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Posted on Thu. Aug. 21, 2014 - 12:01 am EDT

COLUMN

To be a true 'Legacy,' city fund must be spent in the future, not just the present

Spending limits would improve grants, extend program's life indefinitely

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As a member of the Lutheran Foundation's board of directors for six years, I learned how easy it can be to give way a lot of money very quickly.

I also learned how difficult it is to do it wisely, and in a way that produces tangible benefits not only today but tomorrow as well.

So it was good to see several City Council members notice this week that proposed changes for requesting "Legacy" funding address only the application and decision-making process while ignoring a potentially far more important question:

Should the money in the account be spent as quickly as worthwhile projects become available? Or should most of the original $70 million or so be preserved, so that income generated by interest and investments can benefit the city and its residents indefinitely?

During Tuesday's discussion of Mayor Tom Henry's plan to create a seven-member committee to screen applications for funds, Councilman Tom Smith -- who seems to have appointed himself Legacy's guardian-in-chief -- correctly noted that decisions made now will establish a precedent for future council's. Smith, R-1st, noted that if Legacy funds are going to last for decades, "we don't want people chipping away at it easily."

Mitch Harper, R-4th, who said he manages a small private foundation, expressed similar concern and noted that many foundations limit how much can be spent in a given year, so that he enthusiasm for good projects now do not drain funding from even better projects later.

"That's (City Council's) job," Deputy Mayor Karl Bandemer responded.

Yes, it is. But council can only decide among the proposals it has. It cannot weigh those proposals against ideas and needs that do not yet exist.

When I was a foundation director, we generally limited our grants to the investment income average over three years, meaning fluctuations in the market did not greatly affect the amount of money we distributed. We always had more funding requests than we could approve, but the spending cap not only forced the directors to do their homework, establish priorities and make hard choices, it assured our ability to make grants and help people for years to come.

That approach didn't please everyone -- and not just the people whose applications weren't funded.

"I wouldn't want to sitting on that much money when our Lord returns," a delegate said at one of our meetings in hopes of getting the directors to spend more money more quickly. But as the Bible notes, not even Christ himself knows when that will happen. So how could foundation directors possibly plan for it?

Council members, Mayor Henry and other city officials are no more omniscient. And, as politicians, they have the added consideration of having to win re-election. There's no better way to assure that than to spend other people's money as quickly and flamboyantly as possible.

To their credit, they have shown admirable restraint in that regard -- so far. But with this week's tentative decision to accept funding applications from private and not-for-profit group, coupled with next's year's city elections, will exert more spending pressure than has been experienced to date. Tuesday' meeting wasn't even over, in fact, before two council members put in a plug for a soon-to-come proposal for a youth baseball facility.

Since the fund was established about three years ago, a little more than $25 million has been spent or earmarked. A multimillion-dollar riverfront development project is in the pipeline, and other worthy projects and unforeseen needs no doubt will compete for the attention of the new Legacy committee, Henry, and council, which has the final decision.

Because it is geared toward "transformational" projects, the pressure will be great to think and spend big. That's fine, but there should also be pressure to justify the program's name. A "legacy," after all, is handed down from one generation to the next.

Council and the administration should, therefore, give some serious thought to putting a substantial amount of money off-limits, so that it can grow and create a true legacy in ways no one can yet predict. If no more Legacy money is appropriated, City Controller Pat Roller estimates that the fund will contain nearly $102 million by 2025.

It's naive and probably unwise to expect that more money -- a lot more -- won't be spent. But good stewardship yields rewards, too. The Lutheran Foundation's assets were about $168 million in 2012 but more than $178 million last year. That means more grants for good causes.

I suspect the Lord would be pleased. The voters might appreciate a similarly forward-thinking approach to Legacy.

kleininger@news-sentinel.com


This column is the commentary of the writer and does not necessarily reflect the views or opinions of The News-Sentinel. Email Kevin Leininger at kleininger@news-sentinel.com or call him at 461-8355.


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