• November 1, 2014

As Tensions Over Wealth Gap Rise, the Rich Are Giving More

As Tensions Over Wealth Gap RIse, Rich Are Giving More 3

Barbara P. Fernandez/The New York Times/Redux

Jorge M. Pérez, a real-estate developer, pledged $30-million to the Miami Art Museum to help it construct a new building.

The super rich grew more charitable last year, as public opinion of them became less so. The 50 donors on The Chronicle of Philanthropy’s annual list of the most generous Americans gave a median of $61-million in 2011, compared with $39.6-million the previous year. Collectively, the philanthropists in The Chronicle’s rankings lavished $10.4-billion on charitable organizations last year, although a single bequest from the agribusiness heiress Margaret A. Cargill accounted for $6-billion of that total.

The über-wealthy cut those checks against a backdrop of increased scrutiny. The Occupy Wall Street movement and growing concerns about an economic divide have made a target of multimillionaires and billionaires, with mixed implications for their philanthropy. While some fundraisers and philanthropy watchers say the rallying cries of the 99 percent may stir greater generosity, particularly to social-service groups, The Chronicle’s numbers don’t show a shift in how the rich are directing their giving.

David Callahan, a senior fellow at Demos, a left-leaning think tank, says that, historically, wealthy donors have stepped forward when concerns about inequity have flared.

“I don’t think it’s a coincidence that the first great year of philanthropy coincided with the progressive era, in that you had people like Andrew Carnegie and [John D.] Rockefeller recognize that there are big disparities in society and they had themselves been subject to intense criticism,” he says.

But John C. Malone (No. 28 on The Chronicle’s list), the billionaire chairman of Liberty Media, warns that the “scapegoating” of wealthy individuals might make them more hesitant to give away big money in the public eye, and could even stop them from giving altogether.

“They will either try to do whatever they think is appropriate out of the press, or they will perhaps decide to reallocate their capital,” says Mr. Malone, who last year gave $57-million to Yale University and a public charter-school network.

Melissa Berman, president of Rockefeller Philanthropy Advisors, says the gap between rich and poor is influencing how some wealthy clients think about philanthropy. One new foundation client is zeroing in on human needs in New York, she says, while longtime supporters of education want to ensure their money prepares people for jobs.

But The Chronicle survey shows that the “haves” of the nonprofit world—namely the larger, better-known charities—got the lion’s share of gifts.

Excluding Ms. Cargill’s bequest, 36 percent of the dollars from benefactors on the Philanthropy 50 went to higher education; 35 percent went to private foundations; 15 percent to hospitals, medical centers, and medical research; and 7 percent to museums, libraries, and historic preservation. No Philanthropy 50 donor gave a gift of $5-million or more directly to a social-service group.

It’s not that wealthy people don’t write checks to such charities. They do, according to Chronicle data and interviews with donors. They just reserve their $25-million, and even their $5-million, gifts for other types of institutions.

That’s in part because many philanthropists don’t see human-service organizations as the best way to alleviate America’s problems. And that’s not likely to change even in light of the country’s lingering economic troubles.

For example, Eli Broad (No. 49), the real-estate mogul, says he has “some sympathy” for the Occupy Wall Street protestors. But their message about inequality supports his diagnosis of what ails America: a poor education system. Mr. Broad, who has been backing efforts to change public schools since the late 1990s, says he thinks the downturn will produce more education donors.

A 'Virtuous Cycle’

Also at play may be the fact that fundraising success tends to breed fundraising success. Since 2007, eight nonprofits have won at least four gifts apiece of $10-million or more from multiple donors in The Chronicle’s top 50 rankings. All eight are universities and university medical centers. Half are Ivy League institutions.

Ms. Berman says groups like those are benefiting from a “virtuous cycle” of big giving. Other, smaller, organizations are stuck in a “vicious cycle”: Many donors don’t want to be the first to make a whopper of a gift to an untested charity.

Mr. Broad says that social-service groups and those that aren’t winning big gifts “have to make a better case for the needs than they have to date.”

Big donors are turning to universities for projects to advance research on clean energy, like Thomas F. Steyer and Kathryn A. Taylor (tied for No. 33), who pledged $25-million to Yale, or to spur business development in poor countries, like Robert E. and Dorothy J. King (No. 8), who gave $154.5-million to Stanford.

Other charities don’t necessarily craft such ambitious appeals, say donors and nonprofit officials. And donors who want to leave a legacy worry that the newer nonprofits, unlike four-century-old Harvard, might not be around in 25 or 100 years.

But more groups are trying to get into the big-giving game. Bob Carter, a fundraising consultant in Sarasota, Fla., says charities that have long relied mostly on mailings for money are doing more to seek big gifts. He is helping nonprofits like United Way Worldwide and World Vision shape strategies that will appeal to multimillionaires and billionaires.

Kymberly Wolff, chief fundraiser at Habitat for Humanity International, says groups like hers can win huge donations. Well-heeled benefactors often say the university they attended changed their lives; the key, she says, is showing donors how their money can influence another person’s life as deeply. Habitat, which succeeded in winning a $100-million pledge three years ago, tries to accomplish this by inviting would-be donors on home-building projects, where they hammer shingles and lay bricks alongside the low-income families who will live in those homes.

Fundraisers’ Influence

Fundraisers and philanthropy gurus warn, however, that the goal should be more total giving, not redistribution of the gifts currently being made.

“I hate to see this get pitted as an either/or discussion,” says Albert R. Checcio, senior vice president for advancement at the University of Southern California, which won two gifts of more than $100-million last year from Philanthropy 50 donors toward a $6-billion campaign. “There are so many worthy organizations.”

Mr. Checcio also notes that even a fleet of the world’s best fundraisers can’t convince donors to support projects they don’t care about: “Donors give to what they’re interested in, period.”

And yet savvy charity leaders and smart fundraisers do wield influence. Take Mr. Malone’s route to becoming a Yale donor whose support thus far has totaled $80-million.

“The first time Yale hit me up for a contribution, I scratched my head and said, 'Yale’s got plenty of money,’” recalls Mr. Malone, a graduate of the college. That was in the mid-1990s, and Yale’s president, Richard C. Levin, had visited Mr. Malone to ask for money to make its business school first class.

The proposal fell on the wrong set of ears. Mr. Malone, a libertarian and free-market supporter, says he told the university chief: “How can you have a business school if you don’t believe in capitalism?”

The next time Mr. Levin visited, he asked for financial support of an engineering school. An engineering major who believes that people with technical skills create businesses and jobs, Mr. Malone was intrigued. Talks with a fundraiser convinced him that Yale would use his gift wisely: The institution didn’t have unrealistic ideas about becoming “another MIT,” says Mr. Malone. And it had a plan to integrate engineering and medical disciplines.

Of course, Mr. Levin and Yale were tapping into the right giving vein with Mr. Malone, not trying to create a whole new one.

Donors, says Mr. Malone, “will do what’s in their enlightened self-interest and in their heart.”

Caroline Bermudez contributed to this article

  • 1255 Twenty-Third St., N.W.
  • Washington, D.C. 20037
subscribe today

Raise more money and increase awareness with trusted insight.