Fixing a Broken Trust
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Fixing a Broken Trust How Alaska Succeeded The Alaska Children’s Trust (ACT) was born flawed, a ghost of its founders’ hopes, stripped of funding in a political battle that had nothing to do with child abuse prevention and buried with no money in a disinterested government agency. There it languished for eight years, forgotten by all but its most devoted supporters. In the mid-1990s, a new governor and his staff, aided by a group of passionately committed volunteers, resurrected the Trust and set in motion 10 years of high- energy fundraising and successful grant-making. But the flaws in the original structure were still there, obstacles in the way of the mission. In 2006, the ACT board of trustees and the Friends of Alaska Children’s Trust, a 501(c)(3) created in 1997 as an independent fundraiser for ACT, set out to fix what was wrong. This is the story of how they succeeded. creating the trust the alaska children’s trust was created as a government entity — its trustees * Appointed the first board of trustees including business leaders, the appointed by the governor, the Trust corpus managed by the Commissioner of Attorney General, and the Commissioners of Education and Health and Revenue, grant proposals subject to state procurement regulations and given final Social Services. Carol Brice, a Fairbanks public health nurse long active in approval by the Department of Health and Social Services. community child abuse prevention, was elected chair. The Trust entered state statute in 1988, approved by Alaska lawmakers after a fight * Asked staffer Deborah Bonito, who was returning to private life, to create a over its funding mechanism that spanned two legislative sessions. The original non-governmental fundraising 501(c)(3) organization called Friends of the 1987 bills gave Alaska residents who received an annual dividend check from the Alaska Children’s Trust (FACT) to focus on growing the Trust corpus. state’s oil holdings the option of donating part of that money to ACT — a so-called * Transferred $6 million to the Trust from the surplus in an unrelated account. “Permanent Fund Dividend check-off.” In 1988, realizing a vote on the Trust would Despite additional efforts, this proved to be the only state money ever not be allowed as long as it contained the dividend check-off, its sponsors removed appropriated outright to the Trust. (Lawmakers later earmarked special license it and the legislation passed with scant opposition. the trust went into statute plate, marriage license and birth certificate fees for deposit in the Trust.) Grants but was not activated. it had no money and two governors failed to appoint the first year totaled $285,000. the required trustees. Guided by Bonito and a group of highly motivated activists, FACT organized a In 1991, the Alaska State House approved a $2 million deposit into the Trust, but variety of fundraisers over the next decade. Some were single events, e.g. Gov. the State Senate killed it. The Trust remained dormant and broke. Knowles dedicated the money raised at his second inaugural ball to the Children’s In 1994, Tony Knowles was elected governor and made children’s issues a key focus Trust. Others were annual events such as Mush for Kids, a popular Fairbanks treat of his administration. Knowles’ chief of staff, Jim Ayers, was a former head of Kid for children featuring sled dog rides. Pact, a statewide coalition of nonprofits that originally pushed for creation of the Trust. Knowles’ lieutenant governor, former Rep. Fran Ulmer, had co-sponsored the $2 million deposit that died in 1991. knowles created a “children’s cabinet” and made cutting the rate of child abuse in alaska one of its primary goals. By 1996, the Knowles administration had accomplished the following: instrumental supporter * Rewritten the Alaska Children’s Trust statute using an Executive Order that streamlined the structure, made it part of the governor’s office, eliminated elected officials other than the governor from the board and reduced the carol brice a Fairbanks public health nurse long active in board from 10 to seven. However, the Trust remained a government community child abuse prevention, served as controlled entity. founding chair of the Alaska Children’s Trust. 1980 1987 1988 1991 First Children’s Trust created Bills introduced in Alaska Legislature approves Alaska House Finance attempts to deposit $2 million in Kansas. Legislature to create ACT. Children’s Trust without funding. in Trust, fails. 3 4 instrumental supporter deborah bonito created a non-governmental fundraising 501(c)(3) organization called Friends of the Alaska Children’s limitations of structure Trust to focus on growing the Trust corpus. By 2006, the original $6 million in the Trust had grown to $11 million, but only the earnings from interest and dividends were available for programs, an amount FACT members deemed woefully inadequate to fight Alaska’s high child abuse and neglect rates. despite educational and programmatic success over these years, the restrictions imposed on the trust by its status as a government * Attracting significant private donations to grow the Trust proved nearly entity loomed ever larger and more frustrating. According to current and impossible. FACT developed successful community fundraisers over the former staff and board members, major problems included: years, but larger donors were put off by the prospect of writing a check to the * The state’s grant application process was so onerous that many small State of Alaska. In addition, FACT could not truthfully promise any donor prevention programs could not successfully compete. They often didn’t that their money would be used for its designated purpose. act was called understand how to complete proposals, which could require more than 30 an endowment and a trust but it was in fact a pot of unprotected pages, and could not afford to hire a professional grant writer. For the first state money that could be grabbed or redirected at any time. seven years, an employee of the state, paid for by the Trust, worked with It was this problem that most troubled FACT board members, who believed soliciting potential grantees to perfect their applications. Smaller programs, especially large donors was essential to the mission but that doing so was unethical. from rural communities, often didn’t bother to apply. Others submitted flawed applications that were rejected under the state’s rigid point system Lesser but persistent frustrations included: and never brought before the Trustees. As a result, the community-based * The state required extensive quarterly reports from every grantee, even the smallest. funding needs that inspired creation of ACT were thwarted, making it Community-based programs didn’t have the staff or time to prepare acceptable impossible to aggressively work the mission. quarterlies, which as far as board members could tell, no one ever read. * The Commissioner of Revenue was the statutory treasurer of the Trust but * During the grant review process, ACT Trustees were barred by state regulation from in the scope of his primary duties, the ACT money was too little — “decimal contacting anyone to clarify or inquire further about applicants or their programs. dust” — to command much attention. The department invested the fund so conservatively that for five bull market years running the annual returns * At the beginning, getting the state side of the Trust operation to meetings ranked at the very bottom for all endowments nationwide. to talk about plans or problems was extremely difficult, rendering useful communication among the disparate entities largely non-existent, said * When ACT Trustees met to award grants, they rarely knew how much money Deborah Bonito, FACT chair from 1997 to 2003. “It was always a big hassle was available to them or the status of projects they had funded in previous to get state bureaucrats to pay attention.” years. The Department of Revenue and the Department of Health and Social Services used different accounting systems. They didn’t communicate with each other, and neither was able to produce useful information in a timely manner. 1996 1997 2006 2007 The Knowles administration rewrites ACT law, appoints Deborah Bonito creates FACT, as fundraising nonprofit FACT begins discussions on possible privatizing. The Giving Practice advises FACT to negotiate Trustees, and deposits $6 million in Trust corpus. Carol for ACT. She chairs FACT from 1997 to 2003. Rasmuson Foundation funds study/reform of better terms with the state. ACT/FACT form 5 Brice named chair. First year grants total $285,000. state procurement process. Joint Restructuring Committee. 6 negotiations ACT and FACT board members approached the idea of privatization cautiously. Some supporters were concerned that going private would require the diversion of needed program money into administrative costs to make up for the de facto subsidy provided by the state. The statute directed that $150,000 be paid annually from the Trust to the state to cover administrative costs—initially the cost of a state staffer—but the Trust paid no rent, used state phones and technology, and the peripheral services of employees in the Department of Health and Social Services during the process of soliciting and vetting grants. The National Alliance of Children’s Trusts examined the state v. non-state status of children’s trusts in general and “eventually landed on the belief that any structure can work … depending on the level of support,” said Teresa Rafael, Alliance director. However, depending on the structure, association with the state gives a Trust clout it might not have as a private nonprofit, including the governor’s support and access to lawmakers, she said. It increases options for making child abuse and neglect a priority for state and national funding. An evaluation done in the Department of Health and Social Services concluded privatization was not a good option.