Learning to Work
Vocational education has long been at best a peripheral concern among American educational reformers. With persistently high unemployment, however, a number of forward-looking funders are reconsidering the value of vocational education. To that end, several private donors—including the James Irvine Foundation, the W. K. Kellogg Foundation, and the Nellie Mae Education Foundation—funded a recent report on the state of American career and technical education (CTE). The report, entitled Pathways to Prosperity and published by the Harvard Graduate School of Education, proposes a broader vision for education reform, one which sees a bachelor’s degree as one of several paths to a middle-class life. As illustrated elsewhere in this issue, there are millions of well-paid jobs—some of them experiencing dramatic shortages—that do not require a college degree. Pointing to successful CTE offerings in Europe and the United States, the report encourages educators to consider a range of reforms, such as high school apprenticeships, workplace-based learning, and cutting-edge technical education programs, including Project Lead the Way, the Career Academy Movement, and California’s Linked Learning Initiative.
The Generosity of Wealth Generators
“Our experience worldwide is that first-generation wealth is actually more generous than dynastic wealth,” said Bill Gates during a recent trip to India, where he was promoting the Giving Pledge among the subcontinent’s wealthiest entrepreneurs. “Both here in India and in the U.S. and other countries, the biggest givers are those who are . . . first-generation wealth.” One can conceive of many reasons for this tendency. Perhaps the self-made wealthy are more secure in their ability to make more money and thus more content with giving it away; perhaps they have an entrepreneurial imagination that allows them to see opportunities for philanthropic spending where many heirs do not. “For those who made their wealth entrepreneurially,” Kat Rosqueta of the University of Pennsylvania told Bloomberg, “there’s a sense in which they feel their wealth is theirs, as opposed to those whose wealth has been inherited, where they feel much more of a responsibility as stewards of somebody else’s wealth.” Gates’ remarks underscore an important point. The best way to encourage philanthropy is to create the conditions most conducive to business formation and vigorous economic growth.
Know When to Hold ’Em
In 2002, Ray Styles got lucky at the slots in Lake Tahoe. He won $8 million, and decided to contribute a portion of his winnings to charity. Acting on advice of counsel, Styles made an irrevocable, unrestricted $2.5 million donation to a donor-advised fund called Friends of Fiji. Styles took a tax deduction in the year of his gift, and was led to believe that he would be able to recommend distributions from his DAF account at Friends of Fiji. What Styles did not know was that his was the first and only contribution that Friends of Fiji ever received. It was founded by the tax advisor he consulted. The DAF—which, shortly after Styles’ gift, converted itself to a private foundation—never made a single gift based on Styles’ recommendations. Instead, its directors and officers paid themselves large salaries, sponsored money-losing celebrity golf “fundraisers,” and purchased stock in which one of them had an interest, only to sell it at a loss. “In the end,” says Styles’ lawyer, “not one dollar of the donor’s donor-advised fund account was ever used by the charity to further the donor’s charitable purposes.” The Nevada district court noted these facts, finding Friends of Fiji “in violation of the implied covenant of good faith and fair dealing.” But since the gift was unrestricted and Styles took the deduction, the court found he had no recourse to recover or re-direct the donated funds.
First Florida, Now Virginia
In April, Virginia Gov. Bob McDonnell signed into law S. 1483, which codifies protection for nonprofit organizations in the commonwealth. The law prohibits government agencies from:
- requiring charitable organizations to disclose personal demographic information about their employees, officers, and trustees without their consent;
- forcing foundations to disclose the same information about their grantees without their consent;
- imposing rules about the demographic composition of a nonprofit’s board or officers;
- interfering in decisions about the composition of family foundation boards;
- and requiring that a nonprofit distribute its funds to or contract with any individual or entity based upon demographic characteristics, except as lawfully directed by the donor.
The legislation, which was passed unanimously in both houses of the Virginia General Assembly, was introduced by Sen. Jill Holtzman Vogel. It follows a similar law passed in Florida last year after an activist organization targeted the grantmaking activities of private foundations there. (Please see “Sunshine for Philanthropic Freedom,” Philanthropy, Summer 2010.)
“A” Is for Accountability
In January, the New Yorker profiled the Ross Global Academy, a charter school in Manhattan. The school is a labor of love for its founder and lead funder, Courtney Sale Ross, the widow of Steve Ross, the former CEO of Time Warner. The recipient of nearly $8 million in philanthropic support since its opening five years ago, it has a number of personal touches, from stylish blond-wood tables in the classrooms to batik-covered banquettes in the cafeteria. The school offers organic meals and instruction in yoga; it employs a creative curriculum in which the history of civilization “spirals” across cultures. Yet for all of Ross’ personal investment, writes Rebecca Mead, the school had “the worst progress report of any charter school in the city” with “75 percent of its students failing English and 70 percent of them failing math.” In December 2010, Ross received a call from outgoing New York City Schools Chancellor Joel Klein, informing her that the Department of Education would recommend non-renewal of the school’s charter. Although Ross Global Academy’s fate is not yet determined—Courtney Ross plans to appeal—its review is a salutary reminder of the grand bargain at the heart of the charter school movement: autonomy comes at the price of accountability.
A Huge Problem, Indeed
In 2002, Frank and Ruth Caruso created a small foundation through which the New Jersey real estate developer and his wife could support their favored causes. The Carusos directed their foundation grants to well-known health, human services, and animal welfare charities: the Alzheimer’s Association, the Humane Society, St. Jude Children’s Research Hospital. When they died in 2007, their niece Lisa Turngren took control of the foundation, which then had a corpus of around $5 million. Fast forward to 2011. In a strangely celebratory profile, the Wall Street Journal reports that “rather than spread its relatively modest resources . . . [the] group will for at least two years focus nearly exclusively on aiding New York–based organizations that deal with sexual violence.” The Carusos only ever made one grant to such an organization. Why, less than four years after their death, is their foundation switching gears? The Journal’s answer: “It is targeting sexual violence in part because Ms. Turngren, a clinical social worker by training, said many women she came across in her practice disclosed a history of sexual assault. ‘I realized that it was a huge problem,’ said Ms. Turngren, who scaled back her patient load this winter to focus on philanthropy.” And when did this shift take place? From the Journal: “The Caruso Foundation began supporting anti-violence groups in 2007.”
The Big Man
“I started a warehouse business and built big, big buildings. And we hired thousands of employees,” says Richard O. Jacobson. The entrepreneur from Des Moines, Iowa, founded one of the country’s largest privately owned warehouse companies. In February, he did something equally big: he made the largest-ever gift by a living donor to the Mayo Clinic. His $100 million donation will create two new cancer centers at the hospital. Jacobson has many ties to the Mayo Clinic. In addition to being treated there, he began visiting it with family members around age four. (Jacobson’s grandfather was a friend of Charles and William Mayo, the brothers—both physicians—who founded the hospital.) After their planned opening in 2016, the new cancer centers in Rochester, Minnesota, and Phoenix, Arizona, will treat cancerous tumors with proton beam therapy, a more precise and less damaging method than conventional radiation therapy. Jacobson’s donation will help Mayo treat 2,480 patients annually. Said Jacobson at the announcement ceremony: “I like to do things in a big way.”
It’s an old joke. “Q: How do you become a millionaire in the airline industry? A: Start with $100 million.” Not so for Tony Ryan, who co-founded the eponymous Ryanair in 1985. When Margaret Thatcher broke the duopoly on airline service between Great Britain and Ireland, Ryanair pounced into the newly competitive market. When the European Union instituted an open-skies policy, Ryanair was perfectly poised to offer low-cost, no-frills service across the continent. Today, Ryanair is one of Europe’s largest airlines, and when Tony Ryan died in 2007, he was worth as much as €1 billion. The fortune generated by Ryan’s entrepreneurship has gone to great philanthropic lengths: Ryan gave generously to build up the university sector in his native Ireland. According to a recent story in the Irish Independent, Ryan’s surviving son, Declan, is among Ireland’s “foremost philanthropists.” Against the collapse of the Irish economy in 2009, for instance, Declan Ryan donated at least €27 million to charity. In March 2010, he followed those gifts with €10 million to build schools in Sri Lanka. “The economic downturn is going to affect us but we can’t let it hinder what we are doing,” says Declan. “The need in Ireland is going to grow.“
The problem of “tainted money” has long perplexed philanthropy. Its most recent iteration involves Muammar Gaddafi and the London School of Economics (LSE). Gaddafi, it appears, has been something of a patron of the school: the Gaddafi Foundation pledged £1.5 million (£300,000 of which has already been paid) to an LSE research center; Libya inked a deal with the LSE for £2.2 million to train elites in Gaddafi’s regime. Meanwhile, Gaddafi’s son was awarded a doctorate from the LSE (based on a dissertation that is allegedly ghostwritten), and Gaddafi himself addressed the LSE via satellite (during which an LSE professor greeted him as “Brother Leader”). When violence broke out in Libya, the school’s relationship with the regime came under heightened scrutiny. In March, LSE director Howard Davies resigned. “I have concluded that it would be right for me to step down,” Sir Howard told the BBC, “even though I know that this will cause difficulty for the institution I have come to love.” The old line about tainted money is that t’ain’t enough of it. It appears that the LSE was in agreement—but now t’ain’t.
F. M. Kirby II, RIP
“He is not the one who has his jacket off at meetings,” said a business colleague of Fred Morgan Kirby II. “He had a very responsible attitude towards money and felt it should not be wasted,” said another. Kirby led the Alleghany Corporation, his family’s holding and investment company, to a 15 percent annualized return over the course of his career, outpacing the S&P 500 by five percentage points and making Alleghany the nation’s biggest player in title insurance. He applied that same quiet professionalism to philanthropy. As president of the F. M. Kirby Foundation from 1967 to 2010, he increased the foundation’s assets more than 30 times over, quietly giving away $440 million. Kirby believed in providing steady support to high-performing organizations, and was known for consistency with his general operations grants in medical research, education, the arts, and public affairs, including Lafayette College, the Lawrenceville School, the Intercollegiate Studies Institute, Mount Vernon, and numerous institutions in his home region of northern New Jersey. Fred Kirby passed away on February 8, at the age of 91. He exemplified the Kirby family’s motto: facta non verba—“deeds, not words.”
Edward Netter, RIP
Edward Netter had a gift: He could see what everybody else overlooked. Early in his career, he realized that insurance companies had large and under-utilized assets, which he called “surplus surplus” or “redundant capital.” Most of this redundant capital was in common and preferred stock, which meant that insurance companies were accumulating more capital than they were required by law to set aside. By forming a holding company to own the insurance company, Netter hypothesized, the company could put its redundant capital to work by paying dividends to the parent company. Netter capitalized on his discovery, becoming an architect of the modern-day financial services holding company and founding Netter International (later Geneve Corporation). When his daughter-in-law was diagnosed with cancer, Netter again began to look for opportunities otherwise overlooked. With Barbara, his wife of 56 years, he founded the Alliance for Cancer Gene Therapy in 2001. It was a first-of-its-kind organization, providing grants to researchers studying ways to repair defective or missing genes that cause cancer. Such an approach, the Netters believed, could lead to cancer treatments that did not involve the devastating side effects of chemo or radiation. Philanthropy is loath to report that Netter passed away on February 16 at the age of 78. “Whether it’s in the business world or in the pursuit of scientific research,” he once said, “it’s important to critically examine the status quo and relentlessly pursue a better way.” May the success of cancer gene therapy prove to be a fitting tribute for Ed Netter, a man of great heart, a man of great vision.