BIG BUT NOT EASY: As Donors Set Terms, Some Charities
By STEPHANIE STROM
November 15, 2004 - The New York Times
MORE than ever before, donors are tying strings to their gifts
and pulling them hard to ensure that their dollars do exactly
what they want them to do.
Thanks to the immense wealth created in the last decade,
the country has a new generation of philanthropic lions, and,
like their predecessors, these donors seek to invest not just
their money but their ideas into the causes that are their
Eli Broad's recent gift to the Los Angeles County Museum
of Art, for example, gained him virtually exclusive control
over the construction of a new building and strong influence
over the art that will go into it. Michael and Susan Dell
structure their contributions so they can measure the effects.
Like Andrew Carnegie and John D. Rockefeller, the founders
of America's peculiar brand of capitalist compassion, this
new breed of donors has an understanding of the power of money
to produce results. The difference is that the earlier philanthropists
built new institutions while many of today's donors are working
through established groups at a time when public confidence
in charities is low.
Keeping a tight lid on donations is, therefore, not only
a way of asserting one's will but also a way of imposing accountability.
"If somebody's giving a major gift, they're entitled
to an amount of control that makes them comfortable,"
said James S. Tisch, president and chief executive of the
Loews Corporation, whose family has given many millions of
dollars to organizations ranging from the Central Park Zoo
to Jewish groups. Most donors are reluctant to admit to flexing
their muscles. "I don't work that way," said Robert
W. Wilson, a retired hedge-fund manager who is known as a
generous benefactor. "I go to organizations I think are
doing a very good job as it is, and I'm just giving them money
to do more of the same."
Nonetheless, he withdrew a $50 million offer to help underwrite
a new home for the New York City Opera when it tried to become
the cultural anchor at the redeveloped World Trade Center
site. He said it might not be convenient for much of the opera's
audience. The company was not selected and is in talks to
buy the former American Red Cross New York headquarters near
Lincoln Center. Mr. Wilson has renewed his offer.
Some charities, like the UJA-Federation of New York, which
raises money to support Jewish agencies here and abroad, discourage
donors from earmarking gifts for specific groups and programs.
"We are swimming upstream against a kind of philanthropic
individualism," said John Ruskay, the executive director.
But gifts bristling with conditions are usually the biggest
and hardest to turn down. "I've heard of nonprofits striking
Faustian deals with donors," said Leo P. Arnoult, president
of Arnoult & Associates, which advises nonprofits on fund-raising.
Indeed, the nonprofit world has been haunted by the fate
of the Barnes Foundation, outside Philadelphia, which houses
a stunning art collection but struggles financially because
its founder, Albert C. Barnes, imposed such stringent conditions
that the museum cannot even rearrange the art on the walls.
But donors note that Dr. Barnes created his own museum to
exercise his will. "If you're going to get involved with
a large, well-established organization, unless you want to
go along in the way they're going, forget it," said Richard
Gilder, a money manager and philanthropic activist. "If
you think you can change Yale or Columbia or the Metropolitan
Museum because you have a few million bucks, you're kidding
Nonetheless, Mr. Gilder has proved to be adroit at getting
his way. In 1993, he gave a $17 million grant to the Central
Park Conservancy on condition that New York and the conservancy
match the money. Matching gifts are the most benign form of
donor control, an attempt to kindle a fire under fund-raisers.
Mr. Gilder's gift helped spiff up the Great Lawn and allowed
other improvements. It also helped him advance his plan to
privatize the park's management, which the conservancy took
over four years later.
His latest philanthropic target is the New-York Historical
Society. He and Lewis E. Lehrman, also a money manager, who
was the New York Republican gubernatorial candidate in 1982,
have lent the society their collection of historical documents;
built a $1 million vault to house it; and attracted new deep-pocketed
They also agreed, Mr. Gilder said, to underwrite a $2.2 million
Alexander Hamilton exhibition, and they raised almost $4 million
more for the society, which has long struggled.
In exchange, they want the society to try to raise its profile
and attract more visitors and researchers. Critics, including
scholars and staff members, say that that will divert the
society's focus on New York.
Mr. Gilder said his agenda was in line with the society's
charter and that the board had signed off on everything but
his wish to be chairman. Instead, he said, he was made a board
member and became head of a new management committee.
Mr. Broad, the billionaire who once controlled SunAmerica
and what is now known as KB Home, contended that reports of
the influence he won with his $60 million gift to the Los
Angeles museum were overblown.
He is putting up $50 million to build the 80,000-square-foot
Broad Contemporary Art Museum as an anchor for the county
museum's expansion. He also gave $10 million to acquire art.
In exchange, he got to pick the architect Renzo Piano
and set up a separate board to govern the acquisition
fund. The Broad family can name three of its five members.
"We're not going to get involved weekly and monthly
with the hands-on management of the fund," Mr. Broad
said. "If the curators of the museum want to buy something,
they will be able to buy it."
He has held onto his large contemporary art collection, agreeing
so far only to lend it to the new museum. Some people in the
art world have suggested that the arrangement was meant to
retain leverage over the institution.
"We have our own operating foundations to do the things
we want to do," Mr. Broad said, referring to the Broad
Art Foundation and the Broad Education Foundation. Operating
foundations are not grant-making institutions; rather, they
spend their money on programs they devise.
Large, wealthy institutions can, and do, turn down all kinds
of offers and, in rare cases, return gifts accompanied by
conditions that they cannot accept or that do not fit a particular
fund-raising plan, like a capital campaign.
Capital campaigns are by nature restrictive: the money raised
can only be used for the projects and programs that were defined
when the campaign started. Charities like capital campaigns
because they usually raise big sums that are dedicated to
an agenda they control.
The Memorial Sloan-Kettering Cancer Center, for example,
is in the midst of a campaign to raise $1 billion. About half
the money will underwrite construction of a 23-floor research
building and help double the research staff. The rest is for
a variety of clinical and hospital needs.
Richard K. Naum, vice president for development, said that
if a gift were offered that did not meet those priorities,
the hospital would try to persuade the donor to reconsider
and, if that failed, might decline it.
The hospital has discussed a potential gift of tens of millions
of dollars with Evelyn and Leonard Lauder, the cosmetics magnates
who have supported Memorial Sloan-Kettering for years, said
two longtime fund-raisers familiar with its capital campaign.
They spoke on condition of anonymity because they did not
want to alienate the Lauders.
They also said that the Lauders were willing to consider
such a gift if the money were spent on programs related to
breast cancer, Mrs. Lauder's primary philanthropic focus.
She underwrote the hospital's Evelyn H. Lauder Breast Center
and founded the Breast Cancer Research Foundation. And the
Estée Lauder Companies sponsors the annual Breast Cancer
Awareness Campaign, with its pink ribbon.
Breast cancer, though, is not a goal of the hospital's campaign.
"Memorial Sloan-Kettering has approached Evelyn and
Leonard Lauder about a significant gift, as have many other
worthy institutions," said Sally Susman, a spokeswoman
for Estée Lauder. "They decline to reveal the
details of those conversations." Mr. Naum declined to
comment, too, saying he never discusses donors or their gifts.
Many emerging philanthropists seek influence by applying
the principles of venture capital, a practice that gave rise
to the term "venture philanthropy," since replaced
with "engaged philanthropy." "It's money that
can be used to build organizations and put them on a sounder
footing so they can move forward more independently,"
said Mario Marino, an entrepreneur associated with such philanthropy.
Groups that get money from the Michael and Susan Dell Foundation,
for example, do a lot of work to create tracking and reporting
systems to gauge effectiveness.
The Dells underwrote a program that enabled the Austin Independent
School District in Texas to hire additional college advisers
for its 12 high schools. To meet the Dells' requirement for
feedback, the district created a database, using a $50,000
grant from the foundation, to tabulate quarterly effectiveness.
In today's charged atmosphere, charities must be alert to
any sign that a dispute may be brewing. Last year, Mr. Tisch
sent what he calls a "vituperative" e-mail message
to Hannah Rosenthal, executive director of the Jewish Council
for Public Affairs, taking issue with a stance the organization
had taken on a Bush administration tax cut policy.
In an e-mail newsletter to its members, called Insider, the
council had written about the policy: "J.C.P.A. coalition
partners, in advocating for the poor, contend that it does
not best meet their needs."
Mr. Tisch wrote, "I detect some `drift' in the recent
Insiders that I have seen away from `Jewish' issues."
He went on to comment, "I believe that many of our donors
would not be too pleased to see our communal dollars being
spent advocating either for or against tax proposals."
Mr. Tisch, who provided a copy of his e-mail message, said,
"This is the extent of my effort to influence them."
Nonetheless, he was head of United Jewish Communities, a
big underwriter of the Jewish Council for Public Affairs.
The council summoned its 70 board members to discuss the disagreement,
according to members who attended. They said the board decided
to continue to speak out on tax policy, encouraged by one
member's promise to make up any shortfall should United Jewish
Communities withdraw its support.
Copyright 2004 The New York Times Company