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Giving away the family fortune Featured

10:24am EDT April 22, 2005
For five years, Sandra Guthman led a double life, serving as Midwest region director of marketing for IBM during the day and as president of the Polk Bros. Foundation when her schedule allowed.

"I put the (foundation) offices in a building near the IBM building so I could go in at 7:30 in the morning and stop at the foundation on my way home from work," says Guthman. "After five years, it became too frustrating to do both. I was always thinking about more I could be doing at the foundation and that IBM wasn't getting my full attention."

So Guthman took early retirement from IBM, and the foundation became her full-time job.

Until 1988, the year Guthman was named president of the board, the foundation was part of Polk Bros. Corp., a chain of retail furniture and appliance stores founded by Sol, Samuel, Harry, Morris and David Polk, and their sister, Goldie Bachmann. That year, to eliminate conflicts of interest, the foundation was separated from the stores and a new board was appointed. The final store closed in 1992, and all assets were transferred to the foundation, and in 1993, Guthman, daughter of Samuel Polk, was named CEO.

As the various estates of the founders were settled, money flowed into the foundation. Today, the Polk Bros. Foundation has about $365 million in assets and doles out approximately $15 million each year to Chicago organizations in the areas of education, social services and health care.

"We have maintained the values of both the corporation and the early days of the foundation and style and values without necessarily supporting the same type of organizations," Guthman says. "Polk Brothers was a company very much out in the neighborhoods. It's one of the few successful retail businesses in Chicago that never had a store downtown. It was very much of, by and for the neighborhoods, peaking at about 18 stores all over the metropolitan Chicago area."

That's why the foundation only grants money to organizations in Chicago.

"We figure that's where the business was built and the money was earned that went into the foundation, and therefore it should go back into the community," Guthman says.

Smart Business spoke with Guthman about how she leads the foundation and what it takes to make a not-for-profit organization successful.

How did your time at IBM help prepare you for your position as head of the foundation?

Good management is good management. You learn a lot about human resources management at IBM. In my day, IBM had one of the smallest ratios of human resources people per employee of any major American corporation. That's because their culture and strategy was to have line management perform the human resources function.

I learned a lot about management of human capital, management of people, operations management [and] built financial skills. All those are transferable to a not-for-profit corporation.

I also learned when you're in an executive position how important it is to create a vision and then sell that vision to the people that follow you and make sure they understand it. Just because you understand a vision doesn't mean you're articulating it or explaining it well enough to get buy-in.

You have to think of different ways to help people understand why it's important, why it makes sense and why it's good for both the people and the organization.

What are your foundation's core values?

It's a combination of value and mission. The Polk family immigrated to the United States right around the turn of the century. They got an education and set to work at very early ages and were successful. Immigrant families today have many more barriers to capitalizing on those opportunities -- the quality of the education system, the availability of health care, the availability of services, the prevalence of gangs, guns and drugs.

We're about, in the purest sense, brushing away the barriers to opportunity so that families in Chicago today can, if they work hard and stay dedicated to it, capitalize on opportunities.

How would you describe your leadership style?

I tell stories. I think stories resonate with people, but I also try and listen to people. I've discovered it's hard to learn something when your mouth is moving. That's a challenge because I like to talk.

I also tend to be something of a lateral thinker. It's important to listen and try and learn all the time, but also to try and paint a picture for the people you work with of where you're trying to go.

What is your most important role within the organization?

Like every CEO, I think there is an external and an internal role. The external is to be the public face of the foundation, to be very participatory. Chicago is a community where people do things, they don't just talk, and showing up is important. I participate in a lot of different organizations and have a number of leadership roles around the civic community.

Internally, (my role is) to make the vision come alive, to keep people moving in the same direction around what we're trying to accomplish. It is a very flat organization; we have people who are much more skilled in different focus areas than I am, and it's to get them to do their best.

People who tend to get into foundation work are very mission-driven anyway, so that's not a very hard job.

How does running a nonprofit compare to running a for-profit business?

With a foundation, one of the things people tend to forget is that there are two very different sides -- probably more so than a for-profit. That is the revenue side and the expense side. Asset management is a very important function for a foundation that doesn't get talked about quite as much as the grant-making side. The best thing about the CEO job is being able to work on both.

I work on asset management; obviously the board is very involved, the investment committee is very involved, but I, and the chief financial officer, pay attention to that on a day-to-day basis. That is what enables the grant-making. For planning purposes, when those two things come together, you look at your assets to try to figure out some way of forecasting so that you know how much you have to spend.

What goes into your strategic planning?

When we do strategic planning, what we try and do is figure out where there are service gaps, where there are problems that we think not that nobody's working on but where we think we can make an impact. We identify those areas just from our fieldwork.

But when we focus in on how we can best play a role, we involve our grantees because they're the ones who do the work.

How do you measure success?

Rather than saying whether something is a successful grant or not, we tend to renew grants. We don't have a three-year-and-out rule. We're willing to go for a significant period of time. So what we're looking for are markers of progress.

We understand [that] if you can get positive outcomes in a one-year grant, you've probably bit off too small a problem. But you can demonstrate you're moving toward positive outcomes. You work with your grantees to articulate the markers of progress that will help them know if they're moving in the right direction.

What is the most important business lesson you've learned?

The best piece of advice I ever got that I still think about 18 years later is to seek forgiveness, not permission. You have to push the envelope. It's too easy to get complacent.

It's uncomfortable, and you have to learn to live with a little bit of chaos, but I think if you're not moving forward, you're moving backward.

HOW TO REACH: The Polk Bros. Foundation, (312) 527-4684 or www.polkbrosfdn.org