A well-endowed but previously under-the-radar foundation based in Riverside has a new name, new leadership and a new focus.
The Healthy Communities Foundation, formerly the Arthur Foundation, is planning to give out about $6 million in grants next year to promote health equity and combat disparate health outcomes in an area within a five-mile radius of MacNeal Hospital in Berwyn.
“We aim to address the conditions that influence health and access to care so that all the residents of our region enjoy their full potential for good health,” said Maria Pesqueira, who was hired as the new president of the newly christened Healthy Communities Foundation last year.
The foundation has been transformed completely in the last two years after the Illinois Attorney General took the foundation to court to in 2016 and worked out settlement under which the entire board of directors of the Arthur Foundation resigned.
The foundation was created in 1999 with a $100 million endowment after MacNeal Hospital was sold to Vanguard Health Systems, a for profit hospital management company.
State law requires that when a not-for-profit hospital is sold to a for-profit company, the proceeds of the sale must be used to further the aims of the hospital — typically by creating a community-based foundation that focuses on health.
The foundation was first called the MacNeal Health Foundation, but in 2006 changed its name to the Arthur Foundation named after Arthur MacNeal, an early doctor in Berwyn and a founder of MacNeal hospital.
An entirely new board of directors was chosen in 2016 by the Attorney General’s office and, in 2017, the new board decided to change the name of the foundation to the Healthy Communities Foundation.
“We wanted to be clear: That’s what we are. You don’t have to google us to have an understanding,” said current board chairwoman Grace Hou, the president of the Woods Fund of Chicago and a resident of LaGrange Park.
The new board has changed the direction of the foundation, focusing on the original mission to promote health in the area around MacNeal Hospital.
Former longtime Riverside resident Michael Kenahan had been the only president of the Arthur Foundation until 2016 and served on the board for much of that time until he, along with all the other board members of the Arthur Foundation, agreed to resign in 2016.
He left his job as president of the foundation, which paid him a little over $225,000 in 2014 and $262,630 in 2015 according to the foundation’s tax returns, three months after the settlement in 2016.
The Attorney General’s office, which regulates not-for-profit foundations in Illinois, had a number of issues with how the Arthur Foundation was being run and where it spent its money.
In 2006, about the same time as the name of the foundation was changed to the Arthur Foundation, the board deleted a section of its articles of incorporation, stating that the foundation should be operated “to improve and promote health in the Chicago metropolitan area.”
Instead the revised articles of incorporation said that the foundation would be operated for “charitable, educational and scientific purposes.”
The complaint filed by the Attorney General’s Office in the Chancery Division of the Cook County Circuit Court also alleged that the revised Articles of Incorporation were never filed with the Illinois Secretary of State’s office as required.
The attorney general said the foundation was meant “to address the healthcare needs of the residents of the MacNeal Hospital service area on a charitable basis.” It wanted the foundation to limit its grants to organizations working within a 10-mile radius of MacNeal Hospital.
Instead, the Arthur Foundation had given large grants to educational institutions, especially Loyola University of Chicago and Notre Dame University. Five of the seven board members who agreed to resign in 2016, including Kenahan, are graduates of Notre Dame.
According to tax returns filed by the Arthur Foundation, which are accessible on the Illinois Attorney General’s web site, the Arthur Foundation gave Notre Dame $2 million in 2011 to fund fellowships for MBA students and $500,000 to fund executive education.
Kenahan, who now works as the director of American Organization of Nurse Executives, said that the foundation’s relationship with Notre Dame started from its first days when the university’s Institute for Latino Studies conducted a needs assessment for the foundation.
In 2013, the foundation made a $25 million contribution to Notre Dame “to establish a donor advised fund that will be used to support the Arthur’s Foundation’s charitable purposes.”
In a telephone interview with the Landmark, Kenahan characterized that move as a way for the foundation to get higher investment returns on a portion of the Arthur Foundation’s endowment and that the foundation reaps the income from the fund.
“That was more of an investment decision,” Kenahan said. “It actually came through the investment committee thinking long term about how to get a bigger bang for the buck.”
The Arthur Foundation also gave large sums to Loyola. It made a multiyear $14 million commitment to Loyola to pay for a new nursing building on Loyola’s Maywood medical center campus.
In some recent years, the 75 to 80 percent of the Arthur Foundation’s dollars went to Loyola.
In 2014, the Arthur Foundation handed out $4.2 million in grants, of which a little over $3 million went to Loyola, including a little over $2.2 million to nursing school.
In 2015, the foundation handed out just over $5 million, of which Loyola got $4.2 million, including $3 million to help pay for the new nursing building facility and $200,000 for nursing scholarships.
“Loyola was the closest non-profit health care facility to our headquarters and served our catchment area,” said Kenahan, whose mother was a nurse.
Over the years the Arthur Foundation also gave a few hundred thousand dollars to Riverside-Brookfield High School, which all three of Kenahan’s children attended.
It provided grants to help fund The Paw, an ill-fated off campus sandwich shop and café started by former Superintendent/Principal Jack Baldermann that opened in 2003 and shut down in 2006.
“I don’t think the Paw was ever able to sustain itself, but we thought it was a good project,” Kenahan said.
From 2007 to 2010 the Arthur Foundation donated a total of $225,000 to RBHS fund “disadvantaged student enhancement.”
In 2007-08 the foundation donated a total of $100,000 to Fenwick High School to fund scholarships for Hispanic students.
The Attorney General’s office had concerns had concerns about some of the grants the Arthur Foundation was making since they seemed unrelated to the foundation’s original mission.
The 2015 financial report of the Arthur Foundation notes on its last page that “the Illinois Attorney General’s Office raised concerns with respect to certain grants awarded by the Foundation in recent years.”
Kenahan said that the board, after its needs assessment, decided that education was a key area to focus on to improve the lives of people in the area around MacNeal.
“The board had a broader interpretation of that mission,” Kenahan said. “I don’t think we did anything wrong.”
The Attorney General’s complaint also noted that the Arthur Foundation violated a provision in the original articles of incorporation that board members could not serve more than three consecutive three-year terms. The board claimed that it eliminated term limits, but agreed to settle the case by having all the board members resign.
Kenahan left his job at the Arthur Foundation three months after the settlement and after the new board was appointed. He said that he did not feel that he was forced out.
“It was a friendly transition,” Kenahan said.
The current Healthy Communities Foundation board and staff looks much different than the Arthur Foundation board and staff. While the outgoing board was all white males the new board is more diverse. All six staff members are women and all but one is Latina.
“Having individuals who understand the Latino, Asian, and African-American communities was very important to us as we put this team in place,” Pesqueira said.
The staff has grown in the last year to six, four full time and two part time, under Pesquera’s leadership, including two program officers with master’s degrees from the University of Chicago School of Social Service Administration. In the last few years of Kenahan’s time, the staff was only he and a part-time employee.
The new leadership has decided to focus its efforts on an area bounded by a five-mile radius from MacNeal Hospital.
In 2017, the Healthy Communities Foundation doled out $7.2 million split up among 94 different organizations focusing not on universities but on organizations that provide services directly to residents, especially low-income residents.
The Healthy Communities Foundation serves 27 ZIP code areas ranging from Lawndale to Western Springs. It plans on focusing its efforts on 12 of those ZIP code areas that are low-income.
On Aug. 21 it held a meeting at Riverside Township Hall attended by representatives from approximately 140 different organizations who learned about the foundation’s new strategic focus. The attendees were invited to apply for grants that will be awarded in December. The deadline for submitting grant applications is Sept. 17.
“We want to more responsive to our communities’ needs,” Pesqueira said.