Don't Settle For Less: Legal Settlements Support Charity

What happens when a state government is awarded thousands of dollars in a class-action settlement against a major corporation? How does it ensure that the funds are well managed and have the greatest positive impact?

Increasingly, state attorneys general are looking to community foundations - with their extensive administrative infrastructure and in-depth knowledge of local needs - to oversee the distribution of settlement funds. And, by actively seeking out these somewhat unusual donations, community foundations are maximizing the impact they are able to make.

Helping Women Stand on Their Own Two Feet
Three years ago, Nine West Group agreed to settle in a lawsuit that charged it had illegally fixed prices on its women’s footwear and agreed to pay $34 million to the states in which it was alleged to have violated antitrust laws. The Montana Community Foundation read about the settlement in the newspaper and petitioned the state’s attorney general, Mike McGrath, for a portion of the funds.

McGrath, who already knew the Community Foundation’s staff and programs well, awarded half of the state’s portion -- $51,500 -- to it. The Community Foundation placed the original sum into its Women’s Foundation of Montana, an existing fund focused on promoting economic self-sufficiency for women in the state. Among its highly successful programs is the Dress for Success employment-counseling initiative, which has been able to help 75 percent of participants find jobs.

McGrath also had confidence that the community foundation would provide leadership in granting the money to local programs with successful track records. The Montana Foundation is aware of all the women’s programs in the community and continues to partner with those that are making significant contributions.

“The attorney general knew that the Montana Community Foundation was well respected and well run,” says Ralph Yaeger, director of development at the Montana Community Foundation. “He knew we had the resources to ensure that the settlement funds could be used to affect real change among women in the region.” Foundation staff offered the attorney general the full range of services to manage and distribute the settlement funds: accounting, investment oversight, grant-making expertise and nonprofit relationship management.

Improving Quality of Life
Montana isn’t the only state to recently turn to community foundations for help in distributing settlement funds. Wisconsin and Michigan are also taking advantage of their community foundations as they seek to manage settlement funds.

In March, Wisconsin’s attorney general announced that 19 state community foundations would distribute the state’s portion of a settlement against six vitamin companies. So far, $63,800 has been given in grants across the state to support programs for food and dental care.

In Michigan, meanwhile, the Grand Traverse Regional Community Foundation has been tapped to manage the state’s portion of the $368 billion settlement against the tobacco companies. That foundation has established a Healthy Youth/Healthy Seniors fund through which it will make grants that ensure people benefit from the tobacco money for generations.

Community foundations are uniquely positioned to find the best uses of these funds, and, when appropriate oversee investments that ensure funds for future needs. By placing the money in the hands of local experts, state governments have been able to turn negative corporate behavior into a positive social change.

System Admin

Posted at 1:03 PM, May 08, 2003 in Accountability | Nonprofit Management | Permalink | Comment