Back to Bill
How the Daniels Fund lost sight of Bill Daniels, clawed its way back—and is preserving donor intent into the far future.
This article was originally published in the Fall 2011 issue of Philanthropy magazine
By Evan Sparks
Bill Daniels was never one to back down from a fight. As a scrappy, undisciplined youth, he may have even picked a few of those fights. In high school, as a Golden Gloves state boxing champion, he learned how to fight fair and square. And later in his life—after years spent as a naval combat pilot, a cable television pioneer in an industry that battled many times for its survival, and as a political candidate bloodied more than once by the process—Daniels proved that he knew what it meant to fight for a cause he believed in.
Perhaps no fight was as important to Daniels as the cause of freedom. Twice he put his life on the line in defense of freedom, first against fascism, then against communism, in the Second World War and again in the Korean conflict. Not long after the attack on Pearl Harbor, Daniels was commissioned as a carrier-based fighter pilot. He piloted a Grumman Hellcat in the invasion of North Africa, and a Chance Vought Corsair in the desperate battles for Guadalcanal, Midway, and the Coral Sea. He earned the Bronze Star for saving the lives of crewmates after a kamikaze attack trapped them below the decks of the USS Intrepid. In Korea, he would serve his nation once again behind the controls of a Grumman F9 Panther. Indeed, Daniels often said that it was his military service that most defined him as a person.
Daniels passed away in 2000. Two years later, the Smithsonian National Air and Space Museum sent a grant inquiry to the Daniels Fund, the $1 billion foundation Daniels had endowed upon his death, requesting funding for an educational exhibit featuring World War II aircraft. In declining the request, the program officer explained that it would be inappropriate to fund a project featuring “instruments of war.”
When it was pointed out that Daniels had flown the same type of aircraft to defend the cause of freedom, the program officer nonetheless insisted that the request be declined, since the exhibit featured planes designed to “kill people.”
“It was a wake-up call,” recalls John Saeman, who was then a member of the Daniels Fund board and who later served as chairman. Saeman was one of Daniels’ best friends. He had watched as Daniels spent the final years of his life carefully defining his intentions for the philanthropy that would bear his name. After Daniels died in 2000, his estate transferred to the fund, making it one of the largest foundations in the nation. And now, two short years after its founding, the Daniels Fund seemed not to understand—at times, even to disregard—the intentions of Bill Daniels.
“We had to get into the inner workings and understand what was happening internally,” continues Saeman. “We had to make some corrections. We had to make sure people who were responsible for the grantmaking—as well as the board—knew exactly what Bill stood for and what he would have wanted to accomplish.”
Saeman was a busy man. He had his own diversified investment business, Medallion Enterprises, and was already committed to his own extensive philanthropy. But Saeman knew that this had to become a top priority. A great principle was at stake: “We realized pretty quickly that we needed to define and defend Bill’s donor intent.”
That realization by the board triggered something rare, if not unique, in the annals of American philanthropy. It triggered a process of recovery and restoration, of rediscovering Bill Daniels’ intent for his foundation and instituting a process by which it would be protected in the future. It is a story of fidelity to a person and a principle. It is a story of extraordinary friendship.
“Every single person on the board, then and now, really loved Bill,” explains Linda Childears, who was then a board member and is now president of the Daniels Fund. “We wanted to do right by him.”
Building the Best
Bill Daniels had that effect on people. Born in 1920 in Greeley, Colorado, he moved with his family from Omaha, Nebraska, to Council Bluffs, Iowa, before settling in Hobbs, New Mexico, a dusty town near the Texas border. During the Great Depression, he sold magazines door-to-door and worked as a short-order cook—anything to help his family make ends meet. As a teenager, though, Daniels needed discipline. He found it when his parents sent him to the New Mexico Military Institute (NMMI). Daniels entered the service after graduating from NMMI and became a highly decorated naval aviator. In 1952, after serving in the Korean War, Daniels moved to Casper, Wyoming, to start his own insurance business. It was traveling between Hobbs and Casper that Daniels made the discovery that would make his fortune.
Daniels loved boxing. The two-time Golden Gloves state champion stopped at Murphy’s Bar in Denver one Wednesday night—fight night at Madison Square Garden. To his surprise, the fight was visible on a television behind the bar. It was the first time he had seen a television. He was instantly transfixed. “I thought, ‘Wow, what an invention,’” he recalled years later, “and I looked forward to seeing more television when I got to Casper.”
Daniels went on to Wyoming. But, as was the case with many small, rural communities, there was no television in Casper: a mountain range prevented the signal from reaching the town on the banks of the North Platte River. He did some research and found that several towns in the eastern United States had resolved the same issue by transmitting TV signals to homes through cable.
Daniels wasn’t an engineer, but he gained a rudimentary understanding of how cable worked. For communities unable to access broadcast signals, television could be delivered by radio frequency signals transmitted through coaxial cable. A single large antenna might be set up on a mountaintop or hill to pick up the nearest signal, which would then be run through cables strung on telephone poles to the homes of subscribers. The early 1950s had seen a moratorium on new stations, but with war over and the economy beginning to hum, consumers were ready for the entertainment choices television had to offer—or so thought Bill Daniels.
In 1953, Daniels raised $250,000 to start a cable system in Casper. Because of the great distances between towns in the West, he had to have signals transmitted to Casper via microwave, at great initial expense. But the bet paid off. For a single black-and-white channel that broadcast for only eight hours daily, he won 4,000 subscribing households—about a third of the total homes in the area. Daniels soon added other cable systems in Farmington, New Mexico, and Rawlins, Wyoming.
Before long, he found himself traveling all across the West, securing investors, finding customers, and recruiting talent. He brought a salesman’s cheerful persistence, a sense of fair dealing, and an outgoing and sometimes outrageous spirit to his business. “Without quite realizing it, he was starting to define his role in the industry,” notes one biographer. “No one else saw the opportunity or took it. He was the man in the middle of everything—the guy who knew more about the business as a whole than anybody else.”
In 1958, as small cable systems began to proliferate, Daniels sensed the need for a brokerage firm for the nascent industry. He founded Daniels and Associates, and he got on the phone with system operators, buyers, and sellers and arranged the deals that grew the industry. Daniels’ office in Denver became the center of the burgeoning industry. “Bill may have been the prime architect of [cable’s] capital structure—the whole way in which the cable industry decided to make money,” explained cable entrepreneur John Malone. “In the very early days, the theory was that you charged people a lot to hook them up and then you wouldn’t charge them hardly anything after that. Bill took it the other way, which was we’ll have much higher revenues and much more success if we treat it as an ongoing revenue stream.”
Daniels cultivated an intense loyalty among his staff. “He hired you, he gave you responsibility, and he let you do your job,” said one staff member. In exchange, he expected the best—down to the smallest details. Daniels demanded punctuality; work started at 8:00 a.m. sharp. Neatness and good manners were expected every bit as much as hard work. Business in turn flourished. As his stature within the industry rose, Daniels emerged as an ambassador for cable. He led the trade association and was at the front of the fight to overcome regulations that were preventing the industry from reaching its full potential. But in a larger sense, he was an evangelist for the wired world. Daniels believed that cable would eventually offer original content, not just take pre-existing content from broadcast television and deliver it to remote places. “The thing that Bill always conveyed to those around him,” John Saeman says, “was his vision for the industry and his unwavering belief that we were going to be a nation wired for cable TV.”
Daniels set about to make sure that cable’s customers had good reasons to pay subscription fees. He was an early supporter of Ted Turner’s Cable News Network—CNN. He conceived a public affairs network before C-SPAN was created. Inspired by ESPN, he launched Prime Ticket, a Southern California–based regional sports network, and negotiated rights to broadcast the L.A. Lakers’ games. The deregulation of cable in 1984 triggered massive growth in the industry. Daniels sold off his cable systems. In 1994, he sold Prime Ticket to TCI—and found his wealth pushing toward the billion-dollar mark.
Daniels had always been generous to his employees and to people in need, but now in his 70s, he began to think seriously and plan carefully for what would happen with his money. He dedicated himself to laying out plans for the Daniels Fund, and his plans were very specific. He limited funding to Colorado, New Mexico, Utah, and Wyoming, as well as to programs with a national reach. He even detailed what percentage of grantmaking should go to each region. Thirty percent of the grantmaking would provide scholarships to graduating high school seniors who demonstrate (among other qualities) character, leadership, and a commitment to service. The other 70 percent would go to grants in ten areas: aging, alcoholism and substance abuse, amateur sports, disabilities, early childhood education, K–12 education reform, ethics and integrity in education, homelessness and disadvantaged populations, youth development, and, finally, Young Americans Bank, which Daniels had created in 1987 to teach kids financial responsibility through hands-on learning.
Finally, Daniels selected seven close friends and associates for his board of directors. They included his brother, Jack Daniels, whom he named chairman; John Saeman; Linda Childears, the founding president and CEO of Young Americans Bank; fellow cable entrepreneur Leo Hindery; Republican leader Jim Nicholson; and his friend and former banker, Bruce Dines. “Bill had put more thought into what he wanted from his foundation than almost anyone that I have encountered,” says Saeman. “He knew what he wanted it to do and what he didn’t want it to do.”
Giving It Away
“Bill Daniels was bigger than life in this community, and the people adored him and the press loved to write about him,” explains Linda Childears. “When he died, his billion-dollar bequest to the foundation was front-page news. The community pressure was instant and intense.”
To ramp up the scholarship programs, the fund sought guidance from a Washington-based organization that focuses on college access for the underprivileged. “In the early scholarship program, we knew that Bill wanted to find a certain kind of Daniels Scholar—a highly motivated young person who just needed that opportunity,” says Childears. “He was looking for a diamond in the rough. But the experts’ solution was to run a college prep program, with the idea that we’ll get to know those kids and we’ll pick the kids from the prep program.”
“Was it a good idea?” asks Childears. “Absolutely. Did it find some great kids? Absolutely. Was it in the materials that Bill left us? There is nothing to suggest it.”
For the grantmaking program, the fund hired dozens of people with professional philanthropy backgrounds, experienced grantmakers who knew the nonprofit world, who could manage distributions and evaluate results. Current and former fund directors uniformly emphasize that these were good, hard-working, well-intentioned people. But, notes Childears, “we had people who didn’t understand Bill’s approach—the principled, entrepreneurial, self-reliant approach.”
Early on, a decision was made to open satellite offices in the Daniels Fund’s three other states—Utah, New Mexico, and Wyoming—and to staff them with local grantmaking professionals. It didn’t take long before the satellite offices began to present challenges. “The scholarship program was handled completely differently in all four states,” says Childears. “There was no consistency, and brand integrity would have been important to Bill.”
As each of the state satellite offices undertook different approaches to grantmaking, the brand integrity issues became ever more visible. The board grew increasingly concerned that the approaches were not always aligned with donor intent. “The staff at each office considered different factors when deciding whether to fund an organization,” says Childears. “It was clear that some of the factors being considered were not ones that would have been important to Bill, who was primarily concerned about the focus and effectiveness of the organization.”
A troubling thought began to haunt the board. “It didn’t take all that long,” reflects Childears, “but all of a sudden, the Daniels Fund was starting to look like someone else’s foundation.”
In 2002—two short years after the death of Bill Daniels—the board began to implement changes. “It had become clear that the fund was drifting,” explains Jim Nicholson, a former chairman of the Republican National Committee and Secretary of Veterans Affairs who has served on the Daniels Fund board since its inception.
The board took action. First, it hired a new president. Hank Brown had known Bill Daniels for decades through Colorado politics and a mutual interest in charitable activities. The two shared similar backgrounds and values. Brown had been decorated for military service as a forward air observer in the Vietnam War, had served as a Republican member of Congress in both the U.S. House and Senate, and had served as president of the University of Northern Colorado.
“I found a couple things that were of concern,” Brown explains, “and that concerned the directors as well.” First of all, the foundation’s giving had strayed from Daniels’ vision. “The staff was not familiar with Bill’s beliefs,” says Brown. “For example, the staff had unilaterally decided to stop supporting certain organizations, disregarding entirely the fact that Bill had admired and funded those exact organizations during his lifetime.” Nicholson agrees: “You had a bunch of young professionals who weren’t familiar with Bill Daniels—who didn’t know him, who didn’t know his soul.” Brown and the board immediately retracted grantmaking authority to their own level.
Another issue centered on overhead. Brown spent a year studying administrative expenses at foundations with similar asset bases. He soon learned that the Daniels Fund was spending about 20 percent more on administrative overhead than what would be found at peer-level foundations, in large part due to the satellite offices. In 2003, Brown proposed reducing staff and overhead by closing the satellite offices and trimming staff at the headquarters.
“It was enormously painful,” Brown says, “but I think we did it in a way Bill would have wanted us to do.” (For example, the fund helped terminated staff to find new jobs and offered generous severance payments.) The timing of the reduction was also unfortunate, Childears notes. “Opening a new headquarters building and making the cuts at the same time was a mistake,” she explains. “We underestimated the pushback we would get from that. But there’s no way to make that easy.”
The board’s act resulted in headlines throughout the Rocky Mountain states and across the philanthropy community. “Changes at Denver’s Daniels Fund: Politics or Prudence?” read a headline in the Chronicle of Philanthropy. Those concerns diminished over time, notes Brown. “There are people of both political parties on the board, and most of the funding has gone—and continues to go—to direct service programs that serve those in need.”
Defining the Donor
Bill Daniels needed to be front and center at the Daniels Fund, the board decided. The first order of business was to explain—to themselves, their successors, and the world—exactly who Bill Daniels was and what he wanted to do with his money. Then they would have to create a set of institutional safeguards to keep him front and center.
The problem was not that Bill Daniels had not clarified his wishes. In many ways, he had made his wishes very explicit—down to the percentage of the annual payout that would go to his selected funding areas and states. But, as his board was discovering, Daniels did not leave very much guidance for the principles that should govern the foundation’s grantmaking. That was the challenge now facing the Daniels Fund.
Early on, the board faced a fundamental problem. “The directors all knew Bill Daniels in different ways,” Saeman explains. “Each of us brought a little different perspective to the table on who Bill was and how he thought.” Take religion. “I worked for Bill for 15 years, and I never had a conversation with him about religion,” says Childears. “I found out after he passed that Bill had a pastor, that he spoke with him daily, that they prayed together regularly. I had no idea that any of that existed.”
Fortunately for the board, Daniels had a long, clear history of generosity. He endowed scholarships—often in the name of a friend—at colleges and universities across the nation. He personally paid college tuition for many young people he met who were in need. He supported homeless programs, he started Young Americans Bank, and he funded the construction of the Daniels Children’s Center at the Betty Ford Center (where, in 1986, he had overcome his own addiction to alcohol).
Daniels was also clear about his wishes in his personal giving. “Very seldom did a check ever go out that didn’t have a letter with it,” says Saeman. The letter would say clearly what he was giving the gift for and why. “Bill was quite a prolific writer,” he says. “We felt confident that we had a large body of evidence to refer to, in addition to his written directions to the board.”
The board began a painstaking review of Daniels’ correspondence, speeches, and writing. It commissioned researchers to track down any and all available material. As new items became available, they were catalogued and cross-indexed. The board was determined to have as comprehensive a set of primary source documents as it could get. By the time Hank Brown left the Daniels Fund in 2005 to become president of the University of Colorado, the process was well underway. To replace Brown, the board turned to board member Linda Childears. In her new capacity as president and CEO, she would partner with John Saeman (who had become chairman of the fund after Jack Daniels’ death in 2003) to drive the project to completion.
“I don’t think the donor—as smart as he was and as much time and attention as he gave to his plan over the last two years in his life—had any idea of the complexity of implementing his plan,” says Saeman. Childears agrees. “What I wish we’d gotten from Bill was much more about his values, his core principles, and how that should be translated into philanthropy.”
“Here’s an example,” she offers. “In the incorporating documents, Bill said he wanted to fund ‘innovative education programs.’ Well, there isn’t a nonprofit in America that doesn’t claim to have one! It actually doesn’t give a lot of direction. So what did Bill really mean? Well, look at the second half of the sentence—‘such as charter schools and voucher programs.’ When you look into his letters and read his correspondence, it becomes very apparent what he was talking about. Basically, it was what we would call school reform.”
Another example concerns funding ethics programs at business schools. “Bill indicated he wanted to support ethics programs,” explains Saeman. “Well, ‘ethics’ is a pretty broad word. Every school in the country has an ethics program; everybody believes in some kind of ethics. But we wanted to make sure that we were supporting the kinds of ethics programs that Bill would support, not just anything that called itself an ‘ethics program.’”
So what did Bill Daniels mean by “ethics”? “We went through his files, his letters, and, just as importantly, his actions,” continues Saeman. “The board concluded that Bill was fundamentally guided by principle-based ethics. He believed that there are certain principles—man’s integrity, honesty—that are inviolable. He believed in the reality of absolute ethical principles, and the need of all people to follow them. We concluded that Bill would have wanted to fund programs that conformed to standards of right and wrong.”
“It took us a couple of years to get to the point where the whole board could say, ‘I think every word in here describes our guy,’” adds Childears. “It required us to get away from experiences we’d had and boil it down to characteristics—his style, his values, his principles.”
The result: a thorough set of documents describing who Daniels was and what he wanted to do with his money. “Preserving Donor Intent” outlines Daniels’ written instructions (in the fund’s bylaws), along with his principles and beliefs, his giving during his lifetime, and interpretive comments by the board. Another document, “Understanding the Man Behind the Daniels Fund” is longer, identifying 11 core characteristics of Daniels (such as integrity and patriotism) and pointing to examples of these characteristics in Daniels’ life, quotations from Daniels’ writings, and implications for the Daniels Fund.
Assembling the materials on Daniels and his intent was utterly necessary, the board realized, but it would not be sufficient. The documents needed to become operational, to be integrated into the legal structure and, more importantly, the culture of the Daniels Fund. “It had to start with the board establishing Bill’s intent as a matter of governance,” says Saeman. “It had to permeate the whole organization.”
The first order of business was to require all board members to acknowledge, in writing, that they had read and understood the full set of materials on Bill Daniels. Then they were required to sign the following statement:
Signing this document affirms your commitment to preserve Bill Daniels’ donor intent and his personal style of conducting business. You agree to set aside your personal views or preferences when acting on behalf of the Daniels Fund. It is the Board’s responsibility to ensure that the Daniels Fund most effectively fulfills Bill Daniels’ intentions and remains true to his ideals. You also acknowledge that you have read this document and understand its importance in guiding the efforts of the Daniels Fund.
To emphasize the continuing nature of their commitment to Daniels’ intent, at each annual board retreat, a director prepares a presentation reflecting on the donor and his purposes. Likewise, staff members were required to sign a document stating: “I am committed to preserving Bill Daniels’ donor intent and I understand the seriousness of this endeavor.” These practices continue with each new board member and employee.
Brown and Childears made a concerted effort to recruit employees who would honor Daniels’ intent. “It’s enormously important to get people who haven’t worked only in the nonprofit sector,” says Brown. “People who are attracted to foundation work are not typically entrepreneurs,” adds Childears, whose background before helping Daniels to found Young Americans Bank was in commercial banking. “Entrepreneurs are out running their businesses, making money. And there’s a world of difference between how an entrepreneur who’s made his fortune looks at the world and how someone who has never been responsible for revenue looks at the world. The difference is staggering.”
Finally, the board instituted a new mechanism for its own succession. Board members serve a four-year term and are eligible for a second. “If your term is up and you want to run again, the nominating committee chair conducts a peer review, and then it goes to a board vote,” explains Childears. “It’s unusual, it’s not easy at all, but it does get to what we’re trying to do, which is hold each other accountable to donor intent.”
Defining Daniels’ intent has helped the board to understand better the kind of director Daniels would choose. In 2010, the board put their efforts to the test and elected the first director who had not known Bill well. Francisco Garcia had served on the board of Young Americans Bank. “He’s a younger person, an entrepreneur with a military career. He has his own foundation that works with people similar to those Bill worked with. He has an almost instinctive understanding of Bill because of how similar they are,” Childears marvels. “That was extremely deliberate. Francisco is a dynamo director.”
A Fighting Chance
Bill Daniels was a high-profile figure who loved his community, and so his fund’s efforts reach out into that community. As befits a cable pioneer, there’s a lot of video footage of Daniels. His fund’s website hosts videos of him talking about his values and principles. The fund has also commissioned a book about Daniels’ life and philanthropy, in order to reach wider audiences.
Drawing on the board’s collection of Daniels’ letters and writings, as well as video and photo archives, the fund produced a “Legacy Kiosk”—an interactive presentation on Daniels’ life, achievements in business and public service, philanthropy, and personal values. The kiosk is available at Daniels Fund headquarters, as well as at places he loved: Young Americans Bank, NMMI, the Betty Ford Center, the Daniels College of Business at the University of Denver, and his Cableland mansion, which Daniels donated to the City and County of Denver to serve as the official mayoral residence. The legacy kiosks allow future generations of Daniels’ grantees, as well as Daniels Scholars, to learn about their benefactor.
Daniels’ friends are doing everything they can to convey his character to those who never met him. They frequently speak about him to Daniels Scholars, for example. “They seem to be extremely interested and grateful to hear about him,” says Jim Nicholson. “He seems to be an epic figure to them.” Sharing the Daniels story first-hand is especially important, he adds, because it means that “this is working—all the efforts we’ve made to transmit the Bill Daniels story and the Daniels culture.”
“I had a chance to work with Bill, to hear his values and beliefs, and I still marvel at what Bill did and what he’s done with his money—it’s life-altering stuff,” adds Childears. “It’s so clear how important it is to always preserve donor intent. But equally clear is the simple fact that it’s never going to be easy.”
For now, with donor intent clarified and secured, the fund’s path seems clear. Daniels’ legacy was turned around by his loyal friends. Only the fund’s ongoing efforts will provide a foundation for future fidelity to donor intent. If those ongoing efforts succeed, there will be hundreds of thousands of people in the Rockies who know that their education, their well-being, or their financial literacy is owed to the generosity of Bill Daniels. If they succeed, it will be thanks to Saeman, Childears, Brown, and Daniels’ other close friends, who worked tirelessly to give their guy a fighting chance.
Evan Sparks is former managing editor of Philanthropy.