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Charity blooms from tobacco – Lawsuit produces foundation

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By Cindy Stiff

GREENSBORO, N.C. — Big Tobacco is sprouting big philanthropy in the state where the golden leaf has long ruled as the biggest cash crop.

Thanks to the $206 billion settlement in 1998 between 46 states and the tobacco industry, North Carolina has a new foundation that already has received nearly $54 million, which should grow to $80 million to $90 million by April.

Through 2025, the new foundation is expected to receive half of the nearly $4.6 billion expected to go to North Carolina as a result of the settlement, although the total will be adjusted for inflation.

And in the wake of Hurricane Floyd, which last fall devastated tobacco-rich eastern North Carolina, the new Golden Leaf Foundation wants to start handing out grants.

As it organizes itself, the giant new tobacco foundation must figure out how to give away money. But Chairman William Friday hopes to get a jumpstart by giving scholarships to students who couldn’t return to college after Hurricane Floyd.

Friday says the 15-member board of the new Golden Leaf Foundation has a time-consuming job before it will be ready to make grants from North Carolina’s share of the huge tobacco settlement.

But Friday says scholarships should be the group’s first project.

“Human capital is what we’re talking about,” he says. “Bringing hope is what we’re talking about. That’s an immediate, quick, proper use.”

Other projects, Friday says, will be more complicated and must wait until the foundation hires a staff and puts procedures in place to review grant requests.

The panel held its first meeting in January in Greensboro. It meeting is set for 10:30 a.m. on Feb. 7 at the Carolina Club at the University of North Carolina at Chapel Hill. Board meetings are open to the public.

Friday, retired president of the UNC system and retired executive director of the William R. Kenan Jr. Charitable Trust, says executives from two of the state’s largest foundations Tom McGuire, executive director of the A.J. Fletcher Foundation in Raleigh, and Valeria Lee, program officer of the Z. Smith Reynolds Foundation in Winston-Salem will talk to the board about their foundations.

And Rick Carlisle, state secretary of commerce, will describe proposals that the state’s Rural Prosperity Task Force hopes the Golden Leaf foundation will help fund. The panel, led by Erskine Bowles, former White House chief of staff, has crafted recommendations to boost agriculture, including spending more money to market North Carolina farm products and develop alternative crops.

Friday says he already knows of about $250 million in requests to the foundation $220 million alone are from the rural task force.

The Golden Leaf Foundation was set up by state legislators to distribute half of North Carolina’s expected share of the national tobacco settlement. The foundation’s mission is to assist communities in the state that depend on tobacco.

Many of those communities, located in regions hardest hit by flooding from Hurricane Floyd last year, have desperate needs – and some of those suffered once again in late January when a winter storm dumped up to 20 inches of snow.

But Friday says he can’t forecast when the foundation will be ready to make grants.

“It isn’t going to happen overnight,” he says. “We don’t want to create the impression that we’re going to start allocating money in June, because we’re not. We don’t want to be shy or tentative about acting, but we want to be sure-footed when we do.”

Friday says the board should spend only the interest earned on investments of the dollars the foundation will receive as tobacco companies pay installments on the legal settlement.

“It may be in the beginning we’ll have to touch the principal, but if we can keep from using it, when this crisis is behind us, this state will have a permanent endowment, a unique source of research and development funds,” Friday says.

The foundation’s articles of incorporation allow it to spend money on education, job training, scientific research, alternative crops or uses of tobacco, grants for economic hardships, public works and industrial recruitment, health care or general community assistance for tobacco-dependent areas.

State Attorney General Mike Easley asked the board at its first meeting to abandon politics even though Gov. Jim Hunt, House Speaker Jim Black and Senate President Pro Tem Marc Basnight each appointed five members to the foundation.

“I want you to think long-term,” said Easley, who helped negotiate the tobacco settlement and helped win a court decree for state lawmakers to put half the settlement money into the foundation.

“I want you to think big,” Easley told the board. “You answer to no one in politics. This is a chance, I believe, if the foundation acts responsibly, to free our state from the drag of a poor rural economy.”

Critics have complained that the foundation is headed by political appointees who don’t answer to voters, and Eugene Boyce has filed a court suit challenging the foundation’s right to hand out settlement funds collected by the state from tobacco companies.

But Easley advised the foundation members to move forward. He suggested the foundation could invest in computers and the Internet to boost rural North Carolina’s technology, and said he could foresee the foundation supporting genetic research to find new uses for tobacco.

Easley also warned the board to not to become involved in projects that already are the responsibility of the state.

“Stop and think: Is this something we ought to be doing or is this something to be taken care of by other government groups,” Easley said. “We don’t want legislators saying we’re not going to fund this program because it can be done by the Golden Leaf Foundation.”

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