Feature
Sound Counsel
John Egan
11/01/2007

Before contributing $50 million each to the University of Texas M.D. Anderson Cancer Center in Houston and the UT Southwestern Medical Center in Dallas last May, financier and oil magnate T. Boone Pickens, 79, whose net worth is estimated at $2.5 billion, consulted his inner circle of corporate advisors about making the gifts. For Pickens, whose name is synonymous with bold corporate takeovers in the 1980s, philanthropy is an investment, with specific goals and a desired return. With a net worth of $1.3 billion, Billy Joe ‘‘Red’’ McCombs, 80, is somewhat of a legend in Texas. In his career he founded a network of successful car dealerships and cofounded radio station giant Clear Channel Communications. Before donating $50 million to the University of Texas, Austin, business school seven years ago, McCombs sought counsel from his wife and their three daughters. The family collectively made the decision to endow the institution (now called the McCombs School of Business) with what became the largest donation in its history. Similarly, the McCombs family worked together to make a $30 million donation to the M.D. Anderson Cancer Center in 2005. Finally, Tim Blixseth, 57, a self-described timber and real estate baron from Southern California, whose net worth is estimated at $1.2 billion, recently gave $10 million in real estate to a school district in Riverside County, Calif. In stark contrast to his approach to business, Blixseth keeps his philanthropic endeavors simple and to the point: "I have a rule of thumb," he says. "Try to help in areas where the help will directly get to those who really need help." Not surprisingly, when mulling over how best to bestow this gift, he relied on one person: himself.

These three billionaires embrace very different approaches to philanthropy—and to seeking advice—when deciding how best to help others. Pickens and McCombs consult with family or close business associates when giving. Blixseth, on the other hand, goes it alone, avoiding administrative processes and relying instead on his gut feelings about a recipient’s merits. While this approach is certainly the prerogative of a very generous, self-made philanthropist, Pickens’ and McCombs’ approach, experts say, offers numerous advantages in an environment in which requests for aid can often be overwhelming. Paul Comstock, chairman of Houston investment and wealth advisory firm Paul Comstock Partners, says philanthropists should surround themselves with a cadre of qualified, trusted advisors that can include family members, financial and legal advisors and charity officials. "In a multitude of counselors, there is safety," Comstock says, borrowing a line from Proverbs.

Red McCombs: A Family Affair
In McCombs’ case, the family’s careful vetting of recipients and causes drives gift choices. As needed, McCombs, his wife, Charline, and their three daughters—Lynda McCombs, Connie McNab and Marsha Shields—gather at the family home in San Antonio or at McCombs’ nearby office to discuss philanthropic requests.

TOP VIEW Philanthropists Red Mccombs, T. Boone Pickens and Tim Blixseth embrace very different approaches to philanthropy and to the counsel they seek when deciding how best to help others. Pickens and McCombs rely on family or close associates to provide sound advice and insight, while Blixseth relies on his own experience and a gut feeling. As the size of charitable donations grows, experts caution that to truly make an impact, philanthropists should work with legal, financial and philanthropic experts before bestowing large sums of money on even the most reputable and deserving of recipients.

Typically, the family will not commit to making a donation unless the parents and their three daughters unanimously agree on it. But if one family member leans strongly in favor (or against) a contribution, the five of them often will side with that person, McCombs says. "Sometimes if someone is opposed to it, it takes a little more conversation to get it done," he says. "There’s no question that the emotional response to some [requests] is greater than others."

Although the McCombs family set up a private foundation 26 years ago, the foundation does not employ a staff. "Our three daughters and my wife all very excitedly participate. We are a staff. After all, it’s our money," he says. Conversely, McCombs says they do not have any procedure for formally following up on their gifts to confirm that their contributions are being put to good use. "We are taking somewhat of a leap of faith," he adds.

Family counsel won’t be limited to just his children, McCombs says. He and his wife want to include their eight grandchildren, five of whom are at least 21 years old, in the joy the family gets from sharing its wealth. "We’re going to need to start bringing them into the loop, because up to this point we haven’t," he says. "It’s time for them to start participating."

T. Boone Pickens: A "Wide-Open Group"
For Pickens, his paid corporate staff is his go-to team on philanthropic matters. Marti Carlin, a former motivational consultant from Tulsa, Okla., is the leader of the team. As director of community affairs, Carlin sifts through the hundreds of philanthropic requests that Pickens receives. Carlin and Pickens’ director of public affairs, Jay Rosser, frequently visit organizations they are vetting as possible grant recipients. Longtime associates of Pickens, Ron Bassett and Bobby Stillwell, lead the T. Boone Pickens Foundation, which was launched last December with a $135 million gift from the entrepreneur. Bassett, Pickens’ personal finance manager, is president of the foundation, and Stillwell, one of his business  ttorneys, is vice president.

As Pickens explains it, he and his philanthropy team do not follow a rigid, by-the-book process when discussing donation strategies. "We’re a pretty informal, wide-open group up here. We don’t have any secret meetings or closed doors," he says. "Everybody’s involved who wants to be involved."

To ensure that his philanthropic dollars are actually working to change lives, Pickens directs Carlin to track charitable gifts to make certain the money is accomplishing what the foundation intended. He also believes in squeezing as much as he can out of a donation—just as he would handle an energy investment. In the case of the $50 million contributions to the M.D. Anderson Cancer Center and UT Southwestern Medical Center, the gifts came with strings attached. The foundation offered the money with the caveat that the gifts will serve as the basis for special funds at the institutions, requiring that they grow to a total of $1 billion ($500 million each) within 25 years. If they do not achieve this goal, the two institutions must turn over the interest earned over the years to Pickens’ alma mater, Oklahoma State University. That sort of leverage forces fundraising officials to work harder and produce more results, according to Pickens.

"THE PROBLEM is that foundations get too big, unless you’re iron-fisted with the controls and you have an absolute road map of where the money goes.’’ —Tim Blixseth (Photograph by Andrew Geiger.)

"We hunt with a rifle. We don’t hunt with shotguns," he says. "We’d rather give meaningful gifts that are going to make a difference than a lot of little gifts. We want to make an impact."

Tim Blixseth: Going With Gut Feelings
Not everyone finds value in the team approach to philanthropy. In fact, some donors find too much advice a cumbersome layer of bureaucracy that detracts from the pleasure of spontaneous giving. "I really don’t consult with anybody," Blixseth says. "I just go with my gut feelings."

Ignoring the warnings of professionals on the dangers of not performing extensive pre-donation due diligence, Blixseth embraces a strictly informal vetting process. There were no lengthy meetings with advisors or formal sit-down sessions with consultants prior to his giving 40 acres to the Coachella Valley Unified School District in the desert community of Thermal, Calif., for a K-12 school. Blixseth’s gift also included an adjoining 276 acres of land for a community sports complex featuring a championship golf course designed by PGA legend Tom Weiskopf. Blixseth Group will build the golf course and operate it for 10 years, while pursuing donations for a foundation that eventually will run it for the school district.

THE FAMILY THAT GIVES TOGETHER
 
The Bank of America/ Center on Philanthropy study showed that 70.9 percent of affluent households discuss philanthropy with children, but just 35.2 percent allow children to be involved in the process, and only 23.4 percent set criteria for the children’s participation. Wealth advisor Paul Comstock says that although he does not advocate that every wealthy family form a charitable foundation, those that do should pull all family members into the philanthropic experience—a philosophy that McCombs, Pickens and Blixseth heartily embrace.
Blixseth also gravitates toward pumping his money into charitable organizations with low overhead—such as Habitat for Humanity International. "There are a lot of these charities that mean well, and they’re great charities, but they’ve built such a machine to raise money," he says. "For administration, they end up taking 40 to 45 percent of every dollar just to run their deal."

To circumvent that sort of administration-heavy style, Blixseth often spontaneously gives out of his own pocket. "I like to wildcat it. I like to ferret out the one-off deals where you say, ‘You know what, you have changed one person’s life.’" Unlike Pickens and McCombs, Blixseth’s family does not have a foundation to oversee gift giving. Declining to participate in the trend toward more strategic, planned giving, Blixseth wants to keep his approach to philanthropy rather casual. "The problem is that foundations get too big, unless you’re iron-fisted with the controls and you have an absolute road map of where the money goes," he says. "Pretty soon your family foundation is like these other big 501(c)(3)’s—they’ve got administrators and they’ve got staff, and all of sudden you end up with more time administering than giving."

John Egan is a freelance writer and editor in Austin, Texas.

Additional Information
Advise and Consent