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Salvation Army Receives $1.5-Billion Donation From McDonald’s Heiress

By  Brad Wolverton
February 5, 2004

In one of the largest gifts ever to a charity, the estate of Joan B. Kroc, the McDonald’s heiress, announced that it plans to give more than $1.5-billion to the Salvation Army.

The bequest, which represents 75 percent of the estimated $2-billion estate of Mrs. Kroc, who died of brain cancer in October, stipulates that half the money go toward the construction of 30 to 50 recreational and educational facilities across the country. The other half of the money must be put into an endowment whose earnings would pay for operating costs of the facilities. However, Mrs. Kroc deliberately did not provide enough to pay for all of the operating costs because she said she wanted the Salvation Army to continue seeking money from others.

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In one of the largest gifts ever to a charity, the estate of Joan B. Kroc, the McDonald’s heiress, announced that it plans to give more than $1.5-billion to the Salvation Army.

The bequest, which represents 75 percent of the estimated $2-billion estate of Mrs. Kroc, who died of brain cancer in October, stipulates that half the money go toward the construction of 30 to 50 recreational and educational facilities across the country. The other half of the money must be put into an endowment whose earnings would pay for operating costs of the facilities. However, Mrs. Kroc deliberately did not provide enough to pay for all of the operating costs because she said she wanted the Salvation Army to continue seeking money from others.

Mrs. Kroc stands in select company among individuals who have made billion-dollar donations, though many large recent gifts have gone to private foundations. Bill Gates, the Microsoft founder, and his wife, Melinda, gave $5-billion in Microsoft stock to the Bill & Melinda Gates Foundation in 2000 and have donated more than $20-billion to their foundation in recent years. In 1997, Ted Turner, the founder of CNN, pledged $1-billion to a foundation run by the United Nations.

Mrs. Kroc’s donation is the largest ever to go to a nonprofit organization that is not a foundation, says Eugene R. Tempel, executive director of the Center on Philanthropy at Indiana University, in Indianapolis. “When people make gifts of this size, it says something about their confidence in the future of an organization,” Mr. Tempel says. “With the stock market coming back and with people having more confidence in the economy, it will be interesting to see whether this donation encourages other large gifts like we saw a few years ago.”

Other Bequests

The Salvation Army expects to receive the $1.5-billion donation -- an all-cash lump sum that must be divided equally among the organization’s four geographic divisions -- within the next few months, as trustees for Mrs. Kroc disperse her estate. Mrs. Kroc, the widow of Ray Kroc, the founder of McDonald’s Corporation, also gave more than $390-million to at least six other charities. The largest other gift, $200-million, went to National Public Radio.

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The idea behind Mrs. Kroc’s gift to the Salvation Army originated five years ago, when she decided she wanted to help the Army spruce up its image and expand its facilities, says Dick Starmann, a co-trustee of her estate.

She gave $92-million to the organization to build a 175,000-square-foot community center in her hometown of San Diego. Called the Ray and Joan Kroc Corps Community Center, it sits on 12 acres and includes an Olympic-size swimming pool, rock-climbing wall, and 600-seat performing-arts center.

Mrs. Kroc visited the center about once a month and was so impressed with it that she decided to give the majority of her fortune to help the Salvation Army build similar centers around the country, says Mr. Starmann.

“Mrs. Kroc saw how people in the neighborhood accepted the facility, and she hoped that similar centers could benefit many more communities,” Mr. Starmann says.

New Centers

The Salvation Army, an international Christian organization, already operates 9,000 social-service centers around the country. It is best known for providing shelter for the homeless and helping to rehabilitate drug abusers -- and for its armies of volunteer bell ringers who ask for donations during the holidays, says Commissioner W. Todd Bassett, the organization’s top executive.

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Many existing Army facilities are in poor neighborhoods and act as shelters for individuals in need, but the new community centers will have a decidedly different function, Mr. Bassett says. They will be a place where people of various incomes and races can gather to exercise, take classes, use the Internet, and worship, he says.

The new centers also will be much larger and have more-modern architecture than many of the Army’s existing service centers, Mr. Bassett says. But each center could look different from the next, he says, depending on the needs of the community where it is built.

In San Diego, the center was built in a neighborhood where residents speak 47 languages and the average single-family home costs about $400,000. Membership in the center costs about $200 a year per person, but several hundred needy children and adults receive free memberships. “Building the Ray and Joan Kroc Community Centers will be a major challenge for our organization, but they will have tremendous impact on communities,” says Mr. Bassett. “They could catapult the Salvation Army into a new era of exposure across the country.”

$1.37-Billion Raised

The Alexandria, Va., group is already one of the nation’s most successful fund-raising organizations -- it raised $1.37-billion in fiscal 2002, the second-highest amount among organizations in The Chronicle‘s Philanthropy 400 survey of groups that take in the most in private donations. Even so, Mr. Bassett says, it will be a challenge for the Salvation Army to raise the estimated $70-million a year it will need to cover the costs of running the facilities.

The centers will employ an estimated 9,000 more people than the 55,000 the organization currently does, Mr. Bassett says.

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“Fortunately, we have got the next three to five years before we have to start raising money for these centers,” says Mr. Bassett. “But we are confident that once other donors see the impact these centers can have on a community, they will want to give, too.”

We welcome your thoughts and questions about this article. Please email the editors or submit a letter for publication.
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