The Power of Giving: The future of philanthropy without Norfolk Southern

This article was taken from Distinction, written by Victoria Bourne

When the Norfolk Southern Corporation quietly began operating from its new downtown Norfolk headquarters in 1982, an editorial in The Virginian-Pilot lauded the company’s arrival.

A small staff of about 75 had come from Roanoke, Washington, D.C., and Atlanta, half of them principal executives expected to not only live in Norfolk, but become active participants in civic, religious, cultural and political affairs. 

And that’s just what they did. They joined boards. They volunteered. They donated money. In the ensuing decades, the company’s reach has extended to dozens of organizations across Hampton Roads devoted to human services, the arts, education and the environment. 

So late last year, when Norfolk Southern announced it would relocate to Atlanta by summer of 2021 – taking with it around 500 employees – local nonprofits got nervous.

“My heart sank,” says Thaler McCormick, CEO of ForKids. “Throughout our organization, we’re very aware of how important Norfolk Southern has been to us.”

It’s ultimately unclear what size or shape philanthropic hole will be left in Norfolk Southern’s wake, but no one seems keen to see them go. From 2012 to 2018, the company – by way of its foundation created in 1983 to oversee charitable giving – contributed nearly $14 million locally, according to a review of online annual reports. And that’s not including employee matching funds, which reached at least $157,000 last year.

“I don’t think Norfolk Southern’s philanthropy will end in Hampton Roads,” McCormick says. “It will decline. And I do think this community is strong enough to sustain it, but we need everybody stepping forward to fill the void.” 

If nonprofits are the beating heart of a community, donors the likes of Norfolk Southern are their lifeblood. And the benefit of their largesse stretches beyond good feelings and pretty statues.

In 2012, there were more than 2,000 public charity nonprofit organizations in Hampton Roads paying approximately $2.6 billion in employee wages and benefits, according to a 2015 report by Old Dominion University. 

McCormick says Norfolk Southern was a “game changer,” for ForKids, one of the largest providers for homeless families in the state. 

Last year, the nonprofit received $200,000, but McCormick estimates the company has given more than a million in the past decade. It also was the first corporation to jump on a capital campaign toward the nonprofit’s new regional headquarters, which recently broke ground in Chesapeake.

“And of course, when Norfolk Southern said, ‘We believe in this,’ … the rest of the philanthropic community followed, too,” McCormick says.

Elena Montello, director of development of the Hope House Foundation, says there are a lot of great corporations in the area, but Norfolk Southern went “above and beyond” to support her organization’s unique mission, which is to provide services to people with intellectual and developmental disabilities in their own homes. 

Individual donors are the engine that drives most nonprofits – Montello says they make up 86 percent of her donor base – but corporate giving plays an important role. Over the past 15 years, Norfolk Southern grants have gone toward the nonprofit’s affordable housing campaign, rehabilitating apartments for people with disabilities and the purchase of wheelchair accessible passenger vans. 

“They understand that a community is only a community when everyone has the ability to be part of (it),” Montello says. “It’s going to be a huge loss not having them around.”

The Fortune 500 company won’t be leaving the area entirely; Norfolk Southern Chairman, President and CEO Jim Squires told The Pilot last year that operations at the Port of Virginia, particularly its Lambert’s Point terminal, are to continue.

And Norfolk Mayor Kenny Alexander told the paper he was optimistic the company would remain active locally, citing “a record of maintaining relationships with charities and other nonprofit organizations” even as employee presence dwindled. The projected economic impact of Norfolk Southern’s relocation is expected to be about $6.1 million, which includes philanthropic donations through the charitable foundation and employee matches, as well as money spent at restaurants and for other goods and services, The Pilot reported.

Nonprofit leaders on the other side of the state expressed similar concerns four years ago when Norfolk Southern announced plans to shutter its downtown Roanoke office and eliminate 500 jobs. From toy and food drives, to monetary donations and volunteerism, nonprofit leaders told The Roanoke Times in 2015 that they’d come to count on the generosity of the railroad company and its employees. 

According to Katie Fletcher, executive director of the Norfolk Southern Foundation, funding in that city still goes to places like the foodbank and Blue Ridge Literacy, but overall support has dropped roughly by half since 2015, from $500,000 annually to $250,000.

Fletcher has shepherded the company’s charitable giving since 2010. The conversations since the announcement in Hampton Roads haven’t been easy, she says, but she was able to tell longtime beneficiaries early this year what kind of support to expect until 2021 so they can plan accordingly. 

What future funding will look like after that, she can’t say, but she expects giving to continue in the areas of basic needs, human services, the environment and education – just not at previous levels. However, she adds, “We’ve decided to move away from arts funding.”

Norfolk Southern has provided annual operating support to organizations like the Virginia Symphony Orchestra, which Karen Philion, president and CEO, calls “the mother’s milk of nonprofits” because it allows them to apply the funding wherever it’s needed most. 

For the orchestra, that includes paying musicians’ salaries. Stable, consistent contributions from Norfolk Southern over the course of three decades has helped the Virginia Symphony develop into a nationally recognized performing arts organization, Philion says.

“I don’t think we would be where we are artistically without Norfolk Southern’s support over all that time.” 

The orchestra received $75,000 in 2018 and will see a gradual step down in funding over the next few years. 

Fletcher says she hopes companies will step up their corporate giving programs in Hampton Roads, but charitable organizations also need to be thinking about how to operate more efficiently and look for other sources of financial support; some have already successfully secured major grants from outside the area, she notes. 

But it’s not just about the money, say nonprofit leaders in Hampton Roads. Boards around the community have functioned at a higher level as a result of Norfolk Southern executives who have occupied those chairs. 

“I mean, there has been someone connected with Norfolk Southern on our board probably ever since they came to town,” says Virginia Symphony’s Philion. “And that expertise is really invaluable.”

Marjorie Mayfield Jackson, executive director of the Elizabeth River Project, says the company has a culture of community engagement, not just with dollars, but with time and thought. 

“I’d say that’s made as much difference as the dollars, really,” she says, noting that Squires, the company’s top executive, and his wife, Karen, were honored in November for their outstanding philanthropy.

Good corporate citizenship is something that has been instilled from the top down, says Fletcher, “which, you know, is not true for all companies.” They recognize the impact leaving will have on the area but hope what remains is a community better off than when the company arrived, three-plus decades ago.

Nonprofit leaders agree Norfolk Southern has been a philanthropic giant in every way. It’s a legacy they need others to follow.