The family foundation started by Richard Schulze, who built Best Buy into the world’s largest consumer electronics retailer, is poised to become one of Minnesota’s largest charity donors.
As the foundation moves into year three of a major expansion, it’s on track to donate $35 million next year and “considerably more” beyond that. Schulze is pouring about $50 million a year into its assets. The foundation is carving a niche with big, multiyear grants, as well as funding for promising smaller groups.
In the past week alone, Schulze was awarded the American Cancer Society’s top honor after donating $18 million to its Hope Lodges and lauded by Catholic Charities of St. Paul for his $5 million shelter start-up grant, the most significant private investment in the charity’s recent history.
Schulze also is bankrolling two experiments he hopes will become national models. One cranks up teaching and technology at Twin Cities Catholic schools; the other speeds up business research-sharing among academics.
“I get such tremendous satisfaction from the contributions given,” Schulze said by phone from his Florida home. “My goal is to offer up to $1 billion of my wealth, hopefully to be distributed for the common good. We’re on the road to doing that.”
In 2013, when it donated $4.7 million, the Richard M. Schulze Family Foundation ranked 45th in giving among Minnesota foundations, according to the Minnesota Council of Foundations. The expected $35 million in grants next year is likely to catapult it into the Top 15. And if donations climb as planned, the foundation will join the state’s most generous.
The foundation, launched in 2004, was run by Schulze’s daughter Nancy Tellor until 2013. During that time, it donated about $150 million, including megagifts such as $50 million to the Mayo Clinic for cancer research and $40 million to the University of Minnesota for diabetes research.
In 2013, when Schulze became Best Buy’s chairman emeritus after a nearly yearlong ouster, he announced a hefty foundation “reboot,” and that he would donate $1 billion in his lifetime. The foundation, for the first time, would accept community grant proposals.
He appointed a new president, Mark Dienhart, former COO at the University of St. Thomas, where Schulze had been a major donor and trustee. The foundation’s staff of two became a staff of six, and nonprofits started knocking.
The ramp-up will be the biggest philanthropy boost to Minnesota since the Margaret A. Cargill Foundation landed here in 2011, said Steve Paprocki, president of Access Philanthropy in Minneapolis and a longtime Twin Cities nonprofit consultant.
“Locally, it will have a much greater impact, because it has a major focus on the Twin Cities,” he said. “It funds a more diverse group of grantees … and it is willing to take a step out there.”
The foundation focuses on education, health, human services and “transformational ideas.” It likes to give seed money to leverage other donations, such as the new Dorothy Day Center that broke ground recently in St. Paul. It also supports innovation, such as stem cell research for regenerating skin for burn victims.
“We try to think … ‘Where is work being done that can take things to another level?’ ”said Schulze.
The foundation operates differently from others, Dienhart said. Instead of annually giving out 5 percent of assets, the typical formula for most foundations, it gives 15 percent of its assets each year. In addition, Schulze adds $50 million a year to the pot, and will be transferring other funds for special projects.
Grants reflect passions
The foundation’s target areas reflect Schulze’s personal and professional history. The working-class kid from St. Paul attended a Catholic grade school and was admitted to the University of St. Thomas before joining the military. The small electronics business he started in 1966 grew into the behemoth that is Best Buy. Hence, his focus on innovation and entrepreneurism.
Schulze’s interest in health stems from his late wife’s battle with cancer and understanding the toll illness takes on families. The Hope Lodges, which offer free housing to cancer patients and loved ones, “are a breath of fresh air for us,” said Schulze.
Hank and Loretta Boileau are among the beneficiaries of that investment. The Brainerd couple have lived in the Hope Lodge at the U campus for three months as Hank undergoes a bone-marrow transplant. Said Loretta Boileau: “I would never have been able to afford a hotel.”
The Catholic Schools Center of Excellence, meanwhile, is a new project to boost enrollment in Twin Cities Catholic schools by improving technology, teacher training and information-sharing. The $15 million, three-year grant was sparked in part by the bankruptcy of the Archdiocese of St. Paul and Minneapolis, Schulze said.
Another new project is creating university student scholarships and distinguished professorships, along with an online “Entrepreneur & Innovation Exchange” to more quickly share business research. Currently, most researchers submit their work to scholarly journals, a process that can take a year.
“The idea is to get those ideas out there, right now, and allow people to react to them,” said Dienhart. The project receives an ongoing $500,000 annually.
Smaller grants have also been made to dozens of nonprofits, ranging from the Laura Jeffrey Academy in St. Paul to the Friends of Foster Children in southwestern Florida.
Noticeably absent from the list are fine arts. Schulze explained: “I feel there are enough people who have wealth who are prioritizing that. I don’t feel the same way about health and human services, where there are so many that need so much.”
Funding decisions are made by Schulze and his eight-person board of directors, which includes his wife, Maureen; his daughter Susan Hoff; Dienhart; former U President Robert Bruininks and Allen Lenzmeier, former Best Buy vice chairman. About 75 percent of the grants go to Twin Cities projects. Florida gets most of the rest.
Part of a generous trend
Schulze’s public leap into mega-philanthropy is part of a trend among billionaires, said Dwight Burlingame, professor of the Lilly School of Philanthropy at Indiana University. From Microsoft founder Bill Gates to Warren Buffett, the philanthropy of the rich — once a low-profile affair — is making headlines.
“You’re combining personalities with philanthropy, and challenging others to join in,” Burlingame said.
Schulze, meanwhile, said he is mixing his philanthropy with work and family. His family office remains busy with investments and planning, he said. And as chairman emeritus at Best Buy, he still talks several times a month with CEO Hubert Joly.
Moving forward, Schulze plans to expand his giving, including some outside Minnesota and Florida.
“I’m leading the way on a scale different from the average,” he said, “but it’s reflective of who I’ve become.”