Dear Friends,

With a vigorous economic recovery remaining elusive, community foundations nationwide have been challenged not only to help mitigate the economic and societal pain, but to develop innovative approaches to shape a healthier, more stable civic future.

At the Cleveland Foundation, we have responded to this charge with gusto, but we have not acted alone. The core of our efforts has been the many partnerships formed to improve our prospects for success. Thus, we have titled this report “Connecting the Community.”

Beyond robust fundraising and thoughtful grantmaking that serve the community’s needs, these connections are rooted in our multiple roles as convener, catalyst, advocate, strategist—and attentive listener, with an open door and an open mind. Our partners have much to teach us, be they donors, grantees, government or corporate leaders, anchor institutions, other funders, or the people our grantees touch. Only by hearing all these voices can we respond in the best tradition of Cleveland’s community foundation.

Your foundation maintains a diversified portfolio in a volatile period

Respond we did in 2011, authorizing $80 million in grants to local nonprofit organizations, $40 million of which was donor directed. Our grantmaking was constant even though—as anyone with a retirement plan can attest—the financial markets were turbulent. At year’s end, our assets stood at $1.8 billion, down 4 percent from the comparable 2010 figure. This decrease reflected a 1.6 percent loss on our investments—as well as our commitment to meet community needs in a tough economic climate through our consistent grantmaking.

Although continued volatility rattled global markets in the first half of 2012, we are pleased to report that our investment returns were 4.3 percent. We maintain a well-diversified portfolio, in line with our intent to preserve invested capital and achieve long-term real growth of our assets. Our long-term objective is a positive real return on investments over the majority of rolling five- and 10-year periods. Our 10-year return as of June 30, 2012, was 6.1 percent—short of our 8 percent goal, but comparable to industry benchmarks. We are managing prudently in a volatile era, and our portfolio is positioned for a slow-growth environment.

The benevolence of our donors inspires us

Despite an economic climate that negatively impacted everything from mortgages to personal investment portfolios, our donors supported us with a generosity that reminded us of why we are here. By year’s end, our Advancement team (formerly Gift Planning and Donor Relations) had received $41 million in new gifts and additions to existing funds and 47 planned gift commitments with an estimated value exceeding $42 million. Thus, gifts received and anticipated totaled $83 million. This strong giving trend carried into 2012.

We were honored to receive $12 million in May 2011 from the estate of Kay Crawford for an endowed fund to support the Crawford Auto Aviation Collection at the Western Reserve Historical Society. As significant and wonderful as such magnanimous gifts are, we also value the gifts of donors of more modest means whose philanthropy, while on a smaller scale in relative terms, may represent a substantial proportion of their personal assets. Every donor is special, and each one has a unique story.

These stories emerge as donors work with our knowledgeable staff, which is committed to helping each individual meet his or her charitable goals. Under the direction of Kaye Ridolfi, who joined us in November 2011 as our senior vice president for Advancement, we are expanding our fundraising efforts and intensifying our focus on serving and communicating with donors. We have revised our mission statement (see sidebar) to include an explicit reference to this partnership.

Our open door invites nonprofits to bring us their needs

Donors who give unrestricted or broadly restricted funds are key to the high-impact disbursements that typify our community responsive grantmaking program. Known as the doorway into the foundation, our responsive grantmaking team welcomes grant inquiries from nonprofit organizations. The total value of our community responsive grants was $19 million last year.

Many partners know us through this far-reaching program that respects the diversity of community needs and is beholden to no single cause or constituency. In 2011, we authorized community responsive grants to help our prestigious arts organizations with audience development, prevent gang violence through community outreach, provide sorely needed human services, and much more.

Donor dollars and community partners make innovation possible

While we listen and respond to the community, we collaborate with additional partners on game-changing initiatives in specific areas that we have defined as critical to Cleveland's future: economic development, public education reform, neighborhood revitalization, youth development, and arts advancement. In 2011, our board directed $21 million to self-initiated work that promotes progress in these areas, which are outlined in this report.

We are also reporting on our Greater University Circle Initiative, which made significant headway this past year, and which stands out for concentrating our work in all five priority areas within one location.

View a comprehensive list of all our grants.

Thank you and welcome to leaders who make a difference

Our 15-member board of directors underwent substantial change earlier this year as four members who reached their 10-year term limit stepped down. All of them rendered exemplary service to the foundation and the community they love, and we will miss their wise counsel. We are grateful to former Chairman David Goldberg, Joseph Keithley, Dr. Maria Pujana, and Alayne Reitman.

New to the board are Dr. Hiroyuki Fujita, Sally Gries, Michael Petras Jr., and Larry Pollock. We are delighted to welcome this talented group, and look forward to an infusion of new ideas.

Can you imagine? 100 years as the people's foundation!

In 2014, the Cleveland Foundation will mark a century of community philanthropy. Our staff is planning for this landmark commemoration, which will provide us a unique opportunity to tell our story locally and nationally.

Because we are the world's first community trust, our celebration will also mark the centennial of the community philanthropy field. Within a year of our creation, community foundations were established—some with the assistance of our founder, Frederick Harris Goff—in Chicago, Boston, Milwaukee, and Minneapolis. Thus, we are participating in fieldwide centennial projects. We are proud that Cleveland will host the Council on Foundations' fall conference for community foundations, set for Oct. 20-22, 2014. We look forward to welcoming some 1,200 community foundation colleagues to our town.

Centennial preparation affords us an occasion to reflect anew on our bond with Cleveland and on how we can strengthen this connection as we progress toward our second century. It is a privilege to be your community foundation, and we will forever honor that trust.

Ronald B. Richard
President & CEO

Charles P. Bolton
Chairman of the Board

October 2012