OCTOBER 08, 2020

At the core of the donor-intent dispute that unfolded at The Atlantic Philanthropies between 2009 and 2012 lay one key question: “What deference does an independent board owe to the moral—if not legal—authority of a living donor?” Unlike so many other donor-intent tales, this was a conflict in which the donor himself, Chuck Feeney, was able to express his dissatisfaction directly to the board and staff with whom he disagreed.

By 2009, The Atlantic Philanthropies had been operating for over 25 years and had allocated significant sums of money for charitable purposes. Beginning with a focus on American higher education (particularly at Feeney’s alma mater, Cornell University), Atlantic had become a global funder of social change in aging, education, health, and human rights. Because the philanthropy had been incorporated in Bermuda, it was not subject to the restrictions placed on 501(c)(3) organizations in the United States. As a result, Atlantic had the ability to support not only traditional nonprofit organizations, but also political causes. Feeney fully supported Atlantic’s focus on the disadvantaged, but a growing dissatisfaction with staff and board decisions eventually led to his personal intervention to reorient the foundation to the priorities and strategies that he deemed best.

As described in Conor O’Clery’s The Billionaire Who Wasn’t: How Chuck Feeney Secretly Made and Gave Away a Fortune (a biography which Feeney authorized), the crisis at The Atlantic Philanthropies began in 2009. Atlantic’s endowment at that time was $3 billion, $800 million of which was already committed in grants. Two years prior, Gara LaMarche had been appointed president of Atlantic, after serving as vice president and director of U.S. programs for George Soros’ Open Society Institute. Despite some warning signs that LaMarche would favor left-wing giving to a larger degree, Feeney joined the rest of the board in approving the hire.

At the same time, Feeney was growing increasingly distant from Atlantic’s other board members. His original trustees of the 1980s, all personal friends or professional colleagues, were long gone, with only one exception. Staff members had also lost close contact with him as Atlantic operated from multiple offices around the world and Feeney himself was spending far less time in New York City. Then the election of Barack Obama to the presidency in 2008—a victory which Feeney celebrated—gave LaMarche and his supporters on both staff and board even more leeway to pursue a costly “social justice” agenda. For example, Atlantic invested $26.5 million in an advocacy campaign to pass the Affordable Care Act. “Without Gara and Atlantic, the United States would not have enacted legislation,” said the leaders of that effort.

Feeney was certainly not opposed to improving access to health care but was unconvinced that community organizing and social-justice advocacy were the most effective applications of his charitable fund. In seeking what he consistently called “the highest and best use” for Atlantic’s assets, Feeney had grown to believe that far better outcomes would flow from the capital projects that had always appealed to his entrepreneurial inclination to find great people and ripe opportunities to enhance their work.

Feeney also was growing increasingly uneasy about Atlantic’s new style and level of operations. LaMarche had developed a level of national visibility, being invited to the White House for the signing of the Affordable Care Act. This was in stark contrast to Feeney’s preferred approach of quiet, unassuming, and anonymous philanthropy. The CEO had also initiated a move of the foundation’s offices from 24,000 square feet of space to 44,000 square feet, a decision that cost nearly $19 million.

Due to the way The Atlantic Philanthropies had developed its governance structure over the years, Feeney was only one of 12 votes on the board—and substantial changes would require a majority to agree with him. He expressed his displeasure with the general direction of the foundation under LaMarche’s leadership in a letter to the entire board in mid-2009. He particularly objected to the overtly political “social-justice” spending that was edging out other projects that had always been close to his philanthropic heart.

His pleas fell on deaf ears. Eventually, Feeney went so far as to call for the resignation of three board members whom he saw as siding with LaMarche to too great a degree. They refused. Feeney recalled one replying, “You will have to carry me out on a stretcher.”

Adding to Feeney’s consternation, there was increasing debate and concern about whether the board would, as planned, sunset the foundation by 2016 as envisioned, and even whether the funds could still be considered “Feeney’s money.” “Underlying everything was the question of whether the directors had the right and the duty to determine how it should be put to use, regardless of the donor’s priorities,” writes O’Clery in his book.

Frustrated that his tactic of angrily confronting board members during meetings was not working, Feeney turned to an alternative approach. In September 2010 he wrote a 2,000-word “manifesto” to each member outlining his concerns and objections, again requesting that the three board members resign, along with LaMarche as executive director, and proposing that all grantmaking be halted for a reset.

“Today, I stand in disagreement with AP’s recent strategic approach for grant making,” Feeney wrote. “I do not believe that the ‘social-justice’ approach, as now defined for AP’s purpose, is a viable strategy to attain the highest and best use for our resources. Furthermore, I can confirm that this style of grantmaking is not one that I would have supported to any significant extent when, or since, donating the corpus that evolved into the endowment which AP now enjoys.”

Feeney also cited “a moral and fiduciary obligation that the interests, values, and passions of the living sole donor be given central consideration in spending the fruits of his labor.” In response, and over some objections, the board retained legal counsel on the question of Feeney’s rights, further outraging the donor by spending hundreds of thousands of dollars on legal fees.

But as the situation spiraled further out of control, a series of events produced some hope for resolution.

In early 2011, an anonymous writer claiming to represent a group of Feeney’s friends sent the board a letter threatening to take the conflict public and asking, “What will potential philanthropists think if they find out that a foundation board doesn’t listen to the wishes of the founder when he is alive and sitting in the room, never mind when he is dead?” In March the board received another missive, this one from nine staff members, questioning some recent decisions on operations and grantmaking at Atlantic. The staff letter reinforced the determination of the minority of board members sympathetic to Feeney.

In mid-2011 the changes that Feeney sought finally began to materialize. LaMarche resigned, followed by the board’s chairman less than a month later. Feeney himself resigned from the board and his longtime friend and trusted associate Chris Oechsli took over as president. Oechsli proceeded to initiate a review of grantmaking with the goal of refocusing on four core grant areas and the founding chairman’s programs. By the end of 2012, all the board members to whom Feeney had objected were gone; they had either resigned or been disqualified for service by new term limits established for current and future trustees.

The Atlantic Philanthropies provides the most dramatic example of a donor-intent crisis to date, because it happened while the living donor was still actively engaged. Atlantic’s 2018 publication, 2020 Hindsights: Top 10 Lessons, drew this conclusion: “A board and living donor need to reach agreement on priorities, principles, and preferred operating styles,” or there will be “occasional, and sometimes unpleasant tension.” The absence of a clear and detailed statement of donor intent from Feeney, and the failure to create a governance structure that protected the prerogatives of a living donor, fueled this collision.