Hartford Business Journal

10 HARTFORDBUSINESS.COM | March 6, 2023 On The Record | Q&A By Greg Bordonaro gbordonaro@hartfordbusiness.com A mid last year's economic uncertainty — caused by inflation, supply chain issues, workforce shortages and a poor- performing stock market — one might assume charitable giving took a hit. That wasn't necessarily true. In fact, 74% of the 215 private foundations recently surveyed by Fairfield-based consultancy Foundation Source said they maintained their grant-making in 2022 despite a difficult economic environment. And for those foundations that made changes to their activities, most increased the size and number of grants, the survey found. That was the case with the Hartford Foundation for Public Giving, which recently announced it handed out a record $54.5 million in grants last year, breaking its previous $52.7- million record set during the peak of the COVID-19 pandemic in 2020. It also raised $40.8 million in donations — the largest sum in more than two decades — from individuals, families and other groups that collectively opened 41 new funds. Hartford Foundation President and CEO Jay Williams said several factors led to last year's growth in grants and fundraising, including an increase in corporate donations fueled by a major Hartford employer. He declined to provide further details but said more news would be shared in the future. The foundation also established a new individually managed account program that allows donors to maintain use of their own financial advisor, while leveraging the foundation's grant-making services. Traditionally, donors provide funds directly to the foundation, which manages and invests the assets in addition to assisting with grant-making. The new program led to about $5 million in new commitments, Williams said. In terms of grant-making, $54.5 million went to 579 student scholarships and 1,126 nonprofits that have a connection to the foundation's core strategic focus areas, including efforts to: • Increase the number of Hartford residents living in "higher opportunity neighborhoods"; • Provide for residents' basic human needs; • Increase education and employment opportunities for residents of color — including youth and the formerly incarcerated; • Increase civic and resident engagement; and • Increase equity and inclusion in the arts sector. Two of the larger commitments included an 18-month, $2.25 million grant to Hartford-based social services nonprofit The Village for Families & Children Inc., to support its behavioral health, early childhood and youth development programs; and $1 million over 18 months to Catholic Charities to support its efforts to help families improve their employment prospects, including a new entrepreneur microloan program. Perhaps the foundation's biggest headwind in 2022 was riding out the stock market — key to any foundation that oversees and invests donor assets. All three of the major U.S. indices last year recorded their worst annual performance since the 2008 financial crisis, with the Dow Jones down about 8.8%, S&P 500 declining 19.4%, and the Nasdaq down 33.1%. The foundation said it ended 2022 with about $1 billion in assets, down from approximately $1.25 billion reported at the end of 2021. The decline, however, didn't stop the increased grant-making, Williams said, because the foundation calculates its spending policy — or how much money it doles out annually in grants — based on the longer-term performance of its two investment funds. The foundation annually spends about 5% of the market value of the funds. The market values are calculated based on a trailing 20-quarter average. "That smoothes out our ability to make grants," said Williams, a former mayor of Youngstown, Ohio, who served in the Obama administration as assistant secretary of commerce for economic development. "So, although you had a down year in 2022, you had five total years of performance that you take into account. We want to maintain the average because in a down year, you won't see our grants," decline significantly. Williams said the foundation's overall strategy is to "invest to exist in perpetuity" and its staff, consultants and investment advisory committee target an annual return that equals 5% plus a long-term consideration of the Consumer Price Index. That ensures the foundation's spending power isn't eroded by inflation and also accounts for its annual grant-making target. "It isn't glamorous or sexy, we're not out chasing the highest returns," Williams said. "But nor can we say 'let's tuck these resources in (treasury) bills and go about our business.' We have to have an investment strategy that not only allows us to grant money today, but seeks to preserve the spending power for future generations." Here's what else Williams had to say: Q. The individually managed account program seems like a unique offering. What led the foundation to adopt it? Shaky stock market doesn't deter Hartford Foundation from record grant-making year HBJ PHOTO | STEVE LASCHEVER Jay Williams is the president and CEO of the Hartford Foundation for Public Giving. JAY WILLIAMS President & CEO Hartford Foundation for Public Giving Education: Bachelor's degree in finance, Youngstown State University Age: 51

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