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| Best Practices: Philanthropy |
Saving a Spendthrift
Matthew Schuerman
08/01/2005
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“When we jumped in, we had no idea
of the magnitude of the problem,” says JoAnn Taylor Kindle, Jack’s daughter and
the president of the Enterprise Rent-A-Car Foundation. “The problem had dragged
on for 30 years. Nobody was coming to grips with what was happening.”
Jack
Taylor had given to charities, but never such a large amount. The request came
at the time in his life—he was 78—when he was looking for the right beneficiary.
“We have strong ties to the community,” Kindle says. “We were all born and
raised here. Dad was looking forward to doing something for the community.”
The fact that Randy Adams, a former banker, had taken over as orchestra
president gave the Taylors a great deal of confidence that their money would be
wisely spent. In addition, they insisted on certain structural changes. Their
gift would be put into a trust that would be managed by a board separate from
the orchestra’s and that would be shielded against invasion of principal. Kindle
now sits on the orchestra’s executive committee, and a business manager from
Enterprise sits on the orchestra’s finance committee.
There is a certain
cyclical nature to the panic mode that has hit so many cultural nonprofits. If
Adrian Ellis, managing principal of AEA Consulting and an advisor to numerous
cultural entities, is right, nonprofits will soon begin expanding en masse
again, in tandem with the economy. “Cultural organizations see the upturn, they
begin planning their expansion, then the market falls away from them,” he says.
“They don’t respond terribly quickly to the market.”
This is a situation,
however, that puts benefactors in the enviable position of being able to learn
from past mistakes the next time a favorite cultural institution gets the urge
to add a new wing or renovate its hall. As a philanthropist, you will have to
step in at some point, preferably at the front end, when your money has the
chance of fueling a stronger-than-ever endowment and greater reserves, rather
than just paying off the debts.
From Your Side of the Table
Three Questions for Your Favorite Nonprofit
1. Does the board have a plan to hold donor money in an independently
managed trust?
2. If the organization has been dipping into its
endowment, is there a plan to increase ticket or subscription revenues to
finance future costs?
3. If an expansion project is underway, does it rely
on projected investment returns from the endowment, or is it contingent on
a new fund-raising drive?
Illustration by Jim Frazier.
Matthew Schuerman, a Brooklyn resident, writes on philanthropy and teaches at
New York University. ms@post.harvard.edu
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