Kingsway Charities Inc. Shuttering Local Efforts

BRISTOL, Va. – Kingsway Charities Inc., the Twin City’s behemoth Christian charity, faced a difficult decision: With its endowment eroded by the plunge in financial markets, it could no longer afford to feed the area’s hungry, support widows and needy children – and maintain its international medical mission.

On Tuesday, those with the region’s largest charitable-giving organization said they will shutter the local efforts and focus entirely on providing missionaries with medicine for developing countries.

“Due to the major losses on Wall Street in 2008, the endowment that funds Kingsway Charities’ operational cost has lost much of its value,” said Albert Hester, the charity’s director, who read from a prepared statement.

That means an end to the Lord’s Storehouse, a food donation program; the Widow’s Mite Ministry, a service that provided for about 40 women in the area; and the Face of God, a ministry that provided everything from clothes to school supplies for local children. The charity also reduced its staff from 16 to six.

“It’s not anything we’re happy about,” Hester said in an interview. “The funds generated through the endowment could not keep up with expenses.”

The decision to ax three of its operations was a striking move for Kingsway – an organization that banked more than $1 billion in contributions between 2003 and 2006, and has been listed since 2007 as one of the nation’s 200 largest charities by Forbes.com. Last year, Kingsway received $122 million in contributions – at least a five-year low – and ended 2007 with close to $34 million in assets.

In 2007, Kingsway reported $1 million in expenses for the Face of God and $18.5 million for the Lord’s Storehouse. The charity spent more than $100 million on its international medical relief program – or 84 percent of expenses that year, according to its tax returns.

Hester said the board mulled cutbacks for several months, but did not reach a decision until the last week of December.

Kingsway dates to 1998, when it was founded by John M. Gregory, then president and chief executive officer of King Pharmaceuticals. The charity was then known as the King Pharmaceutical Benevolent Fund. Gregory and his wife, Joan, serve as president and vice president of the charity, but Kingsway is no longer affiliated with King Pharmaceuticals.

The Gregory family endowed the charity and that endowment provided for “basically all” of the charity’s services, Hester said.

Hester declined to provide details on how much the endowment had lost. He said the charity has been “very happy” with its investment firm – Stewardship Partners, to which it paid nearly $200,000 in 2007. Stewardship Partners, which describes itself as a “biblically based” investment firm in Matthews, N.C., did not respond to requests for comment Tuesday.

Kingsway board members did not respond to a request for comment through Hester, who said his statement was approved by “upper-level management.”

The Lord’s Storehouse, Hester said, helped feed more than 37,000 families every month in a five-state area; on its 2007 tax returns, the organization said it distributed 12.3 million pounds of food.

Food relief on that scale had its costs: Kingsway reported nearly $500,000 in postage and shipping for 2007. Refrigerating perishable items also took a heavy toll on the organization’s energy consumption, generating electric bills as high as $10,000 a month, Hester said.

Refrigerators have been shut off since Christmas at Kingsway’s 141,000-square-foot facility, which also houses other ministries for nominal fees, Hester said.

The charity now will turn its exclusive focus on acquiring medical supplies and providing them to missionaries who work in developing countries. In 2007, Kingsway contributed medical supplies for 1,003 mission trips, serving nearly 700,000 people in Third World countries, the charity reported on its tax returns.

Hester said the charity supplied $73 million of donated medicine and supplies in 2008, serving nearly 500,000 people in 76 countries. He said Kingsway determined the value of the supplies using the average wholesale price of the donated materials.

The products Kingsway solicits from donors range from antibiotics to bandages and over-the-counter cold medicines.

“All of these go to approved missionaries who take them into Third World countries,” Hester said.

And the future of Kingsway’s cavernous headquarters?

“We would like to see the building become a ministry mall,” Hester said, and a “big shopping center for medical missionaries.”

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