The Z. Smith Reynolds Foundation hasn’t always been the largest funder of liberal activist organizations in North Carolina. But just as the Reynolds family moved away from the legacy of its founding patriarch, in time the foundation abandoned its roots in free-market innovation and success to embrace an array of left-wing causes and dogmas.
The Foundation began as a tribute to its young namesake. In the early years, the Foundation was best known for its philanthropy in traditional areas, such as education, historical preservation, the arts, and building hospitals.
The transition the Foundation made to becoming one of the nation’s elite funders of the Left, and the dominant funder of North Carolina’s liberal and radical causes, began slowly and seemed to pick up steam in the mid to late 1900s, culminating in an announcement in 2002 that the foundation was going to “make sweeping changes in grant making.” The announcement made it clear that the new focus would be on the buzzwords of social, economic and environmental “justice” and backing progressive public policy.
“How does it happen?” is hands-down the most-often asked question when discussing foundations that stray from their original mission and move to funding liberal organizations. In this case, the original funding organization was founded with the money from the hard work and vision of one of America’s most successful free-market industrialists – R.J. Reynolds. When did it begin to cater to groups that attack free enterprise?
In the matter of Z. Smith Reynolds Foundation, the inner circle likes to point all the way back to Katherine Smith Reynolds, the wife of Reynolds Tobacco’s founder, R.J. Reynolds. She encouraged better education and better housing conditions for the company’s workers. However, that type of humanitarianism is a far cry from today’s extreme and sometimes radical progressive activism that most groups today try to sugarcoat with benign and benevolent-sounding names.
The simple answer to “How does it happen?” is that foundations’ missions and philosophies change when their boards change. This phenomenon has become so prevalent that many of today’s more conservative foundations have included “sunsetting” clauses in legally binding agreements in order to protect donor intent. “Sunsetting” or a “spend down” is the act of spending down all of a foundation’s assets in a set period of time. The Z. Smith Reynolds Foundation’s history is a classic example of what happens when philanthropic ventures continue too long, allowing the founder’s original vision to be lost.
In this case, too, a family history that could have come from a novel casts a shadow over all that followed.
In 1874 Richard Joshua Reynolds, better known as R.J. Reynolds, moved to North Carolina to start his own tobacco company. It didn’t take the 24-year-old long to build an empire. A page on the RJR website details the impact of Reynolds’ leadership on the tobacco industry. According to the website, Reynolds Tobacco Company established many industry standards. It was the first to offer the 20-cigarette pack and the 10-pack carton. Reynolds Tobacco was also the first company to package cigarettes with a moisture-proof, cellophane wrap. To say that Reynolds revolutionized the tobacco industry would be an understatement. At the time of his death in 1918, Reynolds’ company employed more than 10,000 people and was the top taxpayer in the state, contributing $1 of every $2.50 in state income taxes. (Winston-Salem: A History, by Frank V. Tursi, p. 196-197.)
In 1905, Reynolds married Katherine Smith, his first cousin’s daughter. He was 55 years old; she was 30 years his junior. Thirteen years and four children later, R.J. Reynolds died from pancreatic cancer. His oldest child, Richard Joshua Reynolds Jr., was 12 years old and his youngest child, Zachary Smith Reynolds, was only 7. His daughters, Mary Katherine and Nancy Susan, were 10 and 8.Three years later (1921), their mother married J. Edward Johnston, the school superintendent at Reynolda Village, the farm community and self-sufficient estate that Katherine Reynolds was credited with planning and where she and R.J. had built Reynolda house, the “60-room bungalow” of her dreams. Three years later, in 1924, after giving birth to another son (J. Edward Johnston Jr.), Katherine Smith Reynolds died of an embolism, leaving her children, all under the age of 18, in the care of their uncle, William Neal Reynolds, R.J.’s brother.
The Foundation’s namesake, Z. Smith Reynolds, was 13 years old. Barely five years later, when he had just turned 18 (1929), he eloped and married Anne Ludlow Cannon, heir to the Cannon Mills fortune. Reynolds and Cannon were divorced two years later after the birth of their daughter, Anne Cannon Reynolds. Just six days after the Reno, Nevada divorce, Smith married a popular torch singer and Broadway star, Libby Holman. Numerous accounts claim Smith had pursued Holman for months.
The marriage lasted less than eight months. Z. Smith Reynolds died of a gunshot wound to his right temple after a party at Reynolda House on July 6, 1932. Mystery has clung to his death ever since.
Did he commit suicide? Or was he murdered? Z. Smith Reynolds has been described as immature, impulsive, sensitive, quiet and restless. He even reportedly threatened to kill himself if Holman had refused to marry him. In stark contrast, according to a 2013 Winston-Salem Journal article, when his uncle was notified of his death, William Reynolds told the press, “I saw the boy a week ago at his home in North Carolina. He seemed the sensible, level-headed boy that I have always known and was extremely interested in flying.” Yet William went on to say that he was “convinced that it was his (Z. Smith’s) act and that no one else had a hand in it.”
These statements seem curious in light of the fact that authorities first thought that Z. Smith Reynolds committed suicide, but later charged Holman with murder and also charged Smith’s high school friend Albert (“Ab”) Walker as an accessory to murder. William Neal Reynolds asked prosecutors to drop the charges and eventually they did, citing lack of evidence.
Z. Smith Reynolds’ older sisters were both married and living in New York when he died. His oldest sister, Mary Katherine Reynolds, was described as one of the richest women in the world when, in 1936, she inherited $30 million from her father’s estate. She married Charles Henry Babcock and they had four children: Mary Katherine (Mountcastle), Charles Henry, Barbara Frances (Millhouse), and Betsy Main. When the elder Mary Katherine died in 1953, the Mary Babcock Foundation was established with $12 million from her will. The Mary Babcock Foundation over a 10-year period gave nearly $5 million to liberal and radical groups in North Carolina. Unlike the Z. Smith Reynolds Foundation, which focuses its giving in North Carolina, the Mary Babcock Foundation gives mostly to out-of-state organizations, and over the same 10-year period gave more than $50 million to out-of-state liberal activist groups.
Z. Smith Reynolds’ other sister, Nancy Susan Reynolds, married Henry Walker Bagley and they had five children: Walker, Nancy Jane (Lehman), Smith Walker, Susan (Bloom) and Anne Katherine (Grant). Nancy was perhaps the most radical and activist of her generation of the family. In 1952 she founded the Nancy Reynolds Bagley Foundation, which later changed its name to ARCA. According to a 2011 article written by Matthew Vadum, “ARCA has been on the cutting edge of radical left-wing causes, embracing Fidel Castro’s Cuba, the Palestinian cause, Saul Alinsky-inspired community organizing, and the never-ending social justice campaigns of the Left.” Vadum goes on to explain that although ARCA is not a large foundation, it makes up for its size by “the focus and intensity of its giving to radical organizations.”
The oldest of R.J. Reynolds’ sons, R.J. Reynolds Jr., was “chained to a tree” on the African coastline, detoxing after a drinking binge when he was told of Z. Smith’s death. That account is from Patrick Reynolds, R.J. Reynolds Jr.’s son. Before Z. Smith’s death, Patrick wrote, his father was a playboy who funded Broadway shows. After Z. Smith’s death, R.J. Jr. entered Democratic politics and was elected mayor of Winston-Salem. He took a leading role in steering the finances of the national Democratic Party and is credited with assisting the successful election efforts of two presidents, Franklin Roosevelt and Harry Truman.
Four years after Z. Smith’s death and after several legal battles, his siblings founded the Z. Smith Reynolds Foundation as a memorial to their late brother. Using his estate, they established a trust for “charitable works in the State of North Carolina.” Their Uncle William was an original member of the foundation’s board of trustees, and when he died in 1951, a trust was formed that provides some of the philanthropy’s annual revenues. The trusts today are worth nearly $500 million.
Nearly 80 years after the formation of the Z. Smith Reynolds Foundation, seven of the 13 board members are related to the first R.J. Reynolds. This scenario is in stark contrast to the Ford Foundation where, in 1976, Henry Ford’s grandson, Henry Ford II, found himself out-numbered on the board and in his resignation “excoriated the trustees for using Ford funds to support left-wing causes while abandoning the commitment to free enterprise that had made possible the profits from which the foundation was created and the funds that it dispensed in its grants.”
Yet though the Reynolds family maintains control of the Z. Smith Reynolds Foundation, it has strayed far from its original legacy. A clue for the reason behind this ideological shift can be found in this statement by Patrick Reynolds, R.J. Reynolds, Jr.’s son and the family’s anti-smoking activist: “No descendant of founder R.J. Reynolds devoted their career to working in the company; only Aunt Nancy’s son Smith Bagley worked there for a time, but did not rise to a top position, and soon left. Just one second cousin has worked for the company.”
In a continuing series of articles, we will do our best to discover what drives this foundation. We will do this by focusing on Reynolds descendants who continue to work as members of this contentious group.