 Welcome to INSIGHT, produced in partnership with Lakeland Public Television, serving North Central Minnesota. Today we are chatting with Matt Verlech, president of the Initiative Foundation. Matt has generously agreed to share some of his experience with us. I'd like to thank you, Matt, for joining us today. My pleasure. Thanks for your invitation. So the Initiative Foundation is very interesting. It's one of six foundations in this region, founded by the McKnight Foundation. Talk about the history of the Initiative Foundation. Right. The McKnight Foundation, a private family foundation based in Minneapolis, recognized in the late 80s that rural Minnesota was still struggling to a large degree in the aftermath of the farm crisis. And as McKnight was traveling that region and pondering how they could make a greater impact, they made an interesting decision to try to have that impact not on their own, but by partnering with local people in Greater Minnesota and helping to establish six independent Initiative Foundations that together cover all of non-metro Minnesota. So that was 1986 when each of the six got started. We are one of the six. We cover the 14 counties of central Minnesota. So we go north as far as Cass and Crow Wing County, south as far as the northern edge of the metro area, east to Wisconsin and west to sort of Todd and Wadena area. And from that beginning, you had the definition of each of the foundations suited and form-fitted to the areas and the people that they serve. How does that take hold in the Initiative Foundation? Yeah, that's an important principle that we are driven by local needs, local priorities. Local people are our greatest resource. I mean, most directly, our governance is by a board that is comprised of local folks. So they come from across our 14 counties. They represent a cross-section of industries and backgrounds so that the strategic priorities that they adopt and really all of our actions reflect the needs of the area. And so across the six Initiative Foundations, to a large degree, we are similar because we have the same origins. We still collaborate. We still work very closely with our partners at the McKnight Foundation. We work on a lot of the same subject areas. And yet we also have the flexibility to deviate from what the others are doing to the extent that local conditions require it. And so it really is a very effective model. It's been in practice now for 30 years. I don't think it exists quite like that anywhere else. So it shows a lot of innovation on the part of McKnight and the others that were in on those early conversations and innovation on the part of the folks that have operated the foundations over these past 30 years, including my predecessor who I've recently taken over from just in the last six or seven months. Part of the fascinating element of this is that you have a number of different approaches that were used, some in common and some separate. So you had the pump priming element that McKnight had. There was initial funding. There was initial setup. There was initial model that could be deployed, multiply deployed to six different foundations. But there's also the principle of leveraging the local strengths in each of the communities. Talk about how those strengths are invested into the organization in both the board in terms of the diversity of skills. You referred to that before and in the staff. Yeah, local strengths here in central Minnesota in particular. We like to think that in addition to having lots of great businesses and the normal things you think about with economic development. We also have a broader set of resources including the fact that the Brainerd Lakes area has so much natural amenity that is an attraction for folks from the Metro and really from across the country to come and visit. And so that's a big economic driver for us and something that we try to leverage in our work. One of our projects that we're really proud of to have been involved with is the Cayuna Recreation area, which is northeast of Brainerd, the Crosby area. That is a former mining area where years ago, lots of the tailings that were left over from the mining after the mining company left, it was just all left to kind of go back to a natural condition. So now you've got beautiful forests and lakes in that area. And some folks involved with mountain biking realized, hey, this landscape could be fashioned into a perfect recreational area for mountain bikers and luckily, the Initiative Foundation had a role early on in providing just a little bit of seed money to help do some of the feasibility studies. And together again with so many other partners, the ball got rolling. And now you've got 25 miles of beautiful, and I'm a mountain biker myself, so I can say this really beautiful trails. And it's now a destination for folks not only across the country but internationally. And they come to take advantage of that natural amenity that we have here. And then the economic spillover impact of that has been substantial. If you go to downtown Crosby now, as I did not too long ago, there's the brewery that had a lot of people in it on a nice Saturday afternoon and restaurants and bike shops and kayaking. And all of that reflects the fact that our natural amenities, along with our industrial capability and human capital, all of that combines to make a really powerful economic mix in this territory. And it's the local sensibility that is so important, whether it's in the Adirondacks, in the aftermath of the mining and logging activity that occurred in upstate New York or here, these are programs that are actually shaped by people who really know the landscape, know the needs of each community. They might need some coordination. They might need some help. They might need some financial assistance. But with that, you have the evolution of not only a form-fitted solution to a rather complicated problem, but you also have economic development, community engagement, new recreation areas for people who live, the attractiveness and the pull of a tourist industry. You really are creating a more livable Minnesota through these efforts. That's right. And another way that what you just described kind of comes into play is that we partner extensively and as much as we have a vision for where we'd like to get, it is at a high level and the implementation varies according to circumstances and according to the inputs of our various partners. A lot of how we accomplish our mission is by taking good ideas from elsewhere and then adapting them to the unique circumstances here. So for example, one of the programs we're really excited about at the foundation these days is called the Initiators Fellowship. So there is an existing fellowship program at a place called Echoing Green on the East Coast and it helps social entrepreneurs to develop their ideas. So that is to develop enterprises that have a higher than average positive social impact that can be non-profit or for-profit. So that has been highly successful where it's been implemented and through some sharing of ideas with them and then a lot of great local partners, we have developed their own version of that called the Initiators Fellowship so that now we are helping an initial class of four initiators, fellows, a diverse group from across our region to build their own enterprises. They're going to have positive impact in the region and really to develop their leadership skills so that even if the current path that the individual is on in the business perhaps doesn't work out the way they intend, even if they do a pivot, we want to invest long-term in leaders for this region who will make a positive impact. And so that's been going for just under a year and we really are excited about the prospects for these individuals. And it's just a great example of adapting a good concept that works elsewhere and putting it into practice here in Central. In terms of how you organize the activities of the Initiative Foundation, do you organize them by programs? Do you organize them by financial buckets? Or do you organize them by geographic impact? We generally talk about three main categories of activity, economy, community, and philanthropy. Those are the three broad ways in which we attempt to enhance the quality of life in our 14 counties. So our grant-making is pretty exclusively focused to those 14 counties. And we do it through each of those streams. So economy generally refers to, I mean economic development broadly, but to a large degree helping businesses, small businesses to start up and in some cases to expand. The community part to a large degree involves collaboration with other nonprofits and that can be grant-making, writing checks as you say. But also we happen to run some capacity building programs internally. So in a sense, we're our own operating nonprofit. So we do in collaboration with the Nonprofits Assistance Fund out of the Twin Cities, something called financial resiliency through social enterprise. So if there's a nonprofit that could develop an income-generating stream of activity, we can help them to develop that concept so that it better enables them to achieve their mission. We can only do so much as an individual entity, but if we have great partners and we enhance their ability to do what they do, that broadens the impact. So that's community. And then the third bucket I mentioned is philanthropy. Obviously we are involved in philanthropy directly by making grants, but we also try to facilitate generosity on the part of others that have resources by making it easy for them to set up their own philanthropic vehicles within our structure. So if you're an individual that has been fortunate enough to generate some resources and would like to deploy that in your community, rather than have to set up your own foundation and figure out all the legal financial considerations, you can bring that to us. And we can handle the paperwork, the investment part, the grant making logistics, and you as the donor can advise where you would like the funds to go. So you can really just focus on your passions and not have to deal with what headaches there might be. And we think that by doing that, we make it easier for people to give. And we keep some of those resources at work in this region in perpetuity. And you have various functions there. You're providing infrastructure, you have a cost avoidance function, because the person setting up their own foundation, their own 501C3 has costs, I certainly know what that's about. And then you're also acting as an investment advisor, because you have certain expertise and now that expertise is immediately available to your partners who are working with you to explore their own philanthropic inclinations and investments. That's right, there are rules to giving and so for one thing we can keep folks out of trouble, we know what the rules are. And as a public charity donations to us are tax deductible and that's attractive to folks as well. And so as a consequence of that, we are home to about 90 other, we call them partner funds. So it could be a community foundation like ours, but covering a smaller geography within ours. Or it could be a donor advice fund for an individual or family. It could be an agency fund that's associated with a particular nonprofit or a range of vehicles. But it's been well received and it's a growing area for us and it's a great way to multiply impact. What does the future hold for the initiative foundation? And are there various initiatives that will receive focus over the coming years? Well, first of all, I'm really lucky that I joined an organization that's in strong condition and has a wonderful track record over the course of 30 years. And so my first objective coming in as a new executive is to maintain that progress, keep it going and ensure that that impact doesn't go away. Of course, you want to grow the impact as well to the extent possible. So generally speaking, we want to do more. And in particular, one of the things that's somewhat unique about our foundation and the other initiative foundations is that we are engaged in small business lending. That's not a common activity for foundations, but we have authorization from the IRS to do that as a charitable activity. So we'll partner with banks and entrepreneurs to provide gap financing when maybe the bank or the credit union can't do the whole deal. And there's a little bit of remaining capital infusion that's needed. We will make that infusion and then help the project to happen. So we want to do more of that and of course all the positive work we do. And then in particular, in the Greater St. Cloud area where we have a large population of Somali Americans and other East African immigrants and refugees. We see an opportunity there to do more in the entrepreneurial space as well. That kind of builds on our expertise when it comes to lending and business training. And so we have partnered with an organization called the Neighborhood Development Center out of the Twin Cities. They've had a lot of practice and success with helping low income communities of color to develop entrepreneurs, start more businesses, and grow prosperity for those communities. And so we are once again seeking to adapt a model that has existed and worked well elsewhere. Well, we're going to make some tweaks and adjustments but put it to work in the Greater St. Cloud area. We think that's an exciting way to help a population that has a lot of potential but certainly could use more opportunity than has been present before. And we feel like we have expertise to do it. Matt Varela, thank you so much for sharing with us the work of the Initiative Foundation. And thank you so much for your insights.