No. 2

Donor Hopes to Build a Legacy Through Focus on Urban Arts, Education

From the 1950's to the 1980's, Eli Broad transformed thousands of acres of farmland and orange groves into residential subdivisions. From coast to coast, the neighborhoods developed by Kaufman and Broad Home Corporation lured legions of baby boomers away from the nation's cities and into the shiny new world of suburbia, complete with freshly constructed schools and civic amenities aplenty.

In the 1980's, Mr. Broad -- his name rhymes with road -- purchased an insurance company, restructured it, and began offering those same boomers life insurance, specializing in annuities. Under Mr. Broad's chairmanship, SunAmerica became one of the fastest-growing companies on the New York Stock Exchange for most of the 1990's, and Mr. Broad became a billionaire five times over. His financial worth now stands at an estimated $5.2-billion.

Now, the man whose bucolic middle-class subdivisions paved the way for the era of suburban sprawl is aiming his millions, and his considerable influence, in the opposite direction: on improving public education in urban schools, which suffered for decades as families departed for the suburbs, taking their children and tax dollars with them.

Last year, Mr. Broad and his wife, Edythe, poured $67-million into the Broad Foundation, which the couple established in 1999 with an initial $100-million donation, to support efforts to substantially change the way urban schools are governed and managed. Mr. Broad says he expects to continue to make large contributions to the foundation over the next several years. In fact, he says he intends to give away the bulk of his fortune in his lifetime.

Mr. Broad, who is 67, says he does not read much into the apparent contradiction between his legacy as a builder and what he hopes will be his legacy as a philanthropist. He says he is proud that his suburban developments made home ownership possible for thousands of families. He acknowledges that cities paid the price, but says his commitment to improving urban schools is by no means a gesture of atonement.

"If I were in the clothing business, I'd still be doing this," he says. "I'm convinced that as we move from an industrial society to an information society, if you want to be a knowledge worker you need to have a good secondary education."

This month, Mr. Broad stepped down as chief executive officer of SunAmerica to devote more time to the Broad Foundation, and to numerous other philanthropic pursuits, although he remains chairman of the giant financial-services company.

He says he plans to leave little room in his schedule for leisure. "I'm not one to play cards or golf at the country club," he says.

Mr. Broad says his wife is an equal partner in the couple's philanthropy, and that she shares "similar but not identical interests." Mrs. Broad is especially interested in supporting programs that help children in the foster-care system in Los Angeles.

Indeed, most of the Broads' giving is directed at causes and institutions that benefit the city and other parts of Southern California. In 2000 alone, the couple gave $137.5-million to five California-based organizations: In addition to the $67-million they gave to the Broad Foundation, they contributed $28-million to the Broad Art Foundation, in Santa Monica, a collection of contemporary art; $21-million to the University of California at Los Angeles to help build the Broad Art Center at the School of the Arts and Architecture; $19.5-million to the California Institute of Technology to help create the Broad Center for Biological Sciences, a research institute dedicated to cutting-edge biotechnology; and $2-million to help build Walt Disney Concert Hall.

In recent years, the Broads have contributed millions of dollars to -- and helped to raise millions more for -- numerous projects aimed at reviving cultural life in downtown Los Angeles.

"I want to make a difference, and I want to create things that weren't there before," Mr. Broad says. "I'm a risk taker. I've never worried about failure."

Barry Munitz, president of the J. Paul Getty Trust, who has known Mr. Broad for a decade, says he represents a "bridge between old and new philanthropy."

"It's the combination between this new, accountability-focused, hands-on, priority-setting new philanthropy and the traditional senior statesman focusing on comprehensive civic improvement for successive generations," says Mr. Munitz, who previously headed California's state university system.

Adds Andrea Rich, president of the Los Angeles County Museum of Art, where Mr. Broad is a board member, "Eli invests in institutions, he has a passion for building beautiful and important environments, but he also likes innovation. He's a very competitive man, and whatever institution he's involved with, he wants them to be out there on the edge."

It is that attitude that drove Mr. Broad, the son of Lithuanian immigrants, to earn his business degree from Michigan State University in three years. He was a certified public accountant before age 21.

In the late 1950's, he became a partner with Donald Kaufman, a builder, and the two began constructing affordable houses in the suburbs of Detroit. By age 30, Mr. Broad was a millionaire.

His involvement in philanthropy, particularly in the areas of visual arts and higher education, stretches back almost as long. From 1969 through 1972, he served as director of the development board at Michigan State. In 1991, he endowed the Eli Broad College of Business and the Eli Broad Graduate School of Management at his alma mater.

Over the last four decades Mr. Broad has served on the boards of myriad organizations, including many arts groups, from the High Museum of Art, in Atlanta, to the Museum of Contemporary Art, in Los Angeles, of which he was the founding chairman.

In 1984, the Broads created the Broad Art Foundation to house part of their extensive collection of contemporary art. But the foundation, in Santa Monica, does not just maintain the collection. It has a "lending library" of more than 650 pieces that are available for loan to museums around the world.

Public education is the cause in which Mr. Broad is most actively involved.

Rather than focusing on curricula or student scholarships, the Broad Foundation finances projects that seek to change the public education system by changing how school districts are governed and managed, and how administrators and teachers' unions work together.

In Los Angeles, for example, where the school district recently was divided into 11 semi-autonomous units, the Broad Foundation is financing a one-year executive leadership program for the 11 new superintendents and other senior administrators.

The foundation also supports a program of the National Center on Education and the Economy to train new principals, using leadership practices drawn from the military, corporate management, and top business and education institutions.

The foundation has also hired the Rand Corporation to develop an evaluation process for its grantees. "Everything we fund we're going to look at more than once a year," Mr. Broad says. "Those that are not getting results we are not going to continue to fund."

Mr. Broad says his interest in public schools was sparked several years ago, as his longtime friend, Richard Riordan, the Republican mayor of Los Angeles, was seeking to shake up the city's school board by getting new, improvement-minded candidates elected. Mr. Broad, a lifelong Democrat who helped lure the Democratic National Convention to the city last August, has backed the mayor's efforts to overhaul the city's school system.

He is also a big supporter of Roderick R. Paige, superintendent of Houston's public schools, whom President George W. Bush has nominated to be secretary of education.

Mr. Broad, who held an inaugural dinner for Mr. Paige in Washington last week, says he looks forward to the opportunity to work with Mr. Paige once he becomes the new education secretary. He has already invited Mr. Paige to look to the foundation for support for "risky" new programs that the education department might be reluctant to finance with tax dollars, or that might invite criticism in the press.

When the Broads organized a weekend retreat at their Brentwood home, inviting 21 prominent education professionals and scholars, Mr. Riordan and Mr. Paige were among the attendees, as was Theodore Mitchell, president of Occidental College. Although the surroundings for the retreat were idyllic, with works of art and sculpture gardens at every turn, the 36 hours it lasted were anything but leisurely, says Mr. Mitchell.

"They were grueling because Eli and Edy both wanted to know from all of us where they should be focusing their philanthropic resources."

He adds, "Before putting a drop of money into the foundation, Eli wanted to be sure he could accomplish results. Because Eli Broad is all about results."