Foundation Annual Reports

KRESGE FOUNDATION

3215 West Big Beaver RoadP.O. Box 3151Troy, Mich. 48007-3151(248) 643-9630http://www.kresge.org

Period covered: Year ending December 31, 2002.

Finances

(in millions) 2001 2002

Assets $2,416.0 $2,164.5

Net investment income 37.7 30.8

Net realized losseson investments – 59.7 – 83.3

Administrative expenses 6.0 6.3

Grants approved 111.8 107.0

Purpose and areas of support: The foundation was created in 1924 by Sebastian S. Kresge, who formed the S.S. Kresge Company, now known as the Kmart Corporation. The foundation has no affiliation with Kmart or any other corporation. Mr. Kresge died in 1966 at the age of 99.

Grants awarded by the foundation are generally made on a conditional or challenge basis; in order to receive the grant money, the awardee must raise matching funds for the project from other sources.

The foundation supports primarily large “bricks and mortar” projects — including capital improvements, such as building construction or renovation and the purchase of equipment — at diverse nonprofit organizations nationwide. Although grant making focuses primarily on U.S. institutions, a few grants also go to international groups. The foundation’s offices are located approximately 22 miles from downtown Detroit, and some 10 percent of grants are made to Michigan organizations, many of which are in Detroit.

In 2002, the foundation reviewed 554 eligible applications and approved 157 grants totaling $108,251,000 in the following categories: human services, which received 48 grants totaling $22,-440,000, or 21 percent of grant dollars; the Detroit Initiative, 11 grants totaling $22,113,000, or 20 percent; arts and humanities, 35 grants totaling $21,425,000, or 20 percent; education, 27 grants totaling $18,125,000, or 17 percent; health and long-term care, 18 grants totaling $10,900,000, or 10 percent; science, nature, and the environment, 7 grants totaling $5,950,000, or 5 percent; the Science Initiative, 5 grants totaling $1,834,000, or 2 percent; and special projects, 6 grants totaling $5,464,000, or 5 percent.

The foundation allocated 27 grants of $1-million or more, and only one grant of less than $100,-000 was made.

Awards to human-services groups included $900,000 to the Atlanta Union Mission to renovate and expand a shelter that provides emergency and transitional housing for women and children.

The Detroit Initiative is a public-private partnership to improve the quality of life in metropolitan Detroit, including by spurring community and economic development, creating and restoring parks and “greenways,” and increasing job-training opportunities. Since its inception in the early 1990s, the Detroit Initiative has received more than $97-million — approximately 10 percent of its aggregate financial support — from the foundation. Allocations made in 2002 included $5.5-million to the Detroit Riverfront Conservancy to plan and construct RiverWalk — a development along the Detroit River that will include public green spaces and pedestrian promenades.

Grants for the arts and humanities included $400,000 to the National Dance Institute of New Mexico, in Santa Fe, to construct a facility that will house studios, offices, and performance spaces.

Grants to educational institutions included a $1.5-million commitment to New York University to construct a building for its School of Law.

Grants for health and long-term care included $600,000 to the Hospice of Naples, in Florida, to construct a residential hospice facility as part of a broader capital campaign.

Grants to science and nature institutions included $1-million to the John G. Shedd Aquarium, in Chicago, to construct an addition to an exhibit that features coral, mangrove, and reef habitats indigenous to the Philippines.

Through its Science Initiative, the foundation helps higher-education and science institutions upgrade and maintain scientific equipment.

Special grants included $3,164,-000 to the Southern Education Foundation, in Atlanta, to support the Kresge HBCU Initiative, a five-year, $18-million program to strengthen historically black colleges and universities, primarily by supporting technical assistance on fund-raising projects, such as those that help the institutions win major gifts from alumni and other individuals.

Created in 1999, the Kresge Foundation Partnership to Raise Community Capital is a five-year, $18-million program designed to help six community foundations increase their assets. The following foundations have each been awarded a $3-million challenge grant: the Community Foundation of Broward, in Fort Lauderdale, Fla.; the Community Foundation of South Alabama, in Mobile; the Community Foundation of the Eastern Shore, in Salisbury, Md.; the Saginaw Community Foundation, in Michigan; the Sioux Falls Community Foundation, in South Dakota; and the Wyoming Community Foundation, in Laramie.

Application procedure: The foundation considers requests for the following types of projects: the construction or renovation of facilities; the purchase of major equipment or an integrated system at a cost of at least $300,000; and the purchase of real estate. Community colleges, private foundations, and individuals are not eligible to apply. More-detailed application guidelines are available on the foundation’s Web site.

Key officials: John E. Marshall III, president and chief executive officer; Edward M. Hunia, senior vice president, treasurer, and secretary; Elizabeth C. Sullivan, vice president, program and administration; Sandra McAlister Ambrozy, Ernest B. Gutierrez Jr., and William F.L. Moses, senior program officers; David D. Fukuzawa, Richard K. Rappleye, and Laura J. Trudeau, program officers; Bruce A. Kresge, chair of the Board of Trustees.

McKNIGHT FOUNDATION

710 Second Street South, Suite 400Minneapolis, Minn. 55401(612) 333-4220http://www.mcknight.org

Period covered: Year ending December 31, 2002.

Finances

(in millions) 2001 2002

Assets $1,877.7 $1,549.7

Interest & dividends 52.1 40.3

Net realized &unrealized losson investments – 77.7 – 268.6

Administrative & program expenses 6.1 6.6

Grants appropriated 103.2 93.4

Purpose and areas of support: William L. McKnight, a founder and president of the 3M Company, in St. Paul, and his wife, Maude, endowed the foundation in 1953. The couple were the parents of Virginia McKnight Binger, who was the chair of the foundation’s Board of Trustees from 1974 until 1987 and then served as the honorary board chair until her death in December 2002. Noa Staryk, a great-granddaughter of the couple, is the current board chair. The foundation is not affiliated with the 3M Company.

In 2002, the foundation paid 813 grants totaling $87-million in the following program areas: children, families, and communities, which received 69 percent of grant dollars; the arts, 10 percent; the environment, 10 percent; research and applied science, 8 percent; and international programs, 3 percent.

On a geographic basis, 50 percent of grant dollars went to organizations in Minneapolis and St. Paul; 31 percent went to groups elsewhere in Minnesota and to statewide programs; 11 percent went to groups in other states; and 7 percent went to organizations outside the United States.

The program on children, families, and communities has been split into two programs: children and families, and region and communities.

Grants for children and families seek to ensure that children and families have the skills, knowledge, and resources that children need to thrive and make successful transitions to adulthood. For example, the Children’s Defense Fund-St. Paul, received $330,000 over two years for a project to help eligible children and families receive federal and state financial support.

Grants for the program on region and communities encourage efficient development within the Twin Cities metropolitan region that creates economic security and a high quality of life for its residents.

In April 2002, the foundation announced its largest-ever grant: $28-million over four years to the Family Housing Fund, in Minneapolis, to develop and preserve affordable housing for low- and moderate-income families in the Twin Cities area.

The arts program makes grants designed to improve the quality of the arts in Minnesota and to expand public access to arts and cultural programs. For example, Ballet of the Dolls, in Minneapolis, received $500,000 to renovate a theater to serve as its new home.

Environmental grants focus on maintaining and restoring a healthy environment in the Mississippi River basin and on encouraging energy conservation and the use of alternative energy in the Midwest.

In fall 2002, the foundation formally announced Embrace Open Space, a two-year multimedia public-education campaign on the need to protect rapidly disappearing open spaces and natural resources in the Twin Cities area and to develop a strong regional advocacy network to press for improved public policies on land use and urban sprawl. The project, a collaboration among several organizations, has included the creation of a Web site, advertising, direct mail, publications, and a photo exhibition.

Grants for research and applied science currently focus on two areas: collaborative research on food crops important to developing countries and the McKnight Endowment Fund for Neuroscience. One grant recipient, the Kenya Agricultural Research Institute, in Nairobi, received $832,900 over four years for research on African sweet-potato germplasm.

International grants support women’s economic development in Tanzania, Uganda, and Zimbabwe, and the following programs in Cambodia, Laos, and Vietnam: community and economic development; education; health services, including assistance for land-mine victims; and local leadership. For example, the Equal Opportunities for All Trust Fund, in Dar es Salaam, Tanzania, received $44,000 for a program to alleviate poverty among women.

Application procedure: Letters of inquiry are accepted throughout the year. Application guidelines for individual program areas are available on the foundation’s Web site. The foundation considers applications in research and applied science only by invitation or in response to a special announcement.

Key officials: Rip Rapson, president; Carol Berde, executive vice president; Richard J. Scott, vice president for finance and administration; Neal I. Cuthbert, program director; Kathleen Rysted, manager of information systems and research programs; Gayle Thorsen, communications director; Daniel M. Bartholomay, Louis Hohlfeld, and Nancy Latimer, senior program officers; Kristin Batson, manager of organizational learning and grants administration; Noa Staryk, chair of the Board of Directors.

RICHARD KING MELLON FOUNDATION

1 Mellon Center500 Grant Street, Suite 4106Pittsburgh, Pa. 15219-2502(412) 392-2800http://www.fdncenter.org/grantmaker/rkmellon

Period covered: Year ending December 31, 2002.

Finances

(in millions) 2001 2002

Assets $1,661.9 $1,393.6

Net investment income 36.4 29.2

Net realized losseson investments – 55.6 – 40.2

Administrative &investment expenses 9.0 9.7

Grants & appropriationsapproved 76.5 77.5

Purpose and areas of support: The foundation was established in 1947 by Richard King Mellon (1899-1970), of Pittsburgh, the founder of Mellon National Bank. His wife, Constance Prosser Mellon, served as chairman of the Board of Trustees from 1947 until her death in 1980, and was succeeded by Richard P. Mellon, the couple’s older son. Their younger son, Seward Prosser Mellon, is president and chairman of the board’s Executive Committee.

The foundation’s grant making has two major emphases: programs to benefit residents of Pittsburgh and southwestern Pennsylvania, and efforts to protect key tracts of land nationwide from urban sprawl and destructive development.

In 2002, the foundation approved grants and program-related investments totaling $77,729,256 in the following five programs: regional economic development,which received $31,527,600; conservation, $29,144,456; education, $9,492,700; families, youths, and child development, $6,381,000; and system reform, $1,183,500.

Grants to benefit residents of Pittsburgh and southwestern Pennsylvania totaled $52,919,911, while grants to benefit other regions totaled $24,809,345.

The foundation increased its emphasis on grants to spur regional economic development in southwestern Pennsylvania, giving nearly triple the amount the program area received the previous year. Areas of interest include job creation, particularly in the biotechnology and manufacturing industries; the improvement of Pittsburgh’s riverfront areas; regional amenities to attract and retain young professionals; and job-skills development for the region’s residents.

Through its American Land Conservation Program, the foundation purchased tracts of undeveloped land that it donated to national parks, wildlife refuges, and other entities, including the Archie Carr National Wildlife Refuge, in Florida; the Grand Canyon-Parashant National Monument, in Arizona; and the Izembek National Wildlife Refuge Complex, in Alaska.

Regional conservation grants focus on stemming urban sprawl in Pennsylvania and managing and conserving the state’s forests and other natural resources.

The education program focuses on charter, independent, and parochial schools; higher education; and work-force training. Grants under this program included $325,000 to Education Delivery Systems, in Pittsburgh, to establish City Charter High School, which seeks to prepare young adults for higher education and employment in technology-related fields.

The sum of grants awarded for families, youths, and child development rose 30 percent over the amount approved in 2001. One grant recipient, Child Development Centers, in Franklin, Pa., received $100,000 to help renovate one of its seven facilities.

Grants made through the foundation’s newest program area, system reform, support efforts in southwestern Pennsylvania to establish standards and “best practices” for youth programs; to redesign or otherwise improve the quality and delivery of human services; and to strengthen leadership at nonprofit organizations.

Application process: Proposals should include a completed application form. Forms and additional information are available on the foundation’s Web site.

Key officials: Seward Prosser Mellon, president and chairman of the Executive Committee; Michael Watson and Arthur D. Miltenberger, vice presidents; Scott D. Izzo, associate director; Ann Marie Helms, program officer; John J. Turcik, controller; Richard P. Mellon, chairman of the Board of Trustees.