Highlights - 2006 Year in Review
President's Message

Strategic Goals
Goal #1: Increase Philanthropy in the community
Goal #2: Assure CFMC's adherence to the highest standards
Goal #3: Manage grants to achieve maximum community impact
Goal #4: Achieve strong collaborative leadership & partnerships
Goal #5: Operate FCPA synergistically within Foundation functions
Goal #6: Continue effective CFMC board & volunteer governance

President's Message

2006 was a very good year for all of the Foundation’s “core functions”, a great year for the Frauenthal and Hilt Building, and a significant year for the work the Foundation does as an important partner in community leadership.

In 2006 we made important moves toward establishing the Donor Impact model, with messaging, (e.g., Your Passion is Our Purpose), operational goals, and new technology and tools implemented to increase the philanthropic activity of living donors for the benefit of the community. The year resulted in $6.49 million in new gifts and grants, 52 new funds, 5 charitable remainder trusts and gift annuities established, 5 new Build-A-Funds, and 17 individuals notifying us that the Foundation is included in their estate plan. It was an outstanding year for grantmaking, because of the quality and impact of the grants made across all the funds (in particular, YAC’s grant to the County for the Juvenile Detention Center received Statewide recognition) and because of the success of our initial attempt to activate donor advisors to “work” their funds. And our Investment Committee continued its hard work of executing our fiduciary responsibilities to grow and care for the community’s philanthropic accounts. Our investments had a 12.6% annual return, and our assets ended the year at $111.6 million (unaudited).

For the FCPA, 2006 began with the strong under girding provided by the Finance Committee Task Force who created the new budget and new direction. The re-organized, re-deployed and re-dedicated FCPA staff operated throughout the year with energy, creativity, flexibility (especially) and professionalism. The Alley Door Club and the Mona Shores Singing Christmas Tree are only two examples of this year’s success in re-establishing the FCPA as “The Community’s Performing Arts Center.”

Finally, in 2006 the Foundation commenced a major investment in the YMCA, continued its commitment to support of One Muskegon, MACA, and the Community Coordinating Council, initiated strong participation in the Muskegon Sustainability Coalition, and saw its investment in the former Mall site start to “pay off”, with the attraction of other investors, funders and active players in the work of creating a vibrant downtown.

Goal #1: Increase philanthropy in the community

Key Performance Indicators

---------------------- YEARS ------------------------
INDICATOR: 2004 2005 2006

Investment Returns 11.2% 8.0% 12.6%

Total Foundation Assets $92.1M $99.3M $111.6M

Total Gifts Received $4,535,176 $5,903,629 $6,169,430

Total Grants Received $219,132 $271,180 $323,735

Total Gifts/
Grants Received $4,765,144 $6,174,809 $6,493,165

Number of Gifts Received 3,879 3,801 3,859

Number of Donors 2,304 2,325 2,666

Number of Memorial/
Honorary gifts 152 100 149

Non-Bequest gifts $3,465,523 $2,359,197 $3,871,774

Bequest Gifts $1,069,653 $3,544,432 $2,197,700

New Funds/Annuities/Trusts 33 36 57

Bequest/Trust Notifications 18 17 17

Total Funds/Annuities/Trusts 742 778 835

Major Donor Events - Public Relations - Marketing

• Hosted annual Organization Endowment Breakfast meeting on March 21 with over 50 in attendance representing some of the major community agencies and organizations who have created funds at the Foundation
• Hosted the Annual Luncheon at the Holiday Inn on June 29th with almost 300 in attendance. The Annual Luncheon was sponsored by the Muskegon Chronicle and featured a video presentation about our donors, and was narrated by John McGarry, the Executive Director of the Muskegon County Museum. We reported to the Community that the Foundation’s cumulative grantmaking since its inception has exceeded $53 million
• The Ambassador Dinner was held on September 28, 2006, and attended by approximately 160 Ambassadors. John McGarry presented the outstanding history of philanthropy in Muskegon County
• On December 5th we held a Reception for approximately 135 donors and special guests on the stage of the Frauenthal. The event celebrates the efforts of donors and provided an opportunity to brief everyone on the downtown re-development efforts. Gary Post announced upcoming new developments for the downtown site and in particular talked about Hegg’s Fine Furnishings moving into the old Century Club location
• The 2005 Annual Report, “Your Passion …. Is our Purpose” was distributed in the Muskegon Chronicle to approximately 38,000 Lakeshore subscribers on July 12th. This distribution strategy results in a county wide circulation of the Report, and according to the Chronicle, may result potentially in our Report being seen by 94,000 individuals. The Report was completed in time to be given to those who attended our Annual Luncheon
• We surveyed our Fundholders and the results will be used to benchmark our performance as we increase our focus on Donor Impact. We received an overall 94% approval rating from the survey respondents
• We mailed a Spring and Fall newsletter to approximately 5,500 of our supporters and friends. We continued to use the newsletter to tell donor stories to highlight grant making, to introduce new funds, and to provide our donors ideas for connecting with the Foundation to do their philanthropy
• The Employee Fund ended 2006 with a Fund balance of $28,408. Established in 1997 by four employees and zero balance, nine participating employees now add more than $1,200 annually to the Fund through payroll deduction. Priorities for the Fund continue to be enhancing the quality of life in the downtown area of Muskegon and meeting other community needs as determined by Fund participants
• Coverage of the Foundation had again been significant in 2006 with: 89 articles appearing in area newspapers mentioned the Foundation’s impact on the Community; 30 articles mentioned or referenced the Foundation in some capacity; 35 articles focused on the Frauenthal Center for the Performing Arts; and 197 articles mentioned or referenced the Frauenthal. There were 135 Advertisement ads and 256 Client Ads which mentioned the Frauenthal
• Placed a Year-End Ad in the Muskegon Chronicle on December 13, 2006 promoting the Foundation, encouraging year-end giving, and “Thanking the Community” for a year of great support
• Mailed at the end of November a Year-End Appeal letter to 5,500 donors and 400 advisors. The letter serves as a reminder and encourages year-end giving to support our many funds, or the creation of a fund to personalize their philanthropy
• Mailed in mid-November to 3,300 donors an information piece about the IRA rollover provision in the Pension Protection Act and held a luncheon for targeted donors. We received gifts totaling $132,000 from IRA rollovers

Goal #2: Assure CFMC's adherence to the highest standards of integrity, ethics and proffessionalism in the management and operations of the Foundation.

• The Foundation was confirmed in Compliance with National Standards for U.S. Community Foundations by the Council of Foundations
• Administrative Services – offered Capital Campaign Administration, Grant Fiduciary services, Scholarship Program administration, Grant administration, Grantmaking for Private Foundations
• Established Segregated Investment Account Program
• On-Line Fund Statement Access by Donors
• 2005 Audit completed with no management letter, and high compliments from Audit Committee
• Investment Best Practices Ad Hoc Committee completed its year long work, creating clear and specific fiduciary standards for the work of administering our investments, establishing clear investment return and risk targets, and creating a new Spending Policy that reflects variations among donors’ objectives, Fund expenses, and a new calculation based on rolling quarters.

Goal #3: CFMC will seek, award and manage all grants with a goal of increasing community philanthropy and achieving maximum community impact consistent with Grant Making Guidelines and Donor Advised Fund Desires.

Grants From: 2006 2006
# of Grants Granted Amount
Organization Endowments 77 $1,357,092
Committee Advised 57 $318,344
Designated 58 $166,878
Discretionary 106 $697,755
Donor Advised 202 $382,265
Affiliate Grants 113 $287,220
Program Grants/Community Service 11 $25,440
Scholarship 169 $712,905

Total Grants Approved 793 $3,947,899

MICHIGAN STATE HOUSING DEVELOPMENT AUTHORITY (MSHDA)

• For the sixth year in a row, the Foundation received a $150,000 MSHDA Economic Development grant to support economic development projects in economically challenged areas of Muskegon. A total of $145,330 was awarded to six grantees to support a variety of community projects consistent with the MSHDA grant guidelines.

SCHOLARSHIPS

• 398 applications received and processed in 2006 (321 in 2005)
• 153 high school seniors interviewed over 3 evenings by 56 community volunteers
• 613 students awarded scholarships, including renewals (576 awarded in 2005). This represents commitments over the next four years of $1,461,205 ($1,625,520 in 2005)
• The retention rate for 4 year scholarship awards is 82%. (Of the 38 4-year awards made in 2003, 31 are still active for the 2006/07 school year)
  

YOUTH ADVISORY COUNCIL (YAC)

• The Youth Advisory Council (YAC) recommended approval of $56,714 in grants in 2006, including a $30,000 grant to the County of Muskegon to support the Juvenile Justice/Youth Home study. The Council heard speakers on the state of the Muskegon Juvenile Justice system in addition to making a trip to the Juvenile Home in Whitehall
• The Muskegon YAC was recognized at the annual CMF Youth Conference and the CMF Members Conference with a “Great Grant” plaque for their efforts to effect the Juvenile Justice System in Muskegon County
• YAC Fund assets grew to $1,770,541 at the end of 2006

Community Foundation for Mason County (CFMA) has been an affiliate since 1996. The 2006 Mason County Foundation accomplishments include:

• Distributed 60 grants totaling $184,233 to a variety of community projects
• Mason County YAC distributed 12 grants totaling $14,390
• Received $651,272 in gifts and grants
• 98 new donors for a total of $185,390 in gifts
• 7 people were memorialized/honored with gifts to the Foundation
• Created 6 new named funds and 1 new annuity for a total of 73 funds in the Mason County Foundation
• Total assets as of 12/31/06: $4,236,220
• Reports to the Community mailed to more than 650 individuals

Community Foundation for Oceana County (CFOC) has been an affiliate since 1989. The 2006 Oceana County Foundation accomplishments include:

• Distributed 53 grants totaling $102,987 back to the community
• Awarded scholarships to 88 students, including renewals, which represents commitments over the next four years of $153,100
• Oceana County YAC distributed 30 grants totaling $22,375
• 1,177,052 in gifts and grants, including 4 bequest gifts of $663,850
• 172 new donors for a total of $429,991 in gifts
• 9 people were memorialized/honored with gifts to the Foundation
• Created 5 new named funds for a total of 44 funds in their Foundation
• Total assets as of 12/31/06: $6,492,147
• Articles to area newspapers highlighting Foundation activities, etc.
• 7,000 copies of the Annual Report inserted into Oceana’s Herald Journal
• Year-end letter mailed to 750 people

• The Paul C. Johnson Foundation continued to provide important leadership and financial support for the re-development of downtown Muskegon. In addition, significant grants were awarded in 2006 in support of key community projects including: The Muskegon Lake Nature Preserve / Muskegon River Board Walk, Grand Valley State University/Johnson Center for Philanthropy, Muskegon Museum of Art, West Shore Symphony and Goodwill Industries
• A portion of the assets of the PCJ Supporting Organization continue to be invested in the Downtown Muskegon Development Corporation (DMDC) as an important time-limited Program Related Investment to support downtown re-development

Goal #4: CFMC will provide strong, collaborative leadership and promote partnerships to influence the community's future direction, racial healing, community pride and unity, and environmental sustainability.

LEAD 2005

• During 2006 the LEAD 2005 program gained 10 new high school graduates and 1 new GED completion, bringing the number of the 219 original participants who completed the first goal of high school/GED completion to 154 (70%). A total of 76 LEAD 2005 students were enrolled in one of our three partner’s colleges, with 18 additional LEAD 2005 students attending other colleges around the state. 61% of the LEAD 2005 graduates have enrolled in post-secondary courses to date!

• During 2006, the Foundation continued to provide office space and administrative support for the Community Coordinating Council (CCC) of Muskegon County. With support from the Foundation, the Council provides a collaborative forum for over 40 human service organizations who deliver a broad range of services to residents in the greater Muskegon region. Leadership for the CCC is provided by an Executive Committee, Program Committee and Data Committee. The CCC is working in partnership with the recently formed Muskegon Area Sustainability Coalition to develop a Prosperity Index for the Muskegon region including indices to measure progress toward social equity, economic prosperity, and environmental integrity.
• Other activities and initiatives of the CCC include:

o Support of Parenting Collaborative
o Reduction of Poverty in Muskegon County
o Violence Reduction committee
o Children’s Action Network – Family Resource Centers
o Support for Homelessness Coalition

MUSKEGON AREA CHILDREN'S AGENDA (MACA)

• The Community Foundation for Muskegon County continued its community leadership role by hosting and facilitating the Muskegon Area Children’s Agenda.
• The Committee meets bi-monthly and provides an important discussion forum for children and family issues in the community. The Committee continued its focus on providing public policy leadership related to children and family issues. Key discussion topics during 2006 included: One Muskegon, Community Poverty, Community Agency Discussion of Nickel and Dimed, Lights on Afterschool Initiative, West Michigan Strategic Alliance WIRED project, and initiated a Community Conversation about local High School Completion Rates and Education Issues in our Urban Centers
  

DOWNTOWN LEADERSHIP

• A DMDC Project Team consisting of representatives of the City of Muskegon, Muskegon County, Community Foundation for Muskegon County, Muskegon Area First, Main Street and other community partners continue to meet bi-weekly in the Foundation Boardroom to develop the public infrastructure and financing strategy for the downtown DMDC site and adjacent properties
• The extensive multi-party effort to secure both State and Federal funding for the construction of the streets saw its reward in the beautiful completion and opening of Western Avenue and a traffic “roundabout” at the intersection of Third and Western
• Purchase of Daniels, the Century Club, and the Savings Bank was completed and renovation begun, and Purchase Agreements signed, and/or projects announced for a new County Bus Terminal and Parking Ramp, a townhouse project by Gary Post, the new Chamber of Commerce Building, and a new Mixed Use Building owned by Sidock Architects and Engineers
• The Public Art Committee of the DMDC received from Fleis and VandenBrink Engineering the completed design of the public spaces on the former Mall site, and identified Internationally known Sculptor Richard Hunt as the creator of the sculpture to go in the roundabout
• The Foundation and the Downtown partners sought and received grants totaling $90,000 from the Alcoa Foundation and the State Cool Cities initiative for sculpture downtown
• Using a grant from our Unrestricted funds, Timberland Resources cleared, prepared and planted the entire DMDC site with wild flowers and decorative grasses to beautify and stabilize the site
  
• Worked with partners throughout the community to “save” and strengthen the YMCA, including intensive work to seek Michigan Land Trust grant to place downtown YMCA waterfront in County ownership and reduce the Y’s debt to the Community Foundation

ENVIRONMENTAL LEADERSHIP

• The Environmental Endowment Fund grew to $343,731 at the end of calendar year 2006. Good progress continues to be made towards increasing the assets of this Fund to the target goal of $350,000
• The Environmental Fund awarded $13,000 in grants to a variety of environmental improvement projects
• Community leadership in promoting environmental awareness. Foundation staff continue to provide significant community leadership and support for a variety of environmental initiatives and project opportunities. Foundation leadership contributes to building community awareness of sound environmental practices, preservation of our natural resources and moving the community toward implementation of emerging environmental technology

Goal #5: Operate the Frauenthal Center for the Performing Arts (FCPA) synergistically with the other core functions of the Community Foundation while increasing the FCPA's endowment, financial performance and facility usage.

• Offered several events including “Cirque”, “the 5 Browns”, the Academy Awards Gala, the 3rd Annual BBQ Fest, Riders In The Sky presented by Bob Scolnik and “Love Letters” sponsored by Ron & Shirley Gossett which featured Danny Winsor and Betsy Palmer
• The Frauenthal became the home of the Irish Music Fest. The Theater hosted the kick-off of the Arts & Humanities Month, featuring poet laureate, Billy Collins
• The first Alley Door Club was held in February 2006 and the Mona Shores Singing Christmas Tree chose the Theater as their new site. We hosted our first Pre-Concert Dinner in the Hilt Building as well
• Became the site for Grand Rapids Ballet’s Muskegon classes
• Hosted a special “Truth ‘n Jazz” concert in the Hilt building for the Hilt family in appreciation for their generosity to the Hilt Building
• Finished the year with an operating loss of $180,000 (1/3 the size of 2005’s loss) plus a $28,000 gift for capital projects from the Hilt Foundation!

Goal #6: Continue CFMC's rich history of utilizing influential, effective Trustees and volunteers and encourage community participation in all aspects of our work.

• The Strategic Planning Task Force assigned to execute action steps met and completed the work plan outline under this goal in early 2005, including an assessment of CFMC’s criteria and methods for committee and Trustee selection and appointment, establishing the process for CEO evaluation, and review of opportunities provided for broad community participation in our work. Most of the Committee’s work, though, centered on consideration of how best to utilize Trustees during Board meetings. That discussion resulted in a Governance Statement which was adopted at the February 2005 Board meeting and is currently observed as we operate Committees and prepare the Board agenda
• In December 2006, the Board adopted a new Agenda Format which utilizes a Consent Agenda in order to free up time for leadership or “generative” questions to be discussed by the Trustees, thereby harnessing more of the potential influence and knowledge of our Trustees
• With the retirement of Trustee Lowell Dana, Dr. Richard Peters was nominated and presented for election by the Members in June 2006
• Throughout the year, Trustees and staff continued to suggest and cultivate corporate and civic leaders for consideration by the Nominating Committee for appointment to the Board and consideration by the Board for appointment to Committees