By Todd Cohen
WINSTON-SALEM, N.C. — Two of Winston-Salem’s most powerful institutions have shared a financial umbilical cord since one of them coaxed the other more than half a century ago into relocating from Wake County.
Now, in an unprecedented move to boost its financial support, the Z. Smith Reynolds Foundation in Winston-Salem has pledged to give Wake Forest University a perpetual gift of 3 percent of its annual income.
The $500 million-asset foundation has contributed more than $63 million to the school since persuading Wake Forest College in 1946 to move to Winston-Salem.
In fact, ties between the two organizations are rooted in efforts to use tobacco wealth to lure medical educators to the Triad.
Wake Forest moved in 1956, 15 years after the relocation of its medical school from Wake County at the prompting of the Gray family of Winston-Salem.
That was the city’s second attempt to land a medical school. A state panel studying the establishment of a four-year medical school at the University of North Carolina previously had declined an anonymous offer by the Gray family that would have located the school in Winston-Salem.
(Greensboro leaders – competing with Charlotte and Raleigh – also coveted a medical school: Before creating Moses Cone Memorial Hospital in 1953, they made an unsuccessful pitch for a new four-year medical school that ultimately was established in Chapel Hill in the early 1950s.)
On moving to Winston-Salem, Wake’s medical school took the name of its benefactor, Bowman Gray, who headed the R.J. Reynolds Tobacco Co.
In 1946, with the medical school operating in Winston-Salem, local leaders set their sights on getting Wake Forest College itself to relocate. At the prompting of those leaders, the foundation proposed the move to the college.
The marriage was sealed with a contract in which the foundation agreed to provide annual support of $400,000 – an amount that the foundation has increased periodically to its current level of $1.2 million.
The new pledge – which will raise that annual payment – is equivalent to increasing the school’s $926 million endowment by $15 million.
A $15 million endowment would generate roughly $750,000 a year — the estimated value of the foundation’s pledge in 2002, the first year it will be paid, based on current interest rates and the foundation’s assets.
The pledge — the first of its kind for the foundation and its biggest long-term commitment ever to the Wake Forest — will be included in the university’s $400 capital campaign.
So far, the campaign has raised $216 million — $105 million in the $250 million drive for Wake’s main Reynolda Campus that kicks off its public phase in April, and $111 million in Wake’s four-year-old, $150 million campaign for its medical school, which in 1997 was renamed Wake Forest University School of Medicine at the Bowman Gray Campus.
Tom Lambeth, the foundation’s executive director, said the pledge grew out of talks between the school and the foundation that began several years ago during planning for Wake’s capital campaign.
The timing of the pledge, he said, was not related to his planned retirement at the end of the year after 22 years as the foundation’s executive director.
“This is really a board-designed grant,” he said. “They decided they wanted to provide this permanent means of support.”
Of the total pledged, 25 percent will fund scholarships for North Carolina students from middle-income families; 20 percent will support scholarships for North Carolina populations under-represented at the school; 15 percent will support merit scholarships; 20 percent will be used for salary supplements for promising young faculty members and to establish new Reynolds professorships; and 20 percent will be used for special undergraduate programs and needs.
The foundation was created in 1936 by the uncle, brother and two sisters of Zachary Smith Reynolds, the son of tobacco magnate R.J. Reynolds, who died at the age of 21.
It is the largest general-purpose foundation in the United States with a legal mandate to makes grants within a single state.