July 20, 2006 | Read Time: 2 minutes
Two large California community foundations have agreed to merge, forming a new organization that will rank among the five wealthiest community funds in the nation.
The boards of the Community Foundation Silicon Valley, in San Jose, and the Peninsula Community Foundation, in San Mateo, voted unanimously last week to approve the merger.
Patricia Bresee, chairwoman of the Peninsula Community Foundation, said the new organization, to be called the Silicon Valley Community Foundation, should begin operating on January 1.
The merger will create a foundation with more than $1.5-billion in assets. The wealthiest community foundation in the country is the New York Community Trust, with assets of $1.9-billion.
Requires Approval
Before the merger can proceed, the new group must win approval from the California attorney general’s office and obtain tax-exempt status from the Internal Revenue Service. Ms. Bresee said articles of incorporation should be written shortly, and the approval process completed in about four months.
Before they agreed to merge, the foundations hired the McKinsey & Company consulting firm to conduct research on the impact of the alliance.
“The vast majority of responses from the community saw the logic of doing this,” Ms. Bresee said.
She added that some nonprofit groups wanted assurances that they would still be served well by the new organization, but most said they felt the merger would benefit them.
No donors said they would reduce their contributions because of the merger, she said, and more than a third of the financial advisers who were surveyed said that they would recommend their clients increase donations as a result of the merger.
Ms. Bresee said that, in addition to streamlining the grants process for nonprofit organizations in the region, the merger would also allow the new foundation to offer more varied investment options to donors and increase the efficiency of its operations through “economies of scale.”
She added, however, that the foundations do not plan to lay off workers, although she expects those in overlapping jobs to be shifted to new positions.
