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McCune Foundation begins exit strategy to give away $343M in 16 years

| Saturday, March 9, 2013, 10:57 p.m.
Judith O’Toole, director and CEO of the Westmoreland Museum of American Art in Greensburg, is excited about its expansion, which garnered $2 million from the McCune Foundation Guy Wathen | Tribune-Review
The late Charles McCune, founder of the McCune Foundation
A model depicts what the Westmoreland Museum of American Art in Greensburg will look like following a planned expansion. Guy Wathen | Tribune-Review
Guy Wathen | Tribune-Review
Judith O’Toole, director and CEO of the Westmoreland Museum of American Art, with a model depicting what the building will look like following a planned expansion.
A model depicts what the Westmoreland Museum of American Art in Greensburg will look like following a planned expansion. Guy Wathen | Tribune-Review

The McCune Foundation is preparing the biggest going-out-of business sale in the region's philanthropic history: giving away $343 million over the next 16 years.

The Downtown-based foundation has begun its exit strategy with the first of its new grants called “Big Ideas.” It is giving away at least $7 million, the biggest single grant in its history, to Carnegie Mellon University to start the Center for Innovation and Entrepreneurship. The money will provide financial aid to undergraduates and graduate students and seed capital for spin-off companies founded by faculty and students.

“What we decided to do was make big bets, rather than just add zeros to the existing work,” said Henry Beukema, executive director of McCune.

McCune officials disclosed details of the foundation's impending demise on its website and later in an interview with the Tribune-Review.

Peggy M. Outon, executive director of Bayer Center for Nonprofit Management, predicted Beukema will encounter “a feeding frenzy of epic proportion” as nonprofit leaders apply for Big Idea grants.

“His phone is going to ring off the hook, and many nonprofits are too small to absorb that kind of gift and not be changed — not necessarily in a good way,” Outon said. She cited difficulties some nonprofits experienced when weaned off federal stimulus dollars.

Set up to expire

The late Charles L. McCune, president and later board chairman of the former Union National Bank of Pittsburgh, established The McCune Foundation through his will in 1979. It makes grants for development, the arts, education and human services.

Last year, for example, McCune granted money to renovate the Palace Theatre in Greensburg and Denis Theatre in Mt. Lebanon, construct a Science, Engineering and Mathematics building at Grove City College and teach about entrepreneurship at Franklin Center of Beaver County.

Even its grants to groups in Pittsburgh extend beyond Allegheny County's borders. McCune gave a $2.5 million loan and grant to Bridgeway Capital, a nonprofit organization that lends money to black-owned businesses, small businesses and nonprofit groups in 15 counties. Among the loans was one to Cannon Systems, a minority-owned construction company in New Kensington. Bridgeway does not disclose the amount of its loans, said Mark Peterson, its president.

Unlike some foundations, McCune shied from the spotlight over the years. It requires that recipients of its generosity withhold McCune's name in publicity, earning it the moniker of “The Anonymous Foundation.”

McCune made a name for itself by giving money to stimulate the regional economy, such as the seed money for Carnegie Mellon's center, Bridgeway Capital and Pittsburgh Life Sciences Greenhouse. Yet, McCune encourages nonprofits to do its mission in a way that makes more money for them.

The Westmoreland Museum of American Art, for example, used McCune money to change its gift shop from a money-loser that sold trinkets to a money-maker that sells American art-related items.

“McCune has its leading role in pushing the creativity button and the change button — how can you do things differently that will make you a better organization,” said Judith O'Toole, director and CEO of the museum.

McCune's will stipulated an atypical factor: He set up the foundation to go out of business by October 2029. By contrast, The Foundation Center and Council on Foundations found in a 2009 study that 63 percent of foundations are set up to run forever; 25 percent don't know how long they will last; and 12 percent plan to limit their lifespans or spend down assets. Those with end dates are called spend-down or limited timespan foundations.

“The McCune Foundation ranks among the largest foundations that have announced an intention to spend down,” said Steven Lawrence, director of research for The Foundation Center in New York City. He said such foundations may choose to end to honor a donor's intent or because the donor no longer can stay involved.

Other spend-down foundations are AVI CHAI in New York City, and Wayne and Gladys Valley in Oakland, Calif. AVI CHAI will spend down $615 million by early 2020; Valley, $506.5 million by the end of 2018.

The most famous limited lifespan foundation is the largest one in the world, the Bill & Melinda Gates Foundation. It will spend its $34.6 billion 50 years after the death of its three trustees: the Gateses and Warren Buffett.

McCune's spending plan

Beukema cites three tacks the foundation will take to spend its money:

• Last year, it gave $80 million to seven community foundations out of state, including some in Texas, Oklahoma and New Mexico. That will replace McCune's regular grant-making in those states.

• The foundation will make fewer but larger grants, going from about $17 million a year to $26 million.

• The Big Ideas category begins with a requirement for recipients to match grants that will be around $7 million.

The money for Carnegie Mellon merges the university's Project Olympus, which supports student and faculty entrepreneurs, with its Don Jones Center for Entrepreneurship to bring together alumni entrepreneurs and faculty and students. It provides space and money to leverage capital and turn ideas into something more.

“Carnegie Mellon has been very good at spinning off companies from our world-class research. The McCune Big Idea grant will help us grow from good to great,” said Dave Mawhinney, who will lead the center with Lenore Blum.

Blum said the McCune grant will help the university stem the flow of its research, startup companies and students from Pittsburgh to Silicon Valley.

“We won't be here after October 2029, but we expect the Big Idea to keep living beyond our end date for the benefit of the institution and the community,” Beukema said.

McCune awarded the Westmoreland Museum $2 million over four years to expand its galleries to hold bigger works of art, reroute visitors and add a park with sculptures. The museum's O'Toole and Peterson, of Bridgeway Capital, are devising plans for Big Idea grants, though neither would disclose ideas.

The McCune Foundation's departure will be bittersweet for people working with charitable organizations, said Kathy Buechel, former president of Alcoa Foundation and senior lecturer and director of the Philanthropy Forum at the University of Pittsburgh's Graduate School of Public and International Affairs.

“That will be a sad day for us, but these grants will allow their voice to echo through the ages,” Buechel said.

Bill Zlatos is a staff writer for Trib Total Media. He can be reached at 412-320-7828 or bzlatos@tribweb.com.

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