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New chief charts course for Golden LEAF

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Dan Gerlach

Dan Gerlach

Ret Boney

ROCKY MOUNT, N.C. – As the new president of the Golden LEAF Foundation, Dan Gerlach put more than 4,000 miles on his car during his first month on the job.

Much of that was from heading out to some of the state’s poorest counties, where he and his co-workers are working to help local communities access the foundation’s grant dollars.

Gerlach also has his eye on large funders around the state and nation, aiming to strike up partnerships that can broaden the impact of Golden LEAF’s grantmaking.

He’s hoping a combined bottom-up and top-down approach will help bolster the local economies and people hardest hit by the state’s transition away from tobacco.

“What keeps me up at night is ‘How do we build the knowledge, talent and skills of people in our rural areas so they can compete?,'” says Gerlach. “And how do we give them opportunities in their own communities to use those skills?”

Gerlach joined the foundation Oct. 1, succeeding Valeria Lee, its founding president, who retired after eight years on the job.

He comes to Golden LEAF from Gov. Mike Easley’s office, where he served for almost seven years as the senior fiscal advisor.

As the foundation’s new president, he inherits a potential giant that by the year 2025 could amass assets of $2 billion from a legal settlement between 46 states and major tobacco companies.

But he also inherits an organization that has gotten a sometimes-hostile reception from the lawmakers it reports to, and criticism from the communities it was created to support.

Relationships

North Carolina lawmakers created the Golden LEAF Foundation in 1999 to receive half the proceeds from a legal settlement with the nation’s big tobacco companies.

With a board appointed by the governor, speaker of the state house and president pro-tem of the state senate, the foundation is charged with helping to bolster the economies of “economically affected or tobacco-dependent regions of North Carolina.”

In the fiscal year ended June 30, 2008, it awarded about $140 million, including a large one-time grant, and has awarded 733 grants totaling $366.5 million since its inception.

But Golden LEAF at times has had an uneasy relationship with state lawmakers, last year alone fending off two pieces of legislation that would have stripped the foundation of its funding.

The bills were filed to get the foundation’s attention, says Gerlach.

“Part of the concern is have we been doing enough in Tier One counties,” he says, referring to the state’s poorest counties. “It’s an education process of reminding people of the good work we’ve done, and that’s a big part of my job.”

That likely will be made easier, Gerlach says, given his prior role in the governor’s office, where he built important connections to state lawmakers

“They know they can call me and I’ll shoot straight with them,” he says.

Those existing relationships also could help as the global economic crisis hits home.

The state is facing a budget shortfall that could top $3 billion in the fiscal year that begins July 1 of 2009, according to the N.C. Budget and Tax Center. That prospect could have lawmakers looking to Golden LEAF’s revenue stream as a way to plug the gap.

But Gerlach says the foundation can have an even greater impact on the budget by spurring economic growth.

“You can only grow your way out of a budget problem,” he says. “We’re going to be good partners in investing in good jobs so we can come out of this better than we went in.”

Golden LEAF’s record is strong, Gerlach says, and will become stronger in the coming years.

“But it’s going to be a challenge to us to be more creative,” he says.

However, the foundation is not immune to the global economic downturn.

While its assets stood at about $700 million in June, they had fallen to about $600 million as of the end of October, Gerlach says.

As of late November, the foundation still planned to award grants totaling about $60 million in the fiscal year that ends June 30, 2009, Gerlach says.

But the foundation’s board likely will have to weigh community needs against Golden LEAF’s charter, which encourages the group to spend interest off the endowment rather than the endowment itself.

“The preservation of the principal as much as possible is part of the long-term vision we have,” he says. “The hope is for a $2 billion foundation by 2025 so we can make a real difference in the economically distressed counties of this state.”

Going local

Over the past year-and-a-half, Golden LEAF has renewed its efforts to funnel money to the state’s poorest counties through a new effort called the “community assistance program.”

Started in early 2007, the program takes the foundation out to the communities it aims to serve.

The funder facilitates meetings in which a cross-section of community members identify challenges, prioritize their needs and suggest how grant dollars would be spent.

A community steering committee invites proposals from the community, then makes funding recommendations to the foundation staff and board.

“It gives them responsibility for grantmaking that’s usually held by the foundation board and staff,” says Gerlach.

The grant cycle for the effort is a rolling one, allowing counties to apply for funds as they work through the process of identifying their needs.

So far, the foundation has visited about 17 counties, including Surry, Bertie and Anson, and has just begun in Robeson and Camden counties.

The goal is to get to all 41 of the poorest counties over a two-year period, Gerlach says.

About 60 percent of Golden LEAF’s planned grantmaking for next year is earmarked for the community assistance program, which since its inception has awarded a total of about $15.1 million in grants.

The community-based philosophy is new to the foundation, Gerlach says, but he’s encouraged by the energy it brings to the process.

“The process itself is important to the communities,” he says. “It’s very intense and it’s hard. I think the grants we’re making are really making a difference.”

Partnerships

In addition to that grassroots approach, Gerlach wants to involve funding partners to bring programs to scale.

To do that, he hopes to develop partnerships with local and state governments, businesses and foundations inside and outside the state.

The funder has some history with collaboration. Currently, it is working with software giant SAS, the Friday Institute and state Department of Public Instruction on an effort to supply laptops to high-school students.

All students at Hunt High School in Wilson, for example, now have a laptop, and training is required for both kids and their parents. And in

November, the board approved grantmaking in three additional school districts.

All told, the foundation has invested about $7.41 million in the laptop effort though 17 high schools. And another $5 million has gone to provide broadband connectivity to districts serving over 75,000 kids.

The foundation and its partners now are working to determine which models work best, with the goal of expanding over time.

In another higher-dollar partnership, Golden LEAF has awarded $100 million to lure airplane-parts manufacturer Spirit AeroSystems to the Global TransPark business complex in Kinston.

That grant, which will be used to construct buildings Spirit will lease, is bundled with money, tax credits, roads and land from the state. Ultimately, Spirit says, it will create 1,100 jobs in the formerly tobacco-dependent community.

The move, however, has been criticized by some who say foundation funds are simply a sweetener to the state’s pot of money used to entice corporations and jobs to the area.

But Gerlach believes the move is a wise one, coming after 18 months of careful consideration by the foundation and building on previous investments in the aerospace industry.

Regardless of the challenges Golden LEAF faces, Gerlach is positive about the foundation and about North Carolina.

“I have a spirit of optimism,” he says. “If we don’t have faith in ourselves, then no one in going to have faith in us.”

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