Thursday, April 23, 2009

Donors' Rites

This morning's Wall Street Journal carries a front page article - "New Unrest on Campus as Donors Rebel," basically a rundown of several situations in which the original intentions of a donor have allegedly been set aside to meet some other need. For example Fisk University is. as the piece says "in litigation over its plan to sell paintings ..." by the late Georgia O'Keefe, works given to the struggling college in perpetuity.

What this and similar articles that have been appearing all around brings to mind an ancient aspect of trust law called cy pres: the legal doctrine that allows a court freedom in interpreting the terms of a will or gift if carrying out the terms literally would be impracticable or illegal. At the same time, the general intent of the testator or donor is supposed to be observed as closely as possible.

A full discussion of cy pres comprehensible to lay people ran in the May 1 2003 University of Pennsylvania Law Review. The bottom line is though the law does allow courts freedom in interpretation for the most part the courts have read the law narrowly and have been generally reluctant to set aside the wishes of a donor as expressed in his or her will.

Probably the most famous case of all was that of Stephen Girard a 19th century philanthropist in Philadelphia who bequeathed his fortune (considerable for that time) to a score of local charities. But his biggest gift was the residue of his estate, $5 million, to found a school for the education of white males. Even at the time the "will was controversial. It offended the religious community, and later females and non-white minorities," writes Thomas J. DiFilippo in his book Stephen Girard, The Man, His College and Estate.

Litigation ensued for over a hundred years but ultimately the courts held that the will was discriminatory, a violation of public policy that of course had evolved and the first children of color were admitted after an NAACP protest (and numerous others).

The point here is that for some donors leaving money to a charity of whatever type is a non-starter because they cannot be sure that "perpetuity" means "perpetuity." If controversies arise even while the donor is still alive what might happen after death?

For we laborers in the presently dessicated vineyards of philanthropy cy pres doesn't come up much. In over 40 years I have only been involved as the consultant in two or maybe three serious instances.

But in these hard times as everyone grapples with need the temptation to fiddle with donor intent is out there and no one really knows what a court might do next. It got the head of the San Francisco Foundation fired years ago in a famous cy pres case involving the Buck Foundation and Marin County. Mrs. Buck died and left her estate - which had grown to $260 million - to the "needy of Marin County," of whom there were too few to soak up so much money. The Foundation, charged with distributing the money, sought to overturn the will. It lost.

Tuesday, April 14, 2009

Search For Terrestrial Intelligence: The New Ford Foundation

Two headlines in this morning's Times caught my eye: first I read "New Leader Overhauls Ford Foundation" and then "Boldly Going Nowhere."

The first piece, by beat reporter Stephanie Strom, tells the story -- in the headline -- as we were taught in J. 101. The second is an Op-Ed piece on the unlikeliness of interstellar travel if ever because the long journeys could not be fueled through any extant technology. Damned if that didn't make me think of how tough it must be for Ford Foundation CEO Luis A. Ubinas, imported from McKinsey two years ago, to make this NASA of philanthropy more accountable and less intimidating to applicants.

When Mr. Ubinas was brought in Those Who Mattered wondered why the Ford trustees would hire a guy with no previous experience as a non-profiteer. But now their reasoning is clear. Ford had become an example of drip-up management. It seemed to me that individual program officers essentially controlled the grant-making process. Those of us who dealt with Ford learned that these POs had "portfolios" and grant budgets that they controlled and it was incumbent on the mendicants to convince the right one that their program deserved funding. This system, never planned as far as I could observe, more or less evolved and though it could be frustrating lent a human bent to the process.

Reading between the lines of today's articles I infer that Mr. Ubinas's two year evaluation of what he took on has resulted in the corporatization of Ford as a top-down managed organization which given its size and unwieldliness is I guess how a McKinsey consultant would work a client. Ford's last financial statement showed assets of $11 billion (before the free fall) and direct grants of $532 million net of expenses and hold-backs for losses.

A visit to the Foundation web site -- which by the way has the full Ubinas manifesto on which Ms. Strom reported -- struck me in an odd way as a don't-bother-coming-in scenario. Interstallar thinking does not seem to me to be encouraged. If you are worthy Ford will find you as in " ... Our programs will address eight significant social justice issues ... grounded in our mission and history and ... familiar to our partners." (Italics added).

I hope there is a side hatch on the Ford vehicle where new ideas and new organizations short on fuel out of gravitational pull but with all rockets firing might enter.

Here's to the Ford galaxy:
  • Access to education
  • Democratic accountable government
  • Ecobomic fairness and opportunity
  • Freedom of expression
  • Human rights
  • Natural resources, sustainable development
  • Sexuality and reproductive health and rights
  • Social justice philanthropy.