At her death in 2003, Joan B. Kroc, the widow of the founder of the McDonald’s Corporation, left a grand idea and $1.8 billion to make it happen. She wanted the Salvation Army to build some 30 lavish community centers around the nation, like the $87 million complex she paid for in San Diego, with three swimming pools, an indoor ice skating arena and a 600-seat theater. But more than five years later, her plan is sputtering
The gift has always rested uncomfortably with some Salvation Army officials, who have a hard time reconciling the elaborate centers with the Army’s image as a frugal church that serves the needy.
Now, the plan is also proving difficult to finance. The Kroc fortune has been battered by the economic downturn, and raising additional money to make sure the centers can sustain themselves in the future has been challenging.
So far, just four centers have been completed. Two are scheduled to open this year, and at least five more next year. Plans for two complexes, in Detroit and Massena, N.Y., have recently been scuttled.
“The Salvation Army is not immune to the economic climate in which we find ourselves,” said Lt. Col. Ken Johnson, the Salvation Army’s secretary for business administration in the southern territory, one of four regional units. “When Mrs. Kroc gave her gift, it was a different economic world.”
Mrs. Kroc left enough money for each center to have an endowment equal to the cost of construction. It was a formula set by her financial advisers and was intended to cover any shortfall between a center’s operating revenues and its overall budget.
The Army, though, believed that was not enough, so it required each community to raise additional money — a total of $628 million nationally.
To date, the Army has received pledges and commitments of 34 percent of that amount, or $214 million, a spokesman said.
At the same time, Mrs. Kroc’s gift has shrunk. The half reserved for endowments has declined by 14 percent, or about $126 million, to $774 million, according to the Army.
“It’s one thing to build,” said Col. Steve Hedgren, chief secretary in the eastern territory, “but we’ve got to have the assurance that everyone understands the importance of these endowments and partnerships in the communities to sustain these centers.”
In some locales, deep-pocketed donors have stepped in to help. In Omaha, for example, a nonprofit fund-raising organization led by the community’s most prominent business leaders pledged to raise the necessary $15 million, while in Grand Rapids, Mich., Amway and the two families who own it have been major contributors.
But in other regions fund-raising has stalled. Long Beach, Calif., is struggling to raise $25 million. Chicago must raise $50 million.
New York City will have to raise $200 million for the Kroc Center scheduled for Staten Island, in part because the community has expanded the project.
In Massena, the cancellation of the Kroc Center was prompted by the closure of a General Motor plant, as well as other signs of economic deterioration.
“We’ll be going back to communicate with donors that have given for Kroc to let them know that we’re backing away from a Kroc center but will put up something else instead,” Colonel Hedgren said.
In Detroit, Salvation Army officials decided to cancel plans for a $40 million Kroc Center, a move that has incited outrage there and raised questions about how they have handled Mrs. Kroc’s gift. Army officials said they were simply unable to raise the needed money.
Supporters of the center disagree. Lt. Col. Clarence Harvey, a retired Salvation Army fund-raiser who was hired part-time to help raise money for the Detroit Kroc Center, said there was a financing plan in place in 2007 that local Army officials sidelined.
“There wasn’t any part of any program or future plan for Kroc that was not an example of the Salvation Army’s mission, but it made some people uncomfortable,” Colonel Harvey said. “There was fear that the Army is incapable of running such a plant, fear that the aquatics programs would be problematic — many concerns.”
The plan proposed by Colonel Harvey and a fund-raiser who was not a Salvation Army member, Russ Russell, included using a loan to give the community more time to raise the $48 million the Army was requiring.
Additionally, a major donor had pledged to line up 18 other large donors to pay down most of the loan, with the remainder coming from a grass-roots fund-raising effort.
The gift has always rested uncomfortably with some Salvation Army officials, who have a hard time reconciling the elaborate centers with the Army’s image as a frugal church that serves the needy.
Now, the plan is also proving difficult to finance. The Kroc fortune has been battered by the economic downturn, and raising additional money to make sure the centers can sustain themselves in the future has been challenging.
So far, just four centers have been completed. Two are scheduled to open this year, and at least five more next year. Plans for two complexes, in Detroit and Massena, N.Y., have recently been scuttled.
“The Salvation Army is not immune to the economic climate in which we find ourselves,” said Lt. Col. Ken Johnson, the Salvation Army’s secretary for business administration in the southern territory, one of four regional units. “When Mrs. Kroc gave her gift, it was a different economic world.”
Mrs. Kroc left enough money for each center to have an endowment equal to the cost of construction. It was a formula set by her financial advisers and was intended to cover any shortfall between a center’s operating revenues and its overall budget.
The Army, though, believed that was not enough, so it required each community to raise additional money — a total of $628 million nationally.
To date, the Army has received pledges and commitments of 34 percent of that amount, or $214 million, a spokesman said.
At the same time, Mrs. Kroc’s gift has shrunk. The half reserved for endowments has declined by 14 percent, or about $126 million, to $774 million, according to the Army.
“It’s one thing to build,” said Col. Steve Hedgren, chief secretary in the eastern territory, “but we’ve got to have the assurance that everyone understands the importance of these endowments and partnerships in the communities to sustain these centers.”
In some locales, deep-pocketed donors have stepped in to help. In Omaha, for example, a nonprofit fund-raising organization led by the community’s most prominent business leaders pledged to raise the necessary $15 million, while in Grand Rapids, Mich., Amway and the two families who own it have been major contributors.
But in other regions fund-raising has stalled. Long Beach, Calif., is struggling to raise $25 million. Chicago must raise $50 million.
New York City will have to raise $200 million for the Kroc Center scheduled for Staten Island, in part because the community has expanded the project.
In Massena, the cancellation of the Kroc Center was prompted by the closure of a General Motor plant, as well as other signs of economic deterioration.
“We’ll be going back to communicate with donors that have given for Kroc to let them know that we’re backing away from a Kroc center but will put up something else instead,” Colonel Hedgren said.
In Detroit, Salvation Army officials decided to cancel plans for a $40 million Kroc Center, a move that has incited outrage there and raised questions about how they have handled Mrs. Kroc’s gift. Army officials said they were simply unable to raise the needed money.
Supporters of the center disagree. Lt. Col. Clarence Harvey, a retired Salvation Army fund-raiser who was hired part-time to help raise money for the Detroit Kroc Center, said there was a financing plan in place in 2007 that local Army officials sidelined.
“There wasn’t any part of any program or future plan for Kroc that was not an example of the Salvation Army’s mission, but it made some people uncomfortable,” Colonel Harvey said. “There was fear that the Army is incapable of running such a plant, fear that the aquatics programs would be problematic — many concerns.”
The plan proposed by Colonel Harvey and a fund-raiser who was not a Salvation Army member, Russ Russell, included using a loan to give the community more time to raise the $48 million the Army was requiring.
Additionally, a major donor had pledged to line up 18 other large donors to pay down most of the loan, with the remainder coming from a grass-roots fund-raising effort.
But the plan was rejected by the leadership of the central territory. “There was never any offer on the table and never any viable deal to pursue,” said Col. Carol Seiler, the territory’s coordinator for strategic mission planning.
She said the “legal and practical” obstacles were too high.
In the end, she said, only $2 million was raised for the Detroit center, and donors in Detroit were telling Army officials there that they preferred to support the Army’s more traditional mission of serving basic needs.
Wayne Doran, a retired Ford Motor Company executive who led the Kroc fund-raising committee in Detroit, said he was confident the fund-raising goals could have been met and blamed internal Army squabbling for the cancellation of the center.
“I have great respect for the Salvation Army, but this couldn’t survive the political bickering that was going on among Army members,” Mr. Doran said. “People who give a lot of money do not want to give into a situation that is fraught with those kinds of problems.”
The Army recently turned down an offer of $250,000 from the Detroit Black McDonald’s Owners to support fund-raising and now plans to put a much smaller non-Kroc facility on the site. Community groups and others involved in the project have signed up more than 150 people to protest at the Salvation Army’s central territory headquarters in Chicago this month.
Meanwhile, other Kroc Centers are progressing. The Salem, Ore., center is scheduled to open in September, and the Omaha center in November; and at least five others are expected to open next year.
In some places, the Salvation Army has shown greater flexibility toward fund-raising goals. The central territory, for example, has allowed fund-raisers in Chicago to split their campaign into three phases.
Similarly, fund-raisers for the Kroc Center in Philadelphia say they believe that starting construction will help spur donations, so a 12-acre site there has been cleared and the holes have been dug for the pools.
“Some folks are less capable of giving because of investment returns and asset values being less, but they still want to hear from us,” said Raymond Welsh, a senior vice president at UBS Financial Services and chairman of the Philadelphia fund-raising committee. “Some are saying not now, but that’s not no forever.”
In the end, she said, only $2 million was raised for the Detroit center, and donors in Detroit were telling Army officials there that they preferred to support the Army’s more traditional mission of serving basic needs.
Wayne Doran, a retired Ford Motor Company executive who led the Kroc fund-raising committee in Detroit, said he was confident the fund-raising goals could have been met and blamed internal Army squabbling for the cancellation of the center.
“I have great respect for the Salvation Army, but this couldn’t survive the political bickering that was going on among Army members,” Mr. Doran said. “People who give a lot of money do not want to give into a situation that is fraught with those kinds of problems.”
The Army recently turned down an offer of $250,000 from the Detroit Black McDonald’s Owners to support fund-raising and now plans to put a much smaller non-Kroc facility on the site. Community groups and others involved in the project have signed up more than 150 people to protest at the Salvation Army’s central territory headquarters in Chicago this month.
Meanwhile, other Kroc Centers are progressing. The Salem, Ore., center is scheduled to open in September, and the Omaha center in November; and at least five others are expected to open next year.
In some places, the Salvation Army has shown greater flexibility toward fund-raising goals. The central territory, for example, has allowed fund-raisers in Chicago to split their campaign into three phases.
Similarly, fund-raisers for the Kroc Center in Philadelphia say they believe that starting construction will help spur donations, so a 12-acre site there has been cleared and the holes have been dug for the pools.
“Some folks are less capable of giving because of investment returns and asset values being less, but they still want to hear from us,” said Raymond Welsh, a senior vice president at UBS Financial Services and chairman of the Philadelphia fund-raising committee. “Some are saying not now, but that’s not no forever.”
