Six Questions for the President of Reynolds Trust As it Reckons With its Past, Plans for the Future

Dr. Laura Gerald, President of Kate B. Reynolds Charitable Trust

To mark its 75th anniversary, the Kate B. Reynolds Charitable Trust made a startling announcement: the organization, which was built on the R.J. Reynolds Tobacco Company fortune, will completely divest from tobacco by the end of 2022.

The R.J. Reynolds Tobacco Company was an industry pioneer; it created Camel cigarettes and was the first to introduce the 20-cigarette pack and the 10-pack carton. Kate Reynolds’ husband, William, took over the company as chairman after the death of his brother, Richard Joshua (R.J.). In her will, Kate Bitting Reynolds left $5 million in Reynolds stock to establish a trust dedicated to improving the lives of people with low incomes in North Carolina’s Forsyth County and improving healthcare throughout the state.

The trust, one of the largest private funders in North Carolina, continues to follow this mission. Its Healthy Places NC initiative, for example, works to improve health in rural, under-resourced regions of the state, focusing on issues including nutrition, drug use and childhood trauma. Another program, called Great Expectations, supports early childhood health and education programs and promotes kindergarten readiness in Forsyth County.

When it announced its divestment from tobacco, the trust committed to expanding its support of health and racial equity. It also announced that $100 million of its portfolio will be invested in North Carolina-based companies and companies that provide jobs in the state.

The announcement marked a historical milestone: By divesting from tobacco, the original source of its wealth, the trust was distancing itself from an industry that fueled the North Carolina economy, where for years, they said “tobacco is king.” In conversations with local media, Dr. Laura Gerald, the trust’s president, had to navigate tricky terrain. She acknowledged tobacco’s contributions to the region’s growth. “We recognize the incredible wealth accumulation that occurred as a result of initial investments and continued investments in tobacco.”she told the Winston-Salem Journal. But she also pointed out tobacco’s many health risks and the conflict with the trust’s mission. “We had to right this wrong and correct this hypocrisy, really,” she said in an interview with radio station WFDD.

For the Reynolds Charitable Trust, making the decision to divest from tobacco involved a reckoning with its past. An examination of the historical record found that not only was the tobacco industry built on the exploitation of Black and brown labor, but the Reynolds themselves, who gave so generously, held deep racial prejudices.

We sat down with Laura Gerald recently to talk about the recent announcement, the trust’s history, and what other funders might be able to learn from its experience.

Can you describe the recent decision to exclude tobacco producers from the trust’s investment portfolio?

First, a little background. The trust structure is a little bit different from normal philanthropies. The trust was founded in 1947 in the will of Katherine Bitting Reynolds. Today, the trust is under the sole purview of Wells Fargo as the trustee. They hired a staff; I’m the president of the trust and the staff runs the day-to-day grantmaking, but Wells Fargo is the sole investor of the corpus (the sum of money or property that is set aside to produce income). Today, the original $5 million trust is worth about $575 million, and Wells Fargo manages that portfolio.

I’ve been the president of the trust for six years now. When I came, we set vision and values and strategic goals for the trust and one of those goals was to be transparent — not just about what we would fund, but what we were trying to accomplish to meet the mission set by Ms. Reynolds. That’s when we started talking about how to best align the investments with the mission of the trust, which is to improve health and quality of life for people experiencing poverty in Forsyth County and around the state of North Carolina.

It was, I think, a bold and courageous move on the part of Wells Fargo as the trustee. Wells Fargo asked what I’d like to see in terms of making sure the trust’s investments were aligned to the trust’s mission. I said that would be to eliminate our exposure to companies that produce and promote and sell tobacco. And that is what we are doing: By the end of this calendar year 2022, we’ll be divested from tobacco.

What factors led to this decision? I understand that you did a deep dive into the history of the Reynolds family.

You know, as an organization we’re very community oriented. We’re going into communities and trying to establish true partnerships and relationships. I felt it was important to do that in a transparent way so we could be more accountable partners. We decided we had to do some tough truth-telling about our history, about where the money came from and how that influences the investments and decisions we’re making today.

There are some uncomfortable truths. For context, Kate B. Reynolds was born in 1867, just after the end of the Civil War, and she died soon after the end of the second World War. In many ways, she was ahead of her time, because she left the money for the trust. And she and her husband invested in a local hospital in Winston Salem, the Kate Bitting Reynolds Memorial Hospital. It was staffed with Black medical providers and treated Black patients at a time when Black people didn’t have access to many health facilities. When I go out now to speak in the area, one or two people will always raise their hand and say, “I was born at Katie B.” This was a beloved institution in the community.

In addition, one of the first grants the trust provided was for a home visiting program for white and Black women. So Kate Reynolds was ahead of her time, because she was trying to provide opportunities that were denied Black people at that time.

But we had a historian go back and do more digging into Kate Reynolds’ background, and we found things that also put her squarely within her time as a Southern white woman. As you know, at that time, all the systems in North Carolina — education, healthcare, economic institutions— were determined to keep Black people out of the American dream. We know that she was a member of the Daughters of the American Revolution. She was also in the United Daughters of the Confederacy. So she was likely comfortable with that white supremacist society that she was born into and knew all of her life.

We also found that she inherited wealth from her father, Joseph Bittings. He was one of the wealthiest folks in Yadkin County, in the western part of North Carolina. He owned many enslaved Black people, and gained his wealth from their labor.

And, of course, the Reynolds made their wealth through the sale and promotion of tobacco products. And their family also profited from the enslavement of Black people. We actually don’t know whether the family owned enslaved people, but we know that tobacco was grown by people who did, and who exploited Black and brown labor.

There’s one more thing that we uncovered, and we know this because we have the Reynolds’ will. When Ms. Reynolds and her husband died, they left their estate, Tanglewood, to establish a park, but it was exclusively for the benefit of white people. That’s why it was so symbolic that we held our first statewide event announcing this disinvestment in Tanglewood Park. I am an African American and descended from tobacco farmers myself. So there we were, standing in that park, which I would not even have been allowed to enter in 1947. And I’m now the president of the trust.

Tobacco is such a big part of the culture and the history of Winston-Salem, where you’re based, and of the entire state. Was there a negative reaction when the trust announced the disinvestment?

Overall, I’d say that our announcement was met with overwhelming support from the community. There was a big article in the local newspaper, and we did receive some negative comments. Of course, the growth in the tobacco industry was a large contributor to the growth in our portfolio over the last 75 years, And there was certainly a question of whether we were going to get pushback in a tobacco-producing state. But that paled in comparison to the hypocrisy of being a health foundation that’s invested in tobacco.

I grew up like a lot of folks around here. I didn’t crop tobacco myself because I was a girl, but my brothers cropped tobacco. That was how we got money for school and to help support the family. And my ancestors cropped tobacco, along with other things. So I know that there is economic opportunity in these crops, and we recognize that there’s a relationship between health and economic opportunity. But I’m also a pediatrician, I’m a public health practitioner. I was the North Carolina state health director before coming to the trust. The economic benefits of tobacco are just so far outweighed by the death and disease and chronic illness that is either caused or exacerbated by tobacco. We know so much more now about the health effects that we cannot justify supporting that industry, knowing how harmful it is to the health of the people we’re trying to serve.

As a part of the recent announcement, the trust committed to increase its investments in racial equity. Could you talk a little about that?

You know, this has been a journey of accountability and redemption. That’s a big part of why we’re looking back in our history to see what the mistakes were, what we need to be accountable for, what would be a more socially responsible way of moving forward.

Our motto for the 75th-year anniversary is “Looking Back. Working Forward.” Working forward, we are determined to work on socially responsible investments, but to also, with our grantmaking, really center racial equity. Because so much of our history is built on a foundation of racial inequity, and the exclusion of Black people in particular from health and economic and educational opportunities.

In our work, we also want to make sure the voices of impacted people are at the center of solutions. We are working very hard on grassroots capacity building. For example, one of our recent events was in McDowell County, which is a western county in North Carolina, and the trust helped to incubate and fund the only Black-led nonprofit in that county. And in Raleigh, we had grantees from Black-led nonprofits from the southeastern part of the state — all organizations that we’ve helped to support.

The trust was already working in the areas of health equity and racial equity. What will be different about your work going forward?

We’re certainly standing on the backs of our predecessors in doing a lot of this work. We have been advocating for policies and practices that would benefit people of color for a long time. This is because, when you look at health improvement, for forever we’ve seen disparities by race and ethnicity and place. If you’re in the business of health improvement, you have to be working on racial equity, there is no credible route that does not go through racial equity.

What is different now is how we’re going about doing this. We are being very transparent and accountable to outcomes, not just saying we’re working on equity, or we’re working on mental health. We’re saying we want to see a North Carolina where everyone has access to health insurance, for example. We know there are disparities by ethnicity and race with access to insurance. And we know that people who have insurance have better outcomes when it comes to maternal health, as one example. So we’re putting up specific outcomes that we want to see in terms of racial equity, that’s one difference.

The other difference is that we are owning up to our history, and I double-dog dare you to find a whole lot of foundations or philanthropies, particularly in the South, who are being honest publicly and apologizing for the harms that they may have contributed to — both in the way they created and perpetuated wealth and in the way they acted in community.

We’re not doing charity care to help those poor, needy people; we’re actually trying to change the systems that have made that charity necessary. So we’re not just working on making poverty and social ills more palatable. We’re going to go back and change the root systems in health, education and economic opportunity. Our biggest wheelhouse, of course, is healthcare.

And so we go to that history, because if we don’t know how we got to the disparities that we’re seeing in all of the major systems, we will mess around and institute the wrong solutions. This is why I implore my other philanthropic colleagues to look critically and honestly at history, because otherwise, we will mess around and assume that people are broken, instead of understanding that systems are broken.

Do you recommend that other funders do the same — that is, examine their institutions’ histories and commit to communities that were harmed?

I know that many of my colleagues in philanthropy want to do more as it relates to racial equity, and I think many of us are just unsure of what’s the best thing to do. At the trust, we are forging one pathway, and for us, that involves looking back in a clear-eyed and honest way.

But I certainly hope I’m not presenting myself as, you know, “We’ve got this figured out.” That’s totally not the case. One of the reasons I have been involved in philanthropy-serving organizations, like the North Carolina Network of Grantmakers, Philanthropy Southeast, and Grantmakers in Health (Gerald is on the board of all three organizations) is that this work is a team sport — particularly if we’re going to engage beyond charity and create systems change. So we’re happy to help anyone, and we want to learn from anyone who can reach out to us with their own lessons and experiences. As a medical doctor, that’s one of the things that has been, frankly, a little challenging about philanthropy. I’m used to there being evidence, and it’s clear that this is the right thing to do or it’s not the right thing to do. That isn’t the case in philanthropy; the answers aren’t always clear. And just because a rich person says it doesn’t make it the right thing to do. So I welcome working with and learning from others.

I hope that maybe we’re providing a little bit of a blueprint for other foundations that may be in a similar situation. Of course, not every foundation is built on the same sources of wealth. But for those that may have things to examine, we’re trying to model how you can examine it truthfully, but also move forward in hope and with gratitude that this foundation was established in the first place. We love Ms. Kate, you know, and we believe she would have evolved over time. But in terms of our grantmaking, we’re going to evolve for her, and we’re going to center the correction of problems that her wealth and wealth creation may have contributed to.

We are being transparent about our history and where the money came from. We can’t change where it came from. We’re not responsible for the condition of our house’s foundation, but it is built on enslaved labor and low-cost labor from Black and brown people. And it’s built on harm caused by tobacco. We are responsible for fixing that foundation.

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