How viable would it be to create a specifically Rail Preservation Endowment, with a granting agency attached? Something along the lines of a combination of the Institute for Museum and Library Studies and The Trains Magazine Preservation Award? This would be an endowment whose principal would be left untouched, but whose interest could be used every year to fund projects who win approval by an appointed or elected board, who have in turn written a detailed, organized grant proposal? Am I nuts in thinking that this may be a real, concrete if you will, way to help projects in our own field, by presenting these projects to a group of their own peers, and letting them judge whether or not they are worthy of funding, and then fund the ones that are? In turn, recommendation can be made to those who don't get the award that given year, and they would be asked, no encouraged, to reapply when the questionable items had been changed or improved?

If I'm nuts, please tell me, but (at least this time) I don't think I am.

Opinions welcomed and replied to!

TJ Gaffney

Port Huron Museum
tjgaffney@phmuseum.org

TJ - thanks for taking the ball I fumbled in your direction a few threads back and running with it.

My gut feeling is that there are already funding agencies with their own endowments out there that lack a specific mission of railroad preservation, and deal with a wider range of "historic" or "educational" missions which do not exclude railroad preservation / museum programming either.

Is it more trouble to sell these funded grantors on railroad preservation than to attempt to adequately endow a new designated program?

Wouldn't we need to write them grants anyhow to come up with the endowment?

Sorry for the questions rather than answers.

Ironic when you think about it, that we railroad preservationsts are for the most part notoriously well endowed apart from financially.........

dave


irondave@bellsouth.net

Dave- No fumble, you just gave it up on a loss of downs.

You make an excellent point in regards to, and please correct me here if I'm missing your point, not re-inventing the wheel. The problem that I see though is that:

1.) The competition is increasing for these existing grants, and in no way is that going to slow down in a bad economy; it will only increase. Granting agencies in many way were a hidden commodity, but with the internet and an increasing awareness across the board, that will not be the case from now on. Granting agencies are already tending to focus on who they want to grant their projects too-- we'd just be a bit ahead of the game in that we'd be starting out that way instead of developing into that.

2.) Maybe I'm jaded (and that is highly possible), but I have yet to see in any real sense that current Granting agencies either understand, nor more importantly, respect the rail preservation field. Antique and classic auto guys have seen the same thing, and got tired of themselves being considered as aging teenagers trying to get their youth back; in many ways we are still considered as big kids playing with trains. You now see a range of both funding sources, parts suppliers, and literarily an entire industry that revolves around classic automotive preservation. Besides, I would consider it an honor to, say (and I am using examples here, so please don't read into this) put a grant proposal before a Lynn Modinger, Dave Lathrop, or Steve Lee, because these guys are recognized (whether they have a piece of paper saying it or not) as experts in their chosen fields. In turn, I would respect and take to heart suggestions, comments, etc must easier from them then I would from someone who had no experience and had absolutely no idea what I am spending hours, days and months decribing into gory detail.

Volley, serve......

TJ

> TJ - thanks for taking the ball I fumbled in
> your direction a few threads back and
> running with it.

> My gut feeling is that there are already
> funding agencies with their own endowments
> out there that lack a specific mission of
> railroad preservation, and deal with a wider
> range of "historic" or
> "educational" missions which do
> not exclude railroad preservation / museum
> programming either.

> Is it more trouble to sell these funded
> grantors on railroad preservation than to
> attempt to adequately endow a new designated
> program?

> Wouldn't we need to write them grants anyhow
> to come up with the endowment?

> Sorry for the questions rather than answers.

> Ironic when you think about it, that we
> railroad preservationsts are for the most
> part notoriously well endowed apart from
> financially.........

> dave


Port Huron Museum
tjgaffney@phmuseum.org

This
> would be an endowment whose principal would
> be left untouched, but whose interest could
> be used every year to fund projects

There's the rub. You need to raise a really significant amount of principle to generate enough interest to make meaningful grants. That same principal could, for example, also be applied to a museum's capital campaign, or a campaign like the FOCTS Another Century of Narrow-Gauge Steam, where it would arguable do more good.

You can't raise an endowment or trust by writing grant applicatons; foundations give to achieve concrete things, not to create other foundations at one remove. The capital has to be raised fresh from individual or corporate donors.

eledbetter@rypn.org

> How viable would it be to create a
> specifically Rail Preservation Endowment,
> with a granting agency attached?

First let me say that I think this is a great idea. But where's the $$$ going to come from?

In order to be able to make grants that will be really useful (say, in the $50K-$100K range), you're going to need a HUGE endowment. Even if you figure an optimistic (and easy to calculate) interest rate of 10%, you're still talking about an endowment of at least a half million dollars. It's tough enough raising money for projects as it is, where is this huge endowment going to come from?

Then there's the question of how the grants will be administered. Who decides who gets the grant? What qualifies a project for the grant? No matter how you handle the granting application and awards process, you'll have expenses -- mailing expenses at minimum. These can add up quickly.

What really need is for some wealthy capitalist to establish the endowment. That's how most endowments get started. The best known is the Nobel endowment that pays for the Nobel Prize. That's not saying you CAN'T raise the bucks piecemeal, but it's a lot harder that way.

Personally, I'd much rather see an insurance endowment set up for the preservation industry so we can insure our railroads and steam boilers at a reasonable rate and still be able to do some of the less dangerous historically accurate proceedures (i.e. kicking cars, Dutch drops, etc.) without undue restriction by our insurance carriers. I figure a $50M endowment would take care of a railroad preservation self-insurance fund.

mconrad@msmgmt.com

> First let me say that I think this is a
> great idea. But where's the $$$ going to
> come from?

> In order to be able to make grants that will
> be really useful (say, in the $50K-$100K
> range), you're going to need a HUGE
> endowment. Even if you figure an optimistic
> (and easy to calculate) interest rate of
> 10%, you're still talking about an endowment
> of at least a half million dollars. It's
> tough enough raising money for projects as
> it is, where is this huge endowment going to
> come from?

> Then there's the question of how the grants
> will be administered. Who decides who gets
> the grant? What qualifies a project for the
> grant? No matter how you handle the granting
> application and awards process, you'll have
> expenses -- mailing expenses at minimum.
> These can add up quickly.

> What really need is for some wealthy
> capitalist to establish the endowment.
> That's how most endowments get started. The
> best known is the Nobel endowment that pays
> for the Nobel Prize. That's not saying you
> CAN'T raise the bucks piecemeal, but it's a
> lot harder that way.

> Personally, I'd much rather see an insurance
> endowment set up for the preservation
> industry so we can insure our railroads and
> steam boilers at a reasonable rate and still
> be able to do some of the less dangerous
> historically accurate proceedures (i.e.
> kicking cars, Dutch drops, etc.) without
> undue restriction by our insurance carriers.
> I figure a $50M endowment would take care of
> a railroad preservation self-insurance fund.

Both Erik and Matt-

The Port Huron Museum has a 2 1/2 Million dollar endowment. A portion of that pays for our salaries and the daily expenses, which goes very far toward what you are saying. I agree that a wealthy industrialist donating is a big help, and sugar-daddies are always appreciated. But I am unconvinved that a project like this can't happen. I NEVER said it would be easy, but something this worthwhile never is.

The problem I have with the wealthy industrialist is that there aren't nearly enough of them out there. our endowment, by the way was a match; A good portion came from what I guess you would call a wealthy industrialist. The rest was matched by a bunch of "you and I's"; everything from $10 - $10,000 donations, mostly on the lower end. It took 20 years, but it happened; I didn't say this would happen overnight, but hey, I'm 28, so if it takes that long, I'll still be only 48. This doesn't mean that we don't still struggle: we do. It just means we no longer have to get grants just to pay the bills or salaries anymore; we go get them for programs and projects, and that still is a CONSTANT process. (Good thing, too).

Matt makes an EXCELLENT point for the insurance endowment, and I fully agree with him: it is very viable, and could be done much quicker and with a real impact for everyone involved. You've got my vote.

As far as the who what when and why's: Read my earlier post. That would need to be established and sorted out, but it should be a jury of balanced peers, people who have expertise over a variety of fields, from locomotive boiler inspectors to business executives. It would need a board a governing body, a mission statement, etc. like any endowment. And remember, this is still be hammered out, and would need to be.But maybe I'm starting to hear that this is at least worth exploring? That is all I am asking.

To quote the Union prisoner from the movie ANDERSONVILLE: "Whose with me? WHOOOOOOO?"

T.J.

Port Huron Museum
tjgaffney@phmuseum.org

All of these comments are very interesting, and all are correct that a substantial sum needs to be developed and set aside. One reply mentioned 10% interest - try 1% today - so the half million becomes 5 million in principal. Maybe the secret is to start small and increase funding and awards as the endowment grows.

One option might be to enlist various museum and preservation efforts as 'subscribers' to the endowment. Say set aside a dime or a quarter from every admission sold over the course of the year and put it in the fund. In return, they would qualify to submit requests and proposals for funding.

Another wrinkle - a lot of the sense of earlier posts seems, TO ME, to be related to funds for equipment repair and restoration. A lot of monies needed in museums are related to other expenses including operating funds, capital projects, and improving the 'visitor experience'. If those categories were to be eligible for endowment generated grant funding, then some monies might be remaining internally in each organization to do the restorations as they see fit - especially as to timing.

What the issue that I am hinting at is that a lot of grants and funding awards specify use of the money and completion of the 'project' in a year or two - something that is usually not achievable on a full restoration.

Bob Kutella


68trolley@comcast.net

> All of these comments are very interesting,
> and all are correct that a substantial sum
> needs to be developed and set aside. One
> reply mentioned 10% interest - try 1% today
> - so the half million becomes 5 million in
> principal. Maybe the secret is to start
> small and increase funding and awards as the
> endowment grows.

Another idea would be to initially not make a grant every year, giving the interest more time to accumulate. At 1% interest, if you wait five years between grants, you effectively have 5%.

mconrad@msmgmt.com

But maybe I'm starting to hear that this
> is at least worth exploring? That is all I
> am asking.

> To quote the Union prisoner from the movie
> ANDERSONVILLE: "Whose with me?
> WHOOOOOOO?"

Well, T.J., reluctantly, not me. Sorry to be the nay-sayer, but here goes...

When well-established institutions have difficulty meeting the goals of their existing capital campaigns (cases in point: B&O Roundhouse repair fund, Friends of C&TS ACNGS campaign) I personally would not support trying to establish a field-wide or movement-wide trust at this time. For now, I would prefer to see effort concentrated on completing the identified campaigns at selected institutions.

In this connection, I'd note that I am not aware of other museum or preservation sub-community that has a dedicated sole-purpose private granting foundation.

IMLS is certainly open to all of us (well, all of us who have at least one paid staff memeber; that's their minimum requirement) and members of our community have had success tapping that source. We have also had the Enhancements program in the highway bill, which has put us in line for a lot of additional Federal bucks.

As for raising capital on a filed-wide basis from the private sector, I have to respectfully but firmly state my suspicion that we would end up cannibalizing our own donations. Our real need is to reach deep-pocketed donors outside our own community of interest, so we bring in fresh dollars--ie. not a zero-sum game. Generally the most effective way to do this is for a single institution to go to its regional community stakeholders and sell itself as a community asset. People may not care about trains per se, but they care about amenities for their community. I'm sure this is how Port Huron built its endowment, and it's what Elmer Lam did for NCTM.

Big donors give to visible projects in their local community, not to an abstract national fund--(OK, with an exception made for political action or advocacy organizations on the national level, like environmental organizations or PACs, but that's not a good analogy to us).

eledbetter@rypn.org

This could very easily be done through NRHS, which has had a very successful grants program in place for several years, all that's needed is for someone to come up with the money !!!!!

Bob H

> How viable would it be to create a
> specifically Rail Preservation Endowment,
> with a granting agency attached? Something
> along the lines of a combination of the
> Institute for Museum and Library Studies and
> The Trains Magazine Preservation Award? This
> would be an endowment whose principal would
> be left untouched, but whose interest could
> be used every year to fund projects who win
> approval by an appointed or elected board,
> who have in turn written a detailed,
> organized grant proposal? Am I nuts in
> thinking that this may be a real, concrete
> if you will, way to help projects in our own
> field, by presenting these projects to a
> group of their own peers, and letting them
> judge whether or not they are worthy of
> funding, and then fund the ones that are? In
> turn, recommendation can be made to those
> who don't get the award that given year, and
> they would be asked, no encouraged, to
> reapply when the questionable items had been
> changed or improved?

> If I'm nuts, please tell me, but (at least
> this time) I don't think I am.

> Opinions welcomed and replied to!

> TJ Gaffney


Heavenrich@yahoo.com

> This could very easily be done through NRHS,
> which has had a very successful grants
> program in place for several years, all
> that's needed is for someone to come up with
> the money !!!!!

> Bob H

In my opinion, every rail museum should have an endowment fund. This is a long range effort, but the payoff can be worthwhile. Sometimes you can get lucky if you can latch on to a wealthy donor or foundation/government grant. But as pointed out on these pages, that largess is uncommon.

To get the ball rolling, $5,000 collected from members and friends would be a good base on which you can build. I suggest your museum consider turning over the fund to a community based foundation for management. The relief from investment oversight and administration is well worth the fee the foundation would impose.

Deferred gifts (payout comes later) should be part of your museum's strategy to increase the endowment. These come in one of four basic ways: annuities, wills, trusts, or real estate. Legal counsel, either on your board or on retainer, should guide you on acquiring such gifts.

Those who have visible trappings of wealth—large houses, luxury cars, big businesses—are certainly good prospects. Don't overlook, however, people of modest means. You would be surprised about what they might have "squirreled" away. You may recall a Mississippi washer woman profiled on television years ago who announced her intention to give $625,000 to a nearby college.

Museum board members must have the commitment and grit to pursue endowment giving. It ain't easy, and it ain't fun.... but, hey, railroad preservations nearly always rise to daunting challenges.

Best of success to all. Sloan


sloan@auchincloss.com

One
> reply mentioned 10% interest - try 1% today
> - so the half million becomes 5 million in
> principal.

I like your concept of a Railroad Preservation Community Chest whereby various organizations pool a portion of admisssions as seed money. One advantage of a railroad preservation community endowment would be have a high quality board whose focus is on managing a portfolio and upon vetting competing proposals, rather than being consummed by operating issues or the crisis of the moment. Their awards would be a seal of approval for getting other grants, so I would make most of their awards challenge grants.

In all likelihood, it would have to be established as a charitable trust or foundation, however, and despite current interest rates, the IRS requires at least a 5% annual distribution of principal. In the past, some foundations included their operating expenses in this floor distribution, but the feds now disallow this.

The 5% rule does not apply to the annual distribution of a 501-c-3's own endowment, although this is a widely followed rule-of-thumb. In the roaring 1990s, many musuems and foundations transfered 6-10% of asset values (based on 3 year rolling average) into operating income or grants. When the equities market collapsed, most of these folks didn't respond quickly enough in reducing their distribution formulas, so they added a high run-off to their portfolio losses. This double-whammy is why we're seeing major reductions in giving by many foundations and formerly "rich" (I was going to say "well-endowed", but that may have a different meaning)institutions.

The low rates you mention are for bank CDs and other consumer oriented investments. These ultra-conservative investments are appropriate for donor-restricted funds, as you ultimatley have to cough-up 100% of the donation for a project. For retained earnings or unrestricted funds, however, a more aggressive portfolio is actually quite prudent. For example, ultra-short bond funds are considered very, very conservative and they currently yield about 3%. Equities have bottomed out and should return to their historic 7-9% annual returns. Having a railroad preservation endowment board that focused of such issues could be quite effective. If not, I would hope that independent museums have an established Finance Committee to understand and review audits, set invesment policy and look at all capital expenditures. I would guess this is not the norm.


fred_ash@bankone.com

T.J.,

Here are a couple of items.

The only private foundations that I know of that are giving to rail projects on a regular basis are the Donnley foundation in Chaicago and the UP Foundation.

Since there is a book the size of a large phone book called the foundation directory, It might make sense to try to get more of the existing foundations to apply for those funds.

the comments above are really important. Having your own endowment is a tool that can't be beat.
The only traction museum that I know of that has significant endowment money is the Pennsylvania Trolley Museum.

But other groups are getting on the endowment bandwagon. At Western Railway Museum we have a fund started and Seashore Trolley Museum has started also. You have to get into the millions in order to start funding staff positions, but the time to start is now!

In terms of small granting funds, both the NRHS and the L&RYHS do some grant giving, but I think to their own chapters. And in New england there is the Train Fair in Springfield. (Not sure of the name) that makes grants to regional groups.

The other benifit of endowment fund raising is that a museum has to get it's act together in terms of Mission Statements, Planning documents etc for a granting agency to look at in any request that is made.

Having that paper foundation is good for any organization any way you look at it..

ted_miles@nps.gov

What about combining a lot of what is being said here, get together those that would be interested, and hash this out? To start with, maybe a session at the next ARM or TRAIN convention is in order to debate this, or at least talk with those who have done successful endowment projects. By the way, excuse the ignorance, but where are the ARM and TRAIN conventions next year? The more I think about it, the insurance endowment suggestion could have the greatest impact in the short term. Regionally, I'd be willing to host a discussion here at our facility, much like Marty Knox hosted an informal "future of steam session" over an 8 foot sub last year at Huckleberry.

TJ

> T.J.,

> Here are a couple of items.

> The only private foundations that I know of
> that are giving to rail projects on a
> regular basis are the Donnley foundation in
> Chaicago and the UP Foundation.

> Since there is a book the size of a large
> phone book called the foundation directory,
> It might make sense to try to get more of
> the existing foundations to apply for those
> funds.

> the comments above are really important.
> Having your own endowment is a tool that
> can't be beat.
> The only traction museum that I know of that
> has significant endowment money is the
> Pennsylvania Trolley Museum.

> But other groups are getting on the
> endowment bandwagon. At Western Railway
> Museum we have a fund started and Seashore
> Trolley Museum has started also. You have to
> get into the millions in order to start
> funding staff positions, but the time to
> start is now!

> In terms of small granting funds, both the
> NRHS and the L&RYHS do some grant
> giving, but I think to their own chapters.
> And in New england there is the Train Fair
> in Springfield. (Not sure of the name) that
> makes grants to regional groups.

> The other benifit of endowment fund raising
> is that a museum has to get it's act
> together in terms of Mission Statements,
> Planning documents etc for a granting agency
> to look at in any request that is made.

> Having that paper foundation is good for any
> organization any way you look at it..


Port Huron Museum
tjgaffney@phmuseum.org

> T.J.,

> Here are a couple of items.

> The only private foundations that I know of
> that are giving to rail projects on a
> regular basis are the Donnley foundation in
> Chaicago and the UP Foundation.

I think you can cross the UP off the list. As of this year they have re-purposed their corporate giving and are targeting strictly educational and teaching related programs (read schooling) so at this time are not supporting rail restorations.

There are, however, many other potential foundations who support historic programs, or community related local projects. Not an easy road to ferret them out, and not always successful in 'selling' your project to them.

Bob Kutella



68trolley@comcast.net