When Philanthropy Goes Wrong
In this special Wall Street Journal essay, Adam Meyerson discusses the importance of protecting donor intent.
By Adam Meyerson
The essay reprinted below was originally published in the Wall Street Journal and is excerpted from Adam Meyerson's foreword to the Roundtable's guidebook, Protecting Donor Intent: How to Define and Safeguard Your Philanthropic Principles, by Jeffrey Cain.
Entrepreneur and philanthropist Chuck Feeney recently made news when his foundation donated $350 million to Cornell University. The huge gift was made to clinch that institution’s victory in Mayor Michael Bloomberg’s competition to build a technology-incubating campus in New York City. Behind the scenes, what generated the Atlantic Philanthropies’ donation was Mr. Feeney’s refusal to fall into a trap that has snared many other philanthropists.
When a foundation is set up to dribble out its funds in perpetuity, there is a high risk it will eventually drift into projects the donor did not believe in. Recognizing this, Mr. Feeney has insisted on giving away money fast to do good now.
Donors, whether large or small, need to take concrete action to safeguard their philanthropic principles.
Giving while living” is his way to make certain his funds support causes he believes in. It’s not simple. By the end of 2016, when he intends it to cease making grants, the Atlantic Philanthropies will have to donate more than $2 million every working day to exhaust its more than $2 billion of assets. The Feeney method is not the only way to avoid having charitable gifts go to the wrong places, but he is absolutely right to be wary. One of the great scandals in modern philanthropy is that trustees and staff of grant-making institutions all too often pay little attention to the principles governing their founders’ charitable giving.
Consider oil magnate J. Howard Pew (1882-1971). As Waldemar A. Nielsen noted in “The Golden Donors,” the charter of the J. Howard Pew Freedom Trust (one of seven trusts making up the Pew Charitable Trusts) in 1957 spelled out that Pew intended 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.” Pew also wanted 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 Pew’s charitable giving. The founding donors themselves are often partly to blame for any departures from their principles, thanks to open-ended statements of their philanthropic intent. Insurance magnate John D. MacArthur (1897-1978) 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.”
The Ford Foundation is one of the best examples of donor neglect. Henry Ford (1863-1947) 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 Detroit’s Henry Ford Hospital.
But he left no instructions on the purposes of the Ford Foundation. Indeed, there is compelling evidence he created it principally to maintain family control of the Ford Motor Company. How it was supposed to give out its money he did not say.
One of the great scandals in modern philanthropy is that trustees and staff of grant-making institutions all too often pay little attention to the principles governing their founders' charitable giving.
Henry’s grandson, Henry Ford II, was later to write his famous 1977 resignation letter from the board of the Ford Foundation, after years of frustration over its anti-free enterprise grants. His words have haunted philanthropists ever since: “The foundation is a creature of capitalism, 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.”
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.” The founder’s son Rod, much more politically liberal than his father, seized control of the board and shaped much of the foundation’s future direction.
But changes in a foundation’s strategy may not only be ideological. This May, 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. Serious mistakes in funding and governance by Barnes when he set up his foundation allowed this to happen.
In 2008, Princeton University agreed to pay $100 million to settle a lawsuit charging it with ignoring the mission of the Robertson Foundation, whose 1961 gift of $35 million—which would grow to an endowment of nearly $900 million—dramatically expanded the graduate-level Woodrow Wilson School of Public and International Affairs. Students were supposed to be prepared for government service, especially in international affairs. But in recent decades only 14% of its graduates took international affairs jobs in the federal government.
To avoid such problems, donors—whether large or small—need to take concrete action to safeguard their philanthropic principles:
- Clearly define your charitable mission. Write it down in your founding documents. Add a long written or oral record about your likes and dislikes in charitable giving.
- Choose trustees and staff who share your fundamental principles. Family members, friends, and close business associates such as lawyers, bankers and accountants may not be good choices, unless you share the same worldview.
- Separate your philanthropic interests from your interests in maintaining control of your company. Donor intent frequently suffers when the two are mixed, as happened at the Ford Foundation.
- Give generously while you're alive and able to guide and oversee your gifts. If you establish a foundation, strongly consider a sunset provision, perhaps a generation or two after your death.
- If you do establish a foundation in perpetuity, create strong procedures for electing future trustees who share your principles, and make respect for donor intent part of their fiduciary duty.
Adam Meyerson is president of The Philanthropy Roundtable.
To read the response to this op-ed from Marta Tellado of the Ford Foundation and Mr. Meyerson’s reply, click here.