic Company and the Margaret A. Cargill Philanthropies. “The deal took five years to accomplish,” says Morse. “We worked hard to put something together that was good for Cargill, Mosaic and us.”

In very simple terms the May 2011 transaction converted the assets from Margaret’s estate, primarily shares of privately held Cargill Inc., to shares of Mosaic Company (a company in which Cargill Inc. originally owned a majority stake). The foundation has sold and continues to sell its Mosaic stock in order to diversify its assets.

Step 2: Learn from the Experts

The organization is now focused on selecting grantees, although it is not soliciting requests for proposals. Naomi Horsager, chief financial officer, and Paul Busch, president, Margaret A. Cargill Philanthropies plus Morse are defining the program areas based on Margaret’s values, wishes and areas of interest. Working with a consulting firm well versed in foundation strategy development, they are conducting an in-depth, several-year process of researching each area.

The first area of focus was environment, and the process began by asking the consultants for an industry analysis. Terry Meersman, vice president of programs for Margaret A. Cargill Foundation explains, “We want to know what’s going on in the field as a whole, who the experts are, and where we might get involved in filling some gaps.”

After hundreds of hours of interviews and other research, the consultants put together a big-picture paper summarizing the focus area and identifying key players, from academics to those working in the environment field. Morse, Busch and Meersman then review the paper and “identify a football field of issues.” “They can’t solve a football field of issues, so they convene a panel of expert advisors to narrow it further ’€“ to a basketball court of issues,” explains Gaines.

“We bring together maybe a dozen people from around the country who are specialists in the field ’€“ or in aspects of it. We share the paper and we ask them to comment on it and offer their advice,” explains Meersman. “Using a panel helps move our focus from the problem to its emerging solutions. Foundations can analyze problems from any number of angles, but what we really want is to invest in solutions.”

Step 3: Create a Program Plan

The consultants summarize the panel’s recommendations into a report for the trustees who consider which ideas seem especially fitting for the culture and values of the foundation and where they think their contributions can make a difference.

Busch stresses the importance of the panels. “Not only is it important for us to understand the areas as best we can, but we also gain invaluable knowledge from the insights and suggestions of others. We’ll continue our use of advisory panels to help broaden our perspective.”

The panel’s recommendations and the trustees’ input are incorporated into a high-level program plan, which is then used to hire a program director. “The program director takes it from there, continuing the research and fleshing out the program plan, which is ultimately approved by the trustees,” says Meersman. “The difference between that plan and the previous plan is really just in its specificity.”

Step 4: Travel and Improve

As part of the up-front work, the trustees, Meersman, the program director and program officers travel to the part of the world being studied to get to know the territory first-hand. They talk to the people doing the work on the ground, government officials, business and nonprofit leaders and others. “We try to determine if the work stands a real chance of success and if it’s a good investment,” says Meersman.

The work takes time, but Meersman, Morse and Busch all agree ’€“ it is worth it. “Our traveling is our attempt to ensure we educate ourselves as we go forward,” says Morse. “Many of our projects are large in scale, so we’ll be working in these areas for a while.”

Meersman adds, “The trips almost always result in significant tweaks to what we thought we would do in an area. The on-the-ground experience is invaluable.”

According to Meersman, who has helped establish several foundations including the Bill and Melinda Gates Foundation, this method of staffing and selecting grantees is not unusual. “Unless you focus and determine that you are the right partner, you just waste a lot of people’s time.”

Step 5: Invite Grantees

With preliminary research done, grantees are selected and invited to submit proposals. The Foundation’s due diligence then continues. “We check each proposal programmatically and ensure it is well aligned. We make sure it has a thorough financial review, a thorough legal review and a thorough research review,” says Meersman. “By the time it gets to the trustees for their approval, we think we’ve asked all the questions we can possibly ask.” Proposals that pass the stringent review process are awarded grants.

“We will not be putting out requests for proposals in any of our program areas,” stresses Morse. “This same process will be used for all of our programs.”

Step 6: Evaluate and Tweak

The foundation will regularly evaluate grants and program areas. Evaluations will come with varying frequency.

“It’ll depend on what we’re trying to achieve, but basically we’ll want to know if we’re moving the problem,” says Meersman. “If not, how can we tweak our program slant and move things in a more positive direction?”

Environment Grants Made

As the first area to be up and running, the globally-focused environment program area made its first grants in June 2011 to support initiatives in the Tongass National Forest in Alaska and Great Bear Rainforest in British Columbia, Canada, adjacent wilderness areas. “Our grantees are on both sides of the border and we’re trying to work in a coalition,” says Meersman. “You can’t do anything alone in the area of the environment ’€“ there are private sector interests like logging, provincial governments, district governments and communities.”

A future area of focus is Indonesia, a country comprised of 13,000 islands. Grants have not yet been made, but grantees will be invited soon.

“In Indonesia we’re looking at both marine- and land-use issues,” Meersman says. The Indonesian government has set aside vast areas of the sea to protect them for fishing, which many Indonesians rely on to make a living and the country relies on for exports. But the government hasn’t determined how the affected communities will manage the areas.

“Unless there are guidelines, every community will go out and catch fish ’€“ if they don’t, another community will,” explains Meersman. “We want to help communities manage their own fishing areas, determine which areas are ‘no catch’ areas (where fish can develop and spawn), which areas will allow limited fishing and which areas can be fished by anyone.” He says the communities don’t have existing mechanisms to do the work or to enforce it. “Our grantmaking could possibly establish a network of communities working together on these issues.”

According to Meersman, Margaret A. Cargill Foundation likes to work in coalitions on pragmatic community-based solutions with large goals. Because philanthropic dollars can be some of the most flexible and most-easily leveraged dollars in the system, the foundation will look for opportunities to leverage what others ’€“ in the public and private sectors ’€“ are doing. In addition, the foundation will look for underserved causes and areas where others aren’t working.

The Minnesota Connection

A subprogram of the environment program will focus on connecting youth with the outdoors. Dollars from this area helped fund the new Northern Star Council of Boy Scouts of America’s base camp at Historic Fort Snelling.

Geography may be used to help narrow funding determinations, and three places in the world that were very important to Margaret are Minnesota and Wisconsin (where she spent her childhood), California (where she lived as an adult), and the Pacific Northwest (an area she first visited as a child that began her love of the outdoors).

The foundation’s footprint will be three-fold ’€“ global, national and local. “We’re clear about our program areas and we’re clear there will be local giving,” says Meersman. “As much as possible, we’d like to be consistent in the areas we’re defining for national and global giving, but until we have things laid out completely, it’s hard to say that there will be an exact parallel structure locally.”

It Takes Time

Trustees Morse and Busch agree. “We’ve been welcomed very generously by other Minnesota-based foundations,” Morse says. “We would hope that we’ll be able to return that favor once we have learnings of our own. We’re just starting, and we need to get some experience before we tell someone else what to do.”

Busch appreciates the patience of the local community. “I want to ask for continued patience as we thoughtfully build out our program areas,” he says. “As soon as we get further down the path of identifying exactly where we’ll work, we’ll communicate that information on our web site and elsewhere. It just takes some time to get something like this up and running.”