Summer 2016 – Interview with Denny Sanford

Denny Sanford on his $1.4 billion in giving to medical research, physics, and more.

Denny Sanford, motherless from a young age, spent the summer after high school in juvenile detention following a drunken brawl. A judge released him early on the condition that he go to college. Within a year of graduating he started a construction chemicals company, whose sale a couple decades later enabled him to comfortably retire at the age of 45. He went to Florida. He improved his golf game. He was bored.

Back on his home turf in the upper Midwest, he bought a small bank chain in Sioux Falls, South Dakota, and transformed it into a powerhouse national credit-card company. With its phenomenal success he began his philanthropy in earnest, initially focusing on foster children, whose problems he understood from his own life. From there he branched into medicine, consolidating regional health-care systems throughout the Dakotas and several neighboring states into a nonprofit super system. He donated roughly $1 billion to various forms of medical philanthropy, including a children’s hospital designed like a fairy-tale castle, and a major effort to combine genomic medicine with primary care.

Sanford has also given more than $200 million to support regenerative medicine and encourage collaboration among top scientists at a group of five San Diego biomedical research institutes. It was at this medical mecca that Philanthropy caught up with Sanford for a chat.

Philanthropy: When did you first get involved in philanthropy?

Sanford: About two decades ago, I gave $2 million to the South Dakota Children’s Home Society for abused children who are legally removed from their families. We find them foster homes and adoptive homes. More recently I created a nonprofit, Sanford Health, where we’re able to serve many more of these kinds of children.

I love children. That’s my passion. Recently I was having lunch at a restaurant in Sioux Falls, and a pregnant woman comes up. She looked like she was nine and a half months pregnant. She had a hose coming from her nose and a medical device attached to her, and she said, “Mr. Sanford, I’m sorry for interrupting your lunch, but I just have to tell you, you saved my life and my baby’s life. Thank you very much.” She had gone to another health-care system where they said, “Listen, we’re probably going to have to terminate your baby.” She went to get a second opinion at our hospital, and now she’s going to have a healthy delivery. Doesn’t get any better than that.

Philanthropy: Part of that network is a pediatric hospital disguised as a fairy-tale castle?

Sanford: The castle was unusual, but now we’re putting that same format into a lot of places around the country. The castle design makes hospitalization more special and less scary for child patients, who deserve everything that we can do to brighten their experience.

We’re also putting 300 medical clinics in Ghana, 30 in China. Sanford Health serves an area that is very rural. We go from Oregon to Oklahoma. In bringing good care to that lightly populated area we have developed a strong expertise in telemedicine, the dispensing of specialized medical advice electronically, even when you don’t have a doctor right in front of the patient. We got good enough that we are now able to apply it to other populations.

Philanthropy: So you’ve gone from localized giving in your own community to larger audiences.

Sanford: I like to put together organizations working on a common problem. Classic example: In San Diego we have one of the biggest children’s hospitals in the country; Ernie Rady just donated $120 million to it for genetic research. I took a look and realized, “They’re going to develop a genetic database which is going to cost hundreds of millions of dollars. Once that tool is developed they should share it and combine it with work that other hospitals are doing.” So I created a national partnership of children’s hospitals. There are now 12 participating. Why not share information and get to solutions faster? It saves a lot of money and a lot of time.

Philanthropy: You also made a major gift in the past couple years for personalized genetic medicine. Can you tell us more about that?

Sanford: The name of the program is Imagenetics. It aims to bridge the separation between laboratory research and clinical practice. Our internists go through additional training to tailor the care of each individual patient to his or her genetic information. We’ll have medical staff involved in building a whole portfolio of people’s genomes—not just as researchers, but as trusted care providers who can translate this knowledge to the public.

Philanthropy: Other kinds of science giving by you have spurred some of the most advanced physics experiments in the world. How did you become involved in making that happen?

Sanford: One of the deepest gold mines in the world is located in South Dakota. When it closed down, physicists started conducting experiments on neutrinos and other particles deep in its chambers, where the overlying earth shields out cosmic radiation. I invested a lot of money seven years ago in converting the mine so it could be used for these kinds of experiments.

I was just out at what’s now called the Sanford Underground Research Facility (Sanford Lab), and the scientists are so excited about making discoveries there that could change the world. The lab I was in last week was 4,850 feet underground—almost a mile. The deeper you go, the more shielded the experiments are from interference, and we could potentially put laboratories 8,500 feet down in our mine.

I wanted this to happen in South Dakota. South Dakota’s been so good to me. They’ve got a work ethic out there second to none. And my success, and all of my donations, are a result of my business in that state. So I went to the governor and said, “We need this. Look at the employment that we can bring into our state. What’s it going to cost to go all the way down 8,500 feet?” He told me it would be $70 million beyond what the state could finance. I said, “I’m in. Let’s do it.”

Philanthropy: What’s it like down in the lab?

Sanford: Since the 1860s, 360 miles of tunnels were dug to take out millions of dollars worth of gold. The elevators used to take the miners down a mile deep in three minutes. Today, with increased safety regulations, visitors and scientists get to 4,850 feet in 10 to 15 minutes.

To avoid introducing outside contamination into the experiments much of the equipment and tools need to be made down there. And it’s a triple clean facility. There are water drums surrounding the centrifuges. All kinds of exotic protections.

Philanthropy: How did you move from South Dakota donations to giving in California, and what’s your focus there?

Sanford: Well, I have some very serious allergies: I’m allergic to slipping off roads and shoveling snow. So, at my age, I decided to spend more time in southern California.

The first local project I connected with was what was then called the Burnham Institute. They approached me with an opportunity to make headway on Type I diabetes and some very rare children’s diseases. So I came aboard.

The joy for me: I held five kids on my lap in the past year who would not be alive today had we not done this. Their condition was so rare, only a handful of people around the world have it. We now have abilities to save their lives. The parents are so grateful, you feel good yourself.

And then there is longer-term work. We’ve got a major group within our institute down here that’s studying children’s diseases. They’ve got some new technologies that are absolutely state of the art, including applications of stem cells. Because of the FDA, they have to go through a lot of very expensive trials. It costs a minimum of a billion dollars to get a drug approved, often much more. And so you better be sure where you’re going pretty early on.

Philanthropy: You’ve said that you see your giving as investments rather than donations. How do you set expectations for what your gifts are going to accomplish?

Sanford: The most difficult part about doing research philanthropy is that the payoff on your investments can be decades away. But I lost my mother at age four to breast cancer, so progress is one of my passions. I invested in Type I diabetes a decade or so ago, and we’re still a long way from solving that. But we’re getting there.

In fact, Sanford Health has a clinical trial underway right now where a child’s own cells are used to improve insulin production, the first such therapy to enroll adolescents. This advance, along with our work in genetics and pediatric cancers, was recently honored at a Vatican conference on regenerative medicine. Medical leaders from around the world were there, with different perspectives but a common purpose. It was a wonderful event, and we even had an opportunity to be greeted by the Pope. For a little Presbyterian kid, that was pretty good.

Philanthropy: The San Diego medical research institute was first known as the Burnham Institute, then Sanford Burnham when you supported it, and now Sanford Burnham Prebys Medical Institute. A mouthful! Each time a big donation came in, an additional name was added. How was this negotiated, and what are your thoughts about naming generally?

Sanford: There was consideration given to calling Sanford Burnham Prebys the La Jolla Cancer Institute instead, or just the Medical Research Institute. But that didn’t shake anybody’s bones. Malin Burnham is Mr. San Diego and putting his name on the organization had value beyond the money he gave. Then he twisted my arm and said, “Let’s put your name on it.” And we went to our friend Conrad Prebys. I would say if the institute is really successful, in ten years there are going to be ten names on that flag.

Philanthropy: You don’t have any staff to administer your philanthropy?

Sanford: You’re looking at him. I have a bookkeeper and a great assistant who directs traffic for me, but no, I just do it myself. I focus on large projects, usually things that I’ve created or that really catch my eye.

Philanthropy: This includes a $19 million gift to Arizona State University for teacher training—the Sanford Inspire Program.

Sanford: I was impressed with the work of Teach For America, a great organization. Up in South Dakota, we have graduates from very impressive schools living on Native American reservations and giving those kids new opportunities.

Wendy Kopp, the founder of TFA, came to me looking for funding, and I said, “Your program is too good to keep it just in poverty-level schools.”  I talked her into coming down to Arizona State University and creating the Sanford Inspire Program, a curriculum we provide to teachers’ colleges at no cost. We also have 33 modules that are freely available to teachers already in the profession. It shows them how to inspire, not just teach subject matter. New York and other major school systems have been using it, 4,000 teachers and counting. The chancellor raves about it, and the participants absolutely love it.

I take surveys every so often. I ask, in your nine years of grade school, how many teachers did you have that really sat you down and lit your fire and got you believing in yourself? Probably just a couple, right? And that’s the problem. All teachers want to do this. They want to, but they don’t have the tools. Sanford Inspire gives them a toolbox. Essentially, it’s getting kids to believe in themselves, and setting high standards and high goals.

Philanthropy: Tell us about your latest project, a new program to help train a more effective philanthropic workforce.

Sanford: This is for people trying to raise funds on a day-to-day basis to keep their organizations going. Our program is designed to help them better connect their needs with donors’ interests, to the benefit of all.

I was introduced to National University president Mike Cunningham. I told him, “Right here within two miles of each other in San Diego I’m involved with three major medical-research groups that have the prestige to hire the best scientists in the world. But we can’t find enough development people to bring them here.” So he put together a team to develop a textbook and training program to help nonprofit professionals improve their fundraising skills and manage their programs. I’m pleased with the result. In its first year, so far we’ve trained 5,550 boots-on-the-ground people who are hired to go out and knock on doors, giving them the basics to raise support for their programs effectively. A gal called me the other day and said, “I paid $400 to go to the class. The first day out working with a donor, he gave me a $10,000 check.” Investment paid off!

Philanthropy: You recently received the Horatio Alger Award. Did you ever expect to be so successful that you’d be in this position?

Sanford: Not a clue. Not a clue. I came from a very poor family, and made my way along. As I said, my mother died when I was four. I had to become more independent because of that. Thank God my dad—he was a taskmaster. I worked virtually full-time for him since I was about eight or ten years old. He said it would pay off. It was tough to believe that when my buddies were all playing baseball and football.

Then I got into trouble getting out of high school. Got sentenced to a 90-day term in a very, very difficult place. I went to the judge and told him it was the best wake-up call I ever had, and he agreed to release me early if I would go to college. After that, I knew I couldn’t mess around.

Horatio Alger was a failing writer who revived his career by writing about people who went through adversity, and then became successful and did something more for mankind. Presidents, entrepreneurs, athletes, and other public figures have been recognized with the award. It’s the biggest honor that I could ever imagine in my life.

My motto is “aspire to inspire before you expire.” I want others to look at me and think, “If this kid who barely got out of high school can do it, I can do it, too.” A rising tide raises all ships—my philanthropy creates philanthropy in others.

I’m having a lot of fun with it, and it’s come back to me in spades. It truly has. I’ve given somewhere over $1.4 billion so far, and my net worth is still more than that—more than when I started giving money away. My businesses are going strong. I’ve got about 2,500 employees, and am still very active in the business. No plans to retire. No way, Jose. Not even slowing down. My biggest bets are still ahead.  

A Gold Mine for Dark Matter

Astronomers have demonstrated that as much as a quarter of the universe is made up of some material which is invisible to conventional imaging methods. The gravitational effects of this invisible matter can be seen, even though the material itself cannot currently be detected. Until someone figures out how to observe, measure, and categorize what is currently referred to as “dark matter,” many of today’s most pressing uncertainties in physics and cosmology will remain unexplained.

The Homestake gold mine in South Dakota is a perfect location for a dark-matter detector, because its open caverns have almost 5,000 feet of rock overhead to shield out the cosmic radiation that surrounds us on the surface of the Earth, creating false signals in instruments created to detect dark matter. After the mine closed in 2003, various government agencies had hoped to create a permanent physics lab in the underground site, but they all failed to find the necessary funding and organization.

In swooped Denny Sanford, who put up $70 million to secure the mine, pump water out of its shafts, and create the Sanford Underground Research Facility. This sparked the state of South Dakota to commit additional funds, and the U.S. Department of Energy to underwrite the cost of science experiments on the premises.

The first such experiment, known as the Large Underground Xenon detector, went into operation in 2013 and soon excited physicists by ruling out one favored theory on the nature of dark matter. The sensitivity of the detector is now being increased several hundred times by physical upgrades, so successor tests can be run. A second important experiment underway at Sanford, called the Majorana Demonstrator, is searching to explain differences between matter and antimatter, which could rewrite today’s standard theory of physics. In 2014 Congress approved a third major particle-physics experiment to be conducted in the Sanford Lab. It will involve beaming a string of neutrinos right through the earth from Illinois to South Dakota to test the behavior of the particles and clear up some mysteries fundamental to the origins of the universe. Four other pioneering experiments are in process within the Sanford Underground Research Facility as this is written.


Pushing Collaboration That Turns Research Into Results

Denny Sanford has given more than $200 million to a “collaboratory” that aims to knit together in cooperative investigations five adjacent San Diego research centers: the Sanford Burnham Prebys Medical Discovery Institute, the Salk Institute for Biological Studies, the Scripps Research Institute, the La Jolla Institute for Allergy and Immunology, and the University of California, San Diego. Over 150 profit-making companies have been spun out of the five nonprofits that are members of the Sanford Consortium.

Guided by a Nobel-studded scientific steering committee and what COO Jeff Steindorf calls the “strongest board in San Diego,” the consortium supports cross-organizational, interdisciplinary experiments in state-of-the-art facilities. There is a particular interest in getting useful discoveries out of the lab and into medical practice. Currently the consortium has three clinical trials under way— therapies for cancer, for diabetes, and for spinal cord regeneration—that have emerged from its research. Stem cells are a particular area of interest. Pathologist David Cheresh, whose work focuses on reversing drug resistance in cancerous tumors, says these successes “could only have been done with Sanford’s vision” in combining disciplines and supporting the whole trajectory of discovery from basic research into useful therapies.

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