Mellon takeover to boost nonprofits
By Rick Stouffer
Wednesday, December 6, 2006
Local nonprofit organizations said Tuesday they're excited about increased funding promised with Bank of New York's acquisition of Mellon Financial Corp.
The merger will create a new Mellon Financial Foundation, formed with $20 million from the $60 million existing foundation, plus $60 million in new money, with all funds dedicated to grant-making in Southwest Pennsylvania.
With $80 million in assets, the new Mellon foundation immediately becomes one of the largest in Pennsylvania. According to The Foundation Center's annual survey, Mellon Financial Foundation would rank as the 33rd-largest in-state foundation overall and the third-largest corporate foundation in the state, according to year-end 2004 statistics, the latest available.
The existing Mellon Financial Foundation will be renamed The Bank of New York Mellon Foundation and will use its $40 million in assets for funding projects outside Southwest Pennsylvania.
The new Mellon Financial Foundation's annual giving limit doubles the old foundation's guidelines, to $4 million, according to Mellon. Last year, however, the foundation surpassed the $2 million figure, supporting local causes with $3.4 million, spokesman Ronald Gruendl said.
A funding increase goes against the usual merger method of handling foundation giving, which is to reduce foundation assets, experts said.
"This is a very significant event that does three things," said Judie Donaldson, executive director of Grantmakers of Western Pennsylvania. "First, it sends a message to the community that even though the corporate headquarters is moving to New York, there is a very significant commitment to this area.
"Second, while research shows that often when mergers occur, foundation spending goes down, and we have suffered in other mergers, this sends a very exciting message. And third, it also communicates a very positive message to other corporations" concerning increased giving, she said.
"This announcement creates a great opportunity for arts organizations. It's very forward-thinking by them," said Mitch Swain, CEO of the Greater Pittsburgh Arts Council.
Mellon's annual Report to the Community 2005 said that between 2001-05, charitable investments, sponsorships and employee volunteer efforts totaled more than $140 million everywhere Mellon does business, $27 million in 2005 alone.
Community-related development loans totaled $19 million last year, including funds to construct 18 low-income housing units in Latrobe, and to convert a building in Wilkinsburg into 15 single-room units.
Local nonprofits pointed out that the Mellon Financial Foundation not only supplies grants, but loans, in-kind services, even office furniture.
Among Mellon's numerous projects are Mellon Jazz, a festival that for two decades has supported jazz in Pittsburgh and Philadelphia, and Operation Warm, a nonprofit organization that provides winter coats to disadvantaged children.
With the help of Mellon and other donors, the project has grown from 58 coats distributed in 1998 to 80,000 distributed to children in 30 states in 2005, according to Mellon.
"The foundation has helped us in numerous ways over the last 20 years, in addition to funds," said Donald Block, executive director of the Greater Pittsburgh Literacy Council. "They've sponsored volunteer recruitment drives for us, then offered training to those volunteer recruits. They created a course for nonprofits back in the 1980s in response to the economic downturn in which they showed us how to raise our own funding."
"They supplied us with office furniture when we moved into our new offices a couple years ago," Swain said.
Rick Stouffer can be reached at email@example.com