The Philanthropy Roundtable is delighted to publish this guidebook by Jeffrey Cain on how donors can define and safeguard their philanthropic principles. With this guidebook, we hope to help philanthropists to think through the best strategies for carrying out their charitable purposes and core values.
The need for such a guidebook is clear. All too often the trustees and staff of grantmaking institutions pay little attention to the principles governing their founders’ charitable giving. Indeed, one can imagine that in many cases the initial donors would never have created their foundations if they knew then what would later be funded in their names.
For example, oil magnate J. Howard Pew established the J. Howard Pew Freedom Trust (one of seven trusts making up the Pew Charitable Trusts) in 1957 to “acquaint the American people” with “the evils of bureaucracy,” “the values of a free market,” and “the paralyzing effects of government controls on the lives and activities of people,” and to “inform our people of the struggle, persecution, hardship, sacrifice and death by which freedom of the individual was won.” Admirers and critics alike of Pew’s recent signature initiatives—such as its crusades for campaign finance regulation, universal early childhood education, and recognition of the dangers of global climate change—can agree that in the past two decades, with the exception of its emphasis on religion in public life, J. Howard’s worldview and philanthropic goals have played little role in informing Pew’s strategy and charitable giving.
Of course, founding donors themselves are often partly to blame for departures from their principles. Instructions have frequently been so open-ended that future trustees have very little guidance in setting philanthropic strategy. John D. MacArthur gave his trustees no instructions at all. “I’ll make [the money],” he told them. “You people, after I’m dead, will have to learn how to spend it.” John D. Rockefeller’s mission for the Rockefeller Foundation was “to improve the well-being of mankind throughout the world,” a charge that could justify just about any philanthropic expenditure. Andrew Carnegie left one instruction to the Carnegie Corporation: to provide pensions to American presidents and their widows. Otherwise, he wrote: “I give my Trustees full authority to change policy or causes hitherto aided. . . . They shall best conform to my wishes by using their own judgment.”
The Ford Foundation is the best known example of donor neglect. Henry Ford had a fairly well-articulated philosophy of giving, both in his writings and interviews—e.g., “I do not believe in giving folks things. I do believe in giving them a chance to make things for themselves”—and in the record of his generous contributions during his lifetime to organizations such as Henry Ford Hospital, historic Greenfield Village, and the Anti-Cigarette League of the United States and Canada. However, in his documents establishing the Ford Foundation, he left no instructions on its philanthropic purposes. Indeed, there is compelling evidence that Henry Ford created his foundation principally to maintain family control of the Ford Motor Company. How it was supposed to give out its money he did not say.
Henry’s grandson, Henry Ford II, was later to write his famous 1977 resignation letter from the Ford Foundation board. “The foundation is a creature of capitalism,” he wrote, “a statement that, I’m sure, would be shocking to many professional staff people in the field of philanthropy. It is hard to discern recognition of this fact in anything the foundation does. It is even more difficult to find an understanding of this in many of the institutions, particularly the universities, that are the beneficiaries of the foundation’s grant programs. . . . I’m not playing the role of the hard-headed tycoon who thinks all philanthropoids are Socialists and all university professors are Communists. I’m just suggesting to the trustees and the staff that the system that makes the foundation possible very probably is worth preserving.”
In many cases, some donors would never have created their foundations if they knew then what would later be funded in their names.
The irony is that the Ford family could have shaped the philosophical and philanthropic direction of the Ford Foundation but voluntarily abdicated this role. Henry Ford II was chairman of the Ford Foundation during its first decade as the foundation began its ideological transformation to the left, and he and his brother initially controlled a majority of the Ford Foundation board. His priority, however, was his 34-year chairmanship of the Ford Motor Company; his attention to the foundation was more limited and sporadic.
If Henry Ford II allowed the philosophical transformation of the Ford Foundation through relative neglect, at some other foundations family members actively led the way. The initial board of the MacArthur Foundation was described by one of its members as “mostly a bunch of Midwestern businessmen devoted to free enterprise and opposed to more government controls.” However, the founder’s son, Rod, much more liberal than his father, was able to seize control of the board and shape much of the foundation’s future direction. Members of the Pew family on the board of the Pew Charitable Trusts have generally been supportive of the trusts’ new strategies.
Departures from donor intent are not simply ideological. In 2012, the Barnes Foundation will be moving its extraordinary collection of impressionist and post-impressionist masterpieces to a new Philadelphia museum substantially different in character from the intimate art school envisioned by Dr. Albert Barnes. In 2008, Princeton University agreed to pay $100 million to settle a lawsuit charging that the university was ignoring the mission of the Robertson Foundation that established and substantially funded the Woodrow Wilson graduate school: preparing students for government service, especially in international affairs.
In order to help donors understand and avoid such problems, The Philanthropy Roundtable suggests the following guidelines for donors who want to safeguard their philanthropic principles:
- Clearly define your charitable mission. Write it down in your founding documents. Supplement your mission statement with a long written or oral record about your likes and dislikes in charitable giving.
- Choose trustees and staff who share your fundamental principles. Choose family members, friends, and close business associates such as lawyers, bankers, and accountants only if they fit into this category.
- If possible, separate your philanthropic interests from your interests in maintaining control of your company. Donor intent frequently suffers when the two are mixed.
- Give generously while living, and strongly consider a sunset provision for your foundation, perhaps a generation or two after your death.
- If you do establish a foundation in perpetuity, establish procedures for electing future trustees who share your principles, and for encouraging future boards to consider respect for donor intent as part of their fiduciary duty.
More Donor Intent Resources from The Philanthropy Roundtable
Protecting Donor Intent by Jeffrey J. Cain
- Get an electronic or print version of this practical guidebook.
- The Philanthropy Roundtable website’s special Donor Intent section where you can find our most recent articles and resources related to protecting donor intent.
Donor Intent Resource Library
- This extensive resource library will direct you to the best articles, books, and discussions on the topic of donor intent