Solid Foundation | Hank Schmelzer has built the Maine Community Foundation into a $200 million nonprofit juggernaut. He's our 2007 Business Leader of the Year.

Henry L.P. Schmelzer, a.k.a. "Hank," is looking forward to a bright future — he's less than two days away from his annual ski vacation in Italy's Dolomite Mountains. Sure, he and his wife haven't packed, his schedule's booked until takeoff with meetings from Ellsworth to Boston, and a nasty nor'easter is due to hit the coast about the time Schmelzer's plane is supposed to lift off from Logan Airport. But Schmelzer, unruffled to the point of serenity, is sure the two of them will arrive in Italy on time and without a hitch.

Schmelzer's uncanny ability to cope with obstacles is one of the reasons he ended up in the somewhat unlikely position of running one of the biggest nonprofits in Maine. Created in 1983 by Edward Kaelber, the founding president of College of the Atlantic in Bar Harbor, the MaineCF, as it is called, had already made a name for itself as one of the state's most influential nonprofits when Schmelzer became the foundation's president and CEO in February 2000. Schmelzer had spent more than 25 years as a corporate investment strategist in Boston, managing a staff of more than 200 and overseeing investments worth billions of dollars. After tiring of the investment world and taking a break — which included plenty of skiing in Italy — he began to consider what he wanted to do next. When he learned the Maine Community Foundation was looking for a new CEO, he jumped at it.

The MaineCF supports thousands of grants and initiatives each year, from scholarships of $500 or less for Maine high school students to one of last year's biggest gifts, $1 million to help support the capital campaign of Spring Harbor Hospital in Westbrook. Under Schmelzer, the foundation's assets have risen from roughly $78 million to more than $200 million. The number of donors has more than doubled, and investment returns have consistently excelled despite a shaky stock market. Schmelzer's focus on streamlining operations and expanding the charity's influence have helped the MaineCF become a significant player in policy and social services throughout the state.

Last year was Schmelzer's best year yet. In 2006, the foundation donated a record $18 million in grants that helped push MaineCF's total giving over the $100 million mark. One of the year's most significant grants was to the Yarmouth nonprofit GrowSmart Maine, to help fund its policy-setting Brookings Institution study and a five-year implementation plan, which includes community meetings and initiatives throughout the state. MaineCF committed more than $100,000 for the study itself — roughly a quarter of the initial cost — and an additional $300,000 for the implementation stage.

Peter Rothschild, the chair of the foundation's investment committee and a private investor in New York City, says one of Schmelzer's key responsibilities is to constantly market the foundation to existing and potential donors. Schmelzer is only minimally involved in the particulars of the foundation's investment policies, Rothschild says, but his investment background makes him an astute representative of both the financial and philosophical sides of the foundation at the committee's quarterly meetings.

"Hank is an enabler," Rothschild explains. "He's a guy who appears not to have a big ego and is there to help. And he's making things happen."

The transition game
Schmelzer's career in the late 1990s can seem close to perfect. He was settled comfortably into a senior level position at New England Investment Companies, now part of the international company IXIS Asset Management Group, where he earned a six-figure salary managing $8 billion and overseeing a staff of 240. But by 1998, the fast-paced investment world had begun to wear on him. Burned out and looking for a more direct hand in social services, Schmelzer, then 55, quit and spent two soul-searching years pondering his next move. He wasn't exactly idle; among his activities was work as a fellow at the Kennedy School of Government at Harvard University, where he studied hedge fund regulation.

He knew he wanted to work at a Maine nonprofit — he'd gone to college at the University of Maine in Orono in the 1960s, and maintained an assortment of connections to the state, not least of which was a long friendship with Owen Wells, head of the Portland-based Libra Foundation — but hadn't figured out where he wanted to land. Then he bumped into a friend in the bathroom at the Regency Hotel in Portland in 1999.

"I ran into a gentleman I knew who told me about this job with some bank," says Schmelzer, "but I didn't want to get involved in that stuff — been there, done that. And then he mentioned that the woman who ran the Maine Community Foundation was leaving. So I thought I'd take a crack at it."

The fit, Schmelzer explains, was perfect. He and his wife already owned a home on Mount Desert Island, and when the MaineCF job became available in nearby Ellsworth, Schmelzer knew he'd finally found his nonprofit opportunity, even if the perks couldn't match those of the for-profit world; he says his annual MaineCF salary of $118,000 is "six or seven times less" than what he made during his Boston days. But MaineCF is where Schmelzer finally feels he's directly helping people in a way he hadn't thought possible since he was an idealistic law student in the 1960s. "I always tried to find a social purpose in the work I did," he says.

The foundation functions as an investment clearinghouse for more than 800 private funds and donors — the minimum fund size is $25,000 — most of whom live in Maine. The donors give their money to MaineCF, which pools it with other funds and invests it in a diverse portfolio that includes U.S. and international stocks. Donors pay MaineCF an annual fee, and in exchange the foundation manages the growth of the fund, cuts checks on the donors' behalf and assists in the selection of grant recipients. Typically, five percent of the annual income generated by those investments is given away in the form of grants; donors can give more if they choose.

The MaineCF under Schmelzer has doubled the number of donors, in part because the foundation's investments have displayed consistent growth. It is now the second largest foundation in the state after the private Libra Foundation, and may soon overtake it, since Libra's charter does not allow it to add donors.

"We're proud of the Maine Community Foundation and the way it's run," says donor Wickham Skinner, a former professor at the Harvard Business School, who with his wife, Alice, has operated a fund totaling "somewhere in the low seven figures" through MaineCF since 1999. Schmelzer drops by the Skinners' Tenant's Harbor home several times a year. "I feel like I can talk with this guy about any problem or issue or opportunity I see," says Skinner, 83. "I don't feel that it's difficult to get him on the phone. It gives me a sense of confidence that you can call the person in charge."

In 2000, MaineCF hired Cambridge Associates, a Boston consulting company. Cambridge Associates' quarterly reports on the foundation's investment portfolio and the firm's increasing consult on investment strategies have helped the foundation maintain an investment return consistently higher than the benchmark for similar portfolios, even in the wake of the dot-com and post-September 11 market collapses. The foundation's three- and five-year investment results rank among the top five percent of approximately 100 community foundations nationwide.

"Really, the philanthropic nonprofit organizations are in themselves businesses," says Schmelzer. "The only way they can successfully carry out their missions is if they're well-run organizations."

Drawing on his managerial background, Schmelzer has focused on clarifying MaineCF's internal operations. Soon after arriving, he held a series of what he describes as "gut-wrenching" meetings to hammer out the foundation's official mission. He oversaw the completion of a long-dormant strategic plan. Most of the current staff, including Jim Geary, vice president of finance and administration, and Peter Taylor, director of grantmaking services, were hired under Schmelzer. In 2000, the foundation had 14 staffers and an annual budget of $6.5 million; it now has a staff of 26 and an annual budget of $20 million.

MaineCF's board chair, Bob Woodbury, says the foundation is poised under Schmelzer's leadership to exact a much stronger influence on social and public policy in Maine. "We've reached a size and visibility that may be a tipping point for the organization," says Woodbury, a former chancellor of the University of Maine System. The MaineCF has emerged as a statewide nonprofit leader, and has helped convene nonprofit managers on issues from how to implement suggestions in the Brookings Institution study to how to support environmental causes in Maine. Schmelzer says his next goal is to identify several broad areas of interest that the foundation can then encourage donors to focus on, such as the environment or stemming Maine's brain drain.

The social bug
Schmelzer's work is as much social as it is logistical. He spends half his workweek on the road, having coffee with donors, speaking at public events, attending cocktail parties, checking in weekly with the foundation's Portland office, and otherwise putting a face to the roughly 3,000 grants, programs and initiatives the foundation sponsors annually.

Compact and wiry, his speech dusted with a Yankee clip, Schmelzer mingles easily, his manner genuine and unassuming; his large tortoiseshell glasses can give him a slightly intense look, but there is a warmth about him that people find reassuring. Schmelzer's wanderlust is apparent in the company's quarterly newsletters, where he manages to appear in almost every group photo.

Even when Schmelzer isn't on the clock, he's looking for potential connections to enhance the foundation. He recalls a weekend this winter when he was delayed in Boston because of bad weather. He ended up grabbing dinner at a downtown restaurant and, fortuitously, the woman who had sat next to him on the plane down from Maine walked in with a friend and sat beside him at the bar.

"These were really great women who were familiar with community foundations in Massachusetts and both had houses in Maine," he says. "And it very easily turned into a conversation about community foundations in Maine. It was a sort of quasi-business thing that developed in a conversational way. It's the classic case of sort of always being on the job. I don't mind it at all." He's still cultivating the woman as a possible MaineCF donor, Schmelzer adds. "I have a good feeling about her," he says.

Schmelzer has not always moved so fluidly in the nonprofit world. When he started at MaineCF, he was used to the corporate model where the person in charge made a decision and the rest of the staff followed. While his corporate management skills have certainly benefited the foundation, Schmelzer quickly figured out that self-aggrandizing superstars aren't welcome in the egalitarian nonprofit world; at MaineCF, where all company documents list staff alphabetically by last name, not rank, he'd have to lead by consensus, not decree. "Maybe I was overly sensitive, but I felt like there was maybe a little resentment for a year or two about my background and where I came from," Schmelzer recalls. "I said, 'I've got to overcome this.' I had to prove that I could work in this environment, and the ball was in my court. And that was okay."

Schmelzer also saw how elements of nonprofits could serve as models for corporate America."In the nonprofit world, there's a sense of inclusiveness," he says. "Some aspects of what happens in the nonprofit world could make the for-profit world a more effective environment. If you look at some of the better run, more progressive companies, you'll find a lot of those practices in place."

Making a difference
Schmelzer, 63, was raised to respect leadership and curiosity. Born in 1943, Schmelzer grew up in Stow, Mass., a small farming town about 30 miles west of Boston. His father, the child of German immigrants, ran a printing press in Boston; his mother was a homemaker. Schmelzer's younger sister, Jane Reynolds, recalls one of her father's favorite stories about the ever-inquisitive Henry, as his family calls him. "My father always talks about how they couldn't keep him in the yard," Reynolds says. "When he was three years old or so they put a fence around the yard, a few feet high. My father went out there and, sure enough, Henry was gone. He'd climbed over the fence."

After high school, Schmelzer considered college in Maine at Bates or Colby, but settled on the more affordable University of Maine. His freshman year, he met another student, a Maine kid named Owen Wells, who would eventually head the Libra Foundation. The two became pals, and they've remained close friends ever since. (For more on Schmelzer's longtime friendship with Wells, see "Two of a kind" see below.) Schmelzer graduated in 1964 with a degree in history and government. He and Wells went off to law school together, at George Washington University in Washington, D.C., and served in Vietnam together in the late 1960s. After being discharged from the army, Schmelzer abandoned his dream of working in social services and instead took a job as a securities lawyer at a life insurance company in Worcester, Mass. In 1972, he joined New England Securities Companies, first as a lawyer and later as an investment manager. He thought he'd be in the job for two or three years. He stayed for 26.

Wells says the nonprofit world is much more to Schmelzer's liking. "Hugely so," Wells says. "That's a big transition, because you go from a CEO's salary to a nonprofit salary, which is considerably less money. But, as Henry says, he'd never go back."

For now, Schmelzer seems content shepherding the MaineCF from one plateau to the next while enjoying life in the postcard-perfect Mount Desert hamlet of Somesville. He shares a 19th century farmhouse with his wife, Cynthia Livingston, and their fluffy orange cat, Leonardo. The house is tidy but lived-in; down jackets, skis and boots are piled near the door. Besides skiing — the license plate of his Jeep Cherokee reads "PELMO," after one of his favorite skiing mountains in Italy — Schmelzer is passionate about Maine painters. In his living room hang works by Eric Hopkins and Michael Lewis.

Schmelzer sips a cup of tea at home and voices his subtle impatience with the slower rate of return on social capital investments compared to for-profit investments. Sometimes, he says, he wonders if he's making a difference at all. It's harder to see in the nonprofit world than the for-profit, because success isn't measured solely in terms of dollars and cents. Instead, progress is measured by improved lives. And that, he says, usually takes time. "In nonprofits, different things motivate people," he says. "There's a sense of making a difference in the world. The double bottom line, as they say."