Philanthropy Summer 2013 by Philanthropy Magazine

WHICH STATES ARE MOST GENEROUS? • WOUNDED VET CAUTIONS DONORS • THE NEW CHINESE “RHODES” A PUBLICATION OF THE

S U M M E R

2 0 1 3

Online at www.PhilanthropyRoundtable.org Email us at AnnualMeeting@ PhilanthropyRoundtable.org Call us at (202) 822-8333

Join us for the 22nd Annual Meeting of The Philanthropy Roundtable as we shine a spotlight on philanthropy’s role in strengthening our free society.

Hotel reservations call Terranea Resort (866) 802-8000 Annual meeting Registration Rates Early registration by August 9 $1,045 (each) Regular registration by September 14 $1,295 (each)

Keynote�Speakers Edyth e and Eli Broa d Founders, The Broad Foundation

Daniel Hannan

Member of the European Parliament

Late registration after September 14 $1,495 (each)

Daphne Koller

A $50 group discount is applied when three or more participants register at the same time.

Daniel R. LiLJ enquist

Attendance at our Annual Meeting is limited to donors who make charitable grants and contributions of at least $250,000 per year or who expect to do so in the future. This is a solicitation-free event.

Founder, Minerva Project

For more information please visit our website: PhilanthropyRoundtable.org or contact Annual Meeting director Lindsay Miller at 202.822.8333 or AnnualMeeting@ PhilanthropyRoundtable.org.

Founder, Coursera

Former state senator, Utah

Ben Ne lson

Chu ck Ree d Mayor, San Jose, California

Gary S inise

Actor, and founder, Gary Sinise Foundation

Rethink�Your�Point�of�View:�

Session�topics� include Billions Spent on Education Reform: What Do We Have to Show for It? Changing Systematic Biases in Science Climate Change and Its Implications for Philanthropy How to Stop Pension Funds from Bankrupting America If I Had $100 Million Dollars to Strengthen America’s Free Society, I Would…

Intelligence Squared U.S. (IQ2US) Debate THE MOTION: FOR A BETTER FUTURE, LIVE IN A RED STATE

While gridlock and division in Washington make it difficult for either party or ideology to set the policy agenda, single-party government prevails in three-quarters of the states. This Intelligence Squared U.S. debate will compare the merits of red and blue states in economic growth, education, health care, quality of life and environment, and the strength of civil society, including philanthropy.

New Business Models for Higher Education Safety Nets for the Poor: More than Just Dollars Strengthening Religious Freedom Worldwide

MODERATOR

Tattoos on the Heart: The Power of Boundless Compassion

John Donvan

correspondent, ABC News

Teaching Constitutional Principles to Future Lawyers A Thriving Cities Index The Trouble with Boys: A Surprising Report Card

FOR Steve Moore

AGAINST Gray Davis

senior economics writer, Wall Street Journal

of counsel, Loeb & Loeb, and former governor, California

Coming Soon!

Michael Lind

co-founder, New America Foundation

K–12 SITE ViSit SCHOOLS OF INNOVATI ON Join us Wednesday, October 16 at noon as we depart Terranea Resort to explore two leading Los Angeles schools pushing the boundaries of K-12 education. SCHOOL OF EXCELLENCE 1: DAVINCI SCHOOLS DaVinci Schools offer a college prep education that combines project-based learning, rigorous STEM coursework, corporate partnerships, and opportunities to earn college credit while still enrolled in high school.

SCHOOL OF EXCELLENCE 2: ALLIANCE FOR COLLEGE-READY PUBLIC SCHOOLS Alliance Schools feature cutting-edge school design that blends the best of in-person teaching with content-rich, interactive online learning that personalizes education for each student. Lunch and bus transportation will be provided. There is no cost to attend these site visits and donors need not register for the Annual Meeting to participate.

The site visit is co-hosted by Southern California Grantmakers.

table of contents

PHILANTHROPY

features

departments

8 DoNation

By Karl Zinsmeister

14 A Road Trip Across Philanthropic America Saving the winged cheetah. A bubbling introduction to business. The grandaddy of charity marathons. For these tales and much more, ride along on our transcontinental tour of local giving in all 50 United States. 16 18 20 22 23 25 27 31 36 39

Upper Midwest Great Lakes Appalachia Midwest Northwest Pacific Southwest Southeast Mid-Atlantic New England

Contributions by Kari Barbic, Eleanor Barkhorn, Brian Brown, Bill Kauffman, Jonathan V. Last, Caitrin Nicol, Thomas Meyer, James Panero, Naomi Schaefer Riley, Tom Riley, Evan Sparks, Justin Torres, and Karl Zinsmeister

Briefly Noted Nations compared. Colleges repaired. How children fare. Crucial science giving.

Which Americans give most to charity?

A P U B L I CATI O N O F THE

Interview Stephen Schwarzman Will his new Rhodes-like scholarship program improve future Sino-U.S. relations?

42 Reviews & Commentary Don’t Disable Vets with Money Philanthropists who want to help veterans must consider long-term incentives, and put self-reliance at the heart of their giving. By Daniel Gade It’s About Freedom, Not Finances The real reason for keeping the state’s hands off of the charitable deduction. By Alexander Reid

52 Books Embarrassment of Riches? A new book on the “problems of vast individual fortunes” is a little threadbare. By John Steele Gordon When Charities Behave Badly Can we tolerate the disorder of philanthropic freedom? By Suzanne Garment and Leslie Lenkowsky

55 Meeting Photos Images from recent Philanthropy Roundtable events in Houston, Dallas, Kansas City, and Washington, D.C.

60 President’s Note Be on the look out. By Adam Meyerson

SUMMER 2013

Adam Meyerson PRE SI D E N T

Karl Zinsmeister

VI C E PRE S ID E N T , P U BL ICA T IO N S

Caitrin Nicol

E X E C U TIV E E D IT O R

Arthur Brooks John Steele Gordon Christopher Levenick Bruno Manno John Miller Tom Riley William Schambra Evan Sparks Justin Torres Scott Walter

C O NTRI B U T IN G E D IT O R S

Taryn Wolf

A RT D I RE CT O R

Dustin Petzold I NTE RN

Philanthropy is published quarterly by The Philanthropy Roundtable. The mission of the Roundtable, a 501(c)(3) tax-exempt educational organization, is to foster excellence in philanthropy, to protect philanthropic freedom, to assist donors in achieving their philanthropic intent, and to help donors advance liberty, opportunity, and personal responsibility in America and abroad. For editorial or subscription inquiries, please contact: The Philanthropy Roundtable 1730 M Street NW, Suite 601 Washington, DC 20036 Phone: (202) 822-8333 Letters to the editor: letters@PhilanthropyRoundtable.org Advertising inquiries: advertise@PhilanthropyRoundtable.org Reprints: reprints@PhilanthropyRoundtable.org Subscription inquiries: subscribe@PhilanthropyRoundtable.org Copyright © 2013 The Philanthropy Roundtable. All rights reserved. Cover: © Ghislain & Marie David de Lossy/cultura/Corbis

briefly noted

to graduate from college thanks to you?

Big Investment in a New Approach In May, City University of New York received one of the largest donations ever to a two-year college. The Guttman Foundation presented CUNY with $25 million—with $10 million of it to fund grants and improve graduation rates at seven existing CUNY campuses, and $15 million allocated to the system’s just-opened new college in midtown Manhattan, now named Gutt4

Carrying Nuclear to Newcastle The University of Colorado has long been known for its left-of-center politics, tinting Boulder as a sort of “Berkeley of the Rockies.” Starting this fall, though, the campus will also be the nation’s first to host a “Visiting Scholar of Conservative Thought and Policy.” The new faculty position was made possible by Earl Wright of AMG National Trust Bank and other donors hoping PHILANTHROPY

Photo by Robin Layton / CC0 1.0

50 percent more likely

Person-to-Person Works A popular form of giving for many Americans and Europeans is international child sponsorship, with over $3 billion contributed every year to support kids in developing countries. Until now, however, little was known about the long-term efficacy of such person-to-person aid. Thanks to a new study led by Bruce Wydick of the University of San Francisco, sponsors can take heart that their donations are making a difference. Wydick’s team surveyed 10,000 individuals in six countries where Compassion International, one of the leading sponsorship organizations, has an active presence. The survey found that, compared to their peers, adults who had been sponsored as children were 27-40 percent more likely to graduate from secondary school, 50-80 percent more likely to graduate from university, and 35 percent more likely to obtain professional employment. In interviews, formerly sponsored individuals most commonly mentioned the educational support that they received as the most valuable aspect of the program—but second to that they ranked “spiritual and character development,” rating it more than three times higher than economic assistance or other benefits.

Scoring Philanthropic Freedom Russian non-profits are in for a heap of trouble. A new law from Putin’s government says that all civic organizations receiving funding from abroad and involved in politics (vaguely defined) must register as “foreign agents”—a term that to many means “spies.” “We call it a shock and audit strategy,” said Douglas Rutzen, president of the International Center for Not-for-Profit Law. “They’re literally auditing hundreds of organizations in an attempt to close them down.” Russia’s restrictions on giving merited the country a score of 2.5 out of 5.0 in a pilot analysis of philanthropic freedom from the Hudson Institute. Its scholars examined 13 nations and the way they treated civil organizations, tax deductions, tax exemptions, and the ease of giving to and from overseas. The United States scored 4.6 overall, with strong non-profit laws and relatively generous tax deductions for giving. The Netherlands earned the top spot at 4.8, and Sweden, Japan, and Australia tied for third at 4.3. Russia, Egypt, and China scored the worst. But even in the best countries for giving, there is room for improvement. Americans can’t get tax deductions if they give to a charity overseas. In Sweden, only gifts between $300 and $900 can earn a tax break. The Hudson Institute’s analysis is preliminary—more information needs to be collected from other countries—but its Center for Global Prosperity, which also created the invaluable Index of Global Philanthropy and Remittances, should be commended for another research innovation. As Lord Kelvin said, if you can’t measure it, you can’t improve it. —Liz Essley

man Community College. Designed from scratch using Gates and Carnegie money, this new campus employs many fresh techniques aimed at getting students to complete practical degrees within reasonable periods of time. Nationally, only 36 percent of students who start at a public community college complete a credential or transfer to another institution within six years. The new Guttman College, by contrast, intends to graduate 35 percent of all new enrollees within three years. Charles Guttman grew up on the Lower East Side of New York City, had no formal education after age 13, but made a fortune as an importer. When they died in 1969, he and his wife earmarked almost all of their wealth to charity. The CUNY gift represented about half of their foundation’s remaining funds, indicating a willingness to use the money to do good now, rather than dribbling it out forever from a perpetual trust. —Andrea Scott

to broaden the political discussion on campus. Keith Maskus, dean of the College of Arts and Sciences, considers the program an opportunity to “expose our students to experienced, interesting conservative scholars… solid thinkers, not just in scholarship but also as practitioners.” Steven Hayward will be the inaugural torchbearer, spending his one-year term teaching courses on free-market environmentalism, constitutional law, and American political thought. —Adam Sawyer Biologist Leroy Hood

Soft Touch on a Thorny Dilemma “Be fruitful and multiply” may be a bounteous Biblical injunction, but it sure can disrupt the charitable mission of a family foundation. As succeeding generations rise to take seats at the foundation board, it can quickly become difficult to harmonize the newcomers’ priorities with those of the foundation’s original donors. Too often this leads to clashes and family

rancor, or the severance of a foundation’s actions from its intended purposes, which has a corrosive effect on the willingness of future donors to give. One foundation that has done a clever job of keeping later generations interested while remaining true to the philanthropic preferences of its founders is the Raskob Foundation of Delaware. Now in its fifth generation, with over 100 family members eligible to participate in the foundation’s work, Raskob has a simple means for keeping faith without squelching the creativity and priorities of younger family members. Raskob simply requires that every domestic grantee must be listed in the Official Catholic Directory, and that it provide a letter from its local bishop affirming that the organization is who it says it is. This allows family members living in different regions, with different passions, to advocate for a wide range of charities— but all under an umbrella consistent with the strong Catholic faith of the original donors. —Tom Riley

Q&A WITH LEROY HOOD Leroy Hood, M.D., Ph.D., is one of America’s most successful scientist-inventors. Four devices he created proved instrumental in decoding the human genome. He pioneered the important new field of systems biology, and has been awarded seven of the highest prizes in experimental science. A dozen and a half companies have been spun off of his research work. In January, he spoke with Philanthropy about the crucial importance of private giving in making his scientific successes possible. For the full interview, see PhilanthropyRoundtable.org.

Photo by Robin Layton / CC0 1.0

Q: You’ve been involved on

the for-profit side of biomedical research, and you’ve been involved in the non-profit side. What do you consider the distinct advantages of working with nonprofit funders?

A: At Caltech my major inter-

ests were developing new technologies. Among other things, we developed the automated

DNA sequencer. And philanthropy played a really catalytic and interesting role in our success. When we were just getting ready to develop the instrument, we put in a number of grants to the National Institutes of Health in Washington. They got some of the worst scores the NIH had ever given. People said what we wanted to do was impossible. So what I did was fashion together a consortium of philanthropy and business. The philanthropy was Sol Price at the Weingart Foundation. What was terrific about Sol was he was really smart and flexible, and excited by innovation and new ideas.

Q: Isn’t a place like Caltech

awash in government funding?

Look, at truly excellent places like MIT or Caltech or Harvard, new innovation almost always comes from philanthropy. When you get federal grants and contracts they’re tied to very spe-

cific concrete things and you’re responsible for their execution. You generally don’t get federal grants to build new centers and create new visions.

Q: It sounds like what you’re

saying is that there is greater threshold for risk, there’s much more tolerance for new ventures, with philanthropy.

Exactly. It’s money that has a potential to be flexible. It’s money that can catalyze new ideas. It’s money that lets you push the frontiers, follow the leading edge.

Q: Is that attitude widespread

among your colleagues?

I would guess if you talked to the heads of most non-profit research institutes they would agree philanthropy is really important. In biology there’s a battle now between what’s called “small science” and “big science.”

SUMMER 2013

Big science can take on, in a beautifully integrated way, really challenging problems. “Small science,” on the other hand, is built on single investigators and the people they have around them working on a small part of a very particular problem. The two are enormously complementary. But at NIH, I would say 80 or 90 percent of the staff are “small science” partisans. And we need a more balanced portfolio, because it’s only big science that can attack the most complex problems.

What does the five- to tenyear horizon look like?

I hope philanthropists who are very technology-oriented don’t swing over to the side of thinking they know what needs to be done all the time. I hope they always leave a little room to fund somebody who comes out of left field with a wild idea they’d never thought about, and not have it all programmed. 5

STEPHEN SCHWARZMAN

Stephen Schwarzman managed to turn his Blackstone Group into an investment behemoth without benefit of ever having won a Rhodes Scholarship. Yet he still seems to wish he’d gotten one. Today, Schwarzman’s extensive philanthropic giving is focused particularly on learning, from his support of New York’s Inner-City Scholarship Fund to a $100 million donation to the New York Public Library. In April, he announced his most ambitious foray yet into education philanthropy: the Schwarzman Scholars, a program modeled on the Rhodes, which will every year unite 200 top young college graduates from the U.S., China, and other nations to study together at Tsinghua University in Beijing (the alma mater for many of China’s elites). With his own $100 million gift and his promise to raise another $100 million in matching funds, Schwarzman has put the new $300 million venture on track to launch in 2016. Schwarzman’s announcement made a splash, with reactions ranging from glowing admiration for his vision to concern about censorship or Chinese government control (Schwarzman insists that the courses will have academic integrity and independence). One Beijing-based dissident speculated that the project is an attempt to curry favor with Chinese officials who could be helpful to Blackstone’s business goals. One man’s ingratiation, of course, can be another’s pragmatism. The large role that China will inevitably play in forthcoming global developments demands deeper personal ties and more mutual understanding among the next generation of leaders, argues Schwarzman. Thus the mix of idealism and utility in his mingling of future elites. Philanthropy recently spoke with Stephen Schwarzman about the Schwarzman Scholars program and what he hopes it will achieve. Philanthropy: What inspired this gift? Schwarzman: I’m on the advisory board of the Tsinghua School of Economics and Management, and they asked me if I’d be 6

interested in helping them attract more international students in conjunction with several initiatives around their 100th anniversary. I had to think about what would get top students to want to study in China, since its top two universities are ranked in the 50 to 60 range in the world. So I realized if we were going to do this, we would have to do something different and create a truly spectacular experience and environment that would be intellectually challenging and attractive to them on a host of different levels. Philanthropy: What problem did you want to address? Schwarzman: The problem I’m trying to address is what to do about the tensions and instability that will grow between China and its largest competitors, as it emerges as the world’s largest economy in the next decade or two. China is growing at approximately three times the rate of the West. At the same time that China is rising, the developed world is either stalling or decreasing in its economic importance. China is creating 10 million jobs per year, while Europe, for example, is producing none. That creates frustration and anger in the developed world. Economic problems, certainly, and potentially military problems as well may develop. We’re already seeing some of that tension occurring between China and Japan. Attracting future leaders to China to study for a one-year master’s degree so they can understand the country, its culture, and its motivations is one important way to help address this issue and seemed like a constructive contribution. Over time, that group of top-level students from across the globe will grow into 10,000 people, and they will be in a good position to interpret China to their home populations, while also giving feedback to China itself on how its actions are perceived in the outside world. Philanthropy: How do you create something influential from scratch? Schwarzman: I looked around for an analog for this that we could learn from. The Rhodes Scholars program was an obvious PHILANTHROPY

model. We took its interview program, selection process, and procedures as a guide. This seemed a pretty compelling way to get some of the best and the brightest of a generation to experience where the world is going, as opposed to where the world has been. The axis of global economic activity is obviously moving towards the Pacific. Success will require making the program really attractive to candidates with many alternatives. Our building at Tsinghua looks like an Oxford college, so the living environment will be familiar to Western students. Our academic program has a mix of Chinese and Western professors. We offer access to Chinese leaders and trips around the country so that the students will meet experts and see other parts of China and have Chinese mentors in their field of study. For example, in law, a student in our program could be assigned to a Chinese law firm, and learn how law firms work in China, as opposed to his or her home country. Students will meet their mentors’ families, and gain a knowledge base beyond what they’d get just by being students. Like the Rhodes program, we’ll have a mix of students. Attendees will be 45 percent American, 20 percent Chinese, and 35 percent from the rest of the world (split among the top 20 economies). This will be a unique program with no real precedent in China. Philanthropy: You’ve been going to China since 1990, so you’ve gained some perspective on the country. I’d be curious to know about Chinese philanthropy. Are you expecting donations from Chinese nationals? Has there been any buy-in from Chinese donors? Is there excitement among some of the businessmen with whom you’ve interacted? Schwarzman: We did not approach any Chinese potential donors before the announcement; we did that to keep the program confidential. So we don’t know yet what that response will be. My expectation is that it will be pretty good. Philanthropy is really just kick-starting in that part of the world. The U.S. is quite an unusual country with respect to philan-

Daphne Borowski / Financial Times CC 2.0

interview

thropy, and other countries are slowly developing more of a tradition. Because this program was endorsed by the new president of China, it’s an easier place for Chinese to give and I expect we’ll have good results. We are already seeing some interest.

Daphne Borowski / Financial Times CC 2.0

Philanthropy: Cecil Rhodes intended his scholarships to create a sense of common purpose, even ethnic solidarity, among English-speaking people.There was a built-in aspect that grew out of the English colonial experience. The program you’re devising cuts across language and culture and has a globalist perspective. How are you going to create a sense of solidarity within that cadre? Schwarzman: First of all, the courses are going to be taught in English, which is the global language. Without any impetus, about half of Tsinghua’s courses are already taught in English. When Cecil Rhodes died in 1902 and endowed his program, it was a nationalized world. Our program is a mirror image. We’re now in a world where people tend to think globally. China is in the thick of a globalized world based on international trade and the Internet. I think that’s a pretty unifying magic. The fact that the students are going to live together will also unify. There will be eight students living in a suite with a shared living room. This community of scholars will have its own building. Of course, there’ll also be lots of other people at the university, people students will meet when they bridge out into extracurricular activities.

designing the architecture of the program itself, the building, the curriculum, the endowment funds, the extracurricular activities. I want the program to be a demonstration of excellence, so this will absorb me for some time. We’re still in the start-up period. I still have to raise another $100 million in addition to the $100 million I’ve given and the $100 million I’ve raised already. So for the next couple years I need to focus on the start-up of this program. In the interim, there are all kinds of philanthropy that I do as a regular course. They just aren’t as consequential and personal as this.

Philanthropy: Is there anybody you looked to as a model for successful philanthropy? Schwarzman: No, I just look at problems and try to figure out how I can be helpful. I generally try to transfer models that have already worked to new situations. So I look back, but just for lessons learned, not to echo Philanthropy: Let’s take a look at the distant future. What does success look people in any way. like at the 100th anniversary of this Philanthropy: Are there any other big gifts scholarship program? Schwarzman: A century from now, there’ll you’re mulling? Schwarzman: Schwarzman Scholars is be 10,000 outstanding graduates of the more than just a monetary gift. It involves Schwarzman Scholars program. They’ll be SUMMER 2013

all around the world. A lot of those students will be in positions of thought leadership in their home countries. Historically, over a 5,000-year period, China produced 20 to 25 percent of global GDP for the most part. It currently has just 12 percent. After World War II, the country was basically devastated and stood at 2 percent of global GDP. We can reasonably expect that China will return to the range of 25 percent GDP. If it does, then this program will be an important link between the two largest economies in the world. I am a strong believer in the U.S. economic future as well. I see this program as the highest prestige student exchange between the two countries. I see it helping transition the Chinese education system toward a bit more of a Western model. And I see a much better-informed global community regarding China as a result. That’s what I see. P 7

Philanthropic America

Donation

Which Americans give most to charity? By Karl Zinsmeister

he small-scale philanthropy that unfolds every day in nearly all American communities—from Alaskan bush villages to Manhattan’s Central Park—will be sketched for you, in a kind of tour across America, in the article that follows this one. At first glance this modest, unsplashy, omnipresent giving may seem mundane. Yet such micro-philanthropy leaves deep imprints in almost every corner of American life, due to its sheer density and the intimate ways in which it is delivered. The fireworks show that delighted your town this week. The children’s hospital where the burned girl from down the street was saved. The Rotary scholarship that allowed you to become dear friends with a visiting Indonesian graduate student. The church-organized handyman service that keeps your elderly mother in her home. The park that adds so much to your family life. These gifts, many of them products of small offerings from thousands of everyday residents, accumulate in powerful ways to make our daily existences safer, sweeter, and more interesting. It is easy to think of philanthropy as something done by the very wealthy, or big foundations, or prosperous companies. Actually, of the more than $300 billion that Americans give to charity every year, only 15 percent comes from foundation grants. Just 6 percent comes from corporations. The rest comes from individuals. And among individual givers in the U.S., while the wealthy do their part (as you’ll see later in this article), the vast predominance of offerings comes from average citizens of moderate income. Between 70 and 90 percent of all U.S. households donate to charity in a given year, and the typical household’s annual gifts add up to between two and three thousand dollars. This is different from the patterns in any other country. Per capita, Americans voluntarily donate something like seven times as much as continental Europeans. Even 8

PHILANTHROPY

our kissing cousins the Canadians, whose culture resembles ours in so many other ways, give to charity at substantially lower rates, and at half the total volume of an American household. There are many reasons for this American distinction. Foremost is the fact that ours is the most religious nation in the industrial world. Religion motivates giving more than any other factor. A second explanation is our deep-rooted tradition of mutual aid, which has impressed observers like Tocqueville since our founding days. Third is the potent entrepreneurial impulse in the U.S., which generates overflowing wealth that can be shared, while simultaneously encouraging a “bootstrap” ethic that says we should help our neighbors pull themselves up (partly because, in our freewheeling economy, we could be the ones who need help next time). You will see all of these fascinating—and heartening—quirks of American generosity illustrated in the state-by-state tour that fills the middle of this magazine. But before you begin that anecdotal road trip, we thought you might like to have a few hard facts in front of you. What exactly do we know about who gives in America, and what motivates them? Dissecting who is generous and who is not can be controversial, and not all of the research agrees. But in our country giving is a vital cultural phenomenon that needs to be understood. So we have methodically waded through heaps of studies and drawn out for you the clearest findings. You’re about to learn what today’s best social science has to say about the geography, demography, and economics of generosity and giving. Some of it will surprise you. Karl Zinsmeister is a vice president at The Philanthropy Roundtable, and is creating the forthcoming Almanac of American Philanthropy.

How U.S. regions vary There have been several attempts to compare the charitable giving of different U.S. states and regions. The most straightforward measures match the itemized charitable donations of local taxpayers to their incomes (both pulled from official IRS figures). The Fraser Institute and the Catalogue for Philanthropy have each used variations of this method to reveal what fraction of their annual resources residents are giving away to philanthropic causes, versus consuming or saving for themselves. Top ten states: Fraction of their income that residents give to charity 2010

national rank

2004

Utah

Wyoming

Utah

Georgia

Tennessee

Alabama

Arkansas

Maryland

Texas

South Carolina

Alabama

Idaho

Oklahoma

North Carolina

Mississippi

Tennessee

South Dakota

New York

These “giving ratios” reveal a consistent pattern. Measured by how much they share out of what they have available, the most generous Americans are not generally those in high-income, urban, liberal states like California or Massachusetts. Rather, people living in areas that are more rural, conservative, religious, and moderate in income are our most generous givers. This same pattern is seen in data very different from the IRS returns. The Panel Study of Income Dynamics is a high-quality micro study of several thousand U.S. households that are representative of the national population, and whose characteristics have been tracked in detail by researchers over a period of years. When income and charitable giving are compared among this carefully documented group, the willingness to “give until it hurts” can be seen to vary sharply by locale. In the PSID statistics, the top regions for donations as a percent of income are the Mountain West, the East South Central states (Tennessee, Alabama, Mississippi, Kentucky), the West North Central states (South Dakota, North Dakota, Iowa, Kansas, Minnesota, Missouri, Nebraska), and the West South Central states (Arkansas, Texas, Oklahoma, Louisiana). The least giving region was New England, closely trailed by the Middle Atlantic states (New Jersey, Pennsylvania, New York). The variations are not trivial: the top group of Utah, Idaho, Wyoming, Arizona, Colorado, Montana, Nevada, and New Mexico were more than twice as generous as the residents of New England or the Mid-Atlantic region.

Source: Fraser Institute (2010 IRS data), Catalogue of Philanthropy (2004 IRS data)

Giving by region national rank

Bottom ten states: Fraction of their income that residents give to charity

Mountain

East South Central

2010

national rank

2004

West North Central

Louisiana

New Mexico

West South Central

New Mexico

Iowa

Alaska

Ohio

South Atlantic

Rhode Island

Hawaii

Pacific

Hawaii

Montana

East North Central

Vermont

Middle Atlantic

New Hampshire

Wisconsin

New England

Maine

New Hampshire

North Dakota

Rhode Island

West Virginia

Maine

Source: Fraser Institute (2010 IRS data), Catalogue of Philanthropy (2004 IRS data)

Source: Panel Study of Income Dynamics

Major study released in 2012 A third take on this topic was assembled in 2012 by the Chronicle of Philanthropy. Its study “How America Gives” SUMMER 2013

analyzed IRS income and giving data right down to the level of each individual ZIP code in the U.S. The researchers incorporated extensive manipulations of the numbers in response to some New England foundations and academics who had complained that earlier studies using the straight IRS data made high-income states look bad because they do not take into account the elevated living costs in predominantly urban states. The Chronicle study thus began with the latest (2008) IRS returns, but then subtracted estimates of the local costs of housing, food, health care, child care, clothing, and household supplies, plus all taxes paid, before comparing “living-cost adjusted” income levels to charitable donations. The results? Not much different from the portraits above. Using four large regional groupings, “How America Gives” reported that southerners are America’s most sacrificial givers, while northeasterners are substantially less generous. Giving in four major regions percentage of “discretionary income” donated to charity

Bottom ten states: Fraction of “discretionary” income that residents give to charity national rank Nevada

New Jersey

North Dakota

Wisconsin

Connecticut

Rhode Island

Massachusetts

Vermont

Maine

New Hampshire

Source: How America Gives

Once again, the biggest givers are found to be concentrated in “Bible belt” states in the south or where MorWest 4.5 mons make up a large portion of the population. On the other hand, scant-giving households are heavily concenMidwest 4.3 trated in relatively wealthy New England. 4.0 Northeast* This effect holds up not only across states but also *New England plus New Jersey, New York, and Pennsylvania in major cities. For instance, denizens of Salt Lake City, Source: How America Gives Birmingham, Memphis, Nashville, and Atlanta donate Here are the top and bottom ten states for giving, using from 6 to 9 percent of their discretionary income to charthe Chronicle technique of first factoring out living costs ity, while counterparts in Boston and Providence average and taxes: 2.8 percent. Silicon Valley is legendary for its wealth, yet lags badly in charity—even after making allowances for the area’s heavy housing costs and taxes, the Chronicle Top ten states: Fraction of “discretionary” income data show San Jose and San Francisco falling near the that residents give to charity bottom of our 50 biggest cities, giving just 3.5 percent and 3.9 percent, respectively, of “discretionary” income. national rank There are about the same number of people in urban, high-education San Francisco County as there are in the Utah 1 rural, religious state of South Dakota, economist Arthur Mississippi 2 Brooks once noted. And families in these two regions Alabama 3 give almost exactly the same amount to charity every year. Yet because the average family income is about $45,000 Tennessee 4 in South Dakota compared to $81,000 in San Francisco, South Carolina 5 the typical South Dakota household is actually giving away 75 percent more of its income every year than a San Idaho 6 Fran counterpart. South

5.2

Arkansas

Georgia

North Carolina

Maryland

Source: How America Gives 10

PHILANTHROPY

Struggling to explain New England’s lag A few years ago, some Bostonians chagrined by these findings created a study which tried to further “rebalance” the national statistics, which they felt did not fully reflect the willingness to give in their region. They used

their own methods for adjusting income downward to compensate for high taxes and living costs, and they created estimates of additional giving by persons who don’t itemize their contributions on their taxes. Their results are quite different from all other measures. Boston-model re-estimates of top and bottom states for giving national rank after income is adjusted and giving is extrapolated for non-itemizers New York

Utah

Maryland

Connecticut

California

New Jersey

Hawaii

Wyoming

Virginia

North Carolina

Ohio

Wisconsin

South Dakota

Vermont

Iowa

New Mexico

West Virginia

New Hampshire

North Dakota

Maine

Source: The Boston Foundation

In this more synthetic data, evidence of scant giving in New England remains, but the top and bottom groups are otherwise much more jumbled and difficult to see patterns in. The Boston data have not been widely embraced, for a variety of reasons. According to Giving USA, about 80 percent of all charitable dollars are captured in the itemized giving data from the IRS (which provide the backbone for the “Generosity Index” and “How America Gives” studies cited earlier). Moreover, the lower-income householders who don’t itemize on their taxes yet give at substantial levels include many “lower-income religious conservatives—who donate at extremely high rates,” notes economist Brooks

(more on this later). These factors leave many observers skeptical of statistical manipulations that reorder the clear trends seen in the IRS data—which are hard measures, not extrapolations or statistical models like the Boston numbers. One intriguing pattern that emerges from the Boston data is a class stratification in New England when it comes to charitable giving. Among people making $100,000 or more in 2003, New Englanders were actually more generous than the national average. Yet among people in the middle-income band ($25,000 to $99,999), New Englanders fell below the national average in giving. And among the low-income (less than $25,000 of annual income in 2003), New Englanders were notoriously skinflinty, giving at less than half the national average for that income group. This may reflect the region’s lower level of religious belief, a factor which, as we’ll see, dramatically lifts giving, even among the comparatively poor. Red state versus blue state A strong pattern that makes some commentators uneasy is the fact that, as Brooks put it, “the electoral map and the charity map are remarkably similar.” Or to quote the Chronicle of Philanthropy’s 2012 summary of its giving research, “the eight states that ranked highest voted for John McCain in the last presidential contest...while the seven lowest-ranking states supported Barack Obama.” In addition to this political tinge, there are many other fascinating demographic and cultural patterns in the national giving statistics. For instance, the PSID survey shows that while New Englanders rank dead last in percentage of income donated to charity, their participation rate (fraction of the population who give something) is actually higher than in any other region. New Englanders reflect, and indeed may lead, the extraordinary American propensity to donate to others. They just don’t give as much as residents of other regions. Some other results emerging from statistical regression of the PSID data: All other things being equal, the self-employed give less to charity. So do people who have moved residences more than the norm. Residents of rural areas and small towns, on the other hand, donate at higher levels. The demographic factor most likely to increase giving to charitable causes is marriage. Compared to the unmarried, married households were 62 percent more giving in 2011. This was after all other factors like income, race, region, etc. were statistically adjusted for, using base data from the government’s Consumer Expenditure Survey. Surprisingly, people who volunteer at secular organizations are a bit undergiving, in regressions of the PSID statistics. Meanwhile, persons who volunteer at religious organizations are dramatically bigger donors of money. Religious practice is the behavioral variable most consistently associated with generous giving. Charitable effort correlates with the frequency with which a person attends religious services. Evangelical Protestants and SUMMER 2013

Mormons in particular are strong givers. Compared to Protestant affiliation, both Catholic affiliation and Jewish affiliation reduce the scope of average giving, when other influences are held constant. Finer-grain numbers from the PSID show that the faithful don’t just give to religious causes; they are also much more likely to give to secular causes than the non-religious. Among Americans who report that they “never” attend religious services, less than half give any money at all to secular causes. People who attend services 27-52 times per year, though, give money to secular charities in two-thirds of all cases. Sociologist Robert Putnam has chronicled the many pro-social and philanthropic overflow effects of religious practice. Not only is half of all American personal philanthropy and half of all volunteering religious in character, but nearly half of all associational membership in the U.S. is church-related. Religious practice links us in webs of mutual knowledge and support like no other influence. Indeed, faith is as important as basic financial success in increasing giving. And religious conviction is often what separates one sub-group from another when it comes to charitable practice. For instance, African Americans, who are generally more religious than whites, are 18 percent bigger givers when households of the same income, region, education, and so forth are compared.

26-45 years old.) Some of the low-income givers charted on page 13 are undoubtedly retirees who, while their annual incomes are modest, have accumulated wealth that allows them to be generous donors. The other factor accounting for the high level of donations among low-income Americans is that a significant minority of them are religious tithers who powerfully push up the group average through sacrificial giving. If you look at what fraction of each group gives, various studies show that the rate of donation among low-income persons is actually half or less of what it is for the rest of the population. Only about a third of low-income individuals give any money at all in a year. But those who are givers tend to be extremely generous, with a third or half of them giving at least 5 percent of their income. These sacrificial givers motivated heavily by religion are found much more among what might be called the working class (households making $25,000-$45,000 in current dollars) than among the truly poor. The 1 percent High-income households provide an outsized share of all philanthropic giving. Those in the top 1 percent of the income distribution (any family making $380,000 or more in 2012) provide about a third of all charitable dollars given in the U.S. When it comes to bequests, the rich are even more important: the wealthiest 1.4 percent of Americans are responsible for 86 percent of the charitable donations made at death, according to one study. At the top of the income spectrum, charitable giving bumps upward both in dollars and as a fraction of income. The fullest study of wealthy donors is done every two years by the Lilly Family School of Philanthropy at Indiana University. Averaging findings from three of its recent reports shows the following:

Giving by income level The curve charting charitable generosity by income takes on an unexpected U-shape largely thanks to the faith factor described above. People with means, as you might expect, are substantial givers. Middle-class Americans donate a little less. But the lower-income population surprises by giving more than the middle—and in some measures even more than the top. (As a percentage of available income, that is. In absolute dollars, those in Portion of income that the wealthy higher income groups give much more.) give to charity The graph on the opposite page combines results from six different studies of how giving varies as income changes. Each study uses somewhat different definitions percentage* of income, different universes of households, measured Households earning less than $200,000 but in different years, so they are not strictly comparable, but 9.7 with liquid assets of at least $1 million: I have made some basic standardizations and converted results to present-day dollars so readers can observe the Households earning $200,000-$500,000: 8.6 general trend uncovered by each of these analyses: If you measure charitable donations as a fraction of the donor’s Households earning $500,000-$2 million: 8.3 income, giving is most robust at the top and bottom of the earnings spectrum. Households earning $2 million and above: 14.0 People are generally more philanthropic toward the end of their lives, when they tend to have more savings, *Gross income levels are used here. If income was adjusted for taxes paid, time, and motivation to help others. (Giving peaks at ages or living expenses, like some of the studies cited earlier, the percentage of 61-75, when 77 percent of households donate, compared income given away would be a considerably higher number. to just over 60 percent among those headed by someone Source: Study of High Net Worth Philanthropy (2005, 2007, 2009) 12

PHILANTHROPY

"Study of High Net Worth Philanthropy"

Charitable giving's u–curve percentage of income donated to charity

Center on Philanthropy Panel Study

Center on Wealth and Philanthropy

"How America Gives"

Social Welfare Research Institute

Panel Study of Income Dynamics

100

150

200

250

300

350

annual income in 2012 dollars

The very wealthy thus give away a much larger chunk of their earnings than others. Note, however, that their robust rates of giving are elevated by the extreme generosity of a subset of the rich. While donations to charity are almost universal among wealthy households (more than 97 percent make some annual gift, according to the Indiana data), many of those gifts are comparatively modest. Others are extraordinarily copious—and these push up the donation average. If instead of the average percentage of income given away by wealthy households, we look at the median percentage (meaning that half gave more than this amount, and half gave less), the wealthy appear less magnanimous. From 2007-2011, the median wealthy household (having annual income of $200,000+ or assets of $1 million+) gave away 3.4 percent of its income. Interestingly, when rich people live in separate enclaves they are not as generous as when they live interspersed in normal communities. The “How Amer-

ica Gives” study showed that when households earning $200,000 a year make up more than 40 percent of the residents of a particular ZIP code, they give just 2.8 percent of their discretionary income to charity. If they live in more mixed neighborhoods and towns, though, they give an average of closer to 5 percent. Physical separation and economic stratification corrode social cooperation and generosity. In towns, villages, and cities where Americans of differing fortunes live in more traditional combinations, though, generosity flourishes. And for many Americans, the resulting generosity seems to be deeply connected to satisfaction in life. “Making a lot of money and spending it on yourself is not a lot of fun,” successful oil businessman Jim Calaway told the Chronicle of Philanthropy last year. “What is a lot of fun is to live modestly so that you can give to the common good. That’s where happiness really lies.” P SUMMER 2013

Librarian book buddies p. 25 Remote dentistry p. 25

Sanfo medi p

Warriors and Quiet Waters p. 24

Silviculture alternatives p. 26

Peregrine Fund p. 24 Wyoming Meth Project p. 23

Kamehameha Schools p. 25 Agassi Academy p. 26

THIS IS THE SEASON when Americans jump into their cars, roll down the windows, and drive. We gape at our countryâ&#x20AC;&#x2122;s many wonders, and observe how folks in opposite corners of our republic live. In that spirit, this issue of Philanthropy takes you on a transcontinental tour, stopping in every state (and twice in three states, plus once in D.C.) to peek at some local artifact of private philanthropy. Some are quirky little pet projects, others are monuments to the very best accomplishments of personal giving. Many fall in between, and exemplify the sorts of

Huntsman Cancer Institute p. 28 Project 1.27 p. 28

Deep Springs College p. 27

Great Hearts p. 27

everyday offerings by donors and volunteers that handsomely speckle every one of our towns. These gifts from one group of citizens to another are a great strength of America. They fill human hungers that would otherwise be ignoredâ&#x20AC;&#x201D;leaving our daily lives duller and . . .

Video medicine p. 29

Maine Woods Park p. 41 Sanford Fargo medical center p. 17

Saint John's Bible p. 16

Dollars for Scholars p. 17

Crazy Horse memorial p. 16

Gideons p. 18

Western Aviation Academy p. 18

Clear Lake fireworks p. 18

Alice's Integrity Loan Fund p. 23

Champaign profit recycling p. 22

Young Entrepreneurs p. 22

New Music Initiative p. 22

Noble soil conservation p. 29

Marketing for kids p. 30

Monmouth Battlefield p. 37 Ladies at home Micro-loans for p. 37 poor kids p. 37

Cleveland Foundation p. 20 The Summit p. 20

Air and Space p. 35

The Parklands p. 21

Museum of the New South p. 34

Imagination Library p. 21

ArtFields p. 34

Crystal Bridges Museum p. 30 Vicksburg preservation p. 31

Fort Worth Zoo p. 29

Mind Trust p. 22

Marworth Drug Treatment p. 37

Beeson Seminary p. 32

Givingâ&#x20AC;&#x2122;s joys p. 40 MacDowell artist colony Remington home p. 40 Boston p. 38 Marathon p. 39 Mystic Seaport NYC p. 39 turnaround p. 37

Georgia Aquarium p. 32

New Orleans SciHigh p. 31 Rum Creek Ranch p. 32

a c i r e m A c i p o r Philanth

Mr. Fix-it p. 37

Touro Synagogue p. 39

SOUTH DAKOTA

Mr. Fantom: I despise a narrow field. O for the reign of universal benevolence. I want to make all mankind good and happy. Mr. Goodman: Dear me! Sure that must be a wholesale sort of a job. Had you not better try your hand at a town or neighborhood first? Mr. Fantom: Sir, I have a plan in my head for relieving the miseries of the whole world…. I would alter all the laws, and put an end to all the wars…. This is what I call doing things on a grand scale…. Mr. Goodman: One must begin to love somewhere; and I think it is as natural to love one’s own family, and to do good in one’s own neighborhood…. If every man in every family, village, and county did the same, why then all the schemes would be met, and the end of one village or town where I was doing good would be the beginning of another village where somebody else was doing good…. Mr. Fantom: Sir, a man of large views will be on the watch for great occasions to prove his benevolence. Mr. Goodman: Yes, sir; but if they are so distant that he cannot reach them, or so vast that he cannot grasp them, he may let a thousand little, snug, kind, good actions slip through his fingers in the meanwhile. And so between the great thing that he cannot do and the little ones that he will not do, life passes, and nothing will be done. —McGuffey’s Reader, 1844

PHILANTHROPY

MINNESOTA

An Illuminated Manuscript for the Internet Age Elaborately illustrated handwritten Bibles used to be one of the foremost human art forms, but these manuscripts glittering in gilt and snaking vines and calligraphic curves disappeared with the invention of the printing press. Then some Minnesotans came along and revived the illuminated Bible for the modern age, in what Smithsonian magazine described as “one of the extraordinary artistic undertakings of our time.” Powered by the private donations of about 1,500 individuals, foundations, and corporations, the Benedictine fathers of Saint John’s Abbey in Collegeville, Minnesota, commissioned what is known as The Saint John’s Bible: a glorious seven-volume work, each volume stretching two feet tall by three feet wide when open and weighing 35 pounds apiece. The text and images were inked with hand-ground pigments and platinum- and gold-leaf on pages made of calf-skin vellum. The abbey’s theologians decided which passages would be given large-scale illustration. Computers scaled images and plotted text breaks. All calligraphy and illumination was carried out by hand in a scriptorium. Goose, turkey, and swan quills were used for lettering. Mineral pigments were mixed with egg yolks and water to paint pages in vivid hues that will endure for centuries, just as in medieval illuminated manuscripts.

Courtesy of Crazy Horse Memorial

. . . darker—or else be foisted on impersonal, less effective agencies of government. We start our road trip in what geographers say is the physical centerpoint of the 50 states— South Dakota—and then wind through our heartland, the west coast, the south, and the northeast, ending atop Mount Katahdin in Maine (just like the Appalachian Trail, itself a tremendous creation of private action and giving). So slip on a pair of shorts and sandals, grab an iced tea, and journey with us across the fertile plain of philanthropic America.

A Gonzo Memorial to Crazy Horse Crazy Horse famously refused to be photographed, and after he died in U.S. Army custody in 1877, his burial place was kept secret. So what would he make of a 560-foot-tall memorial to him and his people? For 65 years, Thunderbird Mountain in the Black Hills has been slowly transforming into an epic tribute to the Lakota fighting chief. Korczak Ziolkowski, a sculptor who cut his teeth as an assistant on nearby Mount Rushmore, began blasting away sections of the mountain in 1948. Ziolkowski continued the work until his death in 1982; since then, his widow, Ruth, has directed the project with the help of seven of their ten children. In 1998, they completed Crazy Horse’s face. Since then they have been slowly excavating his horse’s head, one high-explosive gouge at a time. “Go slowly so you do it right,” was Korczak’s parting wisdom to Ruth. The non-profit project—the world’s largest mountain carving—has been funded entirely by philanthropic gifts and admission fees. Ziolkowski turned down millions in government funds because of his commitment to “individual initiative and private enterprise,” according to the memorial’s foundation. It’s a good guess that Crazy Horse—also a skeptic of U.S. government involvement in people’s lives—would have approved. —Evan Sparks

The Crazy Horse Memorial in the Black Hills near Custer, South Dakota—where the chief’s seven-story-tall face is completed, and his horse is beginning to emerge.

Production of this extraordinary new art Bible extended over two decades and cost $8 million. To bring the final creation to a wide audience, trade books reproducing the seven volumes in a smaller format are now being sold. And the original work is touring churches, museums, and libraries around the world for in-person viewing of what Pope Benedict XVI called “a great work of art…a work for eternity.” Eventually it will all reside in central Minnesota. —Karl Zinsmeister

Courtesy of Crazy Horse Memorial

NORTH DAKOTA

Healing Large in Fargo The business triumphs of Denny Sanford allowed him to retire to Florida at 45—but he was soon itchy, and returned to the upper Midwest where he had spent his entire previous life. After further commercial successes, he started giving away money. He turned his attention to the Sioux Valley Hospitals and Health System, beginning with a $16 million gift for a children’s hospital designed like a fairy castle. After his $400 million pledge in 2007 the organization was renamed Sanford Health. Today, his gifts total $700 million, and the non-profit health system centered on North and South Dakota includes nearly three dozen hospitals and more than 140 clinics. In Fargo, Sanford Health is in the midst of one of the largest construction projects in the history of the Dakotas. The result will be a top-shelf medical facility filled with the

best technology and some of the brightest medical experts in the country. It will bring a new level of care to the region, including a major trauma center, enhanced pediatric services, a heart center, an expanded cancer center, and new services in areas such as eating disorders and rehabilitation. A signatory of the Gates-Buffett Giving Pledge, Sanford says he aims to “die broke.” At a cost of $500 million, Fargo’s remarkable new medical complex will bring that day a little closer. —Caitrin Nicol

DAKOTA/IOWA/MINNESOTA BORDER

A Bachelor Enriches His Place Harvey Ordung, a bachelor farmer who spent his entire lifetime (1923-2007) in the little town of Luverne, Minnesota, was about as unprepossessing as they come. He wore bedroom slippers over his club foot and went everywhere in floppy bib overalls. Harvey “didn’t smoke, he didn’t drink, and I don’t think he ever went on a date,” said his friend Gregg Gropel. Harvey’s modest obituary noted his membership in the First Presbyterian Church of Luverne and the town’s Ben Franklin Masonic Lodge. “He enjoyed billiards, playing cards, farming, and spending time with his lodge brothers,” noted the eulogist. But there was more to Harvey Ordung than met the eye. He was thrifty; he worked hard; he was a shrewd investor; and perhaps most of all, he was deeply in love with his community. Upon SUMMER 2013

MICHIGAN

A frontispiece by Donald Jackson and the opening of the Gospel of Mark from The Saint John’s Bible.

PHILANTHROPY

Fly High On November 8, 2006, Dick DeVos woke up with nothing to do. The day before, he had lost the election for Governor of Michigan. “If you’re not elected, you’ve basically cleared your entire schedule for the foreseeable future,” he chuckles. “You’ve got time on your hands to reflect on, ‘What should I be doing?’” It wasn’t a feeling DeVos was used to. The former CEO of the multi-billion-dollar direct-selling firm Amway and head of the Orlando Magic NBA team,

Sandy Hansen Photography

WISCONSIN

Getting the Word Out On September 14, 1898, the small western Wisconsin town of Boscobel was hosting a convention of lumbermen, so when traveling salesmen John Nicholson and Samuel Hill arrived at the Central House Hotel, they found it was overbooked, leaving them no option but to share room 19. The travelers got to talking, and discovered that they were both Christians. Elated, they studied the Bible together and knelt for prayer. A year later, IOWA they met with another friend in Janesville, Wisconsin, Boosters of the Bang In Clear Lake, Iowa, population 7,700, more than to start an evangelistic discipling ministry for traveling 60,000 visitors gather every July for a carnival and businessmen. Calling themselves the Gideons—after the Old Testament judge who did whatever God called him to—they came up with an additional strategy for reaching their fellow traveling businessmen: placing a Bible in every hotel room in America. With the philanthropic support of their members and members’ home churches, the Bible project launched in 1908 became the Gideons’ signature outreach. Today, with 290,000 members in 190 countries, the Gideons have distributed 1.7 billion Bibles. All thanks to some simple prayers in Boscobel. —Evan Sparks

his death, his neighbors learned something new about Harvey: he was rich. His estate was worth $9.3 million. Ordung bequeathed most of it to local institutions, including the county historical society, the hospital, and the community theater group. His largest single gift— $2,927,447.93—went to “Dollars for Scholars,” which provides financial aid to any Luverne High School graduate who wishes to pursue post-secondary education at a two- or four-year college. He also gave a substantial sum to the Luverne Presbyterian Church because, as he had joked, “someone’s gotta bury me.” Dollars for Scholars was especially close to Harvey’s heart. He and several friends had founded the Luverne chapter in 1983. Harvey “was a bachelor and wanted to help out these young children,” says co-founder Gregg Gropel. Harvey Ordung understood the truth of the adage that “charity begins at home.” Luverne was the love of his life—and in death, his fidelity continues to enrich his place. —Bill Kauffman

spectacular Independence Day fireworks display. Launched from multiple barges on the lake, the celebration is famed for being one of the best shows in the midwest. Back in 1997, Des Moines businessman John Pappajohn and his wife Mary began contributing $10,000 or more a year (anonymously at first) to match other gifts from the community in support of the lake fireworks. The carnival has grown and grown since then. Other local contributors have paid for an extra barge, and even established an endowment fund to keep the commemoration going. Without this donor support, says local Chamber of Commerce director Tim Coffey, the fireworks could not exist. These gifts pay off many times in the revenue brought in by tourism, which at $7-$10 million per year is a pillar of the Clear Lakes economy. But the fun of celebrating freedom in style: that’s priceless. —Caitrin Nicol

Sandy Hansen Photography

DeVos had also been involved in civic activities, including serving on the State Board of Education and on numerous non-profit boards. He was a mentor with Kids Hope, a charitable group in his native Grand Rapids. So DeVos’s wife Betsy—herself a formidable education philanthropist (interviewed in the Spring 2013 issue of Philanthropy)—made a suggestion. “You’re a pilot,” she told him. “You’re interested in aviation, and you’re interested in giving more kids more choices for education. Is there an intersection between those two passions that you should be pursuing at this time?” Dick DeVos is in fact a jet-rated pilot. He took up flying as a hobby 12 years ago, when Betsy “surprised me with a little single-engine airplane…for my 45th birthday.” DeVos quickly racked up his qualifications— single-engine, multi-engine, instrument rating, jet rating—and currently flies a Cessna Citation CJ4, which operates at up to 45,000 feet and 500 miles per hour. He also flies an EC-130 seven-passenger turbine helicopter. He has seen commercial benefits as well as personal pleasures. “The direct-selling business is very much a people business,” he explains. “The company used aircraft very effectively to make sure that people could stay in touch and be face-to-face, attend events together, and speak directly. There’s a relationship argument that was very powerful.” At some point, DeVos thought about connecting aviation with education, and how it might expand the view of some students. He reflects on the boy he was then mentoring through Kids Hope, a Hispanic third-grader living in Grand Rapids’ relatively impoverished inner city: “I remember one time I asked him toward the spring, ‘Are you going to go out to the lake this summer?’ I was referring to Lake Michigan, which is only 30 miles away and where people from Grand Rapids go frequently. “He said, ‘What lake?’ I said, ‘Lake Michigan.’ He said, ‘Where is it?’ I realized how small his world was, compared to my world. As a pilot I fly at 45,000 feet—and the horizon is just enormous.” Resolving to bring those wide horizons to young men and women, DeVos founded the West Michigan Aviation Academy, a public charter school. WMAA opened in 2010 with 80 freshmen in a once-abandoned office building on the grounds of Grand Rapids’ Gerald Ford International Airport. This fall, the school will have its first senior class. There are 400 students enrolled, and it still has room to grow. “We try to introduce an aviation concept or aviation theme into everything that we teach,” DeVos says. “So reading assignments for English class or writing assignments may well involve historic references or stories that relate or connect to aviation. In mathematics, it’s the same thing—we try to relay to them the practical realities of flying.” In addition to its college-prep curriculum, WMAA offers several aviation-related tracks: flight, engineering, aviation maintenance, and aviation business. “You

America’s only high school with an organizing focus on aviation— the West Michigan Aviation Academy.

can choose those electives depending upon your interest level,” DeVos explains. “We already have a young man who secured his private pilot’s license on his 17th birthday. We have others who are looking toward training. We’re in the process of acquiring a plane, now that our kids are getting a bit older, and offering full flight capabilities so that individuals could graduate with their pilot’s license if that’s their interest.” The students—three-quarters of whom are boys— have a wide array of aviation-related extracurriculars. The school offers a gliding program during the summer. A number of retired pilots in Grand Rapids volunteer as flight instructors. There is a radio-controlled aircraft club. “In Michigan winters, it’s a little awkward to fly RC,” DeVos laughs, “so on Saturdays we have all sorts of aircraft buzzing around in our gymnasium.” As president of the board, DeVos is involved with the school on a daily basis. He estimates that he and Betsy have given it nearly $5 million. “We’ve been able to help them with building a facility and then also providing operating financial support for the early years.” Once the school is enrolled at full capacity, DeVos reports, it will be on track for independence from large philanthropic funding. DeVos’s passion for flight has produced something unique in America. Its combination of a rigorous college prep program, strong emphasis on character, multi-faceted technical training, and unparalleled hands-on opportunities in aviation exist in no other public (or private) school. “I think we’ve created a school that not only provides a great education but, I hope, alters their perspective of the world, and every child’s potential,” states DeVos. “The world looks different when you’re 5,000 feet in the air.” —Evan Sparks SUMMER 2013

The Summit, the new adventure center of the Boy Scouts of America, was created in a wild chunk of West Virginia with private donations.

PHILANTHROPY

tribute more than $4 billion every year. Indeed, there are now hundreds of community foundations in other countries. And it all started 100 years ago on the banks of Lake Erie. —Brian Brown

WEST VIRGINIA

High-adventure Haven for Boys The Boy Scouts of America had a problem. Fort A. P. Hill in Virginia had for nearly two decades been home to the Scouts’ national jamboree, which draws 45,000 boys and up to 300,000 friends and family from across the country. But throwing up the temporary infrastructure needed for each quadrennial jamboree cost the Scouts as much as $16 million every time, and the Scouting leadership realized that they needed a more permanent fix. That solution came in the form of a 10,600-acre site in the rugged Allegheny Mountains of West Virginia, near the deep and wild New River Gorge. (The gorge is cut by the only river that rises east of the Appalachians yet manages to find a slot through the mountains and reach the Ohio River Valley.) The location was perfect: 70 percent of Scouts would be within a 10-hour drive of the site, and

Lisa Strader / CC 2.0

OHIO

Donors United As a lawyer and banker, Frederick Goff had seen charitable gifts go awry because of thoughtless administration. So he started talking to his fellow Clevelanders about the desirability of forming a joint “community chest” that could help generous residents make sure their donations really did good. Ultimately, community leaders formed a single permanent endowment, composed of various subfunds, to be managed in perpetuity. Local donors could leave their fortunes to this fund and know that the money would be used for “such charitable purposes as will best make for the mental, moral, and physical improvement of the inhabitants of Cleveland” for years down the road. The Cleveland Foundation, the world’s first community foundation, was launched in 1914. Since then it has grown to $1.8 billion, and has distributed over $1 billion in grants around the region—including $80 million last year. The idea of the community foundation, meanwhile, caught on, and today there are more than 730 similar local charitable pools that contain $50 billion in assets, and dis-

it would provide not only a jamboree location but also an eastern “high adventure” base to supplement Scouting’s famous Philmont ranch in the west. The site is surrounded by more than 70,000 acres of federal recreation land that Scouts may explore. The BSA has long relied on generous giving (see Philanthropy, Fall 2010), but acquiring and developing the West Virginia property was an extraordinary philanthropic lift. Starting in 2009, a long string of individual donors plus some corporations lined up with more than $300 million of quiet gifts. Stephen Bechtel donated $50 million. Walter Scott gave $25 million. Mike Goodrich funded creation of a man-made lake. Consol Energy offered $15 million. A major amount of “terraforming” was needed to create useable sites on the rugged topography. Camping areas and a high-adventure base had to be built. The large lake was created. A 9,000-square-foot warehouse was needed on the grounds. A landmark “wingtip” pedestrian bridge was designed to cross the gorge dividing the eastern and western halves of the property. Bike trails had to be built. In addition to hosting jamborees, this spectacular facility, known as the Summit, will allow 88,000 Scouts each year to enjoy whitewater rafting, hiking, mountain biking, climbing and rappelling, swimming, fishing, and shooting sports. The Summit is projected to host 1.5 million Scouts within its first decade; by comparison, Philmont took 70 years to reach 1 million visitors. Most of the lead donors to the Summit are Eagle Scouts. “We want to have donors who have honorably lived the Scout Oath for long periods of time,” states Perry Cochell of the BSA. Together, these men have created a remarkable place that will thrill boys for generations in the future. And they have solved Scouting’s national jamboree problem. When 45,000 Scouts arrive at the Summit this summer for its first jamboree, they will find themselves at a pinnacle of American philanthropy. —Evan Sparks

Lisa Strader / CC 2.0

KENTUCKY

Bringing Parks to the People In 1891, Frederick Law Olmsted—the visionary American landscape architect—designed three new parks for what were then the suburbs of Louisville: Shawnee to the west, Cherokee to the east, and Iroquois to the south. Olmsted also designed a series of then-novel “parkways,” tree-lined boulevards with wide medians, to connect the three parks. Horse-drawn buggies, and then horseless carriages, plied the parkways and whisked Louisvilleans to their Olmsted oases. As the city grew in the twentieth century, the parkways became more like regular avenues, and the population grew steadily away from the original parks. But the Olmsted parks left an indelible mark. “Everybody understands parkland because of the Olmsted legacy that we have here,” says David Jones, co-founder of the health insurance company Humana, Kentucky’s largest public company. So David and

his son Dan got involved in a plan to refresh the Olmsted parks—and to build on that legacy for the next generation. The first phase opened earlier this year, and eventually the project will involve thousands of acres and create a new ring of parks around the city that echo the Olmsted predecessors. Hundreds of private donors are paying more than $70 million of the $120 million that the effort will cost. The Jones family offered the biggest gift, at $15 million. A permanent endowment will cover the maintenance on the parks, and annual memberships are now being offered ($35 for individuals, $50 for families) that will raise operating funds. “I’ll tell you how excited people are,” David Jones says. “Seventy-five percent of the money came in cash. I’ve never had a project like that—ever.” —Evan Sparks

TENNESSEE

A Sevier Success A generous country-music singer began by encouraging nearby children to stick with school. That eventually led to measures that now put millions of books into the hands of preschool children in the United States, Canada, and the United Kingdom. Dolly Parton’s philanthropy (much of it anonymous) was built on efforts to help her neighbors, raise their level of education, and lift her local community’s economy. She has provided college scholarships in her home county since the 1970s, and through her Dollywood Foundation offers incentives to reduce high-school dropout rates in the region. In 1996, Parton launched her Imagination Library as an even earlier intervention. Her goal was to capture young hearts and minds and teach children to love reading from infancy. The mechanism: allow any child to have his or her own collection of books by kindergarten, at no cost to the family, regardless of income level. The program sends a child one book per month, every month, from birth until his or her fifth birthday. Parton began the Imagination Library in her home county of Sevier in east Tennessee. In a 2006 interview with the Washington Post, she explained that in encouraging a love of reading and boosting childhood literacy, she wanted to give children opportunities that had been rare for many in her family. “My mother was married when she was in the seventh grade, so a lot of my people didn’t get a chance to get an education. Imagination Library was born out of my need to try to help people, knowing what a handicap it was with a lot of my relatives.” The program quickly became enormously popular, and Parton opened it beyond Tennessee in 2000, offering

Dolly Parton’s Imagination Library sends 700,000 children a book every month. SUMMER 2013

to local organizations. Some of the donations that have become public include $1 million toward the construction of a new YMCA, $300,000 to a local health center (half of whose patients are uninsured) plus $80,000 toward its low-income dental clinic. He has also supported various projects in area schools, from mentoring, to field trips, to interview preparation. And he and his parents gave $5 milto replicate the library in any community willing to help lion to the University of Illinois to start a business school in support it financially. The service is now active in 1,600 nearby Chicago. The theme uniting these gifts? Removing locales, sending books to nearly 700,000 children every obstacles to individual success, and unleashing opportunities for people who work hard. —Caitrin Nicol month. —Kari Barbic

ILLINOIS

Catering to the Home Team James John Liautaud is famous for two things: building the 1,500-store sandwich-shop empire known as Jimmy John’s (after his father gave him a loan and a choice between starting a business or enlisting in the military after high school), and his outspoken criticism of business-stifling government policies. What is less well known are his extensive contributions to the community that he and his family have long called home: Champaign, Illinois, also the headquarters of his company. All his profits from Champaign go back into the community, for the most part in anonymous gifts

Getting a loan from Alice’s Integrity depends equally on the moral character of the applicant and on the quality of the business plan. 22

PHILANTHROPY

MISSOURI

Modern Music in MO Rex Sinquefield steered himself from a Missouri orphanage to leadership of a major investment firm in only 30 years, in the process developing some of the first index funds and a large fortune that he is now active in giving away. Sinquefield remains intensely loyal to his home state, where he retired in 2005, and interested in improving its quality of life. His wife Jeanne’s passion for art and music (she is a string bass player) has helped shape the couple’s philanthropy. In 2005 they launched an ambitious statewide program of camps and competitions for a variety of ages to promote composition of new music. Their later gifts added funding for scholarships, a summer music festival, and more. Their New Music Initiative aims to build “a leading center in the areas of composition and new music” right in the bosom of Missouri. —Brian Brown

KANSAS

Training Brains for Business Charles Koch has spent years studying and promulgating what he calls “principled entrepreneurship”—the combination of “judgment, responsibility, initiative, economic and critical thinking skills, and sense of urgency necessary to generate the greatest contribution.” To encourage those capacities in the next generation of Americans, he founded Youth Entrepreneurs in 1991, at Wichita High School North in his Kansas hometown. Initially an eight-week program, YE has since grown into a year-long entrepreneurship course, licensed by the Network for Teaching Entrepreneurship, reaching more than 1,000 students each year at 30 high schools in Kansas and Missouri. All students are welcome, but at-risk students are YE’s target audience. YE teaches entrepreneurship basics with hands-on immersion. Every student writes a business plan, and YE encourages them to use their plans to launch real-life companies. The plans are judged in contests, with the prizes including scholarships and venture capital funding. Students also visit businesses, learn from entrepreneur-mentors, and engage in sales competitions with their peers. Upon completion of the program they receive high-school

S. Carmody Photography

INDIANA

Thinking Hard About Schools Behind every successful student is a dedicated teacher. Behind many of the best teachers are results-based support programs. And in Indianapolis, behind these programs there is The Mind Trust, a clearinghouse for educational innovation. By training leaders, organizing local philanthropic initiatives, forging partnerships with organizations such as Teach for America and College Summit, and recruiting research talent, The Mind Trust has dramatically improved the quality of education in Indianapolis and beyond. Its “Charter-School Incubator” undergirds a network of leaders who are bringing charter-school opportunities to areas that lack good school options. Grants provided by its Education Entrepreneurship Fellowship support educational innovators seeking the best ways to meet community needs. The Mind Trust is also welcomed as a third party to guide city-wide policy. Its “Creating Opportunity Schools” report has defined the conversation on school reform in Indianapolis since its release in 2011. —Caitrin Nicol

Students participating in the Mizzou New Music Initiative.

credit and are eligible for community-college credit as well. “Instead of reading about being an entrepreneur, we got to do it, make it, present it,” says Crystal Lathrop, a 2000 YE alumna who currently owns her own small businesses in Wichita. “It made me feel like a real entrepreneur. YE is a class that can benefit you your whole life.” —Evan Sparks

S. Carmody Photography

NEBRASKA

Alice’s Integrity Loan Fund When Alice Dittman was president and CEO of Cornhusker Bank, she often found herself wishing that she could give out more loans than she did. Sometimes the business idea looked good, but the credit history wasn’t there. So in 2011, soon after she retired, she decided to pick up where her previous job had left off. Dittman donated $1 million to start Alice’s Integrity Loan Fund, a microfinance program to help entrepreneurs get small businesses started. Unlike traditional loans, getting a loan from Alice’s Integrity depends equally on the moral character of the applicant and on the quality of the business plan. Loans for a maximum of $5,000 are given out at 6 percent fixed interest, for a maximum term of 36 months. The loans can be used either as start-up funding or to expand an existing business—perhaps to buy tools, a computer, or supplies. Recipients don’t just get money; they also receive mandatory training and mentoring from retired executives and the Nebraska Business Development Center. Dittman’s effort is entirely local—only residents of Lancaster County are eligible for the fund. —Brian Brown

WYOMING

Truth in Advertising Methamphetamine is all about hollowness: the hollow-eyed look of meth addicts after their bodies begin to consume their own muscle tissue and fat, and the hollowness of rural communities when meth moves in to destroy their peacefulness. Nowhere has the scourge been worse than in Wyoming, which was ranked first in the nation in rates of meth use among individuals aged 12 and over. Wyoming’s share of people in meth treatment was 4.4 times higher than the state’s share of the U.S. population, and more than a third of those admitted for treatment in the state were below the age of 25. Over 90 percent of drug prosecutions in Wyoming involved meth—putting untold strain on local law enforcement. In the face of this catastrophe, the Wyoming Meth Project (an affiliate of the six-state Meth Project driven by philanthropist Tom Seibel) began changing attitudes toward the drug by combining standard drug-education programs with stark TV, billboard, and Internet ads aimed at teens. For example, in “Losing Control,” the camera is centered closely on a young teen’s face as books, clothes, and glass go flying around his head. The camera pans out to show the cause: the boy’s older brother is ransacking his bedroom looking for money. Other vignettes follow: the girl prostituted by her boyfriend; the family terrorized by meth-head burglars; the addict son pounding on his family’s front door at Christmas. The ads are both compelling and deeply unsettling; they work like a punch to the gut. SUMMER 2013

tion is $110. It is broad support, not major wealth, that keeps Warriors and Quiet Waters in business. Speaking of one local supporter, O’Connor says, “I know I can count on a little old lady at the retirement home to send us $25 per month.” —Thomas Meyer

And they seem to be helping: the latest Wyoming health-attitudes survey finds that after several years of exposure to the project, Wyoming teens have elevated “perceptions of risk” associated with meth use, including “getting hooked,” “suffering brain damage,” and “having sex with someone I don’t want to.” Now 87 percent of teens in the state report that the Wyoming Meth Project’s ads helped them understand that meth is more dangerous than they had originally thought. —Justin Torres

MONTANA

Outdoor Therapy “Bozeman is the Holy Grail of fly fishing.” So says Tom O’Connor of Warriors and Quiet Waters, a Montana-based charity that takes service-injured veterans on weeklong trips to learn the sport and spend time in nature. For many participants, the trip is a short vacation from an intensive and lengthy recovery at a military hospital. They are housed in a log cabin outside of town, fed by local “moms,” outfitted with all the gear they’ll need from the last remaining U.S. manufacturer of fishing clothing, taught and led by professional fishing guides, and joined on blue-ribbon streams by local companions. As O’Connor explains, “We decided when we started that we were going to do this right.” Since its inception in 2007, over 200 servicemembers have gone through the program in groups of six. The progression remains the same with each cohort—initial apprehension followed by deep relaxation. So striking is the change from Day One to Day Six that O’Connor’s wife often “can tell by looking at the photos which day of the week it is.” Six attendees enjoyed the program so much that they moved out to Bozeman after completing their recovery—they are currently in college at Montana State. Remarkably, most of the donations that support each attendee (at a total cost of $4,300) come from small local donors—the organization’s median dona-

In 1970 the peregrine falcon was nearly extinct in the U.S. With help from a philanthropic rescue effort it was removed from the endangered species list in 1999. 24

PHILANTHROPY

Courtesy of Warriors and Quiet Waters

IDAHO

Saving the Winged Cheetah The peregrine falcon is the fastest creature on earth. When it spots prey with its piercing eyesight, it shrieks down out of the sky at more than 200 miles an hour. Yet in 1970, the U.S. peregrine falcon was nearly as dead as the dodo. In the lower 48 states there were only 39 known breeding pairs left. The bird’s recovery since then is one of the dramatic ecological success stories of our times, and philanthropy is a star player. Once measures had been taken to curb overuse of pesticides that were weakening falcon eggshells, the government launched efforts to repopulate the bird. They failed. Enter Tom Cade. When Cornell University offered him a job at its famed ornithological lab, he agreed—on condition that it support his efforts to test ideas for restoring the peregrine. A $125,000 grant from IBM was earmarked for the purpose. Then other donations began pouring in, including many small ones from individuals who, like Cade, had taken up the sport of falconry. Instead of trying to breed adult birds, as the government had, Cade’s philanthropic project hand-reared hatchlings and kept them in captivity for use as breeders. Within a few years, the Cornell group was releasing scores of young birds into the wild, and discovering how to keep them alive until they learned to hunt on their own. The researchers concluded, counterintuitively, that one of the best places for artificially incubated peregrines to make the leap back into the wild was the downtown regions of major cities. Skyscrapers and bridges served as cliff-like roosting and nesting places, free from the owls and eagles that were devouring juvenile falcons released into the wilderness. Urban pigeons were ideal food sources for the young hunters. The Peregrine Fund has been located on a bluff near Boise, Idaho, since 1984. Throughout its history, it has been supported by thousands of private donations that cover operating costs, plus an endowment given by donors such as Lee Bass, Roy Disney, Julie Wrigley, and Hank Paulson. Thanks to its efforts, many thousands of endangered birds have been released into independent life. The peregrine falcon thrived to the point where it was removed from the endangered species list in 1999. “Private philanthropy was indispensable,” summarized Adam Meyerson of The Philanthropy Roundtable, “as it is for almost every initiative that challenges conventional wisdom.” The fund has more recently produced chicks to help restore the California Condor to the Grand Canyon, the Aplomado Falcon to the

southwest, the Harpy Eagle to Central America, and the Mauritius Kestrel to Africa. —Karl Zinsmeister

ALASKA

Taking the Ache Out of Bush Life The people served by the Rasmuson Foundation are different. Many reside in very small and isolated towns. Transportation is often poor, weather frequently fierce. Because they are thinly scattered across the Union’s largest state, it can be difficult to provide philanthropic services to Alaskans. But these challenges have always defined Rasmuson’s work, so the foundation has gotten good at coping. Founded in 1955 with an initial $3,000 gift from Jenny Rasmuson, the foundation was created in honor of Jenny’s husband “E. A.,” a Swedish immigrant who built the Bank of Alaska into a powerful financial enterprise. When son Elmer Rasmuson bequeathed the foundation much of his personal fortune of $400 million in 2000, the task became somewhat easier. With assets of $465 million and annual grants in the range of $17 million, Rasmuson has disbursed more than $215 million across its state since 1955. The foundation has a hand in most recent philanthropy in Alaska, with particular attention to the small things that improve the quality of life for ordinary people. A prime example: dentistry. People with normal access to oral care forget how miserable life can become when a tooth erupts and a dentist is nowhere to be found. In 2006, Rasmuson gave a $1 million grant to the Alaska Native Tribal Health Consortium to train special dental-health aides who will live in or fly into remote Alaskan villages. The aides provide preventive and palliative care, and improve the oral health of people living in areas that can’t keep a dentist in business. Rasmuson’s innovation has brought life-changing dental care to more than 35,000 rural Alaskans. Now other funders are looking at exporting the resoundingly successful program to sufferers in other places. —Karl Zinsmeister

Courtesy of Warriors and Quiet Waters

HAWAII

A Royally Philanthropic School System Bernice Pauahi Bishop was the last direct descendant of Hawaii’s King Kamehameha, her great-grandfather. She declined her right to rule and instead led a life devoted to religion and serving her fellow native Hawaiians through philanthropy. When she and her husband died, they willed most of their fortune to found the Kamehameha Schools, where children “of pure or part aboriginal blood” could get a superb education. Having witnessed the rapid decline of the islands’ Polynesian population, Bishop judged education and faith to be the best ways to preserve the people and culture she loved. The 375,000 acres of ancestral land she gave as an endowment (about 9 percent of Hawaii’s total land mass)

An amputee fly-fishing a Montana stream with Warriors and Quiet Waters.

supported the creation of a system of private schools that now educate 6,900 students of Hawaiian ancestry at 31 preschool sites and K-12 schools spread across three islands. Scholarships also support college education of additional students. And 40,000 Hawaiians benefit from community literacy and other outreach programs that are also run by the Kamehameha Schools. The schools still own 365,000 acres of land, most of it in agricultural use. These plus cash investments allow much of the schools’ expenses to be paid out of the endowment left by the Bishops. Thus it is that one of the very largest American school systems fueled and directed by private philanthropy is located six time zones from Manhattan, Washington, or Boston. —Karl Zinsmeister

WASHINGTON

A Personal Book Adviser “Libraries are going through a revolution,” says Lisa Arnold. The digitization of books has forced libraries to rethink how they serve the public. If you don’t need to leave the comfort of your home in order to get a book in the future, what will you get out of going to a library? As manager of the library program of the Paul G. Allen Foundation, Arnold and colleagues have been trying to help libraries “find ways to meet at the crossroads between tradition and innovation.” The foundation, whose namesake started Microsoft with Bill Gates, is currently funding projects in its home region aimed at making libraries more relevant in the Internet age. These range from creating smartphone apps that rural residents can use to access library collections to an experiment that allows readers to connect themselves with librarians who have similar reading interests. The latter will allow patrons to e-mail, SUMMER 2013

Students at Deep Springs College don’t just study hard, they also put in 20 hours of farm chores every week.

including selective logging and overlapping uses of the same land. During his lifetime, Hayes was one of the more generous philanthropists in Oregon, supporting forest-fire prevention efforts, studies of early Oregon history, medical research, libraries, and churches. After his death, his family endowed a Hayes professorship at Oregon State University’s College of Forestry that continues today to generate fresh ideas on “silviculture alternatives.” The latest Hayes professor is using insights from the new field of complexity science to better understand the confluences of hundreds of factors that allow a forest to thrive and produce timber, wildlife habitat, clean water, and other valuable goods. Believing that “Oregon will always need diverse and OREGON productive forests and the wood products that come A Forester Sprouts Research from them,” the Hayes family donors have emphasized Edmund Hayes owned small woodlands and sawmills the same mix of practicality and bold new ideas that in Oregon, and was a leader in finding newly efficient characterized the philanthropic and business career of and effective ways to manage timberlands. He eventually their father. —Karl Zinsmeister became a board member of Weyerhaeuser lumber company. In the first half of the twentieth century, he started NEVADA purchasing cut forestland and second-growth timber. Respectable Education “We Grow Trees” was his company motto at a time when Andre Agassi grew up in Las Vegas, spending the first 15 re-growth was thought to be nature’s responsibility. By the years of his life there before being shipped off to a tennis end of Hayes’s career, planting trees after cutting timber academy in Florida to begin one of the most storied careers had become routine, and loggers were learning to profit in professional tennis. But his heart never left home. from second-growth cuttings on land that they would often At age 24, in the meaty middle of his playing career, own themselves and manage to maximize multiple uses. Agassi formed a foundation with the aim of helping underToday, forestry science has gone even further in finding privileged kids in his home town. After briefly running an new value and efficiencies in woodlands management, after-school program, he founded a Boys & Girls club, and 26

PHILANTHROPY

Plowboylifestyle / Wikimedia Commons

call, chat, or meet with like-minded librarians for purposes of sharing book histories and recommendations. Paul Allen’s father was the associate director of the University of Washington’s library, so “Paul and his sister Jody Allen grew up with an incredible love of books,” Arnold notes. Since 1990, their foundation has made $26 million worth of gifts to libraries throughout the Pacific northwest region. The new readers’ advisory service is an example of their efforts to find “unique approaches for strengthening the personal connections between patrons and librarians” that may eventually serve as models for libraries around the nation. Meanwhile, residents of the northwest already have new buddies for helping them make informed reading picks. —Naomi Schaefer Riley

the following year built a shelter and educational center for abused children. “But then a light bulb went off,” Agassi explained. “We realized we were sticking band-aids on real issues.” Agassi decided that if he were going to really help kids, they needed education. So he built his own school and focused his foundation entirely on its success. He planted his flag in West Las Vegas, the city’s most depressed neighborhood, about nine miles from the glitzy Strip. The Andre Agassi Preparatory Academy opened in August of 2001, with 150 students in grades 3 through 5. Additional grade levels were added until the school spanned K-12, and it graduated its first class of 34 high-school seniors in 2009. All 34 enrolled in colleges the following autumn. Today, more than 1,100 students attend. Thanks to Agassi’s close personal involvement, $40 million of private money was raised to build them a fine campus. Tuition at the charter school is free. The students are chosen by lottery (though Agassi convinced regulators to allow him to give admissions preference to children who live within a two-mile radius of the school). The entire atmosphere at the school is based on Agassi’s “Code of Respect,” which is spelled out in detail. In addition, school days are two hours longer than at other Las Vegas public schools, and the school year is 10 days longer. There is no tenure for teachers. Everyone involved with the school—students, parents, and faculty—begins by signing a pledge of “Commitment to Excellence.” It seems to be working: the school has been recognized at both the state and national levels for its successes. —Jonathan V. Last

Plowboylifestyle / Wikimedia Commons

CALIFORNIA

Desert Educator There are few institutions that generate more affection in the hearts of donors than excellent small colleges. And no college in America is smaller, nor really more excellent, than Deep Springs, an idiosyncratic place nestled a mile above sea level in the California high desert bordered by the White and Inyo mountain ranges. At any one time, Deep Springs is home to two dozen of the most academically qualified young men in America, who are attracted by its offer of two years of intense academic study, hard ranch work for 20 hours per week, and practical lessons in self-governance—all 100 percent free. Its graduates usually go on to complete their degrees at America’s most prestigious universities, and more than half of all attendees have ended up with doctoral degrees. All this is precisely as Lucien Nunn intended. Nunn pioneered long-distance transmission of alternating electrical current, then made his fortune building power plants for mines across the American west. As he expanded his operations, he felt a keen need for hard-working, skilled men of independence and integrity. In response, as one part

of his philanthropic plans, Nunn purchased Deep Springs Ranch and set up a school there that melds esoteric book learning, practical work, self-governance, and a dose of desert spirituality. (“The desert has a deep personality; it has a voice; and God speaks through its personality and voice. Great leaders in all ages…have sought the desert and heard its voice,” wrote Nunn. “But you cannot hear it while in the midst of uproar and strife for material things.”) Today, however, Nunn’s vision is being questioned. Deep Springs is one of only four remaining men’s liberal-arts colleges in the country, and the trustees recently decided to go co-ed. Arguments are flying back and forth: On the one hand, Nunn invested the Deep Springs student body as “true owners” of the college and its properties, and the student body supports co-education. On the other, in legal documents Nunn expressly stated that Deep Springs was “for the education of…promising young men.” Dissenting trustees challenged the vote to accept female students starting in the fall of 2013, and an injunction has so far prevented Deep Springs from going co-ed. While the parties continue to sort it out in court, the dissenting trustees remain convinced that Nunn’s donor intent was for Deep Springs to remain allmale and that their job as trustees is to protect that intent. “Neither trustees nor courts have the authority to change or ignore a trust provision simply because they think it isn’t optimal or preferable, even if the preference is based on their passionate moral beliefs,” trustee Kinch Hoekstra told The Atlantic. “The great thing about the legal protection of charitable trusts over time,” argues Hoekstra, “is that we don’t all have a bunch of institutions in 2013 that are wholly determined by what trustees happen to think in 2013. That would lead to an appalling homogenization of our cultural, social, and educational landscape. Instead, people set up different projects in 1880, or 1938, or 1972, and those visions, sometimes gloriously out of step with how we currently think and sometimes maddeningly so, may continue to thrive.” —Evan Sparks

ARIZONA

Inspired Schooling Seeing that “factory-style” public schools were having poor results, teacher Dan Scoggin went looking for an antidote. His search convinced him that a powerful emphasis on character development, linked to a demanding classical liberal-arts curriculum, would help students feel their human value and potential. That would in turn translate into academic achievement. Scoggin was the leader of a group of Phoenix-area residents who thought their city needed better schools. Their goals were bigger than just improved test scores. They wanted to produce students capable of appreciating “the true, the good, and the beautiful”—while also being 100 SUMMER 2013

COLORADO

Looking After Orphans “Orphans and vulnerable children are not a cause,” megachurch pastor Rick Warren told one of his “civil forums” in 2010. “They are a Biblical and social mandate we can’t ignore.” And Warren is not alone among Christian leaders who have come to believe that adoption should be at the top of the evangelical agenda. Five full years before Warren spoke at his forum, Project 1.27 was already under way. Late in 2004, Pastor Robert Gelinas noted that there were 875 children in the state of Colorado who were legally available for adoption, but had no one willing to take them home. Urging that Christians should “make sure there are no children waiting for homes,” Gelinas and others launched Project 1.27. It trains and supports prospective parents across Colorado, equipping them to scoop up children languishing under state care and adopt or foster them into a loving family. Thanks to Project 1.27 and parallel efforts run directly by churches throughout the state, there UTAH Taking Some of the Fear Out of Cancer were no children waiting to be adopted in Colorado by the Both of Jon Huntsman’s parents died of cancer. In 1992, end of 2012. he was diagnosed with the disease himself—the first of his Taking its name from James 1:27 (“look after orphans and widows in their distress”), Project 1.27 is not an adoption agency itself, but rather educates parents on the legal, financial, and emotional issues involved in adoption and fostering. Parents pay a nominal $100 administrative fee, and all other expenses of being trained and legally certified are covered by donors. It costs the organization an average of $5,000 to help a family adopt one child. That compares to $50,000 of annual cost to the government to maintain one child in the foster-care system.

Over just a few years, a church-based effort in Colorado succeeded in finding homes for all of the hundreds of children in that state who had been waiting fruitlessly for adoption. 28

PHILANTHROPY

Mark Lipczynski

percent qualified to attend college and otherwise achieve and contribute. Taking advantage of Arizona’s embrace of the charter-school concept, and a bevy of generous local donors, Scoggin’s team founded the first Great Hearts Academy in 2002 as a free public charter school located in the Phoenix suburbs. Their idea was that underprivileged children would flourish if they were surrounded by “greatness”—a diet of “great books” and great human examples, neither of which were emphasized in most current educational materials. Great Hearts employs teachers who are experts in their fields, rather than graduates of teacher schools. They require their pupils to read primary sources rather than textbooks. They use Socratic-style discussion rather than lectures, and expect every child to participate and learn, not just the natural scholars. All of which is easier said than done, of course. Particularly since in Arizona, as in most states, charter schools are allotted less money than conventional public schools. (One indicator at the time showed $7,806 going to every student in charters, versus $9,429 for students at conventional schools.) The difference was made up by local donors large and small, like the Quayle family, fourth-generation Arizonans who gave $1.5 million in 2012. Philanthropy also covered crucial costs for expanding the Great Hearts model after it had demonstrated its power (95 percent of students, even those from difficult inner-city neighborhoods, go straight to four-year colleges). By 2013 there were 16 Great Hearts Academies in the Phoenix area (where more than 7,000 students are already on waiting lists for the schools), and the network is planning expansion into other regions. —Karl Zinsmeister and Brian Brown

four separate personal battles with the killer. His stints in the hospital convinced him that better treatments, better research, and better institutional experiences for cancer patients were all sorely needed. After inventing, at the company he founded, the Styrofoam container that cradled McDonald’s Big Mac, Huntsman had gone on to numerous other commercial successes, so he had the resources to act on his dream. He brokered a deal with a big pharmaceutical company to split the $250 million cost of building a state-of-the-art cancer treatment and research center in Salt Lake City, to fill a void in the Rocky Mountain region. Then the company backed out at the last minute. Huntsman and his family decided to foot the entire bill. Today, Huntsman Cancer Institute serves 60,000 patients every year, performs 3,000 surgeries, and conducts groundbreaking research on genetic cancer patterns. Perhaps most important to Huntsman, the treatment facilities are renowned for their peaceful beauty, comfort, family-friendliness, and attention to patient services. The institution now ranks in the 99th percentile in patient satisfaction. —Brian Brown

Families interested in adopting or fostering are recruited by Project 1.27 from affiliated churches. They are given 36 hours of training over a period of several weeks. Church leaders and members of the local community are also offered the organization’s services, because families that adopt or foster will need the support of friends and neighbors. The organization shepherds the volunteer family through the required paperwork. It helps church leaders establish parent support groups and adoption resources within their congregations. And it coaches and encourages parents throughout their engagement with the foster-care system. Having completely eliminated the backlog of kids languishing in state care in Colorado, Project 1.27 is now looking to expand. Recently Pastor Gelinas, who has himself adopted five children with his wife, told an audience in Arizona that if “people of faith step up and open their lives and their hearts…it is possible that a foster-care system can be emptied.” —Naomi Schaefer Riley

NEW MEXICO

Video Medicine In New Mexico, with a population of 2 million spread out over 120,000 square miles and just one academic health center to serve them all, many residents have access only to basic primary care. Project ECHO (Extension for Community Healthcare Outcomes), a philanthropically supported telemedicine initiative, aims to radically and inexpensively expand the availability of expert care to rural patients. The mechanism is simple: local family doctors join weekly videoconferences with a panel of specialists, where they present their patients’ cases and receive advice on what treatments to pursue. The program began with a focus on improving treatment for hepatitis C, a major problem in New Mexico. It has since developed a capacity to address many chronic conditions. The latest addition is mental-health services offered by video link, with support from the GE Foundation and the Robert Wood Johnson Foundation. —Caitrin Nicol

Mark Lipczynski

OKLAHOMA

Hitting Pay Dirt Lloyd Noble was an Oklahoma oilman whose legacy to his beloved home state has endured far longer than any mere gusher. He was born pre-statehood in Ardmore, then part of the Chickasaw Nation. After stints teaching in rural schools and studying at the University of Oklahoma, Lloyd and a partner bought a drilling rig. In 1926 they struck gold—or its Sooner liquid equivalent—in the famed Seminole field. By the 1930s, oil had made Lloyd Noble a very wealthy man. While he prospered, however, his agricultural neighbors suffered. The Dust Bowl was laying waste his state, and driving many of its small farmers California-ward. Noble was convinced that the widespread soil erosion and barren fields of Oklahoma were due, in part, to short-

A typical Socratic class discussion at Great Hearts Academy in Arizona.

sighted farming practices. So his philanthropy sought, in a sense, to recycle dust back into dirt. In 1945 he established the Samuel Roberts Noble Foundation, a central mission of which was to help Oklahoma’s farmers and ranchers “practice land stewardship and resource conservation.” Today, the foundation encourages sustainable agricultural practices through research and consultation with farmers, ranchers, and scholars. The Noble Foundation has also awarded more than $300 million in grants to local charities, and scholarships to young Oklahomans, with links to the field of agriculture. As a footnote (though to Sooner fans, football is anything but a footnote), Lloyd Noble is also the man who revived Oklahoma’s pigskin program in the mid1940s. He was, as an ESPN profile put it, “the most charitable and influential regent O.U. had ever seen,” and his benefactions ranged from paying bonuses to top-flight professors out of his own pocket to luring coach Bud Wilkinson to Norman. The guy just couldn’t help hitting pay dirt. —Bill Kauffman

OUTDOOR TEXAS

A Zoo that Doesn’t Guilt-Trip When the Fort Worth Zoo was owned and operated by the city, money was scarce, facilities were outdated, and attendance was dropping. In 1991, the middling public facility was almost forced to close due to lack of funds. Then Ramona Bass, a local animal lover from a wealthy family, suggested moving control of the zoo to a non-profit association. More substantively, Bass suggested a new mission for the zoo. Frustrated by increasingly negative zoo narratives of people versus planet—a zero-sum game where one side SUMMER 2013

PHILANTHROPY

Charvex / CC0 1.0 / Wikimedia Commons

prospers only at the expense of the other—she envisioned a facility that recognized shared interests between humans and animals, and “strengthened the bond between humans and the environment by promoting responsible stewardship of wildlife.” Bass recruited impressive support from individuals and local businesses, built an unusually diverse board that included people like wildlife experts at corporations and professors of agriculture, and was able to create innovative programming that visitors could find nowhere else. The new zoo was simultaneously pro-animal and pro-human, with striking new displays that highlight harmonious co-existence, rather than walling off wildlife. (Their black bears, for instance, were placed in a facsimile of an abandoned lumbering camp, emphasizing recovery and intelligent adaptation.) Even the logo for the section of the zoo on Texas wildlife—a human hand print overlapping a coyote track—emphasizes mutual prosperity. The new Crystal Bridges Museum in Bentonville, Arkansas, Since its transfer from public management, the makes superb art available to Americans in a association-run zoo has raised more than $20 million in heartland setting, at no charge. private funding and opened 16 new permanent exhibits and facilities. Attendance has doubled, and the Fort Worth Zoo is now rated near the top in the U.S. —Karl Zinsmeister and a section of bottling equipment—to get acquainted with the principal product and the soft-drink industry in INDOOR TEXAS general. Then they get a crash course in entrepreneurship, A Bubbling Introduction to Business with hands-on training that leads them to create their Visitors to the Dr. Pepper Museum in Waco can get a own product, logo, and marketing campaign, including refreshing lesson in the history of free enterprise through a video commercial. Staff members judge the finished the model of an industry built on fun and fancy—the soft products and marketing materials, giving students a taste drink business. The W. W. “Foots” Clements Free Enter- of market competition—and the hard work it takes to prise Institute, which is run by the museum, was founded succeed as an entrepreneur. —Kari Barbic in 1997 to realize Clements’ dream of educating the public on the many creative nuances and social benefits of creating ARKANSAS Great Art in Middle America successful businesses. Clements began his career as a truck driver, joined Only major centers like New York and Boston can support the Dr. Pepper Company, and gradually worked his way great museums. Such is the conventional wisdom, but Alice up the corporate ladder. He eventually led the company Walton didn’t buy it. She had a vision of creating a superb to great success and visibility as president and CEO. After American art museum in the center of the country, and retiring in the 1980s, Clements set out to educate young inviting citizens to enjoy and learn from it in comfortable people on the principles of free enterprise through the Dr. ways. As a successful investment banker and community developer, she had the savvy to guide the project. Pepper Museum. And she had the means: Alice’s father Sam founded “Advertising and Marketing, Kid-style” is a day-long program put on by the Clements Institute that walks Walmart. The family already owned an extensive Ameristudents through the development, production, and mar- can art collection deemed one of the finest in the country, keting process. Students first tour the museum’s exhib- including works by Durand, Sargent, Peale, and others— its—which include a replica of an old corner drugstore centuries of American masterpieces.

ticularly African Americans. Its backers believed that most students could master high-level science, technology, engineering, and math (STEM) subjects if taught by the right people in the right culture. The school did not pre-select its students in any way—one of the few completely open STEM schools in the country. Students quickly proved their teachers right, and 12 successful years followed. After Hurricane Katrina, the Center reopened as a full-time charter high school—the New Orleans Charter Science and Math High School. Three-quarters of its students are African-American, and a similar number qualify for free or reduced-price lunches. Despite these traditional disadvantages to quality education, 97 percent of those kids pass the science section of the state exit exam on the first sitting, and 95 percent do so on the math section. The school offers seven AP classes (the most of any open-admission New Orleans school), and boasts a 93 percent annual graduation rate from its nearly 400 students. Its strength remains what its original private backers founded it to do: teach high-level math and science to everyone. —Karl Zinsmeister and Brian Brown

MISSISSIPPI

Charvex / CC0 1.0 / Wikimedia Commons

And so in 2011, the Crystal Bridges Museum of American Art opened about as far off the beaten path of elite art as one can get, in Bentonville, Arkansas. The museum boasts a new Moshe Safdie building sited on 120 acres, a library, a sculpture garden, an operating budget of $16 million, and an endowment of over $800 million—and free admission sponsored by Walmart. In its first full year of operation, the museum brought in 565,488 visitors, more than double the number anticipated. As this issue went to press, Crystal Bridges was featuring American masterworks from its permanent collection, an intriguing exhibit of American genre paintings from the 19th century, and a heavily attended exhibit of Norman Rockwell paintings. Two new shows were about to open: Historic artifacts used by George Washington, and images of American girls featuring masterworks by Winslow Homer, Thomas Eakins, John Singer Sargent, Mary Cassatt, and others. —Karl Zinsmeister

LOUISIANA

Math and Science for All In 1992, three local college professors decided to try to improve high school science and math in the New Orleans region. They enlisted numerous business and civic leaders to their cause, and in 1992 opened the New Orleans Center for Science and Math, known as SciHigh, as a half-day program that students from any area public school could access. The program’s focus was underserved students, par-

Saving Consecrated Ground On a sweltering Fourth of July in Mississippi, exactly 150 years ago, General Ulysses S. Grant notched what many consider the greatest battlefield achievement in American history: the surrender of Vicksburg. Perched high upon a Mississippi River bluff, the fortress city stood as a barrier to Union control of the western theater. It took a campaign of several months—and a siege of six weeks—to conquer the proud city. When it was complete, the Union had control of the west, and Grant had drawn the attention that would give him command of the armies of the North. If you visit Vicksburg today, you will find the battlefield lately restored. For that you can thank John Nau, longtime CEO of the nation’s largest Anheuser-Busch distributor. Several years ago, he gave $300,000 to transform 90 acres of the Vicksburg theater to what they would have looked like 150 years before, largely unforested and open. The project, completed this year, allows visitors to relive the heat of battle. Nau’s generosity extends beyond Vicksburg. He is one of the foremost philanthropists of America’s hallowed grounds. He has served on the National Parks

The transfer from city to non-profit control not only saved the Fort Worth Zoo, but created a unique institution that emphasizes mutual prosperity between humans and wildlife. SUMMER 2013

ALABAMA

Eclectically Orthodox Ralph Waldo Beeson was legendarily cheap when it came to treating himself. Once, when given some new corduroys, the insurance executive turned them down on account of already owning a pair. At his modest house just south of Birmingham, he often chose not to operate the air conditioning during brutal Alabama summers, saying it “costs a fortune to run that thing.” But just down the hill from his house, he had a view of Samford University—to which he was nothing but generous. As a 29-year-old life insurance salesman, Beeson had poured his savings into the stock of his company, Liberty National, just after the crash of 1929. The bet paid off handsomely, and he cashed in for $100 million in the 1980s. From that windfall, he gave $70 million to create a new divinity school (a tribute to his father) at Samford. Knowing that its future clergy would be unlikely to hold high-paying jobs after graduation, Ralph went to great lengths to ensure that the seminary would be affordable. As a result, tuition is held to just a fraction of what comparable seminaries charge, even though the student body is capped at 180 to maximize teaching quality.

New Orleans Charter Science and Math High School, which has no entrance exam and serves primarily impoverished students, boasts a 97 percent state proficiency rate in science and 95 percent in math. 32

PHILANTHROPY

FLORIDA

Noah’s Ark in DeSoto County Brad Kelley—a college dropout whose discount cigarette empire made him a billionaire—brews his own bourbon, never uses e-mail, sports a magnificent red goatee, sometimes wears a kilt, and owns more land than there are acres in the whole state of Rhode Island. Astonishingly, none of these are the most eccentric thing about him. That honor undoubtedly goes to Rum Creek Ranch, Kelley’s 40,000-acre spread in southwest Florida where he breeds and raises endangered exotic animals. Kelley’s foray into animal conservation started with rare breeds of cattle. That led to the acquisition, over 2004 and 2005, of some 40,000 acres in DeSoto County, for a reported $50 million. Kelley now propagates multiple endangered species on that land, including tapirs, anoas (a three-foot-tall Indonesian buffalo), hippos, rhinos, bongos (an African mountain antelope featuring psychedelic white-yellow stripes and huge tapered horns), bentang (wild cattle), and others. Many of these animals had been reduced to just a handful of breeding pairs; Kelley’s ultimate goal is to work with zoos and conservation groups to reintroduce them in sustainable numbers to their native habitat. —Justin Torres

GEORGIA

World’s Largest Aquarium Not surprisingly for the man who brought the big-box store to the hardware business, when Bernie Marcus decided that Atlanta needed an aquarium, he wanted it to be large. And he got his wish: the Georgia Aquarium is the biggest in the world. Marcus was the co-founder of Home Depot, and after he decided to give a present to the Atlantans who made his stores successful by shopping at

Courtesy of Beeson Divinity School

Foundation, Texas State Historical Association, and Gilder-Lehrman Institute boards, led the Civil War Trust, and been appointed by the President to head the Advisory Council on Historic Preservation. His deep interest in American history began when he was eight years old, during a family visit to a Civil War battlefield at Perryville, Kentucky. Walking the contested ground created a fascination and yearning in Nau that never faded. Thus did previous efforts to save one patch of consecrated land inspire—a generation later—the preservation of many, many more such sites. —Evan Sparks

Beeson aimed for much more than just affordability, though. He told the founding (and current) dean, “Now, Timothy, I want you to keep things orthodox down there.” Moreover, “I want you to train pastors who can preach.” Thanks to Ralph’s clear guidance, 23 years after his death the school remains theologically orthodox and evangelical, and deeply grounded in the theology and discipline of the Protestant Reformation. At the same time, Beeson Divinity School is distinctive in reflecting its donor’s Christian eclecticism: Ralph, a former Methodist, was married to a Baptist, and had become Presbyterian. Likewise, the divinity school, although located at a Baptist university, is interdenominational. That eclecticism is on display in the school’s architectural centerpiece, the beautiful Hodges Chapel (a gift from one of Beeson’s closest friends). It combines Palladian classicism with colonial American design, the cruciform footprint of a Catholic cathedral with a traditionally placed Protestant pulpit, and employs Renaissance-inspired art to celebrate Christian historical figures. The kind of generous mix one finds only in America. —Evan Sparks

Courtesy of Beeson Divinity School

The glorious chapel of the Beeson Divinity School near Birmingham, Alabama, reflects the eclectic orthodoxy of its founding donor.

SUMMER 2013

SOUTH CAROLINA

Stimulated by Art Last spring, a small town in South Carolina was transformed into a communal gallery for ten days. Lake City hosted a new art competition called ArtFields during April. Inspired by ArtPrize in Grand Rapids, Michigan (see Philanthropy Summer 2011), philanthropist Darla Moore wanted to create a similar wide-open art competition to help invigorate her home town. Though smaller in scale than ArtPrize, ArtFields offers the largest purse of any art competition in the southeast—a total of $100,000. With that incentive, artists displayed 400 pieces of art during this first event. For Darla Moore, ArtFields is part of a broader goal of reinventing the local economy. “One aspect of 34

PHILANTHROPY

NORTH CAROLINA

A New Museum for a New South The Levine Museum of the New South in Charlotte has a tricky mission: to faithfully tell the story of the American southeast since 1865. It’s a period that brought the region Reconstruction, Jim Crow, the civil rights movement, an economic boom, waves of northern and then international immigration, and tumultuous change. The museum has generally managed to tackle these complex and emotional topics with nuance and honesty, according to admirers. In 2005, the Levine was given the federal government’s highest award for community service by museums. The Museum of the New South was founded in 1991, but it wasn’t until 2001, when Leon Levine offered a $1.5 million grant, that it reopened in its current incarnation: a 40,000-square-foot space in the city’s recently revitalized First Ward, with a permanent exhibition called “Cotton Fields to Skyscrapers: Charlotte and the Carolina Piedmont in the New South,” plus a range of special exhibitions. Two years ago, Levine announced a $3 million challenge grant for improvements to the museum. The 76-year-old Levine opened a store called Family Dollar in Charlotte in 1959. The company has since grown to 7,600 stores in 45 states, and its progenitor has become a generous supporter of his region. “We want to help build the quality of life here,” Levine says of his hometown of Charlotte. And the managers of the Museum of the New South “have surpassed my expectations,” he wrote in an e-mail interview. “There is no other place like it.” “I remember talking to the museum’s founder, who convinced my wife and me that this would be a place where people would share their memories and life experiences, and that we’d all benefit from their lessons.” As the museum has grown in the 12 years since reopening, it has extended beyond the past to include events aimed at strengthening today’s community. It regularly hosts events tied to

Courtesy of Georgia Aquarium

and staffing them, he went seeking something accessible that all kinds of people could enjoy. He ultimately gave $250 million to build and stock the giant fish tank, which opened in 2005 (see Philanthropy Fall 2012). The centerpiece exhibit is an acrylic enclosure holding 6.3 million gallons of sea water and four whale sharks that many biologists did not believe could be successfully transported (by boat, truck, and plane) from Taiwan. The aquarium is also host to one of two sets of great hammerhead sharks, and the only four manta rays displayed in a U.S. aquarium. There are dolphins, Japanese spider crabs, black-footed penguins, and a new exhibit of sea otters. While Marcus has said he’s just happy to see kids “plastered against the window watching fish go by,” the aquarium has also had a transformative effect on the depressed area near downtown where it is located. Described by Marcus as a tract full of “warehouses and whorehouses,” where local police warned visitors to stay out, the area has been revitalized since 2005. New restaurants, condos, and hotels have been built cheek-by-jowl with the blue metal and glass aquarium, pumping an estimated $4 billion into the local economy. The facility is also home to the Correll Center for Aquatic Animal Health, the world’s only integration of an aquarium and veterinarian teaching hospital. It uses 10,000 square feet to produce some of the leading research on conservation of sea creatures. Finally, the Georgia Aquarium is a major employer, offering jobs to 637 staff who care for 120,000 fish and animals, and inspiring 2,000 volunteers. The facility will host visitor number 20 million before long. —Justin Torres

what we’re doing happens to be culture and arts…. The key is community.” Having made her name in business by bringing companies back from the brink of bankruptcy, Moore is now combining her philanthropy and business acumen to boost the prosperity of the place she lives. The first woman to be featured on the cover of Fortune, Moore began running Rainwater, Inc., in the late 1990s after joining her husband, Richard Rainwater, in his finance business in 1994. As she prepared for the inaugural run of ArtFields, Moore donned a green jacket at the Masters Golf Tournament, as one of the first two female members of Augusta National Golf Club (along with former Secretary of State Condoleeza Rice). While the long-term economic impact of ArtFields remains to be seen, the founder of the feast is a woman who generally succeeds. —Kari Barbic

Grouper groupies at the Georgia Aquarium.

important current issues—like a discussion of problems in the city’s education system, and a bus tour of Charlotte’s neighborhoods. Levine has always seen his stores as a service to people. Selling important household items at low cost at Family Dollar outlets allows people to have things they might not otherwise be able to afford. Knowing that he could fill difficult gaps for local families, he “consistently placed my stores in lower- to middle-income communities.” In his philanthropy today, as in his business, Levine likes to satisfy needs. —Eleanor Barkhorn

Courtesy of Georgia Aquarium

VIRGINIA

Winged History If you land at Washington’s Dulles Airport from the south and look to the right as you glide in, you’ll see an enormous hangar complex just before you reach the airfield. Its gently curved roof, glinting silver in the sunlight, shelters one of the world’s greatest collections of aviation treasures. Moreover, as you jet in, you may well be riding on a plane that belonged to the man who built that han-

gar complex. In 1973, Hungarian immigrant to the U.S. Steven Udvar-Hazy co-founded the International Lease Finance Corporation. Having started an unprofitable airline with leased aircraft, Udvar-Hazy eventually decided more money was to be made on the other side of the lease deal. The company he established eventually owned 1,000 aircraft and counted most of the world’s major airlines among its customers. As Udvar-Hazy was growing his business, the Smithsonian’s National Air and Space Museum had a growth problem of its own. Its facility on Washington’s National Mall could not accommodate its fast-expanding collection. Udvar-Hazy stepped forward with a $65 million gift to build a museum annex adjacent to Dulles Airport, where aircraft joining the collection, even very large specimens, could simply be flown in and taxied over to the exhibition space. Opened in 2003, the Udvar-Hazy Center is now home to hundreds of important artifacts, including the Enola Gay, the B-29 that dropped the atomic bomb on Hiroshima; Space Shuttle orbiter Discovery; a Gemini capsule; a SUMMER 2013

Concorde; an SR-71 Blackbird; the prototype for the first commercially successful jetliner, the Boeing 707; a Dassault Falcon that was FedEx’s first jet; and the GlobalFlyer, the first craft to circumnavigate the world nonstop without refueling. Multimedia offerings and a tower from which visitors can observe movements at Dulles and learn about air traffic control complement the collection. Says Udvar-Hazy: “I know this museum will impart to millions of children the same love for aviation that I have.” —Evan Sparks

DISTRICT OF COLUMBIA

D.C.’s Mr. Fix-it David Rubenstein, co-founder of the investment firm the Carlyle Group, has been a major donor to institutions across the country. He’s given more than $40 million to Duke University, his undergraduate alma mater, more than $10 million to the University of Chicago, where he attended law school, and more than $30 million to Harvard. But he’s made his most distinctive marks in philanthropy in his home town of Washington, D.C. Dubbed “Washington’s Mr. Fix-it” by the Washington Post, Rubenstein donated the money that is now repairing the Washington Monument after it was closed by an earthquake two years ago. He gave 36

PHILANTHROPY

the National Zoo $4.5 million to research panda fertility, hoping to smooth some of the species’ notorious mating troubles. Earlier this year, he pledged $10 million to restore the slave quarters at Thomas Jefferson’s plantation, Monticello, in nearby Charlottesville, Virginia. Rubenstein’s giving is not simply reparative. His largest regional donations have created brand new things. In February, Rubenstein announced a $50 million gift to the Kennedy Center for the Performing Arts to expand that crowded facility with three new pavilions, an outdoor theater, and public gardens. Also in February, he announced a $10 million “birthday gift” to George Washington’s estate, Mt. Vernon, to help build a new library for the president’s books and papers. The following month, Rubenstein was part of a group of local philanthropists who gave $30 million to the city’s National Gallery of Art for a 12,260-squarefoot expansion of the museum’s exhibition space and a rooftop sculpture garden. Rubenstein hopes his local arts and culture giving will encourage others to be generous. “Some people say that the best philanthropy is done anonymously,” Rubenstein told the Washington Post last year. “Other people would say

NASA / Paul E. Alers / CC 2.0

Space Shuttle enters the Udvar-Hazy Center in northern Virginia.

NASA / Paul E. Alers / CC 2.0

that by being public about it, you encourage other people. Marworth, the magnificent family estate that was I guess that’s the path I’ve chosen.” —Eleanor Barkhorn home to three generations of the Scranton family, was where Governor Scranton grew up and ultimately retired. Named for his parents Margery and Worthington, it is sitMARYLAND uated on a sprawling wooded property just north of the city Keeping Old Ladies Home In the diverse tapestry that is American philanthropy, that bears the family surname. In 1980, the governor and his there are few threads quirkier than the Anna Emory wife Mary decided that they wanted to dedicate their home Warfield Fund, a small foundation ($4.5 million in to serving the region that meant so much to them. Recogassets) whose mission is to support elderly women who nizing the dearth of residential substance-abuse treatment want to remain in their homes “in the style to which capacity in their area, they entered into an agreement with they are accustomed.” To that end, the fund provides Geisinger Health Systems to transform Marworth into a bite-sized grants—from as little as $100 to as much as a sterling treatment facility for alcohol and drug addiction. Since then, Marworth has housed over 40,000 few thousand dollars per month—to pay for mortgages, food, and maintenance for elderly women, many of patients—with a particular, fascinating focus on helping them former society matrons in the fund’s home city of doctors and health-care workers suffering from addiction. Baltimore, who have outlived their assets or otherwise The Scrantons (he’s 96) maintain a more modest home at fallen on hard times. It does this with a minimum of fuss the foot of their erstwhile estate, from which they can check and almost no overhead: the foundation has a part-time in on the people being helped by their gift. —Tom Riley bookkeeper, doesn’t pay its board, and employs just one part-time secretary (a grantee) who answers the phone NEW JERSEY a few hours a week in an office rented from a law firm. A Revolutionary Oasis In the June heat of 1778, the American army under George —Justin Torres Washington—toughened by a season of stringent drilling by DELAWARE Baron von Steuben at Valley Forge and no longer an undisHelp with the Little Things ciplined semi-mob—pounced on the British at Monmouth In America, a poor child may be more likely to feel a Court House, New Jersey, during their leisurely withdrawal pang of want or loss over something small than over to New York City after wintering in Philadelphia. For hours, something major. Thankfully few lack a roof over their the Continentals fought savagely, and only the bungling of heads, or enough calories to eat. But the impossibility a senior American general saved the Redcoats from having of attending a camp, or having a music lesson, or buy- an entire wing of their army crushed. Chastened, the main ing a baseball glove—these can sting young children British army in North America withdrew into the island who don’t understand why their parents can’t provide. fortress of Manhattan, never to venture out again. Today, In the state of Delaware there is a philanthropic effort Monmouth is often an overlooked battle, with none of the called the 21st Century Fund that focuses specifically underdog daring of Trenton or dramatic grit of Bunker Hill. on these small things that, while hardly necessities, can But historians recognize it as a turning point, since it set in be sources of joy or pain for vulnerable young children. motion a chain of movements and events that eventually led The fund, donated by individuals and businesses, to American victory at Yorktown. accepts applications for mini-grants of $100 or less to pay In 1995, a vital portion of the battle’s legacy was in for things like art classes, guitar lessons, a bicycle helmet, or danger of being lost as developers eyed a 300-acre tract prom tickets. The goal is to help children exercise particular that was the scene of the heaviest fighting that day. The interests or talents otherwise not affordable or available to Conservation Fund stepped in to coordinate several local them, and in the process to help them define their strengths groups in preserving the battlefield by negotiating the and build hope for the future. —Karl Zinsmeister purchase of property owned by AT&T, raising matching funds from the state, and piecing together hundreds of PENNSYLVANIA private donations. Today, Monmouth Battlefield State The Hometown Treatment Park is a rural, eighteenth-century preserve amidst busWhile most donors are familiar with naming opportu- tling suburbia, with undisturbed orchards, fields, woods nities, few have had an entire city named after them. But and wetlands, as well as a restored Revolutionary-era then the Scranton family of Pennsylvania has had a long farmhouse, all standing sentinel over this scene of Amerand illustrious history of public service, not least that of ican courage and revolutionary sacrifice. —Justin Torres William Scranton, the former Congressman, Governor of Pennsylvania, and U.S. Ambassador to the United Nations. NEW YORK CITY A quiet act of local charity may ultimately be William Donor-powered Turnaround Scranton’s most enduring legacy. Beneath its sometimes rude exterior, New York City is SUMMER 2013

Private donors who overturned conventional wisdom by funding experimental projects were instrumental in rescuing New York City from the dystopian brink it reached at the end of the 1970s. 38

PHILANTHROPY

UPSTATE NEW YORK

West by Northeast Though he was the progenitor of America’s famed school of cowboy art, the painter, sculptor, and illustrator Frederic Remington was not a westerner but an upstate New Yorker. Born and buried in Canton, New York, in the far north country near the U.S.-Canada border, Remington spent his youth there and in nearby Ogdensburg, hard by the St. Lawrence River, where he gloried in the local hunting, fishing, swimming, camping, and horse riding. After Remington died, his widow Eva returned to Ogdensburg, where she too had grown up, bringing her husband’s personal collection of art and western artifacts with her. She tried to offer the Indian-related items to the Smithsonian Institution in Washington, but reversed course when she learned that the museum would break up the firearms, clothing, saddles, and other items into separate displays. Eva instead donated the lot to the Ogdensburg library in 1915, and at her death added as a bequest the family’s own selection of Remington paintings, sketches, and bronzes, plus Frederic’s papers and personal effects, and other private memorabilia. Local businessmen and philanthropists John Howard and George Hall offered $100,000 to erect a proper building in Ogdensburg to house this trove. The two patrons eventually provided the means to have the invaluable collection installed in the 1810 home where Eva lived out the end of her life, suitably renovated and opened to the public in 1923. In the years since, locals have continued to generously support the beloved museum, allowing it to add many additional items, and to expand into a second building. Today, the “Benefactors and Supporters” page of the Remington Museum’s annual report lists ten full pages of area boosters—hundreds of individual donors plus regional businesses like the Heritage Clock Shop, the Busy Corner Cafe, and the North Country Savings Bank. Along with an active mix of teas, raffles, BBQs, and replica sales, these local angels sustain a top-flight art collection in a rural New York locale that remains nearly as wild today as it was during

actually a generous town. A study by the Center on Wealth and Philanthropy concludes that, adjusted in the Center’s own way for the cost of living, high-income households in the New York metropolitan area give more to charity than in any other city—on average, nearly 9 percent of their disposable income. This dates way back. When a collection of businessmen decided after the Civil War that the city needed to add some polish to its industrial vigor, they quickly created what became the Metropolitan Museum of Art. Today, the local cultural institutions that are the beneficiaries of so much giving are in some ways what makes New York New York. But what happens when it’s not a museum that needs help, but the culture of the city itself? By the end of the 1970s, New York City was broke, the Bronx was burning, crime and drug abuse were spiking, essential agencies seemed ungovernable, and racial tension was literally murderous. Dystopia lurked around every corner. Once again, private philanthropy stepped in. Non-profit “Business Improvement Districts” were created to provide basic street services where the city government was falling down. Philanthropically supported research organizations like the Manhattan Institute spewed new ideas on how to tame and revive the metropolis. Donor-funded researchers like Charles Murray, Lawrence Mead, the Working Seminar on Poverty, and others churned out fresh ideas that, within a decade, led to new laws undoing the excesses of Great Society lenience and bringing an end to “welfare as we know it.” Similarly, idea-based philanthropy helped spread the “broken windows” understanding that tolerating petty offenses and visual blight will quickly lead to bigger crimes; amazingly, crime was pushed down to a f ifth or less of its 1990 peak. Habitat for Humanity and numerous housing charities built blocks and blocks of single-family homes ringed

by carefully tended lawns where two decades earlier empty arson-damaged towers had loomed. As the gravest emergencies were gradually solved, smart philanthropists challenged prevailing assumptions in additional areas and improved other aspects of the city’s quality of life. Richard Gilder and allied donors formed the privately funded Central Park Conservancy to resuscitate the worn, dangerous park and turn it back into one of the city’s crown jewels. David Koch and numerous colleague-givers revitalized Lincoln Center and the Metropolitan Museum. Robert Rosenkranz established a brainy live debate series called “Intelligence Squared.” A city where ugliness, dysfunction, and danger had become the norm was once again made livable. And private giving sparked most of the turnarounds. —James Panero

the formative years when Frederic Remington rambled its woods and streams. —Karl Zinsmeister

CONNECTICUT

Keeping Local History Afloat Mystic Seaport, in Mystic, Connecticut, had been an active commercial harbor since the 1600s. Over parts of three centuries during the era of sailing ships, its yards built more than 600 vessels. Others turned in and out on merchant business. Yet by the 1920s, the port was fading fast. In 1929, three Mystic residents took it upon themselves to preserve their town’s vibrant past. Lawyer Carl Cutter, industrialist Edward Bradley, and doctor Charles Stillman formed the Marine Historical Association (known today as Mystic Seaport), and rapidly filled a one-building museum with donated photos, books, and maritime artifacts. Then in 1941 the men managed to purchase the Charles W. Morgan, the last remaining U.S. wooden whaling ship. Buildings followed, and the recreated Mystic Seaport began. In the 1970s the du Pont family made additional donations, and the entire shipyard was recreated. By the 1990s, Mystic had become the nation’s leading maritime museum. In 1998, local craftsmen built an eighteenth-century schooner from scratch, with an educational program surrounding the construction process. Each year 300,000 visitors come to see the 500 boats, one million photographs, and two million artifacts now arrayed across 40 acres of salt-water frontage. —Karl Zinsmeister and Brian Brown

RHODE ISLAND

A Shrine to Religious Liberty As the oldest Jewish house of worship in America, dating from 1763, Touro Synagogue in Newport, Rhode Island, would be famous under any circumstances. But the modest Palladian-inspired building has played an outsized role in American history largely because our first President chose to write an eloquent statement of his views on religious tolerance to the elders of Touro. Responding to a written welcome from the warden of the synagogue on the occasion of the President’s visit to the city to drum up support for passage of the Bill of Rights, the newly ensconced head of state penned a 340-word letter of thanks to the congregation. He unveiled a glimmering vision of the nation, achieved when citizens of all faiths abide together under a government that “gives to bigotry no sanction, to persecution no assistance.” Closing with imagery straight from the Old Testament, Washington expressed his wish that “the children of the stock of Abraham who dwell in this land continue to merit and enjoy the good will of the other inhabitants—while every one shall sit in safety under his own vine and fig tree and there shall be none to make him afraid.” The father of his country was well aware that Americans would not overlook his gesture towards this small, frequently persecuted minority, and the letter has been a seminal document in the history of American

“The Broncho Buster,” an 1895 bronze by Frederic Remington, resides at the Remington Art Museum in Ogdensburg, in New York’s north country.

religious freedom, cited by judges, politicians, and philosophers ever since. The Touro Synagogue has been sustained by believers and donors throughout its long history. Judah Touro, second son of one of the congregation’s first rabbis, gave many gifts in the first half of the nineteenth century to preserve the facility. In 2009, another descendant of the Touro family, financier John Loeb, created an exhibit-filled visitor’s center on the campus of the synagogue, as well as a new George Washington Institute for Religious Freedom, that jointly shine a bright light on our nation’s history of religious liberty and attempt to foster tolerance and respect for faith among the next generation of Americans. —Justin Torres

MASSACHUSETTS

The Grandaddy of Charity Marathons In the early years of the 20th century, Italians were one of the largest immigrant groups in America. So when a tremendous earthquake rocked southern Italy and Sicily in 1908 and killed 100,000 people, Americans leapt to mobilize relief. One of the most significant charitable efforts was centered in Boston, where would-be helpers launched what is now one of the grand philanthropic traditions in our country. SUMMER 2013

VERMONT

Personal Rewards Rick Davis, a 58-year-old businessman who has been very active both personally and as a donor in programs in Vermont that support early-childhood development and the mentoring of elementary-age children, was named Philanthropist of the Year in his home state a few years ago. In an interview with Vermont Public Radio, he explained that when giving is personal, it can provide satisfactions to the giver that are hard to achieve in any other way: “What we’ve discovered is that mentors get as much out of this as the children that they’re mentoring. So it’s a win for the child, and for the adult who’s volunteering. Philanthropy is a very personal thing, and I don’t think we do this because we feel we’re obligated to. I really think the main motivator is the great joy you get from knowing you’ve made a difference. 40

PHILANTHROPY

NEW HAMPSHIRE

Our Colony Tucked into the woods surrounding the quiet town of Peterborough, New Hampshire, there is a powerhouse of explosive creativity. The MacDowell Colony, founded in 1907 by the composer Edward MacDowell and his wife Marian to foster “enduring works of the imagination,” attracts and supports 250 promising American artists every year, both the famous and the unknown, in fields from architecture to theater to music composition. A MacDowell residency, which may last from two weeks to two months, allows the artist to focus on a project without distraction, while drawing inspiration from the beautiful New England environs. Edward MacDowell, an inaugural member of the American Academy of Arts and Letters, realized toward the end of his life that the tranquility of his New Hampshire summer home had enabled him to compose many of his best pieces. As he was dying, Marian hoped to extend his legacy by offering the same opportunity to other artists. With the support of Andrew Carnegie, J. Pierpont Morgan, Grover Cleveland, and others, she converted the property into a retreat, with (ultimately) 32 individual studios scattered through the 450-acre forest, and a common dining area and library. Among the signature features of the colony are the lunches delivered silently to artists’ doorsteps in picnic baskets every day, and the tablets inside the studios inscribed by everyone who has worked there before. The Colony was designated a National Historic Landmark in 1962. In the century since its founding, MacDowell Colony has not only supported more than 6,000 artists, but inspired similar colonies across the nation and the world. Dozens of the works created at MacDowell have gone on to win a Pulitzer Prize or similar award, including Aaron Copland’s

Sonia Su / CC 2.0

Marathon road races were all the rage in America a century ago, partly due to Johnny Hayes’s gold medal for the U.S. in the 1908 Olympic Games. So when the Boston American went looking for a vehicle to raise money for earthquake relief, the decision was quickly made to organize a charity event around a marathon. The newspaper publicized a January 9, 1909 race managed by the local amateur athletic association, and Boston businesses covered the costs. It was announced that all proceeds from admission to the grounds where the finish could be viewed would be devoted to the victims in Italy. Despite freezing temperatures, 108 runners participated, and thousands of spectators turned out. Hundreds of thousands of dollars were raised (the exact figure is not known). In 1909 currency that was an eye-popping result. The Boston Marathon thus became the first in a long history of charity marathons held all across the United States, which collectively raise $1.7 billion annually. Even as the phenomenon spread to other cities, interest has never waned in the cradle of the concept. In 1989 (the year the charity mechanism for the Boston race was formalized into its current structure), 5,000 runners participated in the Boston Marathon; by 2013 that was up to nearly 27,000. The event now raises about $11 million every year, with the funds going to three dozen local charities ranging from the Dana-Farber Cancer Institute to the Girl Scouts of Eastern Massachusetts. —Karl Zinsmeister

“I’ll give you an example. Six or seven years ago I had a chance to donate a kidney to my sister Maggie. And folks would hear I was doing this and would say ‘Gosh, what a nice guy you are Rick.’ And somehow that didn’t resonate with me. “And then one day I told a friend of mine who was a doctor...and the first words out of his mouth were, ‘Lucky you, Rick. What an opportunity.’ “Bingo. He really got it. Because imagine the joy I get now when I see Maggie skiing down through deep powder, or being a great mother to her kids. It just doesn’t get any better than that. Nothing beats it. “And the same is true of philanthropy. You’ll notice that Bill Gates’s smile has gone from size two to size twelve since he got involved. When you invest in children and, against all odds, see them staying in school, and against all odds they’re not getting involved in drugs, and against all odds they’re graduating and succeeding.... I think that’s the great motivator for most philanthropy.” —Karl Zinsmeister

A superwoman competing in the 2013 Boston Marathon, one of America’s original charity fundraisers.

Appalachian Spring, Michael Chabon’s The Adventures of Kavalier and Clay, and Thornton Wilder’s Our Town (which was modeled on nearby Peterborough—setting “the village against the largest dimensions of time and space” in an attempt, Wilder wrote, “to find a value above all price for the smallest events of our daily life”). —Caitrin Nicol

Sonia Su / CC 2.0

MAINE

From Bees to Trees Roxanne Quimby moved to Maine because she had $3,000 in savings and Maine land was cheap. By a couple decades later, she had decided that that same land was priceless. Now she is hiking a trail blazed by some major philanthropists before her: trying to create a national park. In the mid-1970s, Quimby relocated to rural Maine to live close to the earth, without electricity or running water. A decade later, she partnered with beekeeper Burt Shavitz and began making beeswax candles, polishes, and eventually the lip balm that turned Burt’s Bees into a multimillion-dollar personal-care company. In 2000, Quimby started buying up land in Maine’s north woods, surrounding Mount Katahdin, with some of her profits. She accelerated the process after she sold Burt’s Bees for hundreds of millions of dollars (she had previously bought out Burt). Quimby now controls 120,000 acres of woodland wilderness, and is seeking to donate most of it to become the germ of America’s newest national park. Many of America’s iconic national parklands were the products of philanthropy. The Acadia, Muir Woods, and

Guadalupe Mountains parks were all donated. Members of Pittsburgh’s Mellon family gave several Civil War battlefields, barrier islands as national seashores, and portions of Shenandoah National Park. (Herbert Hoover donated his personal camp to become part of Shenandoah, too.) The Rockefeller family is the preeminent patron of national parks—in particular John Jr. and his son Laurance. Their giving provided or enlarged Grand Teton, Great Smoky Mountains, Virgin Islands, Yosemite, Big Bend, Rocky Mountain, Acadia, Olympic, Grand Canyon, Glacier, and other park units. Quimby’s desire to catalyze a park has proved controversial. A liberal environmentalist, she has closed access to land she has purchased, banned hunting and fishing, torn up roads and bridges, and stopped snowmobiling. Many residents of the Maine woods fear losing forestry jobs, development opportunities, and recreational use. (The paper companies that had previously been the proprietors allowed easy access for personal enjoyment.) To soften resistance, Quimby has more recently offered to set aside parts of her land as a state park where some things like snowmobiling and hunting could be allowed. This has been well received, but “Ban Roxanne” bumper stickers can still be spotted across the state. How well she balances interests may determine whether Congress will designate a park that Quimby can give her land to by the centennial of the National Park Service in 2016, as she hopes. —Evan Sparks and Brian Brown P SUMMER 2013

reviews commentary AND

Don’t Disable Wounded Veterans With Money Philanthropists who want to help must consider long-term incentives, and put self-reliance at the heart of their giving BY DANIEL GADE

A fundamental principle of design in any public-policy program can be found in the ancient Hippocratic Oath: “First, do no harm.” Unfortunately, many policies directed toward servicemembers and veterans recovering from wounds of various sorts violate this fundamental rule. While created out of an intention to help the wounded warrior, they often combine to yield a perfect storm of disincentives that can cause individuals to become passive dependents during a season of acute distress. Veterans unintentionally robbed of self-sufficiency lose crucial abilities to take part in all that American society has to offer. This problem is far-reaching, entrenched, and serious, and I encourage philanthropists and non-profit organizations to take it into account when operating programs for helping veterans. Philanthropists should assess opportunities for giving with a gimlet eye: Perverse incentives and moral hazards can corrode veterans as much as anyone else. As with most recipients of aid, the best help is generally that which speeds the beneficiary toward the point where help is no longer needed. When “help” can harm For the sake of argument, let us examine a fictional soldier, Adam, and the forces that affect his reintegration into society. Adam is from a small town in Kentucky. Although he dropped out of college after his first year, he is the first member of his family to attend college at all. He joined the Army for several reasons: If you ask him, he might say he did it because “they attacked us.” 42

Four months into Adam’s deployment to Afghanistan’s Nuristan province, an improvised explosive device destroyed his Humvee, killing two other soldiers and seriously injuring Adam. He woke up at Walter Reed National Military Medical Center after two weeks of unconsciousness with a mild brain injury, amputation of his lower right leg, and minor shrapnel wounds to his remaining leg, arms, and face. At first, Adam is just happy to be alive: although he is in some pain, his medical care is excellent and he feels confident that he will recover fully. He has headaches from the mild brain injury, and his shrapnel wounds are taking a while to heal, but his mother and girlfriend are there to nurse him back to health, and he is grateful. He can’t wait to learn to walk on his new prosthetic so that he can get back to Kentucky and go on with his life. Adam has an interesting life: the President pinned on his Purple Heart, his Congressman visited him just last week, and the quarterback of his favorite team came by with an autographed jersey. He was invited to join Faith Hill on stage at a concert where 10,000 people gave him a standing ovation. After six months, Adam can run again on his new prosthetic leg. A year after his injury, he starts his medical board process so that he can separate from military service, and eight months later he is a civilian. He goes to an advocacy group for disabled veterans for help filing his disability claim, and they insist that he apply for disability based not just on the lower leg amputation (which, in truth, is more of an inconvenience at this point), but also for the shrapnel wounds, PHILANTHROPY

mild traumatic brain injury (TBI), and for his bad dreams, which they call post-traumatic stress disorder (PTSD). Fortunately, his claim is handled rather quickly, and the government gives him a disability rating of 40 percent for the leg, an additional 10 percent for the scarring, plus 30 percent for the PTSD. He is also offered the chance to go to vocational rehabilitation, or back to college on the greatly expanded new G.I. Bill. On the other hand, his counselor from the Department of Veterans Affairs says that he qualifies for something called “Individual Unemployability.” I.U. is a program where someone like Adam, whose injuries don’t add up to 100 percent disability, can receive compensation at the 100 percent rate as long as he doesn’t work. Adam feels like he could work, but the difference between compensation at 80 percent and 100 percent is significant (about $1,000 per month), and he wouldn’t have to make all the adjustments involved in going to work every day, so he applies for I.U. and receives it. This is excerpted from an introductory chapter of the Roundtable’s new book Serving Those Who Served: A Wise Giver’s Guide to Assisting Veterans and Military Families. LTC Daniel Gade, who holds a Ph.D. in public policy from the University of Georgia, teaches at the U.S. Military Academy. He served as a company commander in Iraq, where he was wounded in action twice and decorated for valor. Despite losing his right leg at the hip, he won his category at Ironman Arizona in 2010.

While “Adam” is fictional, his experience is very common to veterans wounded in the post-9/11 war on terror. These men and women are deserving of the praise, support, and love of their fellow Americans. It is in many ways a natural impulse to give them whatever they desire. But if we really want the best for these veterans we will be very careful in how we approach them with both public policy and private charity. Cut off from healthy work and self-support There are many Adams today who end up permanently and totally “disabled,” but not because of their injuries. Instead, they are being disabled by well-intentioned charity and governmental support that works as a massive impediment to their reintegration into mainstream society. Let us examine several of these forces. Financial: Due to his injury, Adam receives $50,000 in Traumatic Servicemen’s Group Life Insurance. This money is intended to serve as a bridge to rehabilitation. During his recovery, Adam lives in lodging provided free of charge. He can eat for free at the hospital or other Army dining facilities. He also receives his full salary and other benefits. Once he leaves the Army, Adam will receive a portion of his military retirement pay and all of his disability benefits from the Department of Veterans Affairs. Because he chose to apply for I.U., he will receive compensation from the V.A. at the 100 percent rate (around $2,800 per month). Depending on where and when he applies, he might qualify for Social Security Disability Insurance as well. SSDI is worth around $800 a month for someone like Adam. All told, his benefits package from the government could be worth in excess of $4,000 per month, most of which is tax-free. Considering that the national median earnings of 20- to 24-year-old males who work full time is $1,908 before taxes, he is doing well. It is in this environment that

Adam must make a decision about whether to work or not. Because he loses his I.U. benefit and his SSDI if he begins to earn above a minimal amount, he faces a stiff financial penalty for beginning a job. Considering that he has only one year of college, it will initially be difficult to replace that income, much less exceed it. Psychological: When considering the nature of disability, it is important to consider the difference between diagnosis and impairment. For someone like Adam, his diagnosis was serious at the beginning, but his residual impairment might be mild. So how “disabled” is Adam? From one perspective, he is not disabled at all: He is bright, strong, walks with a slight limp, and only occasionally has headaches or a sleepless night due to his TBI. On the other hand, Adam has just spent more than two years proving to the federal government that he is disabled, and not one but two federal programs have labeled him as “disabled.” It is relatively easy to imagine that he may begin to label himself disabled as well, with all of the negative psychological outcomes that can bring. Social: A person’s work is a huge portion of how he relates to society, and a key part of his identity. Although each of us has many identities, our work-related identity is typically near the top of the list. Because Adam is labeled disabled by two federal programs, he decides not to get a job. As a result he meets fewer people. In fact, he is pretty isolated at home, and has a much smaller social network than someone who goes to

work every day. He is involved in fewer social activities, and more likely to become depressed and experience other social dysfunction. More fundamentally, he doesn’t have the meaning and purpose that comes with work, even when it taxes us. Charitable: Many charities have begun assisting veterans and wounded warriors in the last decade. Someone like Adam might be touched by a half-dozen or more groups providing him tickets to events, sporting equipment, cash, dinners, vacations, clothing, a place to live or housing services, and more. Each one of these types of support is provided with the best of intentions. If there isn’t some correlated effort to help Adam enter productive, self-supporting society, however, the downside is that these gifts can cumulatively sap the recipient’s willingness to earn those things for himself. It can be difficult for well-meaning donors to accept that this really does happen, but the reality matches the intuition: people value those things for which they strive, and tend to devalue those things that are given to them. Obviously not every veteran responds to these incentives in the same way. Some people will take their disability payments and job re-training and make dramatic successes of themselves. Rep. Tammy Duckworth, Wounded Warrior Project board president Dawn Halfaker, Sen. John McCain, and many others have done just that. It’s critically important to realize, though, that the men and women who are

Veterans are deserving of the love and support of their fellow Americans. But if we really want the best for these men and women, we will be very careful in how we approach them with both government payments and private charity. SUMMER 2013

reviews commentary AND

able to resist the siren song of gifts, charity, and disability payments are often exceptional, and the system should be designed not to harm those who might be lured astray by poorly constructed incentives. Real disability The concept of “disability” is a key starting point for helping injured veterans navigate their recovery processes. At least two major models of disability exist, the first of which is the so-called “medical model.” The medical model of disability says that an amputee is “disabled” because of his limb loss. A more modern approach is the broader “social model of disability,”which assumes that a physical ailment is only the first element of disability. The social model adds environmental and personal factors to the physical diagnosis. For example, a wheelchair user has much

disability in its International Classification of Functioning, Disability, and Health. Most human-resources managers in businesses, government, and non-profit agencies now apply a social model of disability. We’ve become accustomed to seeing amputees pass us on the ski hill. Children with disabilities are often put into “mainstream” classrooms. Adults with disabilities are accommodated at many kinds of jobs. Lots of us have watched co-workers find new employment niches with the help of retraining, computerized equipment, or other accommodations. Our views of what is possible and “normal” have been altered dramatically over the last generation. A key concept for understanding disability today is appreciating that there is a difference between capacity and performance. Capacity is the best that an individual can be

Individualized Education Plan as part of the re-employment process.These plans take into account the particular strengths and weaknesses of the candidate before placing him into a tailored program of rehabilitation, education, or training in independent living. Writing checks vs. building independence Unfortunately, several major U.S. government programs rely on the old medical model rather than a social model. The Department of Veterans Affairs disability-compensation program is one. The V.A.’s statutory requirement is to compensate for disabilities based on “average loss of earnings” that would be expected in a worker with that particular diagnosis. What this means, in essence, is that the V.A. doesn’t base its compensation on dis-

A person’s work is a huge portion of his identity. When we discourage work we don’t just suppress income, we cut people off from healthy society, and the meaning and purpose that comes from labor, even when it taxes us. less mobility impairment in an environment free of wheelchair barriers (curbs, stairs, etc.). Similarly, personal factors at the individual and family level strongly affect the degree of disablement that a person will exhibit at the completion of their medical course of treatment. Many families are able to find “a new normal” after a family member becomes disabled; some are not. Some individuals are resilient in the face of daunting challenges; some crumble. As a society, the United States has begun to shun the medical model in favor of the social model. The 1990 passage of the Americans with Disabilities Act reduced physical barriers in the built environment and required reasonable accommodation in the workplace. New prosthetic, computer, and drug technologies have had some revolutionary effects. Societal attitudes have changed. The World Health Organization (WHO) also has adopted a social model of 44

expected to do in a specific area of life. Performance is what that person actually does. The goal of any program relating to persons with disabilities should be to narrow the capacity-performance gap. In some areas, technology is decisive: A computer that reads materials aloud for a person with dyslexia, for example, may eliminate the gap between capacity and performance entirely. Some prostheses can significantly narrow gaps in mobility, appearance, or performance, if not close them. Alternatively, the gap between capacity and performance may be widened by human behavior. Bullying or negative attitudes toward disability could pull a disabled person’s performance far below what he is capable of. Many government programs acknowledge the social model of disability. For example, most disability employment programs run at the state level require some version of an PHILANTHROPY

ability at all, but rather around a diagnosis. By this definition, those athletes you see sprinting and swimming at the Paralympics, and the wounded veterans now working in many Wall Street banks, are “totally disabled.” Some injured servicemembers who remain on active duty and return to what they did before their injuries will, bizarrely, be labeled “totally disabled” once they leave the service. Clearly, the medical model leaves something to be desired. The reason that disability systems and supports must be carefully designed is simple: The process of applying and proving that one is “disabled” can trigger a powerful set of social constructs in the disabled person, his family, and his community. Applicants can start to rely routinely on others. Personal aspiration can dry up. Passivity and dependence can become normal.

In their recent book The Declining Work and Welfare of People with Disabilities, economists Richard Burkhauser and Mary Daly study two massive federal programs—Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI)—and find that despite the last generation’s many new legal protections and forms of assistance for the disabled, their employment rates are at an all-time low, support rolls are rising, and household income among persons with disabilities is stagnant. The design of these programs makes work both “less attractive and less profitable” than passively receiving benefits. The positive effects of the Americans with Disabilities Act and other efforts at mainstreaming and integration, the researchers conclude, have thus been considerably nullified by carelessly designed entitlements.

individual get rehabilitated, retrained, and reoriented so he can engage in productive labor. The many psychological, social, and financial benefits of work are thus often lost to recipients. Because systems giving cash to the disabled are filled with perverse incentives, Burkhauser and Daly suggest enhancing employment and offering other mainstreaming services, instead of just writing checks. They offer a series of reforms using the Dutch model of rewarding and thus incentivizing work. The unfortunate incentives identified by Burkhauser and Daly may actually be worse for wounded warriors than for private-sector workers. Not only does the individual face the moral hazard of being tempted to substitute a cash entitlement for daily labor, but there is also a greater moral hazard for the employer. The Depart-

particular veterans working through transitions to civilian life, or struggling with specific personal burdens, who may need assistance from fellow citizens. Despite the many assets of today’s young veterans, though, there are reasons for serious concern in current trends. A staggering 45 percent of Iraq and Afghanistan veterans are currently seeking compensation for service-connected disabilities. They are applying at more than twice the rate of troops who served in the 1990s Gulf War. Currently, about a third of all new veterans are being granted some level of disability. And the number of disabling medical conditions claimed by the average applicant has soared from 1 or 2 among post-World War II veterans, and 3 or 4 among Vietnam veterans, to 8.5 medical conditions per claimant among veterans who served in Iraq and Afghanistan.

Thanks to new technology, law, and attitudes, our views of what disabled persons are capable of have been altered dramatically over the last generation. The goal of any helping program ought to be to build independent capability and self-reliance. Astonishingly, there are more Americans of working age receiving government disability checks today (more than 12 million) than there are paid workers in our entire manufacturing sector. Through our Social Security system alone, cash payments to individuals classified as disabled totaled $135 billion in the latest fiscal year. New York Times opinion writer Nicholas Kristof recently acknowledged that “this is painful for a liberal to admit, but...America’s safety net can sometimes entangle people in a soul-crushing dependency.” The disability system for veterans is bedeviled with this problem. Benefits are predicated on an individual first proving a work-related disability or handicap, causing individuals to become economically and emotionally invested in their condition as a barrier. And the primary focus is on cash assistance, rather than on helping the

ment of Defense bears no burden when an employee exits the military with a disability settlement, since the V.A. handles the caseload, and taxpayers pay the tab. The normal risks of simply cutting checks rather than undertaking the work of rehabilitation and integration are thus actually worsened by the nature of public employment. Dramatic increases in compensation It is a serious mistake to look at veterans overall as victims, or as a problem class. The earnings of veterans in this country are higher than those of non-veterans, and their poverty rate is half the general population’s. Post-9/11 servicemembers are on average healthier, more educated, and less likely to have a criminal record. Iraq and Afghanistan veterans as a group will be a valuable asset to America’s economy and society over the coming decades. It is only SUMMER 2013

Those are shocking numbers. They are influenced, however, by many inducements in today’s system, including V.A. procedures. The definition of disability in the V.A. system is such that most of these veterans are not “disabled” in the commonly used sense of the term. More accurate terminology would describe them as “having a service-connected condition.” The most prevalent service-connected condition in the V.A. system in 2011 was tinnitus (ringing in the ears), and the second-most prevalent was hearing loss. Keep in mind that out of the 2.7 million servicemembers who have served in Iraq or Afghanistan, less than 14,000 were wounded in action seriously enough to merit evacuation from the theater. It is appropriate for the nation to spend whatever it takes to help seriously injured servicemembers recover their capacities. 45

reviews commentary AND

Thankfully, catastrophic injuries are less common among post-9/11 veterans than generally imagined. For example, there are a total of about 1,700 amputees. Approximately 250 Iraq-Afghanistan veterans are blind. About a hundred suffered spinal-cord injuries. And penetrating brain injuries total 4,174. PTSD is the affliction most mentioned in popular discussions. It is a syndrome covering a very wide range of complaints, and estimating its prevalence is complicated by the fact that there have been at least two major policy changes in PTSD diagnosis and treatment. First, the V.A. no longer requires proof that a traumatic incident occurred. (Indeed some advocates argue that there need not be any precipitating incident, that PTSD can occur simply from an accumulation of occupational pressure.) Second, the V.A. actively seeks patients instead of just accepting them when they come.This latter decision gets more veterans into treatment, but also makes the total number much higher. Among Iraq and Afghanistan veterans, the Department of Veterans Affairs reported 217,082 cases of diagnosed PTSD as of the first quarter of the 2012 fiscal year, a significant increase in prevalence compared to previous generations of combat veterans. The pitfalls of assistance without demands A rich network of services for returning servicemembers would first treat acute and chronic medical needs, then provide rehabilitation services as needed, and finally help veterans gain and maintain useful employment, all roughly in that sequence. At each stage, the needs of the soldier or veteran can be met by federal programs, by assistance from state or

local government, by non-profit groups of various stripes, or by individuals— family members, neighbors, church congregants, or donors. When services are being offered to individuals, dangers can arise in the area of perverse incentives or unintended consequences.This is a well-known phenomenon in economics—well-intentioned policies or programs often create side-effects that are not at all what the program’s creator desired, but which can be as pronounced as (or even stronger than) the intended good result. It is a truism of public policy that “if you want more of something, subsidize it.” If the thing being subsidized carries downside risks, recipients may be hurt as well as helped. This trend is visible in the stark growth of disability programs of all types over the last several decades. After reviewing the last generation’s 19-fold explosion of disability claimants (from 455,000 in 1960 to 8.6 million today), Washington Post columnist George Will warns that “gaming…of disability entitlements” has made work “neither a duty nor a necessity”—which is one major reason why the male labor force participation has plummeted from 89 percent in 1948 to 73 percent at present. Federal agencies like the Government Accountability Office have called repeatedly for serious reform of incentives in disability programs, warning that “low return-to-work rates may be due, in part, to the timing in which certain supports are offered to beneficiaries.” It makes policymakers and taxpayers queasy to think that programs designed for good might instead be crippling intended beneficiaries, but it’s clear that poorly designed compensation programs can serve as a “headwind” that holds back veterans from long-term success. This isn’t just a risk

A staggering 45 percent of Iraq and Afghanistan veterans are seeking compensation for service-connected disabilities. They are applying at more than twice the rate of troops who served in the 1990s Gulf War. 46

PHILANTHROPY

with government entitlements. Some charitable programs designed to honor veterans can also have negative effects. That’s why giveaways which decrease a veteran’s desire to participate in the labor force need to be balanced via sweat-equity requirements, financial co-pays, and concrete expectations of employment as the recipient moves on. Those important details are lacking in most of today’s programs. This warning that poorly designed assistance for veterans can actually hurt the intended beneficiary is rarely spoken, partly because it can so easily be attacked for demagogic purposes. But this is a hard reality, one I have observed both through years of academic specialization in this area and through personal experience. The second time I was wounded in Iraq I nearly lost my life, did lose my entire right leg, and ultimately required more than 40 operations before I could return to self-supporting work and family life. During my year at the Walter Reed medical center I saw many soldiers who had been moderately wounded, like Adam, get sidetracked from their reentry into productive society by overly generous or poorly targeted programs. I myself was offered forms of help along the way that could have sidetracked my quest to regain independence. I was also blessed by wiser offers from generous helpers at hundreds of points along the way, and by a supportive and loving family. But far too many veterans are disabled by poorly designed incentives and programs before they even get out of the starting gate. The vast preponderance of charitable assistance offered to veterans today does wonderful things, for men and women who wholly deserve support. And most of the individuals who have served our country in uniform will respond well to wise incentives, and end up as highly productive civilians. But as you feel inspired to undertake philanthropy for veterans, servicemembers, or their families (which I certainly hope you will consider), do so in smart and hardheaded ways. The flip side of avoiding bad incentives is the imperative to offer smart incentives. Donors who do so can dramatically increase the opportunities for today’s veterans to participate fully in the American dream without headwinds or handicaps. P

It’s About Freedom, Not Finances The real reason for keeping the government’s hands off of the charitable deduction BY A L EXA N D E R R E ID

The charitable contribution deduction is at risk, a potential casualty in the looming budget wars. Were it to disappear, U.S. charitable organizations would lose a vital source of support. We as American citizens, however, would stand to lose much more than that. The charitable deduction protects our freedom to create and operate institutions that make up a civil society separate from government. Although America is a democracy, Americans are not limited to the election of representatives as our sole means of expressing ourselves and contributing to the public good. We also have the right of direct action in the public sphere. The robust civil society that flourishes within our borders is the envy of the world and the bedrock underlying our democratic system. The individual deduction for charitable donations, and income tax exemption for charitable organizations, are more than just tax rules. They form a legal boundary between the state and civil society. They are not federal subsidies for civil society, but rather fences around civil society to limit government interference in a vital sector of our free nation. Income taxes are the contributions we make to the public good indirectly by force of law. Charitable donations are the contributions we make to the public good directly and voluntarily. Direct giving through donations and indirect giving through taxes are dual aspects of our right to self-governance. Altering the charitable deduction would renegotiate the fundamental relationship between citizens and the state, and risk undermining our most deeply held freedom to shape our own society. Is there more to the public sector than government? Our deficit-ridden federal government is

coveting the billions of dollars that citizens send annually to charities. For several years in a row, President Obama has proposed lowering the income-tax deduction for charitable giving. Congress is now also entertaining proposals for capping, eliminating, or altering the charitable deduction as part of tax reform. Policymakers sometimes justify these proposals by claims that the charitable deduction is a government subsidy for charity. According to this argument, when you give $100 to charity and deduct $39.60 from the taxes you owe, the government has effectively subsidized the transaction. An alternative view is that the charitable deduction is not a subsidy but simply an accounting mechanism to ensure that your income is measured accurately. Money you give away for public benefit is neither part of your income nor the government’s money to claim. Any income tax requires a charitable deduction as a matter of principle, because funds given away for the public good are not part of a taxpayer’s personal resources. Under the first view, the state sponsors and subsidizes civil society using tax revenue. Under the second view, individuals create civil society using their own funds, without state interference. Some people say that charitable contributions should be taxed because they are a form of personal consumption. If the donor feels good about himself for giving money away, he has “consumed” the warm glow that comes from being a donor. The rejoinder to this is that the economic value of the charitable contribution actually settles on the recipient of the gift, not the donor. When I buy and eat a pint of ice cream, I literally consume some of my income. When I give money to a disaster relief fund or cancer hospital, the person whose home or body SUMMER 2013

has been ravaged consumes the funds. I may get a good feeling from both experiences, but the private gulping and the giving to others are wholly different acts. At its core, the issue of whether charitable contributions should be included in the tax base is a matter of values as much as economics. It is a question of what the relationship should be between citizen and state. If you believe that a citizen’s right to elect representatives is all that’s needed for self-governance, then interfering with citizens’ direct contributions to the public good may not be a big deal. Under this view, charitable contributions are a luxury that a democratic government may choose to subsidize through charitable deductions when it is wealthy, or eliminate when it is poor. Not only does income belong to the state, but so does philanthropy; the donor’s choice is irrelevant. On the other hand, if you believe that citizens should have the freedom to contribute directly to the public good without government interference, that civil society is an end in itself, and that civic engagement is healthy for democracy, then charitable contributions should not be treated as part of the tax base. The donor’s right to support independent organizations is part of his fundamental freedom, as valuable as his right to vote. Citizen, private charity, state Kamal Jahanbein has a vision. He believes that everyone in the world should have the right to prosper, to speak his or her mind, and to petition the government for redress. Born in Iran, Kamal derives tremendous personal satisfaction from the American system of philanthropy which enables him to enact his vision Alexander Reid is a tax attorney in Washington, D.C., and former counsel to the Joint Committee on Taxation of the U.S. Congress. For more on this topic see his essay in the January 2013 issue of Exempt Organizations Tax Review, or his statement submitted to the House Ways & Means Committee hearing of February 14, 2013. 47

reviews commentary AND

of the public good without interference from anyone, a precious freedom to those with experience living under an oppressive regime. Kamal runs a neighborhood pub in Washington, D.C., called the Saloon. The most surprising thing about this popular business is the sign on the door that says, “The Saloon will be closed for the month of August while we go to Africa to do some good.” After 20 years of nurturing his now-profitable business, Kamal began building schools in some of the world’s poorest towns. He has now completed more than 16 schools around the world, as well as medical facilities and homes, in places like Bafang, Cameroon; Rio Dulce, Guatemala; and Pakua, Laos. This year he will build a school in Uganda. By his own estimate, Kamal has given away more than $1.5 million and countless hours to his humanitarian projects. Hundreds of names on the bricks that line

with determined mothers, waving their contracts and demanding the teachers that they were promised,” he said, smiling. Talking to Kamal, you realize that giving to charity is a radical act. It is defining what is good for society, and putting your money where your mouth is. Marshaling resources for the good of society is also what governments do, which is why there can be a tension between charities and political officials. The ability to create an institution to accomplish a particular vision of the public good creates a locus of power that is separate and apart from the governmental authority. Government is about centralized power; charity is about local problem-solving. Before there is government, there is charity: ordinary people gathering together to provide for the common good by helping the needy, healing the sick, teaching the ignorant. At its core, char-

purposes in public policy. But that is not the system of self-rule enshrined in our Constitution. In fact, that is just the sort of government that our founders fought and died rebelling against. The right of self-governance Americans tend to chafe against restraints on our liberty to speak, act, worship, or band together, even if these acts are heretical or otherwise controversial. Nor do we wait for government to become involved when we perceive a problem. We act on our own, or in concert, to solve it as we see fit. Our ability to define what is wholesome and necessary for the public good, as individuals or self-organized groups, is the essence of American freedom. And making charitable contributions without government interference or taxation is an important part of this original right. America’s passion for self-governance is manifest in our many associ-

A longstanding power struggle between the U.S. government and our private charities continues to this day. his pub belong to individuals who have contributed to his philanthropic projects. When Kamal builds a school, he seeks to give the gift of self-empowerment, the strength to strive against forces that seem greater than oneself—to have the confidence of David in a world full of Goliaths. Before he begins, Kamal asks representatives from the village where the school will be built to raise 10 percent of the funds from their own pockets, “so they are invested in the project.” Then Kamal helps the village negotiate with the local government to provide the teachers, furniture, and equipment necessary to operate the school. When the project is complete, Kamal makes sure the village representatives have copies of the contract with the government so that they can enforce it. “You have never seen such a beautiful sight as a government minister’s office filled 48

ity is about self-reliance. The charitable institutions we create are manifestations of our right to self-governance that is truly by the people, for the people. A nation can be judged by the amount of charity it permits within its borders. A government that represents its citizens’ best interests is not threatened by the additional exercise of self-governance. On the contrary, the exercise of self-reliance by the citizenry strengthens civil society, the stuff of which democracies are made. Competition between the government and non-profits to best represent the public interest dates to the founding of America. It is perhaps understandable, given human jealousies, why the government should prefer to control the vast resources of the private non-profit sector, and to manipulate their contributions to serve government PHILANTHROPY

ations. We have more than 1.5 million tax-exempt organizations, including 900,000 public charities, 100,000 private foundations, and 600,000 other types of non-profit organizations, including chambers of commerce, fraternal organizations, and civic leagues, and roughly 320,000 religious congregations. Many associations are effective; many are not. Some last a century; some never get off the ground. But in America, that is our business, not the government’s. We are free to create, free to operate, and free to terminate our associations as we please. Since our nation’s founding, the federal government and private associations have been rivals, and the lines of battle have shifted back and forth over the years. Today we take it for granted that private associations serving the public benefit may compete with the federal

government. That, however, is a freedom that was hard fought and won by previous generations. In 1816, the State of New Hampshire attempted to seize control of Dartmouth College, a private university established by charitable contributions in 1754 for the purpose of educating Native Americans and other people of New Hampshire. The motivation for taking over Dartmouth was political. The Jeffersonians had won the New Hampshire governorship and state legislature in the election of 1812. The trustees of Dartmouth College, however, were members of the opposition Federalist party, and the state sought to replace them with loyal Jeffersonians. The Jeffersonians argued that the government should have the right to control charitable contributions. As Thomas Jefferson himself explained in a letter he wrote to New Hampshire Governor William

touched or modified, even to make them answer their end, because of rights gratuitously supposed to be in those employed to manage them in trust for the public, may, perhaps, be a salutary provision against the abuses of a monarch, but it is most absurd against the nation itself.” The college challenged the state in the Supreme Court. Daniel Webster, a Dartmouth alumnus, argued the case for Dartmouth’s freedom to operate from government interference—even when that government is a democracy. He said, “Shall our state legislature be allowed to take that which is not their own, to turn it from its original use, and apply it to such ends or purposes as they, in their discretion, shall see fit? Sir, you may destroy this little institution; it is weak; it is in your hands! You may put it out; but if you do, you must carry on with your work! You must extinguish one after another, all those great lights of sci-

benefit is not a gift to the government, and doesn’t allow the state to interfere with the institution created by the gift. It would be difficult to overstate the importance of the Dartmouth decision in shaping American civil society over the past two centuries. With one stroke, the Supreme Court severed the public and private spheres, making clear that under our Constitution the government could not direct private associations to implement government policy. After Dartmouth, private associations were free to operate autonomously, to accomplish whatever public purposes they choose, constrained only by the legal framework of the tax law, general laws against fraud, discrimination, and so forth, and their ability to obtain resources from charitable donors. The great flourishing of private associations for the public benefit that followed the Dartmouth decision has been

There is a fashionable argument at present that the charitable deduction is a subsidy from the state. That’s wrong. Plumer in 1816, a private gift to accomplish a public purpose such as education is, in effect, a gift to the people, and as the people’s representative, the democratically elected government of New Hampshire should have the right to oversee the gift. Jefferson believed that state control of Dartmouth was critical to ensure that Dartmouth educated the future leaders of New Hampshire in a manner meeting state approval. Why should a state controlled by Jeffersonians allow a Federalist educational agenda to continue? Jefferson saw no need to protect Dartmouth from government interference because he believed that democracy itself guaranteed that the government’s purposes and those of Dartmouth College would always be synchronous. He wrote, “the idea that institutions, established for the use of the nation cannot be

ence, which, for more than a century, have thrown their radiance over the land! It is, sir, as I have said, a small college, and yet there are those who love it.” Spoken just 40 years after the signing of the Declaration of Independence, Webster’s words resonated deeply with those present. Writing for the Court, Chief Justice John Marshall was moved to agree with Webster. He found that the state could not replace the trustees of Dartmouth College, because doing so would interfere with the charitable contributions of Dartmouth’s donors. Dartmouth was a vehicle through which individual donors pooled their resources to accomplish public benefits they deemed appropriate, and the Constitution gave the state no right to interfere with such a private contract. A gift to accomplish a public SUMMER 2013

the hallmark of American civil society ever since. Writing a couple decades after Dartmouth, French philosopher Alexis de Tocqueville observed that public-benefit associations are the foundation on which American democracy rests. Private associations working for the public benefit are not just signs of a healthy democracy, he concluded, they are its cause. The tax man cometh The power struggle between charities and the government continues to this day. The difference is that today, the battle is waged through the tax law. Nearly 100 years after the Dartmouth case, Congress gained the power to tax income through ratification of the 16th Amendment to the Constitution. It enacted the corporate and individual income taxes in 1913. Previous attempts to enact an income 49

reviews commentary AND

tax, dating back to the Civil War, all exempted charitable organizations from taxation, as our current code does. The individual deduction for contributions to charities was first introduced in 1917, and has been in place since. This protection of charities and charitable contributions from taxation was a manifestation of the unwritten social contract that private giving should be excluded from the tax base out of deference to the sovereignty of American citizens. That is very different from the claim made in some quarters today that our present partial tax protections of charitable contributions are a gift from the state—a subsidy. The historic understanding is also completely at odds with today’s fashionable argument that, as a contributor, the government has a right to decide how much charity to subsidize, which recipients to support, and how best to manage them. Those who believe the charitable contribution deduction is a subsidy from the state often argue that the purpose of subsidizing charitable goods and services such as education, poverty relief, scientific research, and health care is because the government would have to provide these things if charities did not. The problem with this view is that if the purpose of the charitable deduction is to serve governmental purposes, then the charities should also be under government control. Under this view, charities should be subject to the rules that apply to government contractors, and the government should have rights to direct and supervise charitable actions. As yet, the government does not tell charities what goods and services to provide, when and where to provide them, or how much they should cost. The gov-

ernment cannot hire and fire charities at will, reward the ones it favors, or dock the ones that displease officials. The government so far has no right to appoint a charity’s board of directors or to select its officers. The government cannot refuse to subsidize charities controlled by individuals the government does not like. When a new government is elected, disfavored charities do not lose their tax benefits, and loyal charities do not get extra credit. (These are not just theoretical worries, as shown by recent actions like IRS discrimination against social-welfare organizations affiliated with the Tea Party, and HHS Secretary Sibelius’s calls asking companies to give money to new charities operated by former Obama campaign staff to help implement Obamacare.) Under current law (if not always practice), anyone can form a charity, regardless of his or her experience, expertise, or political persuasion. To secure tax exemption and be eligible to receive deductible contributions, all that is required is that the organization promise the Internal Revenue Service that it will primarily conduct activities that further its charitable purpose, not intervene in political campaigns or engage in excessive amounts of lobbying, and not distribute profits to shareholders. To maintain its tax exemption, the organization simply must file annual information returns and continue to operate as promised. The government may periodically audit the organization to confirm that it is not breaking its promises, but beyond that, the government is supposed to stay out of the picture, and let charities govern themselves and pursue their own purposes. All of that existing practice would be very different if the charitable deduction was accepted as a government

Charitable contributions are protected from taxation in order to keep government from entangling itself with the exercise of individual freedom. 50

PHILANTHROPY

subsidy rather than a bulwark against government intrusion. Moreover, there is another crucial flaw in the idea that protecting charity from taxation represents a government subsidy. Many of the objects of American charity—like religious flourishing—are things our government cannot constitutionally subsidize. That’s why the Supreme Court has expressly rejected subsidy theory as an explanation of the charitable exemption from income tax— because it cannot be reconciled with the clauses of the Constitution protecting free exercise of religion and forbidding establishment of an official church. The Court has found that tax exemption of churches is not a favor granted to churches, but a democratic necessity to ensure that the state does not infringe on individuals’ religious freedom. As Chief Justice Burger wrote in Walz v. Tax Commission of the City of New York: “The exemption creates only a minimal and remote involvement between church and state, and far less than taxation of churches. It restricts the fiscal relationship between church and state, and tends to complement and reinforce the desired separation insulating each from the other.” In other words, churches are exempt from tax not because the government is underwriting religion, but because it is vital, constitutionally, that a free and fair government stay out of their business—which is best accomplished by tax exemption. Subsidy or immunity? This, then, is the crucial point: Charitable contributions must be protected from taxation not because the government wishes to subsidize charitable activity, but because government intrusion in this sector would dangerously entangle the state with the exercise of individual freedom. Through charitable contributions, Americans make real many of our constitutionally protected rights—creating organizations that engage in freedom of speech, freedom of association, freedom to practice religion. The civil society we build through our non-profit institutions

is not just some sweetener of our quality of life. It is fundamental to our democracy, a replenishing source of nourishment to individual freedom. The justification for the charitable deduction is akin to the intergovernmental immunity from taxation that the Supreme Court recognized in McCulloch v. Maryland, where Justice Marshall famously wrote that “the power to tax involves the power to destroy.” Just as the principles of federalism constrain the federal government’s power to tax the states and the states’ power to tax the federal government, the individual freedoms the Constitution guarantees to American citizens to engage in civil society by creating and funding non-profit organizations should likewise block intrusive government manipulation of charity via taxation. Although someone focused only on the federal budget might not care whether the charitable deduction is justified as a subsidy or as an immunity from tax, these diametrically opposed justifications are built on entirely different understandings of the relationship between citizen and state. And legislative action growing out of these two different interpretations could eventually lead to dramatically different results in American society. Tax subsidies are things the government chooses not to tax in order to encourage behavior that the government supports. The government may manipulate these as it sees fit. Tax immunity is a framework that strictly limits the government’s ability to control and collect revenue from an activity. The charitable deduction, which protects the vital role of civil society in America, should be understood as a tax immunity, not a subsidy. It is crucial that donors and lovers of liberty in America protect this traditional understanding and not fall into the trap of letting it be redefined as a subsidy, not even a benevolent one. Charities do not normally provide goods and services to help the government. In fact, they often provide goods and services that the government cannot or will not provide, and even things

Sacrificing the charitable deduction to improve federal finances would be a profound renegotiation of the relationship between the government and our civil society, a drastic move running counter to the spirit and longstanding practice of American democracy. the government does not like. Philanthropy in America is rich with examples of citizens acting where government has refused to act. It was charitable giving that educated Native Americans at Dartmouth and Hamilton colleges. It was private givers who set up thousands of schools for African-Americans when the state was scorning them during the Jim Crow era. It was Rockefeller donations that eliminated hookworm in the U.S. when embarrassed hot-weather state governments refused to acknowledge that such parasites were endemic among their residents. Philanthropists like Bill Gates pursued vaccines for diseases like malaria when that was too costly for government or insufficiently profitable for corporations to pursue. Charitable giving has even repeatedly spawned movements that fundamentally alter the complexion of democracy. Reforms ranging from abolition to women’s suffrage to protections for religious conscience to tort reform have all been inaugurated by philanthropy. In each case, the government has been more adversary than contributor, until the government itself was changed by the movement. So today’s debate over the charitable deduction is about much, much more than taxes and deficits. The charitable deduction is a main artery within our body politic. It nourishes American civil society and gives strength to our democracy. It gives form and substance to our basic freedom of self-governance—a right that is not fully discharged by our ability to elect representatives. It is not a luxury we can do without. SUMMER 2013

If the charitable deduction were eliminated, Americans would no doubt continue to give generously at some level. But that is not the point. The charitable deduction does not exist to subsidize good works, though the good effects are many. Rather, we shield private donations from the brunt of taxation in order to limit government interference with our personal choices on how best to further the public interest. The charitable deduction is a mechanism for ensuring that the government does not lay claim to that which it should not own: private gifts devoted to the good of the people. The charitable deduction is a negotiated bargain between citizens and the state, establishing a delicate balance of power. We have accepted limits on how much money we may contribute, on the types of property that can be given, on the arrangements that constitute a gift, on the broad sectors we may give to, and on what the recipients are forbidden to do with our gifts. But, historically and philosophically, there are more reasons to argue that the charitable deduction should be expanded today than that it should be further circumscribed. Sacrificing the charitable deduction is not a wise, safe, or acceptable means of improving today’s disastrous federal finances. The appropriation of charitable revenue by the federal government would be a profound renegotiation of the relationship between the American government and our civil society. Bluntly, such a drastic move would run counter to the entire history and spirit of American democracy. P 51

books

Embarrassment of Riches? A new book on the “problems of vast individual fortunes” is a little threadbare BY J OHN ST EE L E G O R D O N

Americans have always had a love-hate relationship with the rich. We’re fascinated by them and their living styles, we aspire to join their ranks—and yet we often denigrate them as mere money-making machines, somehow less than human. And many of us think we could give their money away more efficiently and to better purpose than they do themselves. Certainly in that latter category is Robert F. Dalzell Jr., an emeritus professor of history at Williams College. Dalzell has written a curious little book that seems more stitched together from bits and pieces than written whole. Its early chapters are narrative history, telling the stories of several very rich Americans who lived in the four centuries the American colonies and republic have existed. He also specifies, at length, to what eleemosynary purposes they put their wealth. The rest of the book is a musing on the contradiction he sees between democracy and the existence of great wealth and the threat of a spreading gap between the very rich and everyone else. Robert Keayne, perhaps the least known of Dalzell’s subjects, lived in Puritan Boston, became a successful merchant, and served as Speaker of the House in the General Court, Massachusetts Bay’s legislature. But he ran afoul of a medieval notion called the “just price,” and was accused of selling a cask of nails at a price above what the Rev. John Cotton thought was proper. The dispute was never really settled, and it clearly rankled Keayne deeply the rest of his life, as he explained himself at length in his will. Dalzell’s second subject is George Washington, who is here treated not as the father of his country but as one of its richest citizens. He achieved this status by speculating in land, marrying a rich widow, and managing his and his wife’s estates with business-like care—all standard routes to fortune in 18th-century America. Dalzell’s next subjects are Amos and Abbott Lawrence, enormously successful textile manufacturers in early-19th-century Massachusetts as the Industrial Revolution began to affect the American economy. And then there are the Rockefellers—father, son, and grandsons—whose careers take up a considerable portion of the book. In all his case studies, Dalzell concentrates on the philanthropy of these men, and the details he 52

The Good Rich and What They Cost Us by Robert Dalzell Yale University Press, 2012 $28, 199 pp.

With Charity for All: Why Charities are Failing, and a Better Way to Give by Ken Stern Doubleday, 2013 $26.95, 272 pp.

PHILANTHROPY

gives break no new ground. Keayne gave generously to establish such things as a place where merchants could trade protected from the weather. Washington’s greatest act of philanthropy is described as his decision to free his slaves in his will, establishing what amounted to a trust fund to care for those too elderly or sick to work. (We know from other sources that Washington also contributed regularly to the relief of those in debtor’s prison, and made the largest gift of the Founding era to what became Washington and Lee University.) The Lawrence brothers differed as to where they should give their money, but each was generous with his own causes. And the Rockefellers, of course, became the greatest philanthropists in world history, funding everything from Rockefeller University to Colonial Williamsburg to the Virgin Islands National Park and making enormous contributions to the Metropolitan Museum of Art, the Museum of Modern Art, and more. But Dalzell never really grapples with the different worlds these men lived in, an odd fault for so distinguished a historian. For instance, he never discusses the economic absurdity of the idea of the “just price,” and why a merchant like Robert Keayne might object to being told by a clergyman what that price was. Nor does he discuss how the moral climate regarding slavery underwent a fundamental change in Washington’s lifetime. The reader would never know from this book that John D. Rockefeller made his titanic fortune while the rules of democratic capitalism were being thrashed out in the political marketplace, although he does note that Rockefeller broke no laws in place at the time. The second half of the book is even more problematic. Dalzell decries the fact that the rich are so much richer today than they were half a century ago, both in absolute wealth and relative to the rest of us. But he never comes to grips with why that is so. Instead Dalzell assumes, as is clear in the book’s title, that these fortunes are the result of faulty public policy, especially taxation and the charitable deduction, and thus “cost us” what would otherwise be applied to public purposes. But he never actually makes the argument that the rich cost us anything. He simply ignores the fact, for instance, that the makers of tremendous fortunes make us all richer by providing better goods and services than were previously available. That, after all, is how they got so rich. Nor does he deal with the possible real-world consequences of aggressively narrowing the gap between

the fortunes of the very rich and everyone else through government policy. How would that affect the willingness to take risks and work hard? Dalzell doesn’t say. Dalzell plays with the numbers provided by the Forbes 400 list, but not altogether fairly. He makes much of the fact, for instance, that some members of the list are related to others on the list. This is an attempt to show that there is a self-perpetuating aristocracy of wealth in this country, much as there has been in Europe for hundreds of years. But the fact that there are six Waltons on the list is not very surprising, given that they are immediate relatives of the man who generated a fortune at Walmart within just the last two or three decades. American economic patterns strongly suggest that two or three generations from now, Walton offspring will be footnotes rather than Forbes-list moguls. In fact, what is most interesting about the Forbes 400 list is how new these fortunes are. Of all the legendarily rich families of a hundred years ago—Whitney, Morgan, Harriman, Vanderbilt, Astor, etc.—only the Rockefeller family today holds one of the top 400 biggest American fortunes, and that not even in the top 100. America’s aristocracy of wealth has always been of the nouveau riche variety. Also unmentioned is the real reason the rich are getting so much richer these days: the technological revolution being brought about by the microprocessor. This has opened vast new market niches in the economic ecosystem. Whenever there has been a profound technological development—from the full-rigged ship of the 15th century to the steam engine of the 18th to the railroad of the 19th to the automobile of the 20th—there has always been an explosion of new and larger fortunes. The microprocessor is at least as profound a technology as the stream engine and it has led to an even larger inflorescence of new fortunes. And not just directly with the likes of Bill Gates, Michael Dell, and Mark Zuckerberg; such fortunes as Michael Bloomberg’s in journalism and Sam Walton’s in retailing would not have been possible without the

computer. And for every member of the Forbes 400, there are hundreds who have created smaller fortunes. In short, The Good Rich and What They Cost Us is half potted history and half poorly argued polemic. Contributing editor John Steele Gordon is the author of An Empire of Wealth: The Epic History of American Economic Power.

When Charities Behave Badly

Can we tolerate the disorder of philanthropic freedom? BY SUZANNE GARMENT AND LESLIE LENKOWSKY

Every few years a book appears claiming that beneath the much-admired surface of America’s charities lies a cesspool of corruption, greed, and ineffectiveness. The latest entry comes from a former National Public Radio chief executive, Ken Stern. Its title—With Charity for All—is meant ironically. The last thing Stern believes is that the nation’s charities act charitably. Among his complaints: Hospitals and other organizations charge high fees for their services and seem more concerned with getting patients to pay up than with helping the needy who cannot meet their bills. Charities spend too little on accomplishing their goals and too much on enriching their leaders through high salaries. Donors are too indulgent, choosing to support activities that make them feel virtuous but do nothing to solve social problems. And despite the substantial tax breaks that charities receive, government oversight of those charities is too loose. None of these criticisms will surprise anyone who has followed the past decade’s newspaper and Congressional investigations of charitable malfeasants, from which Stern draws many of his examples. But do they reveal, as Stern believes, that America’s charities are “failing” and that we need “a better way to give”? If so, what is it? SUMMER 2013

Recent years have certainly produced a number of highly publicized charitable scandals, often involving accusations that money intended for good purposes instead wound up providing benefits to the people who ran (or solicited funds for) the organizations that raised it. But Stern exaggerates the scope of such misconduct. For example, to buttress his claim that large numbers of charities engage in financial misconduct he cites a sensational 2008 article from the New York Times headlined, “Report Sketches Crime Costing Billions: Theft from Charities,” which put 2006 losses at $40 billion, or 6 percent of total nonprofit revenues that year. However, neither Stern nor the story makes clear that this was not hard fact but just the opinion of a sample of members of the Association of Certified Fraud Examiners—or mentions that the same sample believed wrongdoing to be far more extensive in government and business than in the non-profit sector. Stern also cites surveys showing that the public trusts charities less than it used to. But these same surveys show that confidence in most American institutions has been slipping for quite some time, and that charities are generally still held in higher esteem than Congressmen, journalists, corporations, and many others. Non-profit hospitals come in for particular reproach in Stern’s book. He charges that they increasingly behave like their forprofit counterparts, pointing out that in addition to the similarities in the salaries their top executives are paid, each type of institution seems to provide about the same amount of “charity care.” He views this as evidence of a spreading commercial ethos among hospitals but does not consider the alternative possibility: that doctors and other health-care personnel have a consistent view of their professional responsibilities and appropriate salaries regardless of whether they work in for-profit or nonprofit institutions. Donors are not spared, either. Stern contends that many give self-servingly—to feel good, or bask in public acclaim—rather than follow proven ways of dealing with social 53

books problems, as if the two things were irreconcilable. He says the wealthy do not give as large a proportion of their incomes to charity as lower-income people do. However, to reach that conclusion, he has to ignore some inconvenient facts: Among the “low-income” donors he cites are the elderly, whose giving comes from assets accumulated when their incomes were higher. Moreover, wealthier people are more likely to donate than those in other income groups. Among the millions of charities in the United States, undoubtedly some—perhaps even many—behave less than charitably. (Stern singles out as prime examples the small number of non-profit groups that sponsor college football bowl games; originally established to raise scholarship funds, they now operate more like advertiser-fueled promoters of sports and tourism, producing little for education but a lot for their leaders. The Internal Revenue Service has been trying to tax them for years, mostly without success.) And doubtless the ranks of philanthropists include some—perhaps even many—whose motives are less than purely altruistic. But no one, least of all Stern, has offered any evidence that such conduct is widespread, or that America’s charities are collectively “failing.” This absence of evidence does not stop him from offering two ideas for improving giving, both of which are problematic. First, Stern calls for increased oversight of the non-profit sector, including a narrowing of the definition of what a charity is. While acknowledging the “benefits to an open charitable system,” Stern professes dismay with the latitude that federal and state officials give the same system, including the infrequency with which they re-examine, let alone revoke, the legal protections of charities that have strayed from their intended purposes. He characterizes the IRS approach to deciding what is or is not a charity as too much of an “open-gate” policy. With Charity for All was published just before the Inspector General’s report on the IRS’s targeting of conservative political groups, which illustrates the dangers of more aggressive oversight by regulators empowered to decide what is and is not “legitimate.” And the dangers of a more intrusive 54

government role go beyond the possibility that tax or other laws will be manipulated for political purposes. What it means to be “charitable” has long been debated, and in a heterogeneous society like the United States the answers will inevitably take many forms. American law has been conspicuously lenient in allowing organizations to obtain the status of charities, which undoubtedly helps explain why U.S. charities are so numerous compared to those of other countries. A more restrictive approach, far from producing more “charity for all,” would simply produce less charity. That result might be of little concern to those who see art museums and symphony orchestras—or teaching hospitals and Ivy League universities—as less worthy than programs to help the needy. But many Americans would miss the consequent loss of diverse benefits provided by voluntary giving. Stern’s second proposal calls for a change not in laws but in attitudes. He says charities—and those who fund them, including government—should focus less on good intentions and more on good results. In recent years this sentiment has enjoyed increasing support, not without reason, among non-profit professionals and prominent philanthropists like Bill Gates. Stern gives examples of well-known charities that have grown substantially despite considerable evidence that they have achieved little or nothing. He also profiles results-oriented organizations that seem to have had success with difficult social problems like improving pre-natal and postnatal care for low-income mothers. Sensible as this recommendation seems, it, too, has critics. Some point to the challenges (and costs) of properly assessing the sorts of subtle or long-term changes that many charities hope to achieve. Others emphasize both the limits of knowledge about what works and the crucial role that non-profits play in testing new approaches, including ideas that are risky or controversial. Too much focus on measurable outcomes, they fear, will lead to less innovation and, ultimately, less capacity to solve stubborn social problems. The main problem with Stern’s second proposal, though, is that, as with the defiPHILANTHROPY

nition of “charity,” people disagree about what “effectiveness” means. Take education. Should a non-profit that is interested in the school problems faced by children from low-income families measure its success by improvements in test scores? By high school or college graduation rates? The jobs eventually obtained by the children it helps? The incomes they earn? Something else? The answers to these questions depend on the values that the organization and its supporters consider most important. Indeed, beyond the leniency of our laws, the large number of American charities is due to the fact that Americans have so many different ideas about what results should be most welcomed—including some ideas that will not seem like good measures of success at all except to those who embrace them. Stern suggests that if we want to get serious about increasing charities’ effectiveness, we should pool our donations and turn them over to experts, who will decide how to use them for maximum impact. But this would only substitute the experts’ judgments about what really matters for those of the rest of us, an undemocratic result that will curtail our involvement with charities and stunt our collective desire to help fix social problems. For all its flaws, With Charity for All highlights an important disagreement in today’s non-profit world: between those like Ken Stern, who wish to make American philanthropy more orderly, more focused, and more capable, and those who see it as an expression and engine of popular ideas, hopes, and fears, however unruly, unguided, and passionate. Traditionally, Americans have leaned toward the wide-open side of this debate, judging that in a democracy, it is worth tolerating organizations that are imperfect and susceptible to exploitation for the sake of maintaining an engaged citizenry. But a steady diet of anecdotes like the ones that fill Ken Stern’s book and regularly appear in newspapers and government hearings could make that position harder to sustain. Suzanne Garment is a visiting fellow, and Leslie Lenkowsky a professor, at Indiana University. Jointly, they are writing a book on philanthropy and public policy.

meeting photos

Prisoner Rehabilitation The economic opportunity team convened a February program in Houston on prisoner rehabilitation, “Charting a Path from Criminality to Opportunity,” co-hosted with the Texas Public Policy Foundation and the Conference of Southwest Foundations. Attendees visited the Prison Entrepreneurship Program located inside Cleveland Correctional Center north of the city, and had a chance to talk with inmates, hear about their businesses, and learn how philanthropy can help them succeed upon release.

left to right:

1. Adam Meyerson, Philanthropy Roundtable 2. Carlos Tramutola, Techint 3. Joanie Haley, Robert and Janice McNair Foundation 4. Pat O’Brien, Rogers O’Brien Construction; James Liske, Prison Fellowship Ministries; John Sage, Bridges to Life

Photos by Talya

SUMMER 2013

meeting photos 3

Summit for Leaders On March 19, over 230 foundation and nonprofit leaders gathered in Washington, D.C. for the fourth annual Alliance for Charitable Reform Summit for Leaders. There were four sessions: on tax reform, state issues, charitable deduction, and the fiscal cliff. Participants included staff members from both the House and Senate, and representatives of groups like Leadership 18, the Council on Foundations, United Way Worldwide, the Council for Advancement and Support of Education, and many foundations and individual donors.

left to right: 1. Miguel Martinez, staff of Rep. John

Lewis (D-GA); Zachary Rudisill, staff of Rep. Dave Reichert (R-WA); Preston Rutledge, staff of Sen. Orrin Hatch (R-UT); Tiffany Smith, staff of Sen. Max Baucus (D-MT) 2. Gloria JohnsonCusack, Leadership 18; Alison Hawkins, ACR; Brian Flahaven, CASE; 3. Alexander Reid, Morgan & Lewis LLP Murdock

Photos by Shirene Urry

Charitable Trust

PHILANTHROPY

Photos by Trevor Kobrin and by Grant Miller for the George W. Bush Presidential Center

4. Steve Moore, M. J.

meeting photos 1

National School Reform

left to right: 1. Ebony Lee, Bill and

Melinda Gates Foundation

Donors from around the country convened in Dallas for the Roundtableâ&#x20AC;&#x2122;s 2013 National Forum on K-12 Philanthropy. Visiting the George W. Bush Presidential Library weeks before it opened, attendees enjoyed an address on education and civil society from the former President. Other speakers included school founder Eva Moskowitz, Denis Calabrese of the Arnold Foundation, and National Math and Science Initiative chair Tom Luce. Site visits were made to top-performing schools, and topics like blended learning, principal training, and school start-ups were discussed.

2. Eva Moskowitz, Success Academy Charter Schools 3. Jeremy Smith, Rainwater Charitable Foundation; Forrest Hoglund, Hoglund Foundation 4. President George W. Bush 5. Ernie Cockrell, The Cockrell Foundation; Melissa Pridmore, Mike and Mary Terry Photos by Trevor Kobrin and by Grant Miller for the George W. Bush Presidential Center

Photos by Shirene Urry

Foundation; Barbara Sullivan, Strategic

Grant Partners

SUMMER 2013

meeting photos 3

Philanthropy for Vets The Philanthropy Roundtable launched its new program on philanthropy for veterans and military families in D.C. in May. More than 100 donors learned about promising strategies in areas like improving employment prospects for vets and military spouses, ensuring college completion for student veterans, raising the quality of schooling available to military children, and using legal aid to help veterans overcome barriers. Lunch keynoter LTC Daniel Gade urged philanthropists not to undercut the economic self-reliance of veterans when offering aid.

left to right: 1. Catharine Grimes,

Bristol-Myers Squibb Foundation 2. Mike Haynie, Institute for Veterans and Military Families; Thomas Meyer, The Philanthropy Roundtable; Eric Weingartner, Robin Hood Foundation 3. Christian Anschutz, The Anschutz Foundation 4. Barbara Van Dahlen, Give An Hour

PHILANTHROPY

Photos by Prentiss Earl and Shirene Urry

Photos by Skye Fine Art Photographics

meeting photos 1

Supporting Entrepreneurship “Ten Great Ways Donors Can Support Entrepreneurship” was the subject of a May meeting organized by the Roundtable’s economic opportunity program. It was staged at the Kansas City headquarters of the Ewing Marion Kauffman Foundation, the leading organization on philanthropic support of entrepreneurial activity. Priceline.com founder Jeff Hoffman spoke, and guests had a chance to learn about KauffmanLabs, a work and event space designed to encourage innovative thinking and collaboration.

left to right: 1. Jeff Hoffman, keynote speaker; Frank

Whitfield, Nord Family Foundation 2. Grant Coates, Miles Foundation 3. Pamela Bishop, Southern Minnesota Initiative Foundation 4. Arthur Lipper III, Berger Collection Educational Trust; Janet Moore, Powell Foundation 5. Thom Ruhe, Ewing Marion Kauffman Foundation

Photos by Prentiss Earl and Shirene Urry

Photos by Skye Fine Art Photographics

SUMMER 2013

president’s note Be On the Look Out

Chief Justice John Marshall famously declared that “the power to tax involves the power to destroy.” The same can be said of the power to grant, deny, and administer tax exemptions. To the great credit of the Internal Revenue Service, for most of its history, with some notable exceptions, it has been guided by a culture of professionalism, philosophical impartiality, and respect for privacy in its administration of tax laws for exempt organizations. As the scathing May 2013 report by the Treasury Department’s Inspector General for Tax Administration makes clear, the IRS has been seriously violating its own standards in recent years. The Inspector General found that beginning in 2010 the IRS used “inappropriate criteria” and asked “unnecessary information” in subjecting organizations to additional scrutiny based on their names and policy positions, resulting in “substantial delays” in their applications for tax-exempt status. While the IG report focused on applications for 501(c)(4) “social welfare” status, it found that “inappropriate criteria” were used in evaluating 501(c)(3) charities as well. Americans from across the political spectrum are rightly alarmed by the IRS’s “Be On the Look Out” list targeting organizations with “Tea Party” or “Patriots” in their name, or with a mission to educate about the Constitution and Bill of Rights, or to “make America a better place to live.” There is also widespread shock at allegations by the National Organization for Marriage, in testimony before Congress, that the IRS illegally leaked confidential donor information to the organization’s opponents. It remains to be determined whether political abuse of the IRS was 60

directed by the White House, as has occurred in the past with both Democratic and Republican presidents. Whatever the source, a return to impartial application of tax laws governing non-profits is crucial for active citizenship and democratic discourse in our free society. At The Philanthropy Roundtable, and our legislative arm the Alliance for Charitable Reform, the IRS scandal has reinforced our commitment to protect philanthropic freedom, and to work closely with Congress to guard against the creation of new laws or agencies that would unintentionally make such political abuse more likely in the rules governing charities and foundations. We will strongly oppose any effort to make tax-exempt status contingent on accreditation, as the Senate Finance Committee staff proposed in a 2004 white paper. Congress wisely decided not to proceed along these lines, as this would have been an open invitation for the political abuse we have seen in the IRS scandal. We will strongly oppose any effort to expand the IRS’s oversight over foundations and public charities, beyond its historic role of ensuring compliance with the tax code. In 2007, Steven Miller, then director of the agency’s exempt organizations and government entities division and more recently acting IRS commissioner until his dismissal in May, said that the IRS was planning “to promote standards of good governance, management, and accountability” at non-profits and was considering making assessments of the effectiveness and efficiency of tax-exempt organizations. Giving the IRS the authority to assess the effectiveness, efficiency, and governance of tax-exempt organizations would give it unprecedented discretionary power PHILANTHROPY

and be a threat to the independence of foundations and charities. We will strongly oppose the creation of a new regulatory agency to oversee foundations and charities, as was proposed in a Congressional Research Service report in 2009. Some have suggested that the answer to IRS abuses might be to transfer the administration of tax laws for non-profits from the IRS to an independent agency. But such an independent agency would be more likely to be subject to political pressure and manipulation from interest groups within the non-profit sector itself than is the IRS with its century-long tradition of professionalism and impartiality. For similar reasons, we will oppose any initiative for formal mandatory industry-wide self-regulation as an alternative to IRS oversight. Finally, we will strongly oppose efforts by federal and state legislators to restrict what is considered charitable. Americans have historically enjoyed wide discretion in choosing their charitable causes, even unpopular ones. The tax code itself is broad-ranging, stating that “The exempt purposes set forth in section 501(c)(3) are charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals.” The Philanthropy Roundtable and the Alliance for Charitable Reform will continue to work closely with Congress to ensure that our laws protect philanthropic freedom and are impartially administered.

Adam Meyerson President The Philanthropy Roundtable

SERVING THOSE WHO SERVED MEYER

milies is a le giving. isely. This pists who ir nation, h profiles ntial data, w veterans to advise,

JUST RELEASED

SERVING THOSE WHO SERVED A Wise Giver’s Guide to Assisting Veterans and Military Families Thomas Meyer

A Wise Giver’s Guide to Helping Veterans & Military Families Philanthropy for current and former service members is mushrooming. Yet there is little reliable information about how to do it right. Until now.

Available without charge to Philanthropy magazine readers. To order a FREE printed copy of Serving Those Who Served: A Wise Giver’s Guide to Assisting Veterans and Military Families email main@PhilanthropyRoundtable.org or call (202) 822-8333 To download an e-book or PDF, please visit PhilanthropyRoundtable.org/guidebook

This book was created as a how-to manual for donors who want to make a difference with individuals who have served their nation, particularly during the period since the 9/11 attacks. It is packed with profiles of the most promising people and groups and strategies, plus essential data. This is a timely new tool for philanthropists who want to truly help a worthy population, and blaze a trail of excellence in this under-provisioned new field.

The Philanthropy Roundtable 1730 M St. NW Suite 601 Washington, DC 20036

www.PhilanthropyRoundtable.org EMAIL US AT

AnnualMeeting@ PhilanthropyRoundtable.org CALL US AT

(202) 822-8333 HOTEL RESERVATIONS CALL

Terranea Resort (866) 802-8000 Register by August 9 and receive an early registration rate of $1,045.

Join us in California for our 22nd Annual Meeting as we shine the spotlight on philanthropy's role in strengthening our free society. More details inside!