Matthew Schuerman
09/01/2004
The maxim that wealth breeds wealth is as true in philanthropy as it is in investing. While grassroots charitable organizations often struggle to raise funds, the largest and richest nonprofit institutions have access to the country’s deepest pockets. Deciding whether to provide life-sustaining funding to a local community initiative or to add a percent or two to our alma mater’s multibillion-dollar endowment requires us to weigh our preferences for personal involvement and control against the scope and effectiveness of the institutions we consider supporting.
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| PICTURED FROM left, Roy Bostock, Cyndie McLachlan and John Frey. |
The cochair of that campaign, Robert Stone, knew how to make an impression: He would take alums out for oysters at the New York Yacht Club. Because he had once run the place, staff would hover about and call him “Commodore.” According to the account in the Harvard Crimson, Stone would conclude the repast by asking, “Wouldn’t it be nice if you gave a few million?”
| TOP VIEW The resources of elite universities, hospitals and other prominent institutions, and the assurance that they will put our money to productive use, make them appealing beneficiaries for many philanthropists. Others prefer to provide seed or sustenance capital for smaller, local charities, and those in which they may participate directly. The three profiles here provide a small sample of the divergent strategies we may pursue as philanthropists. |
Grassroots organizations lack the type of seed funding they need to finance larger campaigns; they also lack the nostalgic tug that alma maters exert over their alumni. Most of the strategies that small charities use are, by their nature, not targeted at high-stakes donors; they ring doorbells, send out mass mailings, have bake sales or sponsor fund-raising walks.
The uneven distribution of fund-raising muscle leads, not surprisingly, to a skewed distribution of philanthropic capital. The Foundation Center, a New York research institute, recently surveyed 1,000 of the country’s largest foundations and discovered that they awarded 16.5 percent of their major grants—those over $10,000—to the same 50 institutions in 2002, primarily elite universities and hospitals. However, these beneficiaries often pass a portion of that funding on to smaller nonprofits.
Even so, philanthropists who support large nonprofits may want to know whether their charitable dollars are indeed making a significant difference. This, after all, bears on the central questions in philanthropy: Where can our money do the most good? Where can we most effectively leave our mark while advancing our deeply held beliefs? The experiences of the three philanthropists profiled here show how their personal experiences have led them to take very different approaches to these questions.
John Frey
The Personal Touch
John Frey, 45, was born the son of a junior sales trainee at a packaging
manufacturer in St. Paul, Minn. Gradually, his father, Eugene, worked his way up
the ranks until he purchased the company with a partner in 1985. His family
later bought out the partner, and sold the whole enterprise, then employing
2,200 workers, for $415 million seven years ago. Charity had always been a part
of the family’s life, and once their wealth increased, so did their giving.
Frey’s parents started a family foundation in 1988, and they remain actively
involved in its administration. The younger generation—John and his brother and
sister—sit on its board of directors, but also give out of their own
pockets.
| “I Like meeting and getting to know the people behind an
organization, which you can only really do when supporting
smaller causes.” – John Frey |
Frey is a member of the One Percent Club, a Minneapolis-based group of 550 philanthropists who pledge to give away 1 percent of their net worth or 5 percent of their income, whichever is greater, each year.
Among the many human service charities in the Twin Cities that he supports as a donor and trustee are Open Arms of Minnesota, which delivers meals to homebound patients with AIDS, and the Jeremiah Program, which gives apartments to single moms. Both the family foundation and Frey’s personal giving favor community groups that help people in need attain self-sufficiency. His parents direct their foundation monies to places where they have a personal connection, such as the Archdiocese of St. Paul and Minneapolis and, since Eugene Frey was an Eagle Scout growing up, the local Boy Scouts council. However, John’s preferred tactic is to seek out organizations that sound worthy, research their financial data and introduce himself to the staff.
His involvement in Open Arms is typical of his approach. After a friend mentioned the organization in 1996, Frey called its head, Kevin Winge, for an appointment. Winge made quite an impression: Two years later, Frey joined the board, and he is now its chairman.
“I’m glad there are people out there making grants to large organizations,” Frey says. “Some people like to look at the annual report and see their names there. I like meeting and getting to know the people behind an organization, which you can only really do when supporting smaller causes.”
| “There are 40 or 50 programs in Chicago that are doing
wonderful things with kids... Maybe people could try giving to just one or
two to see if it fits.” – Cyndie McLachlan |
In Her Own Image
Cyndie McLachlan grew up in New Jersey, where her father owned a small abrasives company. She graduated from a junior college in upstate New York and began casting about for Mr. Right. “I was as traditional as possible,” she recalls, “with my curly blond bubble-cut hair, circle pin, scarab bracelet and loafers.”
She married Donald McLachlan, a corporate lawyer who cofounded Wisconsin Central Railroad. The business prospered and grew, but Donald McLachlan was secretive about his finances. The couple lived in a pleasant but not ostentatious part of Chicago’s North Side. It was not until he died in 1992, of pancreatic cancer, that Cyndie McLachlan learned of the fortune her husband amassed.
In a meeting after her husband’s death, her lawyer asked, “If you
wanted to start a foundation, what is the most important thing you could do?”
The lawyer, Richard Thies, a partner at Wildman Harrold, was not just trying to
reduce her tax load. He believes that when a client faces a personal loss and a
huge windfall simultaneously, it can be therapeutic to spend time in
philanthropic pursuits.
“Without missing a beat,” McLachlan recalls, “I said
I would love to help women, at least one woman, say to herself or her partner or
her boss, ‘This is how I feel,’ and to act or conduct herself the way she wanted
to conduct herself. I would give it all away for that.”
McLachlan says a
series of unexpected twists taught her a great deal about herself and what she
wanted to do with her life and in her philanthropy. In the 1970s she had
started, more or less as a hobby, a jewelry store that turned out to be quite
successful, only to leave it a few years later after differences with her
business partner. In 1986, her oldest son, Jason, was kidnapped while visiting
Colombia and held for 10 months. Determined to take control of her life, she
returned to college, only to receive the news soon after that her husband had an
incurable illness. She began studying pastoral ministry and became a lay
chaplain at a hospital.
“For 20 years, I didn’t have a voice and don’t know
how conscious I was that I didn’t have a voice,” she says. “I felt I had been
released into a new orbit, and didn’t know quite what to do, but thought it
would be wonderful if other people could start a little earlier.” In 1994, she
established the Girl’s Best Friend Foundation, which last year gave out $700,000
to initiatives benefiting girls.
Though McLachlan now lives on an island near
Seattle, she has decided to restrict her foundation grants to charities in
Chicago because that is where she spent most of her adult life. Some of the
community organizations her foundation sponsors encourage young women to express
themselves. Redmoon Theater teaches middle school girls to develop and perform
their own plays. Girl Talk presents weekly workshops on health, self-esteem and
career options to teenage girls in juvenile detention.
Her grant recipients
are mostly organizations without long track records. “A small organization could
go under tomorrow,” she acknowledges. She believes other philanthropists would
be supportive of grassroots groups if only they knew about them. “There are 40
or 50 programs in Chicago that are doing wonderful things with kids,” she says.
“Maybe people could try giving to just one or two to see if it fits.”
| “There are a lot of charities out there to which people give
money, and they are not always assured that that money is
well-handled and well-spent.” – Roy Bostock |
Giving Back
Former Duke linebacker Roy Bostock jokes that he started giving to his university five minutes after he graduated in 1962. The school gave him a full football scholarship for four years, and when he graduated, he promised himself he would repay it. Bostock figured he owed $10,000.
He has far surpassed that goal: The university has announced that gifts from Bostock and his wife, Merilee, also a graduate of Duke, now total $8 million. “Obviously, over time the decimal point moved to the right,” Bostock says.
Bostock grew up in the
affluent suburbs of Montclair, N.J., and Edina, Minn., but when his father, an
insurance salesman, died in an automobile accident during the boy’s senior year
in high school, he left the family no money for college. His uncle, a Duke
alumnus and scout for the university’s Division I football team, was able to
recommend the young Bostock for a full athletic scholarship, which beat out
Harvard’s offer by $300 a year.
“Who knows what an experience it might have
been at Harvard, but I could not have had a better experience than at Duke, I
know that,” Bostock says. “As long as you showed up for practice, you could do
whatever you wanted to do. So I became an English literature major and loved it.
I really discovered learning.” He did make it to Harvard for an MBA, and then
went into advertising, as president of Benton & Bowles and later chairman of
BCom3 Group. Retired since 2001, Bostock now donates his time as chairman of two
organizations, the Partnership for a Drug-Free America and the Committee for
Economic Development.
Bostock’s giving to Duke started in a big way in 1978,
when then-president Terry Sanford cold-called a number of alumni in senior
management positions to serve on a new visiting committee that would advise the
business school. Bostock agreed to give both his time and money. Since then, he
has served in several governance positions, including as a trustee from 1991
until last July. His two daughters and one son are all Duke graduates as well.
The university recently completed a major campaign that helped raise its
endowment from a mere $700 million to just over $3 billion and funded a host of
building projects, among them, the Bostock Library, a five-story addition to its
system. Duke, one of the few universities to raise more than $2 billion in a
single fund-raising drive, now ranks 16th in size of endowment among higher
education institutions in the country.
In some ways, Bostock is not so much
a philanthropist as he is a booster of his one cause. He prefers to concentrate
his giving in ways that will have a large impact, and says he simply has not
found any other institution or organization that he trusts as much. Not only is
Duke wealthy and prestigious enough to use his money to draw top talent to an
endowed professorship, but it is also large and savvy enough to develop long
range plans for putting alumni donations to work.
His $2 million gift toward
the Duke libraries, for example, was part of a $40 million plan to expand and
modernize the university’s library system. “There are a lot of charities out
there to which people give money, and they are not always assured that that
money is well-handled and well-spent,” Bostock notes. “At Duke, they have laid
out a very clear strategy for what they want to accomplish.”