The California Endowment is searching for a new leader following the departure last month of Steven Uranga McKane.
Dr. McKane had served as the first president of the $1.7-billion health-care foundation, which was created in 1996 following the controversial conversion of Blue Cross of California to for-profit status. He resigned after nearly two years in the job.
In a statement, Dr. McKane said that he had taken the position with the understanding that his role would be to help the foundation define its areas of focus in health-care philanthropy, and that he had achieved that goal.
“Upon completion of the programmatic and operational components of the strategic plan, the next phase of work was not something I was inclined to pursue,” he said.
Leroy T. Barnes, Jr., chairman of the endowment’s Board of Directors, said Dr. McKane resigned “because he believed his skills were really start-up skills.” Over the past two years, Mr. Barnes said, it became clear both to Dr. McKane and to the board that Dr. McKane was not the right person to move the foundation forward.
“Steve is a very mild-mannered guy, and a quiet-demeanored guy,” Mr. Barnes said. “In a philanthropic world full of foundation heads who are dinnertime speechmakers, that really wasn’t close to his set of interests.”
Dr. McKane does not yet have another job, but he has received several offers, Mr. Barnes said.
Meanwhile, the foundation plans to name an interim chief executive officer later this month as it begins a national search for a permanent replacement for Dr. McKane.
Dr. McKane presided over the California Endowment during a difficult period of transition marked by staff turnover, uncertainty, and confusion as the foundation sought to clarify its vision and carve out program areas in which to focus its grant making. At the same time, it was distributing hundreds of millions of dollars in grants.
“We’re coming through a very awkward time when we’ve been trying to develop our programs and our staff,” Mr. Barnes said. “Hiring the right staff for your program and having the right program for your staff is a chicken-and-egg situation.”
The foundation only recently determined its four grant-making priorities. Its grants will go primarily to projects that improve access to health care, that develop innovative solutions to health problems in California cities, that deal with issues affecting health care for ethnic and racial minorities, or that have the overall goal of improving the health and well-being of all Californians.
But even before those priorities were chosen, the endowment was under pressure to give away a lot of money -- more than $300-million over the last three years.
Its grant making has taken place under intense scrutiny, not only from state regulators who oversaw the foundation’s creation, but also from consumer advocates and from charities anxious to avail themselves of the new source of support and to have a voice in determining the endowment’s direction.
Much of the scrutiny of the California Endowment stems from the foundation’s controversial origins.
When Blue Cross of California first sought to convert to for-profit status in the early 1990s, it objected to turning over the bulk of its assets to charity. But pressure from non-profit leaders and from consumer-advocate organizations prompted the California Department of Corporations, which oversees such conversions, to intervene. Eventually a deal was hammered out in which two foundations -- the California Endowment and the California Healthcare Foundation, with combined assets totaling $3.2-billion -- were created.
In 1996, the endowment’s first year of operation, the Corporations Commissioner required the endowment to distribute $150-million in grants, said Lew Reid, general counsel and interim chief operating officer. That order put the new foundation at a disadvantage, since it was not able to delay its grant making for one year as other new private foundations are entitled to do under distribution rules.
Foundation officials persuaded the commissioner to spread the distribution over three years -- $30-million in 1996, $50-million in 1997, and $70-million this year. In addition to those grant-making obligations, the endowment has also had to adhere to the normal obligation of distributing at least 5 per cent of the value of its assets every year.
What’s more, Mr. Reid said, as part of the deal, the endowment has also been responsible for distributing millions of dollars in grants in behalf of the California Healthcare Foundation, its sister organization.
All told, that has meant that the California Endowment has had to give away three times what it would normally be obliged to distribute under the rules covering private foundations. So far, the endowment has distributed about $159-million, and it is working on plans to make an additional $150-million in grants over the next six months, Mr. Barnes said.
The biggest challenge, he said, has been letting grant seekers know what programs it was interested in supporting, since it had not defined its grant-making priorities until recently.
“There very understandably is not a lot of patience in communities for an organization with an endowment of over a billion dollars which hasn’t quite decided how it’s going to give it out,” Mr. Barnes said.
In order to meet its grant-making deadlines, the endowment made some large grants to so-called intermediary organizations -- institutions such as community foundations and the University of California -- which in turn redistributed the funds.
That strategy riled some charity leaders, who argued the endowment did not put enough thought into selecting its grant recipients.
“In a state that is 51 per cent minority, not one of those intermediaries was a minority-run organization,” says John Gamboa, executive director of the Greenlining Institute, a network of charities that works to bring development to poor neighborhoods. “In their haste to give out funds they did not think about that.”
Mr. Barnes said the endowment plans to stop using intermediaries now that it has determined its program areas, and will concentrate on direct grant making.