Manitou Fund rises near the top of Minnesota foundations

A White Bear Lake-based foundation suddenly has risen from obscurity to become one of the state's largest charities, a change of fortune that has it scrambling to give away millions of dollars by the end of the year in order to retain its tax-exempt status.

But the recent infusion into the Manitou Fund of nearly $1 billion from the estate of Minnesota business magnate Donald G. McNeely has made even more puzzling the decision by foundation officials to pull the plug on a popular nature center on the St. Croix River that it had supported for half a century — one that McNeely himself sometimes visited before his death in 2009.

The Manitou Fund, created by McNeely in 1966, has recently awarded major gifts in education and the environment. Its president, Oliver Din, said it should be able to meet its legal requirement to donate nearly $50 million to worthy causes by year's end.

"It's been a race in some ways," he said.

But the foundation continues to face questions about its decision this fall to close the Warner Nature Center in Marine on St. Croix. The move surprised the Warner staff and hundreds of volunteers, some of whom continue to lobby for the continuation of the center's research projects.

What's become clear is that the decision was reached after dramatic changes to the Manitou Fund's bottom line and leadership.

Those changes were set in motion by McNeely, who in his lifetime took a share of his father's warehouse business, Space Center Inc., and grew it from its St. Paul roots into a nationwide empire with millions of square feet of storage space, logistics services and an oil and gas business.

The sale of Space Center this year brought sweeping change to the Manitou Fund due to stipulations laid down by McNeely. Space Center executives who had served as Manitou Fund trustees for years were required upon sale of the company to resign from the foundation. That left the Manitou Fund in the hands of the three McNeely children — Kevin, Nora and Greg — along with Din, a longtime family friend.

In 2009, the year McNeely died, the Manitou Fund held about $30 million in assets. By 2015 it was ranked as the 50th biggest Minnesota foundation by the Foundation Center, an organization that tracks foundation financials using publicly available tax returns.

But following the Space Center sale, the Manitou Fund likely ranks among the state's top 10 foundations and perhaps the top five. The exact numbers won't be known until the foundations release their 2019 tax returns a year from now.

Din and family attorney Richard Allyn confirmed in a recent interview that the Manitou Fund holds nearly $1 billion in assets, likely placing it near the Otto Bremer Trust and the Bush Foundation in size. The state's largest foundations are thought to be the Margaret A. Cargill Philanthropies, which as of last week listed $6.8 billion in assets, followed by the McKnight Foundation with $2.3 billion.

It's illegal for family members to use the fund's money for themselves. And in order for the Manitou Fund to remain tax-exempt, trustees must give away 5% of the fund's assets annually, an amount fixed by federal tax law. For the Manitou Fund that comes to about $50 million — roughly the same amount the fund was worth a year ago.

Most of the state's largest foundations have staffs of anywhere from 20 to nearly 100 people, both to manage and grow their assets and to search for worthy groups and individuals to support. Din declined to say how many staffers work at the Manitou Fund's new office on Hwy. 61 in White Bear Lake, adding that they use several consultants. Greg McNeely said the lack of a large staff makes the organization more efficient.

"We're probably one of the leanest organizations in the country," he said.

Din declined to divulge much about his own background. He said he had experience in business and finance without naming any employers, and he wouldn't say where he lives or why he came to the United States (other than for a job) after obtaining a degree in Toronto. Though records show that he owns a modest house in Kansas, he said he doesn't live there and plans to buy a house in Minnesota.

Din also didn't say how he met the McNeely family, but he has hired the children as employees of the Manitou Fund in addition to their work as trustees. He said the Manitou Fund wants to build relationships with organizations for long-term support.

"We're rushed in a happy way," he said of the fund's work so far this year. "It's a spectacular opportunity to make a difference in many people's lives."

Greg McNeely said that he, Din, and his siblings are just getting going.

"Now the family runs it, and we're going to run it professionally," he said, referring to recent changes among the Manitou Fund's trustees. "Before, it was frustrating. We didn't have the votes. And now we're in business."

After Donald McNeely died in 2009, his estate was estimated at $231 million and incurred taxes of $9.1 million, according to court filings. Some of that bill was paid according to a 10-year installment plan, Allyn said. But the remainder was paid this year, when McNeely's wish that his warehouse business eventually be sold was carried out by the executives who had worked for him.

McNeely provided trusts for his three children with his wife, Marjorie, and directed that the proceeds from the sale of his business go to the Manitou Fund, which he and Marjorie created to "promote the well-being of mankind."

Even for a businessman of McNeely's stature, this year's sale was a whopper: The Blackstone Group, a private equity and financial services firm, paid $1.24 billion for Space Center in a deal considered one of the largest of its kind in the country this year.

But the McNeelys remain a presence in St. Paul. Donald's brother, Harry Jr., split from his brother decades ago to run his own share of the family business and now serves as chairman emeritus of Meritex Corp.; his son, Harry III or "Paddy," is chief executive.'

Harry Jr. also served on the McNeely Foundation, the philanthropy founded by his parents, Harry Sr. and Adelaide Frenzel, which promotes the development of St. Paul's East Side. It has offices in Lowertown, near the spot where Harry Sr. started the family business in 1916 with $5,000 borrowed from Adelaide's father.

Din said they'll likely build a website to share more information about the Manitou Fund, but added that comparisons to other foundations can be misleading. "There are no two organizations like this that are alike," he said.

Some of the early beneficiaries of the Manitou Fund's newfound largesse will include the Minnesota Center for Environmental Advocacy, the Natural Resources Defense Council, and places that have long enjoyed McNeely family support like St. John's University in Collegeville, Minn., and the College of St. Scholastica in Duluth, according to Din and McNeely.

They said they couldn't name other recipients yet, either because awards were still being worked on or because some of the organizations want to announce the grants themselves.

The McNeely family in the past has been responsible for high-profile gifts like the Marjorie McNeely Conservatory at Como Park; the McNeely Spectrum and Donald McNeely Center for Entrepreneurship at St. John's; and gifts named for a beloved aunt and uncle, Lee and Rose Warner: the Warner Palestra in Collegeville, Warner Coliseum at the Minnesota State Fairgrounds, and the nature center on the St. Croix. McNeely Hall at the University of St. Thomas was a gift from Harry Jr., who like his father attended the school.

Din said the Manitou Fund wants to retool the Warner Nature Center and that it could reopen within a couple of years. He said the foundation has hired consultants, including a past director of the nature center, to help plan the future.

The abrupt announcement of the nature center's closing confused longtime supporters because Manitou Fund officials didn't give a specific explanation.

Din didn't elaborate last week, but he disputed the idea that the decision had been sudden and said it had been under consideration for a long time.

"Manitou Fund is committed to that community and the environment and needed to just pause for a moment," he said.

Matt McKinney • 612-673-7329