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Foundation Spotlight

Milton Hakel
Foundation President

The SIOP Foundation provides funding for the advancement of the field of industrial-organizational (I-O) psychology. It is a structure through which members of SIOP and other donors can express tangible support for the field with tax-deductible gifts. In this issue of TIP, we initiate a series of reports that will shine a spotlight on the good work aided through the Foundation.

We begin with a history of Foundation itself, adapted from a memoir by Lee Hakel, director (retired) of the SIOP Administrative Office.

Origin of the SIOP Foundation

The SIOP Foundation exists because in 1995 Bill and Barbara Owens wanted to make a significant donation to SIOP, and they wanted it to be tax deductible. A committee chaired by Elaine Pulakos reported at the summer 1995 Executive Committee (EC) meeting that the only feasible way to get the necessary 501(c)(3) status was to set up a foundation. The committee looked into various possibilities and concluded that the best option would be to become a part of the APA Foundation, but Bill Owens, who had been through the bad old days with APA, said that he would not write a check that began with “APA.” Elaine had to report that SIOP had no way to accept the money under Bill’s terms. The EC accepted her report and adjourned for a mid-morning break.

This was Lee Hakel’s first meeting with the Executive Committee as she had just begun managing the SIOP office on June 1, 1995. Lee approached Elaine during the break and said, “I know how to start a foundation. I just helped to create one in Bowling Green.” (Marcia Latta, Bob Latta, Lee, and three others had founded the Bowling Green Community Foundation the previous year.) Elaine asked Lee a few questions and when the meeting resumed she asked for the previous decision to be reconsidered. The EC asked Lee to begin working on establishing a foundation for SIOP.

The First Money

To get started, seed money was needed for the fledging foundation. This need was presented to the EC at its January 24, 1996 meeting, where Lee asked that each member give her $100…and the 17 members did! Those donations were followed almost immediately by Bill and Barbara Owens sending a check for $25,000. They believed we would become a public charity and we did, but it took a while. Later, Barbara Owens sent an additional check for $15,000.

Getting Organized

When a foundation is new you have to invent everything as you go, including the answers to some tough questions. Who would we solicit, and how would we do it? How would we give out money, and to whom would we give it? What would be our relationship to SIOP—a 501(c)(6) educational entity not entitled to give tax deductions for donations. How would we look in print? How often would we meet and where? Who would pay for the board’s expenses? SIOP agreed to pay for the Foundation’s expenses to help it get started. We were to be treated like a committee of SIOP. The SIOP Foundation president would attend SIOP Exec meetings and report for the Foundation.

At the 1996 SIOP conference, the EC sought advice from members who had been involved with charitable entities. We had a brainstorming meeting with Bill Byham, Doug Bray, Lowell Hellervik, Bill Mobley, Irv Goldstein, and Jim Farr. This helped a great deal as we got first-hand information about many different 501(c)(3) charities, their problems, and their successes.

Becoming a Public Charity

On December 31, 1996, the SIOP Foundation funds totaled $52,787.50. We needed to take the next steps to organize the effort more formally. The SIOP Foundation needed a board of trustees with officers. Hakel would serve as the staff person, and the SIOP Financial Officer would serve ex officio. On June 20, 1997, Irv Goldstein sent invitations to four others to join the board and meet for the first time on September 20, 1997. At that meeting, Irv Goldstein was elected as the first president. Other board members were A. Catherine Higgs (Secretary), Paul Thayer (Vice President), Bill Mobley, and Lyman Porter. Goldstein, Thayer, Mobley, and Porter had all served or were serving at the highest levels of universities (president, provost, dean), and they had reservations about foundations based on their university experiences. Hakel was instructed to obtain 501(c)(3) status from the IRS, get a logo, and Goldstein agreed to write the code of regulations.

Lee called attorney Bob Latta and asked whether he still had the Bowling Green Community Foundation application on his computer—he did. Because much of the work was already accomplished, he agreed to draft the needed documents for SIOP for a cost of $500 plus filing fees. The first step was to incorporate the new entity, which was to be named the SIOP Foundation. Latta hand carried the documents through the incorporation process in Columbus, which certainly sped it up! The SIOP Foundation was incorporated on September 9, 1998. Then we drafted the structure for the SIOP Foundation and applied for 501(c)(3) status on December 15, 1998. We received only one request for clarification from the IRS, and then on August 5, 1999 we were granted 501(c)(3) status, making us a public charity that could receive tax deductible donations.

Many early operating procedures were worked out while we developed the criteria for the William A. Owens Award, given for the best research article published in the previous year. It would join the three awards that SIOP then gave out: the Distinguished Scientific Contributions Award, the Distinguished Professional Contributions Award, and the Distinguished Service Award. The Owens’ fund was large enough for the award to be $1,000. This moved SIOP to raise the amount of the other three awards up to the same level.

Linking up With Community Foundations

Because it was to be a new foundation, we decided the SIOP Foundation should affiliate with an existing community foundation, which would invest our funds and keep us informed of both legalities and the ever-changing IRS rules. With the help of Marcia Latta, a development officer at BGSU, we got information on many foundations and sent letters to 12. Six replied. The Kettering Foundation said we didn’t fit their criteria, but its president physically walked our letter upstairs to The Dayton Foundation and said to them, “You want to go nationwide, and here is a national group for you.” Indeed, The Dayton Foundation had recently decided to become a national foundation. Their representative, Ed Merriman, visited Bowling Green and began the talks that ended with us becoming a fund of The Dayton Foundation (TDF).

Things were moving along well. Our partnership with TDF had given us a good start regarding IRS compliance and tax filings. TDF also gave us an advantageous financial arrangement. The APA Foundation had wanted 4%–5% of our total assets per year to manage our Foundation, but TDF required only .5%. The attitude of the TDF staff was that they were there to help us create the Foundation we needed, not to make us fit into their mold. Among other things, TDF provided a model for our code of regulations, which Goldstein used in drafting the code for the SIOP Foundation. They advised and guided us through the many regulatory changes coming from the IRS. The federal government had encouraged the development of community foundations as a way of providing funds for many social services that were no longer going to be funded by the government. The number of community foundations greatly and quickly increased, so the IRS felt it necessary to write and enforce rules, some of which reversed previous practice.

The arrangement with TDF worked well for several years, but then things began to change at TDF. Merriman left abruptly. After that, it seemed like nobody was paying attention to us anymore. We began to get strange advice, which we couldn’t decide was because of changed IRS rules or changes at TDF. John Cornwell was then the SIOP Financial Officer, so after completing the annual SIOP financial audit in October 2002, he and Hakel made the trip to Dayton and met with the staff there. It was an incredible and surreal experience. They essentially disavowed all of our previous understandings and arrangements and treated us shabbily. We immediately looked around for another community foundation with which to affiliate. We identified The Toledo Community Foundation (TCF), met with them, and agreed in early 2003 to become a subfund. Hakel and staff member Esther Benitez then made a second trip to Dayton and met with the TDF president, received an apology, and received an agreement to send all of our deposited funds to the Toledo Community Foundation. We later learned through back channels that when a new board and new management started at TDF they had decided to concentrate only on the Dayton area and not become national in scope. They also had to reconfigure some of their management practices as IRS rules had became more defined.

Growing Stronger

The minutes of early foundation board meetings, written by Cathy Higgs, make the Foundation appear to be well organized, but the reality felt somewhat different. Hakel drafted a memo that talked about there being three stages to the forming of a foundation. The point was to give context to our efforts and to point out that although we had accomplished the first and second stages of organization, we now needed to move to the final stage, which is growth through fundraising. Goldstein asked Hakel to present it to the board, and they accepted the ideas and agreed to move into the fundraising phase. The board then moved on under its own steam, confident in the undertaking.

Growth in those early years was steady and heartening. Susan Myers created an endowment for the M. Scott Myers award, and the American Institutes for Research endowed the John C. Flanagan award. The first annual report for the SIOP Foundation was published in Autumn 2000. Besides giving the financial report, names of the board members, a message from the president, and descriptions of various ways to donate, the report listed the first winners of the three awards funded through the Foundation: The William A. Owens, The M. Scott Myers, and the John C. Flanagan awards. We were happy to demonstrate that we were doing exactly what we promised we would do.

The SIOP Board worked to identify other named funding opportunities that would propel the science and practice of I-O psychology and not be just additional awards for past accomplishments. Out of this came the emphasis on scholarships and research grants, including the small grant program. And in April 2002, the first small grants were given for research. These grants are available to stimulate research and to help young researchers begin their career and get those much needed early publications. They are funded from donations made specifically to the Advancement Fund or other undesignated donations.

The Advancement Fund of the SIOP Foundation, which receives all undesignated donations, has been the recipient of many gifts—from $5 to $100,000. Each gift is appreciated because each one helps to grow the corpus. Earnings from the Advancement Fund are used by the board to creatively meet the needs of the Society and give the Foundation much needed flexibility.

The annual winter solicitation is dedicated to raising funds for scholarships. Every member of SIOP was once a graduate student, so each of us has memories of how tough it was to finance graduate school.

Each year, the SIOP Foundation Board reports to the SIOP EC how much money is available for distribution. This amount is based on 5% of the corpus, except when the donor agreement contains other arrangements. It is the Awards Committee of SIOP, not the SIOP Foundation, which makes the decisions about who will receive the awards, scholarships, and research grants funded through the Foundation.

It is not possible in this initial column to recount here all of the initiatives created and funded through the Foundation, so check out the Foundation pages on the SIOP Web site, especially at http://www.siop.org/foundation/ awardsandgrants.aspx and http://www.siop.org/Foundation/gifts.aspx.

In 2006, we reached our goal of an endowment of $1 million, thanks in part to the generosity of Ann Howard, who doubled the Bray Howard Award endowment. We achieved our new goal of a total endowment of $2 million in 2008, thanks in large part to the efforts of Milt Hakel, Lowell Hellervik, and Bob Muschewske, who brought the Dunnette Fund to almost $500,000. The first Dunnette Prize will not be made until its endowment earns $50,000. Although the recession has reduced the total endowment somewhat, conservative investment policies of the Toledo Community Foundation have left us in good shape. Although still a work in process, the SIOP Foundation is already a great success.

And watch this space—in coming issues of TIP we will report on the good work aided by the SIOP Foundation, instigated by the desire of Bill and Barbara Owens to give something back to our field and made possible by the generous contributions from SIOP members like you.

The Genius of a Foundation

When initially making the case to the SIOP EC for why a foundation would best meet their needs, the following story was offered: A wealthy single woman living at the end of the 19th century in a small midwestern town decided to leave, in her will, her entire fortune to solve one particular problem in her town once and for all. It took until nearly the end of the 20th century for the town government to break the will and stop putting out water for the horses tied up in front of the county courthouse.

The donor could not have imagined a world where horses didn’t provide transportation nor can we imagine the needs of the world of I-O psychology in the future. But by putting our contributions into the SIOP Foundation, we know there will always be a board whose members will interpret the original bequest in a way that responds to present situations. If that small midwestern town had established a foundation, the wealthy woman’s money could have funded any number of local animal welfare agencies instead of being used to put water out for nonexistent horses before a hitching post that disappeared many decades earlier. The genius of a foundation is that it adapts to change when needed.