The Year 1926
A Publication of
The Cleveland Foundation
"The Committee to distri bu te said income shall be residents of Cleveland, men or women interested in welfare work, possessing a knowledge of the civic, educational, physical and moral needs of the commun. " Ity.... Excerpt from the Resolution of January 2, 1914. (See Appendix)
The Annual Report of the Director of the Cleveland Foundation for the Year 1926
The Committee of the Foundation MALCOLM COLONEL
L. McBRIDE,
LEONARD
Chairman Secretary
P. AYRES,
W. BRAND MRS. F. H. GOFF W. H. PRESCOTT C.
JAMES
R.
GARFIELD
Counsel
CARLTON
K. MATSON
Director
710 Federal Reserve Bank Building
Presen ta tion
T
HE Committee of the Cleveland Foundation for the first time presents to the public the report of the Director of the Foundation. The record of the year 1926 is impressive, a demonstration that the Foundation is fulfilling the promise of its early years. In presenting this report, we ask earnest consideration of it by every person interested in the Cleveland community. The Foundation is a public enterprise, charged always with a public interest. THE
COMMITTEE
CLEVELAND
MALCOLM
OF THE
FOUNDATION
1. McBRIDE,
Chairman
The Year 1926 The Annual Report of the Director to the Committee
D
URING the past year income from three trusts, amounting to a combined capital sum of $810,000, has come under the administration of the Committee of the Cleveland Foundation. While the principal is considerable and financially an important fore-runner of greater sums, yet the nature of the three trusts and the terms governing them, are even more significant than the funds themselves to the man or woman who wishes to make the accumulations of his lifetime supremely useful to his community. The three funds are: The George H. Boyd fund (approximately) $700,000; the Dr. Hamilton F. Biggar fund, $100,000; an anonymous scholarship fund (to be augmented by yearly additions) of $10,000. The terms of the trusts directing the Foundation in the administration of these funds, will be set forth in paragraphs which follow.
The George H. Boyd Fund George H. Boyd, of Sharon, Pa., who died on July 25, 1926, made the Cleveland Trust Company trustee and the Cleveland Foundation residuary legatee of his estate under a living trust agreement with certain provisions taking effect at his death. A present conservative estimate of the amount which will be [3}
placed at once under the administration of the Foundation, is $700,000. The annual income to be distributed by the Foundation Committee is estimated at $35,000. Mr. Boyd, who lived in Cleveland the first forty years of his life, became interested in the Foundation through his acquaintance with the founder, the late F. H. Goff. The possibility the Foundation offered Mr. Boyd of carrying out purposes dear to him with an intelligent and informed continuity, and at the same time of safeguarding these purposes against futility, made its immediate appeal. Therefore, in the living trust agreement controlling his property, the provisions governing "The George H. Boyd Fund" were written as follows: "Pursuant to the power reserved to the contributors to said Foundation, I hereby direct that the trust estate be devoted to educational purposes, and that the Committee having in charge the disbursement of income shall, in conference with the officials of Western Reserve University, utilize said income for the benefit of Western Reserve University, or such one or any of its departments as may at any time seem most in need of assistance; except that such Committee may, from time to time, by way of loan or otherwise, use a portion of such income for assisting worthy and deserving young men or women in securing the benefits of a collegiate or university education at said institution or elsewhere, according to its judgment and discretion, provided that it shall not at any time use more than twenty-five per cent (25%) of the income for such purposes, and provided further, that in case said university should cease to exist, then said income may be used for such other educational purposes as the Committee may determine." I t is under these provisions that the Committee of the Cleveland Foundation is now beginning to function in its administration of the Boyd fund. The president of Western Reserve University has already met with [4]
the Committee and tentatively presented his suggestions and those of his board of trustees as to what uses should be made of the portion of the income available to the University. The first distribution will probably be made in this direction with the beginning of the fall semester, 1927. Scholarship support of Sharon youths already undertaken during Mr. Boyd's lifetime, is being continued this year to the extent of $8,900. This will probably nearly exhaust the quarter of the income available for scholarships during this one year. Further decisions about the administration of the scholarship funds will take into account Mr. Boyd's wishes and intentions, conditioned by such newly arisen needs or appeals as should influence the Foundation Committee in carrying out its trust. The terms of the Boyd Fund illustrate to the man or woman who wishes first of all to remember some special institution or undertaking, how that can be done through the Cleveland Foundation, and how at the same time there can be secured through the Foundation plan an adequate safeguard against a harmful or futile rigidity. As has been well said, the Foundation offers "Insurance of Usefulness."
The Biggar Fund Dr. Hamilton F. Biggar, a prominent Cleveland physician, who died on November 29, 1926, at the age of 88, had provided through a living trust agreement that there should be established: "A fund of One Hundred Thousand Dollars ($100,000.00) to THE CLEVELANDTRUST COMPANY,of Cleveland, Ohio, which it shall thereafter hold as Trustee for the charitable uses and purposes set forth in a Resolution adopted by the Board of Directors of THE CLEVELANDTRUST COMPANYon the second day of January, 1914, providing for a community charitable trust [5]
designated in said Resolution as "The Cleveland Foundation," to be managed, controlled, administered and disbursed in all respects as provided in said Resolution, reference to which is hereby set forth at length. It is my desire that the committee of The Cleveland Foundation having charge of the disbursement of its income give preference in the distribution of three-fourths (3/4) of the income derived from said fund to such institutions and objects as have for their purpose the advancement of medical science, assistance of young men or women in procuring a medical education, or the relief from time to time of hospitals or similar institutions whose facilities are curtailed or impaired from lack of funds. It is my desire that this gift be known as 'The Dr. Hamilton Fisk Biggar Fund'."
It is the fixed policy of the Cleveland Foundation Committee that a preference as expressed by Dr. Biggar, should be scrupulously observed until such time as unquestionable negative reasons make the carrying out of the preference impossible or positively harmful. Dr. Biggar made his gift in so broad and liberal a way that such a contingency will probably never arise and the preference can always be observed. It is not probable that all, or even one, of the three named optional purposes of medical research, medical scholarships or hospital aid, will ever become futile or without point. The terms of Dr. Biggar's trust illustrate admirably how funds can be set aside for cherished general purposes, with the option to choose the spending agencies or individuals residing in the hands of the Foundation Committee. In such a use of the Foundation, the utility of the gift is protected through the positive choice from time to time of such active income-spending agencies as may currently be most serviceable to the community in the fields specified. ' The Foundation Committee has expressed its appre[6]
ciation of the fact that the income from one quarter of the Biggar fund is available without preference or designation for the general purposes of the Foundation. There have in the past been several funds of this sort set up, giving the Foundation Committee the greatest latitude in administration. It is highly desirable from the viewpoint of the future service of the Foundation to the community, that such undesignated funds be increased to the point where the Committee will always be ready to back those projects or meet those unexpected needs which the future development of a great city naturally places beyond the vision of any single individual or generation. Special Scholarship Fund A donor, who wishes to remain anonymous, during 1926 set up a special scholarship fund of $10,000, the income from which is to be used for the higher education or training of young people having unusual ability or being specially gifted. The initial fund was created under a living trust agreement. The donor has expressed the intention of adding to this fund, and the hope that the imagination of others will be so caught by the fine and constructive purpose of the gift that they will set up trusts directed to the same achievement. The terms of the trust agreement making this $10,000 grant are as follows: "Pursuant to the powers reserved to the donor in said Resolution, I hereby express the preference that at the discretion and under the direction of the Committee of the Cleveland Foundation the income shall be used to defray expenses of the further education or special training of young people of either sex who have adequate basic preparation, preferably secondary school education or its equivalent, and who shall have given sufficient evidence of being specially gifted or of [7]
having unusual ability, and of being so qualified by character and situation in life as to entitle them to such education or training."
It will not be easy to carry out the admirable constructive intention which is behind this fund. Properly administered, the income from the fund will go to individual young men and women who have shown promise of real talent. They will be young people in whom intellect and imagination and not personality alone are the controlling factors. They will have the basic equipment with which they can be taught to think independently of the standard patterns of thought with which they may come in contact. When their training is completed they should be able to exercise real leadership in industry, finance, art, political and social relations, the kind of leadership which not only goes ahead, but which continually finds better ways ahead and leads along those ways. They should be in some measure pathfinders of civilization. The Foundation is prepared to give its earnest thought and energy to the administration of the income from this trust, not only because it is a trust, but because the Foundation believes that the encouragement through education of the specially gifted is a service not only to Cleveland, but to the nation. It is an undertaking in which there may be many failures. Human material which gives promise of the unusual will even in the process of education frequently prove ordinary. But if only one really superior person is discovered and aided in each generation the effort and the expenditure will probably have proved worth while.
It is hoped that this fund and its purposes will catch the imagination of other potential benefactors, and that resources enough will be added so that a broad program of scholarship aid to the gifted can be carried out in Cleveland. [8]
Current Activities Since June, 1926, the Director has been acting as executive secretary of the Cleveland Conference for Educational Co-operation. The Foundation has considered this loan of service as a contribution to an important and essential Cleveland activity. Office space for the staff of the Conference has been loaned by the Foundation since the Fall of 1925. The Conference, of which Dr. Robert E. Vinson is president, and Frederic Allen Whiting, secretary, was organized in 1924 to study "the educational problems of Cleveland and community with the expectation of ultimately developing a co-ordinated educational program for the entire community." Nineteen Cleveland institutions, having primary or secondary educational functions are included in the Conference. These institutions, through the Conference, have been making a self-study of their related problems in eight fields: Adult Education; Art, Music and Drama; Exchanges of Services; Research and Graduate Instruction; Sites and Finances; Social Agencies and Correlated Activities; Teacher Training; Vocational Guidance and Instruction. The reports of the various committees have been submitted from time to time, after being prepared by the sub-committees and presented to the Conference as a whole, to a Study Committee of representative citizens whose function it is to criticize and accept the reports for the community. This committee consists of: Hon. Newton D. Baker, chairman; Col. Leonard P. Ayres; Hon. James R. Garfield; Philip Mather; W. H. Prescott; E. M. Williams; L. B. Williams. Four reports have been accepted, and notable progress, particularly in the field of teacher training, [9]
has already developed from the reports. The Conference expense has been generously met by grant of the Carnegie Corporation before whom an application for further support is now pending. The Cleveland Year Book, "the sixth annual publication of the chronicles of Cleveland by the Cleveland Foundation," was issued in the Spring of 1926. This edition included as an appendix a Directory of the Civic and Welfare Activities in the city of Cleveland. The Directory was added to meet a demand constantly voiced by the community. In the interests of economy the Foundation office did, as it has in the past, most of the work of collecting and editing the material which goes into the Year Book. It is hoped that some time funds will be available to make the Year Book a much more comprehensive volume with a correspondingly broader appeal to the needs of students of current affairs in Cleveland. It is intended that the Year Book shall serve two purposes: First, A current reference book. Second, A historical record of the years in Cleveland.
It seems worthwhile here to quote from the foreword of the 1925 edition as to the place and significance of the Year Book: "The Cleveland Foundation is an enduring link between the vision of the present and the achievement of the future, and as such it is highly fitting that the Foundation should preserve the chronicles of the city. "Something of history will have to go into those vital decisions regarding the distributing of income and principal which the Foundation Committee of each future period will be called upon to make. Those decisions will be made, not in disregard of the civic deeds and ideals of the benefactors who have passed, but in the interpreting of those deeds and ideals in terms of contemporary needs and conditions. "The Foundation Committee is charged perpetually [ 10]
with the laying out of the roads of progress, not broken off from the trodden highways of the past, but continuing those thoroughfares to fit the living needs of each generation. "It is hoped that the Year Book of 1925, with the other Year Books, will be a useful servant to all those who have to make the decisions of the future." Official actiVities of the Director completed during the year were:
undertaken
or
Executive Secretary, Cleveland Conference for Educational Co-operation; Chairman, Committee on Attendance and Membership, National Conference of Social Work; Chairman, Publicity Committee, the University Hospitals; Member, Executive Committee, Education Extension Council; Member, Board of Trustees, Community Child Guidance Clinic; Member, Community Christmas Committee of the Welfare Federation; Member, Educational Committee of the Associated Charities; Member, Special Committee on the School of Applied Social Sciences, appointed by the president of Western Reserve University; Chairman, Public Affairs Committee of the City Club; Member, Alumni Advisory Committee on the Appointment of a President of Oberlin College; Member, Ohio Institute Committee, appointed by the president of the Welfare Federation. Financial Statement There is appended to this report the auditor's statement covering the affairs of the Cleveland Foundation to the close of the fiscal year ending July 15, 1926. A study of this should give the reader an idea of the revenues and expenditures of the Cleveland Foundation up to the beginning of, and including, the first half of 1926. This statement does not include any income from the three funds established during the year. It is to be noted that the income from trust funds, either designated or undesignated, has not been large. While, the expectancy of the Foundation is impressive, [11]
conservatively estimated to be more than $50,000,000, it has happened that the realization of the Foundation, particularly up to 1926, has been relatively small. This is due in a measure to the fact that in its earlier years the possibilities of the Foundation in safeguarding the usefulness either of gifts to take effect immediately through living trusts, or of bequests to take effect at death, were not much emphasized. The emphasis in presenting the Foundation idea in these years was largely upon its function as residuary legatee of estates of which representatives of one or more generations up to the legal limit of perpetuities, were given life uses. The fact that some of the other and newer Community Trusts, set up after the original plan of the Cleveland Foundation, have larger capital funds is due in some cases to the accident of mortality. This is true in Indianapolis, with Community Trust funds of $2,000,000, and in Boston, with funds of $4,434,000. Recently established funds of $1,500,000 under Chicago Community Trust administration, and $1,000,000 in New York City, however, are under a living trust agreement or a deed of gift, and derive from the newer conception of the community foundations as currently active agents immediately available to donors. It is possible, therefore, that an increasing number of funds will now continue to swell the aggregate of the Cleveland Foundation as there is a very apparent tendency, well defined in the foregoing record of 1926, to recognize the immediate availability and utility of the Foundation plan, either for insuring the usefulness of current gifts made under living trust agreements, or of bequests made to take effect immediately following death and independent of any life estates. Respectfully submitted, Carlton K. Matson, Director. February 14, 1927 [12]
Cash Receipts and Disbursements of The Cleveland Foundation For the Period from July 16, 1925, to July 15, 1926
BALANCEon Hand and on Deposit July 15,1925
_
$2,358.37
_ $ 3,750.00 _ 23,594.20
$27,344.20
RECEIPTS
Contributions Other Income
$29,702.57 DISBURSEMENTS
Disbursements as provided under the terms of the will governing the funds: Julia A. Beebe $2,225.00 A. H. and Julia W. Shunk__ 3,636.33 $ 5,861.33 General Office and Administrative Expense 14,359.61 *Survey of Higher Education in Cleveland 990.30 Cleveland Year Book—1926_ _____ ___ 2,083.11 Payment on Bank Loan________________ 4,055.76 Interest on Note Payable_______________ 136.26 Office Fixtures Purchased_______________ 18.21
$27,504.58
Balance On Hand and On Deposit, July 15, 1926
$2,197.99
*The major expenses of the Survey were paid during the fiscal year 1924-1925.
[131
Resolution Creating the Foundation Adopted by the Board of Directors of The Cleveland Trust Company, January 2nd, 1914 With a view to securing greater uniformity of purpose, powers and duties of administration in the management and control of property given, devised and bequeathed for charitable purposes, the Board of Directors of The Cleveland Trust Company agrees to accept of such gifts, devises and bequests as Trustee for the uses, purposes and with the powers and duties hereinafter set forth, all property so held to be Iknown as constituting The Cleveland Foundation, and to be administered, managed and dealt with, save as hereinafter provided, as a single trust. From the time the donor or testator provides that income shall be available for use of such Foundation, such income, less proper charges and expenses, shall be annually devoted perpetually to charitable purposes, unless principal is distributed as hereinafter provided. Without limiting in any way the charitable purposes for which such income may be used, it shall be available for assisting charitable and educational institutions whether supported by private donations or public taxation, for promoting education, scientific research, for care of the sick, aged or helpless, to improve living conditions or to provide recreation for all classes, and for such other charitable purposes as will best make for the mental, moral and physical improvement of the inhabitants of the City of Cleveland as now or hereafter constituted, regardless of race, color or creed, according to the discretion of a majority in number of a committee to be constituted as hereinafter provided, or in event of the failure of two of the public officials empowered to appoint members upon the committee, to make such appointments within thirty days from the time they are requested in writing by the Trustee to do so, or in event of the unwillingness, failure or inability of a majority of the members to serve if appointed, or of the power to disburse income by said committee being adjudged by a court of last resort to be illegal, then according to the unfettered discretion of a majority of the members of the Board of Directors of The Cleveland Trust Company, such committee, or the directors of The Cleveland Trust Company in event the power shall lodge in them, to use or distribute the net income when and as above provided, in such manner as will best accomplish the purpose expressed, according to their absolute discretion; provided that, if contributors to the Foundation, in the instruments creating their trusts, indicate their desire: 1. As to time when and purposes for which principal contributed by them shall be distributed; 2. As to purposes for which their income shall be used, either for a definite or indefinite period of time; [14]
3. That the power to distribute principal or income shall be vested in the Committee constituted as hereinafter provided, with the exception only that the member provided to be selected by the Judge of the United States District Court shall be appointed by the Board of Directors of The Cleveland Trust Company; the Trustee shall respect and be governed by the wishes as so expressed, but only in so far as the purposes indicated shall seem to the Trustee, under conditions as they may hereafter exist, wise and most widely beneficial, absolute discretion being vested in a majority of the then members of the Board of Directors of The Cleveland Trust Company to determine with respect thereto. Principal or interest diverted under this power to other than the specific purposes indicated shall be used and distributed for the general purpose of the Foundation.
The Committee The committee to distribute said income shall be residents of Cleveland, men or women interested in welfare work, possessing a knowledge of the civic, educational, physical and moral needs of the community, preferably but one, and in no event to excede two members of said committee to belong to the same religious sect or denomination; those holding or seeking political office to be disqualified from serving. Said committee shall be selected as follows: Two by the directors of The Cleveland Trust Company, preferably to be designated from their own number. One by the Mayor or chief executive officer of the City of Cleveland. One by the senior or presiding Judge of the Court for the time being having jurisdiction of the settlement of estates in Cuyahoga County. One by the senior or presiding Judge of the United States District Court for the Northern District of Ohio, or of the Court that may hereafter exercise the jurisdiction of said Court in Cuyahoga County. In event of any question arising as to the official herein authorized to make said appointments, the decision of the Board of Directors of The Cleveland Trust Company shall be final and conclusive with respect thereto; all appointments to be for a term of five years except the appointments first made, which shall be as follows: One member by the Board of Directors of The Cleveland Trust Company fOr_
One Year
One member by the Judge of the United States District Court for the Northern District of Ohio for Two Years
[15]
One member by the Judge of the Probate Court of Cuyahoga County fOL Three Years One member by the Mayor of the City of Cleveland fOL __Four Years One member by the Board of Directors of The Cleveland Trust Company fOL Five Years Vacancies by expiration, death, resignation or refusal to serve to be filled for the unexpired term by authority making original appointment, in event of the failure for thirty days after receipt of written notice from the Trustee so to do, then by the Directors of The Cleveland Trust Company; the expenses of the committee, including compensation to be fixed by the Trustee to a secretary, who shall be appointed by and hold office subject to the will of the Trustee, shall be paid out of the income, but the members shall serve without compensation. They shall annually organize by the election of a chairman and shall keep complete records of their proceedings, receipts and disbursements, copies of which shall be filed with the Trustee on or before the 20th day of January in each year; disbursements shall be made by the Trustee on the written orders of a majority of the committee given at regularly called meetings. Failure of the committee for twelve months to file disbursement orders with the Trustee shall empower the Board of Directors of The Cleveland Trust Company to disburse income then available for distribution.
Taxation After the entire income of any trust constituting the Foundation is available for charitable purposes, all or any portion of the property belonging to such trust may be listed for taxation, regardless of any statute exempting all or any part thereof by reason of its application to charitable purposes, if a majority of the Board of Directors of The Cleveland Trust Company shall so direct. The receipts and disbursements of the committee as well as of the Trustee shall be annually audited by an independent Auditor, and there shall be published annually in the two newspapers published in the City of Cleveland reputed to have the largest circulation therein, a certified statement by such Auditor showing in detail the investments held in each separate trust constituting the Foundation, the amount of income received during the preceding year, the purpose for which the income has been used, and a classified statement of the expenses of the committee and the Trustee. Failure to make such publication shall authorize any court of competent jurisdiction to appoint another trustee in event the court shall find that neglect to make such publication is due to gross carelessness or willful neglect of the Trustee. 116]
Successor trustees, however, or for whatever reason appointed or created, shall have all powers and discretions and be charged with like duties in all respects as herein conferred upon The Cleveland Trust Company.
Principal With the approval of two-thirds of the entire Board of Directors, of The Cleveland Trust Company, given at a meeting called specifically for that purpose, all or any part of the principal constituting the trust estate may be used for any purpose within the scope of the Foundation, which may have the approval of four members of said committee, providing that not to exceed twenty (20) per cent of the entire amount held as principal shall be disbursed during a period of five consecutive years. In event a court of last resort shall ever adjudge that the provisions requiring the approval of said committee to disbursement of principal or that the power conferred on said committee to disburse income is invalid, the power to distribute principal and income shall be vested exclusively in the Board of Directors of The Cleveland Trust Company, and thereafter said committee shall act in an advisory capacity only. To further assure the carrying out of the purposes of the Foundation, each and every of its provisions are to be regarded and construed as independent of every other provision. In event a court of last resort shall adjudge that any of the terms, conditions or provisions of the Foundation are invalid, such adjudication shall in no wise affect the validity of the remaining provisions, and the Directors of The Cleveland Trust Company, by a two-thirds vote of the entire Board at a meeting called specially for that purpose, are empowered to direct that the administration of the trust be proceeded with in such manner as will most nearly conform in their judgment to the charitable intention and purposes of the Foundation, due consideration being given to changed conditions and varying circumstances. Either the attorney-general of the State of Ohio, or the law officer of the City of Cleveland, shall have the right to institute appropriate proceedings in any court of competent jurisdiction to restrain, correct or recover for any mal-adminstration of the trust estate by Trustee or the Committee, and shall at all reasonable times have the right to inspect the books, vouchers and records of the Trustee and the Committee in any way pertaining to the Foundation.
Powers of Trustee In administering the property constituting such Foundation, unless otherwise specifically provided in the instrument creating the [17]
trust, the Trustee shall have power to sell, lease, transfer or exchange all or any part of said property at such prices and upon such terms and conditions and in such manner as it may deem best; to execute and deliver any proxies, powers of attorney or agreements that it may deem necessary or proper; to invest and re-invest in such loans, securities or real esate as it may deem suitable for the investment of trust funds, irrespective of any statutes or rules or practices of Chancery Courts now or hereafter in force limiting the investments of trusts companies or trustees generally; to determine whether money or property coming into its possession shall be treated as principal or income and charge or apportion any expenses or losses to principal or income according as it may deem just and equitable; to select and employ in and about the execution of the trust, suitable agents and attorneys and to pay their reasonable compensation and expenses; the Trustee in no event to be held liable for any neglect, omission or wrong-doing of such agents or attorneys, provided reasonable care shall have been exercised in their selection. The Trustee, save for its own gross neglect or willful default, shall not be liable for any loss or damage.