The Interview

Michael Marsicano, President and CEO, Foundation for the Carolinas
Chris Edwards
Marscicano sees this as a key period for Charlotte: "It's a very critical time ... I don't know what we’ll look like on the other side."

If anyone is an authority on Charlotte’s nonprofits, it’s Michael Marsicano. Since 1999, he’s been president of Foundation for the Carolinas, a community foundation with more than $720 million in assets. Before that, the New York native and Duke graduate was head of the Arts & Science Council for ten years. In his office overlooking Tryon Street, we talked with the soft-spoken, thoughtful Marsicano about the future of leadership, the state of Charlotte’s charities, and the Foundation’s role in both.

Since you’ve been here you have seen almost complete turnover among Charlotte’s top leadership. What has that been like to watch?

have been here for twenty years. In the nineties you had a partnership between nonprofits and corporate leaders — there was joint design in the capital projects we were going to build or the programs we were going to launch. Since the late nineties the corporate community has been very responsive to the nonprofit sector, but it has not been a partnership in design. It has begun to be led much more by the nonprofits. It’s been the nonprofits setting the agenda and then corporate Charlotte deciding whether to buy the agenda or not. And that’s a markedly different approach.

Is that shift less healthy or more healthy?

I don’t know if it’s more or less healthy; I think it’s the reality. Our major corporations are global companies and the sheer size of their enterprises doesn’t allow them to be intimately involved with what we are doing locally. As long as they keep responding from a financial standpoint it’s not necessarily healthier or less healthy. It may not be as much fun. I mean, these are intelligent, bright, obviously established individuals who I would enjoy more of that time with because they are so brilliant. And so I miss a little bit of that partnership, because they simply don’t have as much time. They have been available to me anytime that I have called, but I’d say in the nineties for every call I made, I was called. Now it’s a bit more I ask for the meeting or ask to present a proposal. It’s not as much of the give and take.

So has that been a comfortable or uncomfortable transition?

It’s just different. It’s just a transition, and you learn to adjust with the changing dynamics of the way to get things done.

It seems it could be healthier for Charlotte because for a well-run, well-led nonprofit, its mission is Charlotte, and the mission’s going to be Charlotte in five years and in ten years and does not change with the whims of the market or the CEO.

Even if the dynamics that have led to this change were not there, it would have changed anyway because of the politics of the community. We now have to connect multiple tables. We got too big, and even if the same corporate executives and the same size corporations existed today as in the nineties, we still would have a more shared leadership approach to decision making. And I think ultimately that’s healthy.

Where are those leaders going to come from?

I think we will need to look more to elected officials to lead. Traditionally our government has followed our private sector agenda or agendas, and I think government will need to set more agendas out of the gate rather than follow the private sector lead. I’m very encouraged by new and emerging corporations and their potential for leadership. I think we have a lot of strong new neighborhood leaders across the county who have yet to be tapped. I am very taken with the Millennium generation and its great interest in community service that I don’t think we’ve tapped. But what all that says is, it’s going to come from multiple places and it’s not going to be the consistent leadership from the same companies year after year after year.

That scares people.

It’s scares people, but it’s also exciting. Opens up a lot more doors.

It seems like there is a panel discussion on these topics in this city every week. How does the community move beyond just talking?
It’s an introspective time. I think this is very healthy. The way we have gotten things done has forever changed, and there are a lot of conversations about how it’s going to work because it’s going to be so different from what it was. Things are moving forward. They are going to take longer and they are going to be messy. And it’s time that we just get used to that.

So what is the state of our nonprofits and charities right now? Are we still on the cliff?

I think the financial condition of the nonprofits will have another year of compromise, because a lot of the revenue sources will lag the economic return. For example, most of the nonprofits in our community calculate their spendable office endowments by a three-year rolling average of the assets. So the income that’s going to those groups this year has two top asset years and one decline. Well, as we move to the next year you will drop a peak year and you will add another compromised year. So for endowment income, while the assets may begin to go back up, the actual spendable for the nonprofits is going to go down again.

That’s just an example of one revenue source. And I don’t think we are going to expect an uptick yet in government grants to nonprofits, except the use of the stimulus money. We will find out soon about the Arts & Science Council campaign and the United Way campaign. Will the community rally behind the living challenge, which we are hoping? I don’t know which way it’s going to go.

So, no, I do not think we are through the cliff. I don’t want to be pessimistic, but if the need is still way up in terms of services, and the revenue line items don’t bounce back, we could be more compromised next year.

What does a more compromised situation look like? What does that mean?

The fiscal year for most nonprofit groups is July 1 to June 30. So this is really the cliff year. Last year was a precursor, because most of those line items didn’t start to plummet until July 1. What we don’t know yet is whether or not the compromises in this fiscal year are resulting in a decrease in services at a time when there is peak need. I suspect that it is. That means potentially an awful lot of people that are not getting services that they need. But I don’t think we are going to know that until this winter, on the human services side.

Is there a chance that we are hitting a new normal in terms of money coming in?

There are a couple of major changes [happening] on the philanthropic side. In the human services and the arts and cultural sectors, we built a system of support based on very broad-based employee giving. And when we look at the groups that they fund in terms of their annual revenues, they are significant percentages and, I would argue, much greater than most communities. And a large portion of both of those campaigns were employee giving from the two banks.

That is structurally changing because of the global view of Bank of America and the loss of the headquarters of Wachovia/Wells Fargo, and a change in style — Wells allowed this year full designations to anything including your alma mater or your church [as opposed to only United Way charities].

Then we could have a new norm of a much lower level of giving to those two campaigns. So then the question becomes, will something change on the positive side?

And we have begun to see some significant giving from foundations in the last two years. That traditionally has not been, except in capital campaigns, our philanthropic path.

Has Charlotte been different from other cities our size in terms of foundation giving? Have we not had as much?

It’s a developmental question. The South in general did not have the great wealth at the turn of the century that other places in America had. We had Mr. Duke and Mr. Duke founded the Duke Endowment, which is over two billion [dollars] in assets now, but he was very targeted in the purpose of that. But Mr. Duke was really an exception even in the South—I mean we didn’t have money, right?
So now that Charlotte has come into more wealth over time, you began to see the creation of private foundations in the 1950s. And you are just beginning to see significant giving out of those foundations in ways that we haven’t seen before.

What is the Foundation for the Carolinas’ role?

It’s in this theme of a shared leadership model and connecting the tables. It is our sense that when you move from an ever-expanding table to connecting the dots between tables, to combine two metaphors, there needs to be a connector. So you ask yourself, are people those connectors or can institutions be those connectors? The Foundation believes that it’s within its mission to try to be one of the major connectors to those multiple tables.

What are some ways that the Foundation is doing that?

We have three centers: Center for Personal Family Philanthropy, Center for Nonprofits, and Center for Corporate Philanthropy. Those three centers are service centers for the funds we hold, whether they are corporate, nonprofit, or individual. We’ve added a fourth center called the Center for Civic Leadership, and it is out of that center where we are experimenting and exploring this notion of the connector piece to the multiple tables of decision making. The CMS Task Force, spearheading the cultural facilities plan—these are all things that have come out of the foundation’s leadership work and connecting tables. And I think now that we have institutionalized it in a center you are going to see increasing numbers of things, depending on what is needed of us, spearheading efforts to move the community forward.

How do you decide what’s needed?

We either want to fill gaps or we want to partner with established institutions. We are looking for the need as expressed by the community and whether or not we are the logical choice to help move that ball across the goal line.

The Foundation’s money comes from individuals who have set up their own foundations or groups that set up their own foundations under your umbrella?

We have 1,700 different funds, and most of those are family funds. Essentially it is a fund in their family’s name and they operate it by giving grants to the things that they care about. It is very much like a private foundation except it’s in a co-op arrangement within what is a public foundation, and there are additional tax benefits for doing it through a public foundation, and not through a private foundation. So we are servicing those families to help them accomplish what they want to accomplish. Because they are tied here and see all the civic work we do, it is not uncommon for some of those families to say, "We like the Carolina Thread Trail project," or, "We like the cultural facilities project," and so sometimes there is a flow of capital from those family funds to civic leadership projects. It’s not, however, a fox in the henhouse situation. I don’t ask those donors who have funds here to give to a particular cause that’s being promoted by the Foundation—donors respond by seeing what we are doing and like it and then offer to give.

But yes, it’s essentially a co-op of foundations. Over time people have bequeathed us money, which gives us some level of funds that are in endowments that give our boards the discretionary powers to make grants where they want to. So of the $103 million in grants we gave last year, about $5 million in total are at our discretion. We leverage that.

Start-up capital.

Exactly. Now an older community foundation—Cleveland, which is the oldest—gives away about the same money that we do, but 70 percent of it is unrestricted.

And so our leadership work has to be an initial investment by the Foundation with our discretionary dollars that is then leveraged by others joining us. The Cleveland model is an example where they have a huge amount of discretionary dollars they can use to make things happen on their own. We have to leverage everything. Now, how did they get there? They served donors really well in their lifetime and those donors bequeathed them increasing amounts of unrestricted assets, which then gave them the ability to have discretionary dollars to be able to invest.

Is that the vision for Foundation for the Carolinas?

It is a vision, but I also think it’s a reality.

What is a typical day or week like for you?

Back-to-back meetings round the clock. Sometimes it’s on the philanthropic side, sometimes it’s on the grant-making side, sometimes it’s on the fundraising side, sometimes it’s on the civic leadership side, but all those things are wrapped into one day.

It seems like a great job though.

I love my work. It’s a great community to work in. It’s not baked yet. You can play a significant role in helping it grow up, but it’s had the resources and the civic energy to move multiple agendas forward, and that’s a lot of fun.

What kind of a city are we right now?

We are a city that’s moving from adolescence to adulthood and trying to figure out exactly what we want to be when we grow up, and I find that very exciting. I don’t think we can say we’re in adolescence anymore, I think we have to say we are entering young adulthood. So it’s a very critical time, and probably a time where we need leadership more than ever. But I don’t know what we will look like as an adult on the other side. This economic downturn has shaken us all to not feeling quite as confident as to where we thought we were going. It never occurred to me that we would lose the Wachovia headquarters, for example. So I think it’s a thoughtful time, it’s a regrouping time, it’s a rethinking time.

This interview has been edited for space and clarity.