Giving away money for a living isn't the sinecure it might seem.
In fact, running a charitable organization is anything but easy the way Marilyn G. Gelber, the executive director of Independence Community Foundation, does it.
Since Independence Community Bank Corp. in Brooklyn, N.Y., established the foundation three years ago with proceeds from its mutual-to-stock conversion, Ms. Gelber has helped to fund nearly 300 organizations with grants ranging from $500 to $5 million. Along with her five-person staff she has reviewed more than 1,700 applications and disbursed more than $16 million, but not before getting to know the organizations' leaders as well as how any grant money would be spent and how the community would benefit.
"I'm not a check-writing service," said Ms. Gelber, who spent 28 years as an urban planner, investment strategist, and administrator before she was chosen to head the foundation. "The bank doesn't need me - it doesn't need a staff like this - if all we're going to do is do photo ops and hold up big checks."
Many once looked askance at thrifts that set up charitable foundations in converting from mutual holding companies, but in the five years since the first thrift set up a charitable foundation as part of its conversion, this suspicion has all but vanished. One of the things that initially worried depositors, regulators, and investors was that executives of the thrifts, which typically allocate 4% to 8% of their stock to fund their foundations, were using them as a ploy to keep big chunks of stock in friendly hands. (Regulatory safeguards include pro rata voting, so that all of a foundation's shares are voted in line with shareholders rather than with the thrift's management.)
"When people first came to us with the idea, we were skeptical," said David Permut, counsel at the Office of Thrift Supervision, who oversees the conversion process. Thrifts have always had the ability to set up foundations, but those being proposed were on a much larger scale, using as much as 10% of stock, he said.
"We thought, you can do that, but we had to think it through. We wanted to make sure membership was OK with that," Mr. Permut said. Now, "most of the questions have been satisfied. It's not just a gimmick, and the communities are benefiting."
After regulators became acquainted with the structure and reviewed the rules governing foundations, which are overseen by the Internal Revenue Service, guidelines were adopted - these may soon become regulations - and criticism waned.
"The conventional wisdom is it's a prudent thing when you're converting," said Mark Fitzgibbon, an analyst at Sandler O'Neill & Partners in New York. He said it's a great marketing tool, an opportunity to give back to the community, and a way reduce excess capital after a conversion.
About 30 of the 245 thrifts that converted between 1996 and 2000 have established charitable organizations, according to figures from the OTS and the Federal Deposit Insurance Corp. It has become so commonplace that the Community Bankers Association of New York State has formed a charitable foundation subcommittee, Massachusetts is considering making the establish of foundations mandatory in mutual-to-stock conversions, and the OTS has taken steps to make the start-up process easier for converting thrifts.
For instance, under rules expected to be implemented by yearend, they would no longer have to obtain a waiver of conversion regulations by the OTS, and setting up a foundation would become a standard part of the application process. As it is now, starting a foundation is a research project for a thrift, though the OTS does provide guidelines upon request.
Things weren't easy for OceanFirst Financial Corp. of Toms River, N.J., the first thrift to establish a charitable foundation as part of its conversion, in 1996.
"There was quite a bit of salesmanship to be done to have the regulators look favorably on it," recalled John R. Garbarino, chairman, president and chief executive officer of $1.6 billion-asset OceanFirst.
After six months of discussions with regulators, OceanFirst established a $13.5 million foundation that is now valued at close to $30 million and has given $5 million to medical centers, community colleges, the Boy Scouts and Girls Scouts of America, Habitat for Humanity, and other groups.
Another pioneer was $492 million-asset Bay State Bancorp Inc. of Brookline, Mass., which started the Bay State Federal Savings Charitable Foundation in 1998. John Murphy, chairman and chief executive of the banking company, said, "We had been in existence for 80 years and felt that if the bank could give back to community, we'd benefit."
The foundation has assets of about $5 million supports many children's and elderly organizations, Mr. Murphy said.
While it is difficult to measure in numbers how banks gain from such foundations - IRS regulations prohibit them from directly receiving tangible benefits from a foundation - all concur that they help get a company's name out and establish it as a friend to the community. At the very least, banks can get credit under the Community Reinvestment Act.
Alan H. Fishman, who joined Independence Community Bank Corp. this year as president and CEO, said the foundation is "probably not a bad thing for business."
Like every foundation, Independence Community Foundation must donate 5% of its assets every year.
"We don't do it with an eye on getting business, we do it with an eye on doing good," Mr. Fishman said. "But doing good and getting business are not inconsistent."
Ms. Gelber said, "For me what this is about is forming relationships with not-for-profits that are active in accomplishing something in their community."
Independence has made affordable housing a focal point, though it has made grants to a range of organizations, including the Brooklyn Art Museum, a Parent Teachers Association, and the Council on the Environment of New York City.
As the largest New York City foundation based outside Manhattan and one that has been around for a few years, Independence is looked to as a model. Ms. Gelber chairs the subcommittee on thrift foundations at the New York community bankers group and advises other banks interested in setting up foundations.
"I want to make sure at the end of the day that the money we spent has actually helped rebuild communities, has helped people's lives."