The Duke Endowment today is built on the strong foundation of our past. We celebrate that living history in our 2014 Annual Report.
We opened the doors to The Duke Endowment’s new headquarters on East Morehead Street on August 25, 2014. We had relocated from just a mile away, but the process of moving was still an adventure.
From the time Mr. Duke established his Trust in 1924, the Endowment has been on a journey with grantees in the Carolinas to create a place where children are nurtured, health is promoted, minds are educated and spirits are enriched.
When Barium Springs Home for Children opened its doors as an orphanage in 1891, most residents would arrive as infants and stay through high school or college. Orphanages played a custodial role, providing food, shelter and schooling for “wards of society.”
The Duke family long supported these homes for children, and James B. Duke, who grew up motherless, continued that assistance in his own philanthropy. When he listed beneficiaries in the Indenture of Trust that established The Duke Endowment, he included “properly operated” facilities “in an effort to help those who are most unable to help themselves.”
In the early decades, the Endowment distributed its funding to facilities in North Carolina and South Carolina based on the number of children served. After the end of World War II, the need for orphanages lessened. Instead of providing homes for children who were parentless, they began offering therapy for children who suffered from abuse and neglect. Grants from the Endowment during that time went toward campus renovations and programs.
Today, the Endowment’s Child Care program area looks at group care as an intervention, not a placement. Recent grants have helped quality providers offer an array of programs to help vulnerable children receive services based on their assessed needs. With Endowment funding, several organizations have joined forces to become full-service child welfare agencies.
In 2014, Barium Springs, based in Statesville, merged with another of the Endowment’s original grantees, Grandfather Home for Children, based in Banner Elk. Through that consolidation, two of North Carolina’s oldest campuses have become one of the state’s largest private child welfare providers — Children’s Hope Alliance — serving some 3,500 children in 63 counties through adoption, foster care and comprehensive treatment for abuse and neglect.
The merger will help the two organizations maximize resources to provide the highest quality care. A $350,000 grant from the Endowment offsets costs related to the effort.
“By helping ‘properly operated’ providers offer a continuum of effective services, more families will have access to the critical resources they need,” says Dr. Jean Spaulding, the Trustee who chairs the Endowment’s Committee on Child Care, “and vulnerable youth will have a better chance to flourish and thrive.”
“Modern” medicine had reached only segments of South Carolina when Spartanburg General Hospital first welcomed patients in the 1920s. The doctor-to-patient ratio stood at one to 1,409, and there was one hospital bed for every 652 people. In 20 of the state’s 46 counties, no hospitals existed.
James B. Duke was committed to removing these barriers to care in North Carolina and South Carolina. He envisioned “adequate and convenient” hospitals in communities across the two states, noting that they had become “indispensable institutions.” To defray the cost of indigent patients, he included a clause to pay hospitals $1 “per free bed per day.”
One dollar may seem small today — but in Mr. Duke’s time, it was anywhere from 25 percent to a full third of the cost of hospital care. At Spartanburg’s hospital, 55 percent of patients were unable to pay in 1925, and the Endowment contributed $6,400 for their care.
In 2006, with increasing costs of health care and the growing number of uninsured, the Trustees elected to redesign the “Free Days of Care” program. The new model would help develop community-based partnerships to connect low-income, uninsured patients to medical homes and offer comprehensive, coordinated services through safety net providers.
An initial grant of $2.3 million from The Duke Endowment to the North Carolina Hospital Association and South Carolina Hospital Association established statewide partnerships and technical assistance centers to help communities develop collaborative networks of care for the uninsured.
Spartanburg Regional Medical Center was home to the first network in South Carolina. AccessHealth Spartanburg now serves 2,300 people, and leaders say it has decreased emergency department use, lowered hospitalizations and reduced hospital costs.
In 2014, more than $5.7 million in grants from the Endowment went toward the low-Income, uninsured program. Today, 62 counties have collaborative networks in the Carolinas.
"In this ever-changing field, the Endowment’s Health Care program area has worked to maintain Mr. Duke’s vision for the Carolinas," says Dr. K.D. Weeks, the Trustee who chairs the Endowment’s Committee on Health Care. "By closing gaps and eliminating barriers, more people now have the chance to lead healthy lives."
Photos courtesy of Johnson C. Smith University and Special Collections and Archives, Furman University
James B. Duke had little formal schooling himself, but he selected four institutions of higher education in North Carolina and South Carolina as beneficiaries of his Trust. He believed education could help “develop our resources, increase our wisdom and promote human happiness.”
Davidson College, Furman University, Johnson C. Smith University and a Methodist school called Trinity College — known today as Duke University — have unique cultures and priorities, but each has received annual unrestricted funding from The Duke Endowment since 1924.
In the beginning, the unrestricted support strengthened the schools at a critical time in their growth. Johnson C. Smith, for example, was able to gain full membership in the Association of American Colleges. The university’s president said money from the Endowment allowed the school to become “so developed as to merit such recognition.” At Davidson, charred walls stood as a grim reminder of a prominent structure that had burned to the ground. Endowment funding went toward other needs, such as hiring professors, which freed money for rebuilding.
During the Great Depression, the checks became a rare stream of reliable revenue. “Every penny (from the Endowment) is expended with the utmost care,” Furman’s president wrote in 1931. For several years, Endowment support had exceeded tuition income at the university.
After the Endowment established its Committee on Educational Institutions in 1961, the Trustees began approving special purpose grants in addition to the annual operating dollars. At first, those special grants were a small percentage of higher education funding, but they allowed Trustees to make more directed investments in the four schools. In later years, they became a major part of Endowment giving.
Today, the field of higher education is increasingly complex. The Endowment’s unrestricted operating assistance — which totaled nearly $17 million in 2014 — still provides a predictable income for the schools, while other grants help them explore ways to enhance academic excellence and increase student access and attainment.
Recently, Endowment funding has also created opportunities for Davidson, Duke, Furman and Johnson C. Smith to work together on several special initiatives, such as campus food and farming. The Endowment also brought the schools together through a four-year grant to study student resiliency and pilot interventions to enhance it.
"The annual funding continues to be important, but it is now secondary to more targeted grantmaking," says Wilhelmina Reuben-Cooke, the Trustee who chairs the Endowment’s Committee on Educational Institutions. "Our goal remains the same: To help these four institutions provide exceptional educational experiences for tomorrow’s leaders."
In the 1920s, when parishioners decided to build Reeds Methodist Church, they chose a knoll at a country crossroads outside Lexington for their site. A local doctor donated the land and the congregation built a red-brick edifice, modern for its day.
A 1925 grant from The Duke Endowment supported the work. Our founder believed that houses of faith held great significance in rural communities, and he cherished his family’s ties to the Methodist church.
By the mid-1970s, of the 2,000 Methodist congregations in North Carolina, more than three-fourths were in rural communities. Early funding from the Endowment supported church construction in those communities, and then expansion. At Reeds, the congregation received a grant from the Endowment to add an educational building in 1978, providing much-needed space for classrooms and fellowship.
Today, the Endowment’s Rural Church program area honors Mr. Duke’s desire to strengthen churches by helping them increase capacity, develop effective leadership and engage in service. Congregational Outreach grants provide resources for programs that address critical needs, such as food pantries, affordable housing and other relief projects. Clergy and Lay Leadership grants, such as the Thriving Rural Communities Initiative, support leadership development — both in preparing clergy for service in rural churches and in strengthening congregations for community roles.
Recent grants helped Reeds open, and then expand, an emergency food pantry, giving hope and a hand forward to neighbors in need. It’s now an independent nonprofit serving more than 200 families a month with supplemental groceries. A dozen churches are involved.
In 2014, a $27,000 grant helped Reeds expand a backpack feeding program to ensure that local elementary students had nutritious food through weekends away from school. The program includes 150 children; the grant will allow that number to grow.
Reeds’ pastor, the Rev. Duncan Martin — a former Thriving Rural Communities Fellow — says the church has become stronger by being a base of support for outreach. "Our community and our congregation can flourish," he says, "when we are actively engaged together."
Dr. Dennis Campbell, the Trustee who chairs the Endowment’s Committee on Rural Church, agrees. "By supporting ministry and mission, we’re helping rural churches face today’s challenges and opportunities. With resources for outreach, congregations will be able to live out their faith in their communities, and strengthen each other through service."
We have had a long history of collaborating with organizations in North Carolina and South Carolina that are making a lasting impact on the communities and people they serve.
In 2014, The Duke Endowment distributed $140 million through 375 grants, some of which were approved in previous years. The Endowment approved 198 new grants totaling over $96.9 million, some of which will be paid in future years.
As one of the older foundations in the United States, The Duke Endowment is steeped in history and traditions. But we must be willing to adapt and change to serve the Carolinas and address today’s complex issues effectively.
Since James B. Duke’s death in 1925, the assets of The Duke Endowment have achieved significant growth, from $107 million to $3.4 billion. During the same time, over $3.3 billion has been distributed in grants.
Almost 83 percent of the Endowment’s total spending goes directly to grantmaking. This compares favorably to foundations of similar size. These figures show our grantmaking in the context of other spending. This grantmaking volume depends on our ability to invest assets wisely.
Amounts may differ from 2014 Grants Summary, which reports multiple-year commitments.
The Duke Endowment’s investment portfolio is managed by DUMAC, Inc., a professionally-staffed investment organization governed by Duke University. During 2014, the investment return on the Endowment’s portfolio was 10.9 percent. Investment performance benefited from increases in global equity, hedged strategies, private capital, real estate, natural resources, fixed income and opportunistic strategies. Impacted by investment returns, grants and expenses, the Endowment’s assets increased in value from $3.37 billion to $3.43 billion from December 31, 2013 to December 31, 2014.
For the 10-year period ending December 31, 2014, the Endowment’s investment portfolio, net of fees, returned 8.4 percent annualized, outperforming its policy benchmark by 2.9 percent and a 70 percent MSCI All Country World Index/30 percent Barclays Capital Aggregate Bond Index benchmark by 2.4 percent annualized over the same period.
As staff members moved into our new building, we were keenly aware that this chapter in the legacy of our founder was the result of not only months of planning, but of the decades of hard work that came before us.
Mr. Duke wanted his philanthropy to continue in perpetuity, and our Trustees view both our new building and our commitment to fulfilling Mr. Duke’s legacy as an investment for the Endowment’s future. This will be our home for years to come – a place for continuing our long commitment to North Carolina and South Carolina.