The Kronkosky Foundation Story: Creating Profound Good through Community Philanthropy

By Ingrid Friese Petty, Robert Rivard and J. Tullos Wells

The Kronkosky Foundation Story provides a broad review of the twenty-five-year history of the Albert and Bessie Mae Kronkosky Charitable Foundation. Albert and Bessie Mae Kronkosky were committed to creating a legacy of “profound good” through charitable giving across four Texas counties that were dear to their hearts. The private foundation, formed in 1995 with a mission focused on health and human services (especially for children and the elderly), arts, and culture, has had a significant impact on San Antonio and the surrounding area.

The book recounts the Kronkosky family’s history and how they came into the wealth that eventually led to the foundation’s creation. The nonprofit organization’s story is one of exemplary management and wide-ranging positive impact on a community, and an examination of how local giving has changed in recent decades.

The Kronkosky Charitable Foundation exists in perpetuity, and their story stands as a testament to philanthropic commitment to a community.

• Language: English
• Publisher: Maverick Books
• Release date: Nov 16, 2021
• ISBN: 9781595349545

Ingrid Friese Petty

Ingrid Friese Petty, a native Texan, was the director of initiatives and partnerships at the Kronkosky Charitable Foundation. She has also served in the U.S. Army Reserve, and she is a graduate of the Leadership Women America program. She lives in San Antonio.

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Cover: The Kronkosky Foundation Story, Creating Profound Good through Community Philanthropy by Ingrid Friese Petty

THE KRONKOSKY FOUNDATION STORY

Creating Profound Good through Community Philanthropy

INGRID FRIESE PETTY

Foreword by ROBERT RIVARD

Introduction by J. TULLOS WELLS

MAVERICK BOOKS / TRINITY UNIVERSITY PRESS

ALBERT AND BESSIE MAE KRONKOSKY CHARITABLE FOUNDATION

San Antonio, Texas

Published by Trinity University Press, San Antonio, Texas 78212

Copublished with Albert and Bessie Mae Kronkosky Charitable Foundation

Copyright © 2021 by Albert and Bessie Mae Kronkosky Charitable Foundation

All rights reserved. No part of this book may be reproduced in any form or by any electronic or mechanical means, including information storage and retrieval systems, without permission in writing from the publisher.

Book design by BookMatters, Berkeley

Jacket design by Anne Richmond Boston

Jacket front: From Albert and Bessie Mae Kronkosky, by Sally Phillips Buffington

Author photo by Robin Jerstad

978-1-59534-953-8 hardcover

978-1-59534-954-5 ebook

Trinity University Press strives to produce its books using methods and materials in an environmentally sensitive manner. We favor working with manufacturers that practice sustainable management of all natural resources, produce paper using recycled stock, and manage forests with the best possible practices for people, biodiversity, and sustainability. The press is a member of the Green Press Initiative, a nonprofit program dedicated to supporting publishers in their efforts to reduce their impacts on endangered forests, climate change, and forest-dependent communities.

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CONTENTS

Foreword, by Robert Rivard

Introduction, by J. Tullos Wells

The Donors and the Trust

Establishment of the Albert and Bessie Mae Kronkosky Charitable Foundation

First Works

New Leadership, New Look, New Strategies

Collective Impact in the Realm of Special Needs

Initiatives for the Protection of Children

San Antonio African American Community Archive and Museum

Bexar County Needs

Applying Consultative Philanthropy

Bandera County Needs

Kendall County Needs

Comal County Needs

Overall Impact of the Kronkosky Charitable Foundation

COVID-19 Response

Final Word

Acknowledgments

Appendix: Community Testimonials

Glossary of Acronyms

Notes

Index

FOREWORD

ROBERT RIVARD

For the city of San Antonio and the four contiguous counties of Bexar, Bandera, Comal, and Kendall, the creation and launch of the Kronkosky Foundation in 1998 was manna from heaven. The biblical metaphor from the book of Exodus is appropriate here because this singular act of philanthropy by the Kronkoskys took the city and its leadership by surprise, and in doing so, it marked the advent of the most notable charitable foundation in San Antonio and the surrounding communities.

The Kronkosky Foundation literally changed the charitable landscape overnight. It has been twenty-five eventful years since the passing of Albert Kronkosky Jr. Thousands of nonprofits, families, and individuals have been directly touched by the perpetual generosity that is the lasting legacy of Albert and Bessie Mae Kronkosky.

I was executive editor of the San Antonio Express-News when Kenny Wilson, then the president of the Bank of America, and Palmer Moe, the foundation’s first managing director, first shared with me the news of the foundation’s creation. I have received advance notice of countless news announcements over a long journalistic career, but I can’t think of another instance that left me so astonished and grateful.

Often enough, people are given to exaggeration when describing the anticipated impact of a coming news event. Not this time. It would be difficult to overstate the profound effect the Kronkosky Foundation has had in San Antonio and the four-county area the foundation benefits.

Palmer Moe set the course for the Kronkosky Foundation and served as the trusted steward for the foundation’s first seventeen years. Tullos Wells, since taking over in 2014, has expanded the foundation’s reach by fostering a culture of collaboration among donors and nonprofits alike, thus leveraging the value of each Kronkosky Foundation gift, and at the same time, bringing greater governance and sounder management and operational practices to nonprofits.

As part of the foundation team, Ingrid Petty has done a highly admirable job of compressing so much history into one very readable book. The first twenty-five years, as you will read, have been momentous ones. Until now, much of the story has never been told. There is every reason to believe the next twenty-five years will be even more newsworthy.

Introduction

J. TULLOS WELLS

I was first introduced to the Kronkosky gift by Guy Bodine, then the head of Bank of America in the Austin-San Antonio market. At breakfast at the Blanco Café, he told me of a gift that will transform the San Antonio community. He was prescient.

The year 2020 marks the twenty-fifth anniversary of the passing of Albert Kronkosky Jr. Albert was a quiet, unassuming, kind, and gentle man. He and his wife Bessie Mae were largely invisible to most of San Antonio and the surrounding counties. Yet, they made what was then—and remains—the largest single, most profound philanthropic gift to the greater San Antonio area by establishing, in perpetuity, the Albert and Bessie Mae Kronkosky Charitable Foundation. Their desire was to produce profound good in tangible and measurable ways for the citizens of Bandera, Bexar, Comal, and Kendall Counties. As of year-end 2020, their unprecedented generosity through their foundation has made 3,058 grants to 465 organizations, totaling $309.1 million.

As a devoted student of history, and of the history of our communities, I believe that this is a story that needs to be told. And the depth and breadth of the Kronkoskys’ generosity and its impact needs to be remembered. This is the story of how one man’s act of giving changed the lives of untold numbers of our citizens, for now and forever—those in need of human services and supports, those enjoying cultural and fine arts, those gaining restoration through the preservation of nature, and the most vulnerable among us: the children, the elderly, and families struggling with special needs, disability, and disease.

This narrative records not only the processes involved in the establishment of one of the largest regional foundations in South Central Texas but also reveals the how to and the how not to in the efforts of those, including myself, who were tasked with implementing the Kronkoskys’ vision. It incorporates examples of various approaches to providing support for the nonprofit community. These include the grant making processes of the foundation, styles in funding and capacity building, and creation of proactive initiatives. It is about our successes and our failures in the pursuit of intentional change designed specifically for the challenges unique to this four-county area and its residents.

One of the most uncommon aspects about the Kronkosky Charitable Foundation is that it has no board of directors. Rather, Albert and Bessie Mae asked the predecessors of what is now Bank of America to administer their Trust. In a remarkable act of selflessness, and to assure that the community never felt obligated to do business with the bank to receive a grant, the bank created the foundation as a separate legal entity. Special thanks to founding managing director, Palmer Moe; to then Bank of America president Kenny Wilson; and to the Kronkoskys’ personal lawyer, Allan Paterson, for orchestrating that so well. Not having a board of directors has allowed the managing director and staff to be quite clever in decision-making about where to invest the Kronkoskys’ money in the community.

But I have used, and I believe wisely, as my de facto board of directors the three-person Distribution Committee of Allan Paterson, John Kerr, and Dean Lammert. They and their predecessors during my tenure, Kenny Wilson and Shantel Wilkins, have politely suffered my many inquiries, working sessions, and requests for their time and talent to ensure that we are making good decisions.

All of us who have worked to provide the profound good envisioned by the Kronkoskys always remember that this is their money, not ours; that our role is to assure fealty to the guidance that their Trust gave to us. The many who have worked to guarantee this commitment to their legacy are ever mindful of that fact. Under Palmer’s leadership, the necessary research and background work was conducted to craft a grant process that remains as rigorous and effective today as it was twenty-five years ago.

We hope this account can serve as a guiding light to the continued charitable work of the many foundations that have come into existence since the advent of the Albert and Bessie Mae Kronkosky Charitable Foundation, and those that are destined for our community in the future.

The occurrence of the 2020 COVID-19 pandemic, while greatly altering our community, has provided opportunity for all of us—individuals, governmental organizations, institutions, corporations, and charitable agencies alike—to identify the fundamental struggles within our community and find innovative, collaborative ways to work for a better tomorrow for the people of Bandera, Bexar, Comal, and Kendall Counties.

We owe much to Albert and Bessie Mae Kronkosky. Their gift will continue to serve countless generations to come. We hope this story will help others to better understand how this particular great organization came to pass, and the influence it has had.

Special thanks to several. First, to the author, Ingrid Petty—who has worked with me off and on for forty years—for her tireless and superb effort in pulling together all the information necessary for this book, and for her authorship. It was a larger task than either of us thought it would be. In that vein, thanks also to our editor, Robert Rivard, a well-known San Antonio journalist, author, and publisher, and to our publisher, Trinity University Press, and its director, Tom Payton.

The work of the Kronkosky Charitable Foundation has been done and influenced by way too many valuable folks to list. I want to pass on my personal and our institutional thanks to Erin Hogan, Robert Fox, and David Bader at Bank of America for providing the resources and guidance that this incredible institution delivers around the country. I specifically want to thank Tom McGuire, Molly Dupnick, Janet Clifford, Irma Young, Maria Carreón, Alice Alvarez, Ingrid Petty, Michelle Lugalia-Hollon, Cara Magrane, Natasha Lane, Shantel Wilkins, Shannon Johnson, and Lisa Miller—those with whom I have worked during my tenure here. Early on, Tom, Molly, and Janet taught me this business, and I would not have made it without them.

The Donors and the Trust

It was a boon to the communities of Bexar, Bandera, Comal, and Kendall Counties when, on May 20, 1998, the Kronkosky Charitable Foundation opened its doors to area nonprofits. Based in the Weston Centre in downtown San Antonio, Texas, the foundation, formed under a 1991 Trust Agreement, was funded in August 1997 with initial assets of $295 million after the death of Albert Kronkosky Jr. When Bessie Mae died in 2010, another $75 million was added to its trust.

On March 10, 1999, Frank Shubert of the Bandera Bulletin reported the advent of Kronkosky Charitable Foundation as one of the greatest acts of giving ever seen in our neck of the woods.

Who Were the Kronkoskys?

Albert Kronkosky Jr. and his wife Bessie Mae were married in 1936, had their principal residence in San Antonio, Bexar County, Texas, and never had children.

Family, friends, business associates, and beneficiaries of the Kronkoskys all consistently describe Albert Jr. and his wife, Bessie Mae, as exceedingly private people. Albert Jr. often made charitable gifts anonymously, through his bank’s trust department.

The Kronkoskys maintained a low economic and social profile in San Antonio, friends said. Politics was never discussed, Martha Lee Granato, a longtime friend, said. Alfredo Flores Sr., who knew Albert Jr. for almost sixty years, described him as very, very modest, a simple, fine man. It was very hard to get close to Albert. Nobody could get close to him. He was self-contained and I think he was lonely. Flores was a golfing and traveling companion.

The Kronkoskys shared their wealth in a lasting fashion, without ostentation. In 1961, Albert Jr. sold the family estate in Boerne, vacant for ten years, to the Benedictine Sisters in San Antonio. He sold it for $40,000—far less than market value. It became the home of the Benedictine monastery, a religious retreat center, and a home for ill children.

The Kronkoskys maintained an interest in the hilltop property, Sister Lucille Goertz, former prioress of the order, said. The couple visited frequently, staying in touch with the land. They funded pews for the chapel, fencing of the entire thirty-acre property, food for a day camp for underprivileged children, and other projects. One of Bessie Mae’s pet Chihuahua dogs is buried on the grounds.

The Kronkoskys had a sense of their own being. They were very humble, regular folks. They ate what we ate, which often was very basic fare, Sister Susan Mika said. People talk about the Kronkoskys’ legacy. They left their money to what they believed was important.

Albert Kronkosky Sr.’s family originally settled in New Braunfels in the late 1850s and moved to San Antonio in 1885.

It was widely believed that the Kronkosky family fortune was built on the Gebhardt Chili Powder Company, which was sold in 1960 to Chicago-based Beatrice Foods. That was true, but only partially so.

The Kronkoskys became involved in chili powder through a brother-inlaw, William Gebhardt, of New Braunfels. Gebhardt, who married Rosa Kronkosky, learned to dry Mexican peppers in his mother-in-law’s oven. Gebhardt established the business and invented most of the machinery to manufacture the chili powders. But he was not a businessman, and Rosa’s brother, Albert Kronkosky Sr., became owner and managed the firm’s growth.

Albert Sr. had moved from New Braunfels to San Antonio at the age of sixteen and worked as a grocery clerk. He began a startlingly successful business career, starting out as a clerk in a retail drug store, which added a wholesale business. Eventually, he became chairman of the board of that business, the San Antonio Drug Company.

Chili powder contributed to the Kronkosky wealth. So did the San Antonio Drug Company. Both businesses were built by John Albert Kronkosky Sr. (known as Albert) and were carried on by his son. Both were later sold to larger companies. Both sales were for stock, rather than cash. But the real source of the family’s millions was stock in Merck and Company, the pharmaceutical giant. Early and continued investment in Merck more than surpassed chili powder and retail drugs in amassing the wealth that subsequently funded the Kronkosky Charitable Foundation (KCF).

Albert Kronkosky Sr. was one of the very original investors in Merck & Co., according to longtime family attorney Allan Paterson. George W. Merck was a traveling wholesale drug salesman from New Jersey. He decided to start his own drug company and invited Kronkosky Sr. to invest, Paterson said. Kronkosky did invest.

When Merck became ill in San Antonio, Kronkosky was at his side and apparently was rewarded with more stock, including some for Albert Jr.

When he died, Albert Jr. was the largest single individual stockholder in Merck, with 5.9 million shares valued at about $60 per share. He held onto Merck through its ups and downs over the years. Repeated stock splits added to his holdings. Albert Kronkosky Jr. died on October 23, 1995, at the age of eighty-seven. In his 1994 will, Albert Jr. designated that $7 million of his fortune go to his wife Bessie Mae with another $100 million set aside with NationsBank for two trusts for the benefit of Bessie Mae, which also held the ownership of the remaining Kronkosky real estate holdings. In addition, it was specified that the Animal Defense League, the American Red Cross, Wildlife Rescue and Rehabilitation, and the Salvation Army each receive $50,000. The rest of the estate—then estimated at $300 million—established the charitable foundation, to benefit the communities in which the Kronkosky family had lived and flourished.

The Albert and Bessie Mae Kronkosky Charitable Foundation 1991 Trust

The San Antonio banking entity NCNB (formerly National Bank of Commerce) managed the Kronkosky funds and served as trustee of the Kronkosky fortune. Mr. Kronkosky [Jr.] was a quiet, private man who invested wisely and saved his money—saved a lot of money, said Kenny Wilson, past market president of Bank of America (formerly known as NCNB and NationsBank). Bessie Mae was known as a generous person who loved children and animals.

As is commonly the case with wealthy individuals having no heirs, Albert Jr. had voiced his desire to leave his fortune in a charitable trust on his death. Revocable trusts were drafted and developed over the years; however, Kronkosky, concerned that bank ownership could change hands over time, worried that the terms allowed too much latitude to the bank trustees for distribution decisions and eventual permanent liquidation of the Trust. Albert and Bessie Mae’s attorney, Allan Paterson, with whom Albert Jr. had become quite close during the nearly two decades he represented the couple in their personal matters, discussed particulars of Albert’s concerns with him over the years. Together they decided the following criteria for the charitable foundation be met:

♦  A specific geographic area for distribution of funds

♦  Program interest areas for giving delineated

♦  The capacity for charitable giving to exist in perpetuity

♦  A Distribution Committee be designated to make distribution decisions by a majority

Albert and Bessie Mae formed the 1991 trust to meet the above criteria, with the intention of establishing a committee, of which a bank representative would be a member, to manage distribution of the funds, in perpetuity, to qualified 501(c)(3) organizations to support the arts, green spaces, wildlife, and the needs of citizens in four Texas counties that had a place in the hearts of Albert and Bessie Mae—Bandera, Bexar, Comal, and Kendall.

Albert Jr. and Allan Paterson spent many hours walking together, meeting, and discussing the terms of the proposed charitable foundation. Paterson, having specialized in estate planning and trusts since 1967, was adept at foreseeing possible barriers that could arise for a trust existing in perpetuity. In spelling out the Trust’s limitations, he was careful to be both as specific and as broad as necessary in the wording to allow the Kronkosky Charitable Foundation to continue making relevant decisions and distributions as the Kronkoskys had intended, for hundreds of years to come. Twenty-five years after the formation of the Trust, however, certain complications have surfaced and are shared here as lessons learned for others contemplating a similar infrastructure.

The Trust Agreement established a private foundation that, under the provisions of the Internal Revenue Code, is required to distribute approximately 5 percent of the value of the assets of the Trust, computed annually. Palmer Moe, the foundation’s initial managing director, was quoted by the Rivard Report on his retirement in 2014, stating, Research has shown that a five percent annual expenditure of an endowment will likely ensure perpetuity based on historic investment returns; however, whether the movement of stock markets in the future will reflect historical results is an unknown. The five percent level of expenditures is a firm provision … so the Trust is required to be operated within that level of expenditures.

However, the Distribution Committee and the foundation staff have no control over how the bank trustee chooses to invest the corpus, or for that matter, the fees that the bank trustee may charge the foundation to manage its funds. Furthermore, there was no avenue chosen to select another bank to serve as trustee at any future date. It is important to understand that prior to the execution of the 1991 Trust Agreement establishing the foundation, Albert’s longtime banking relationship had always been with the National Bank of Commerce of San Antonio. During the banking turmoil of the 1980s, North Carolina National Bank (NCNB) took over National Bank of Commerce, and the foundation was created naming NCNB as the trustee. Subsequently, NationsBank took over NCNB and Bank of America took over NationsBank. There is always the possibility that in the future, some other financial entity will replace Bank of America. While this may never materialize as a stumbling block to the operation of the foundation, these are details that probably should have been considered at the time the trust document was drafted.

Additionally, there is no mandate to the trustee that the foundation’s operating offices should exist at all. The trust document is ambiguous as to the Distribution Committee members’ right to compensation, which, over time, could become a serious impediment to its intended operations. The trustee could conceivably elect to eliminate a majority of the overhead cost of maintaining foundation staff, including grant managers who do the complicated and time-consuming work of assessing applicants for consideration by the Distribution Committee for grants; these weighty duties would then fall on the currently uncompensated members of the Distribution Committee themselves.

Establishment of the Albert and Bessie Mae Kronkosky Charitable Foundation

As part of a lengthy career with NationsBank (now Bank of America), Kenny Wilson was the executive responsible for managing the massive Kronkosky trust on the death of Albert Kronkosky Jr. in October 1995. The liquidation of assets according to the terms of Kronkosky’s will provided a coordination opportunity among the trust and estates group of the bank. This was a unique and lengthy process; as Kronkosky was the largest individual shareholder of Merck stock, care had to be taken so as not to disrupt the stock market. A complete liquidation of all assets, including several real estate holdings, and the development of the charitable giving infrastructure, took more than two years, and Wilson was responsible for bringing together all those who provided technical knowledge to execute those processes.

The bank had no philanthropic arm in Texas designed to manage charitable trusts of this size. After consulting with the bank’s in-house counsel Terry Abel, whose office was at the Dallas headquarters, Wilson made the decision to hire legal professionals seasoned in foundation management to assist. The advice he received was to separate the management of the Kronkoskys’ charitable trust from the bank and to develop best practices and fair processes for distribution of its funds as intended by the Kronkoskys under their 1991 Trust Agreement.

As the chief representative of the trustee, Wilson oversaw decisions about the foundation’s strategic planning process, the ratification of its stated mission, the establishment of the foundation, the hiring of the managing director, and the adoption of operating policies.

Wilson launched a search for the individual to serve as the new foundation’s managing director. After considering nearly three hundred applicants, Palmer Moe, former president and chief operating officer of Valero Energy Corporation and managing partner at Arthur Andersen and Company was hired. Moe phased out his ongoing oil and gas consultancy and assumed his new role as managing director of the Albert and Bessie Mae Kronkosky Charitable Foundation on August 15, 1997.

The journey to discover best practices and implement operating processes began with Kenny Wilson and Allan Paterson—and later, Palmer Moe—visiting other large foundations, including the Woodruff Foundation in Atlanta, the Moody Foundation in Galveston, the Meadows Foundation in Dallas, and others across the nation. At the time, the Woodruff was a $10 billion foundation—one of the largest in the United States. Executive director Pete McTier presented to the KCF visiting committee a study his organization had conducted. The study indicated that Woodruff funded throughout nine states in the southeastern part of the country, with the greatest amount of its benefits distributed in the greater Atlanta area. The study revealed that the Woodruff Foundation’s impact over the last three years per capita in the area of its greatest concentration was in fact less than the amount of per capita impact the Kronkosky Charitable Foundation would have on the citizens of the four counties it served. Albert and Bessie Mae’s act of giving amounted to an unheard-of concentration of philanthropy in South Central Texas.

"We learned how each of those organizations conducted their grant making process, and we picked what we thought were