A Donor’s Messy Legacy

Independence of fund’s board at issue in disposal of multimillionaire’s estate

Multimillionaire Howard Gilman was passionate and personal about his charitable causes — especially wildlife conservation and the performing arts.

He loved talented, beautiful people and provided the dancer Mikhail Baryshnikov with a studio on the grounds of White Oak Plantation, the Gilman estate in Florida where he set up a world-famous program to breed endangered species in captivity. After meeting the actress Isabella Rossellini at a birthday party for Mr. Baryshnikov, Mr. Gilman appointed her to the 12-member board of directors of the $30-million Howard Gilman Foundation.

“Howard was a patron, not a philanthropist,” said a former employee.

His taste set the standards for grant making, and his foundation board was there to concur.

While this very personal style of grant making and governance endeared Howard Gilman, heir to the nation’s largest privately held paper company, to many people while he was alive, it has caused big problems since his death two years ago. It is in part Mr. Gilman’s reliance on close friends and his mistrust of professional people, particularly lawyers, that has left the executors of his estate — Bernard Bergreen and Natalie Moody, who also happen to be board members of the foundation — fielding questions from the New York State Attorney General’s Office.

Assistant Attorney General William Josephson said he is worried that Mr. Bergreen and Ms. Moody may be playing too many roles.

“There is significant overlap between the executors and the foundation,” Mr. Josephson, head of the charities bureau, said, adding that although that is not uncommon in the world of charitable bequests, “it is always a concern.”

Another legacy of Mr. Gilman’s highly personal style is that the 12-member board of directors consists of friends he appointed — people who appear to be disinclined to offer independent oversight of the estate’s executors. The foundation’s executive director, James Smith, resigned last year and has not been replaced — leaving no one in charge who can speak solely for the interests of the philanthropy.

Mr. Bergreen and Ms. Moody deny any impropriety. Most of the other people with firsthand knowledge of the foundation’s affairs either will not or cannot speak on the record. Lawyers for the foundation can’t speak about the situation because of lawyer-client privilege. Mr. Smith can’t speak because of his termination agreement. And the majority of the foundation’s trustees have chosen not to speak publicly.

What is on the record is that there is a lot of money involved, money that Mr. Gilman, who died of a heart attack at age 73, intended to continue his philanthropy. Mr. Gilman, who never married, left most of his fortune to the foundation, which since 1981 has been making grants primarily to dance, theater, conservation, and heart-disease research. When the estate’s assets are sold, the foundation’s funds could grow to over $1-billion. Even in these days of mushrooming endowments, only about 50 of the approximately 55,000 U.S. foundations have assets of $1-billion or more.

Elaborating on his concern, Mr. Josephson said he was offering guidance to the foundation on the procedures necessary to make sure that the very complex process of selling Mr. Gilman’s assets was approved by people who didn’t have conflicting interests.

When Mr. Gilman was alive, things were easier. Stephen Cropper, assistant general counsel to the intricate network of investment and paper companies owned by Mr. Gilman, said, “Before his death, it was simple to say Howard was in charge This was equally true of the foundation. No question about it,” Mr. Cropper said. “Howard was the foundation.”

But now, Mr. Bergreen and Ms. Moody must step into the role of deciding what Mr. Gilman would have wanted as his estate is settled. They were previously executives of Gilman Paper Company.

Under their direction, about 65 percent of the company was sold in December. The sale price, to a company based in Mexico City, is not on public record but is estimated by pulp and paper experts to be more than $500-million. The sale of the entire company is key to the future assets of the foundation.

One law firm, from which Mr. Bergreen and Ms. Moody had an acrimonious parting, Simpson, Thacher & Bartlett, advised that there should be an independent evaluation by an investment bank on the sale of Gilman Paper Company in order to avoid any hint that there was conflict of interest. “We had words,” Mr. Bergreen said of his conversation with the firm. “I don’t want to go into it.”

The executors recently parted ways with a second prominent New York law firm — Davis Polk & Wardwell — that they had asked for help in sorting out the questions raised about the estate and the foundation. They are now being counseled by a legal team that includes Pamela Mann, who headed the Charities Bureau of the New York Attorney General’s Office for 11 years.

Despite that history of legal consultation, in a recent interview at the foundation’s New York City headquarters, Ms. Moody said firmly, “We have no problems.”

Mr. Bergreen quickly added, alluding to the gossip that has rippled across New York’s philanthropic circles, “There are people who think we have problems and think certain things are being done, and think things should be done differently.”

Mr. Bergreen and Ms. Moody have indeed gotten a strong taste of what people think in the two years since Mr. Gilman’s death. The process of resolving the will has also caused turmoil among the staff and board of the foundation. In addition to Mr. Smith, three of the other six staff members who worked for the foundation when Mr. Gilman was alive have left.

Mr. Smith resigned, about a year after Mr. Gilman’s death, after being removed from the board by Mr. Bergreen and Ms. Moody.

Only a few days after Mr. Smith left, Marcello Guidi, former deputy secretary of the North Atlantic Treaty Organization, Italian ambassador to Japan, and a close friend of Mr. Gilman’s since 1950, stepped down as president of the foundation board.

In an interview, Ambassador Guidi said he had quit as president because he disagreed with Mr. Bergreen and Ms. Moody over the removal of Mr. Smith. There were other things, he said, that he chose not to discuss out of loyalty to the foundation. He, too, has retained a lawyer, Daniel Kurtz, who also is a past head of the Attorney General’s Charities Bureau.

Replacing Mr. Smith, whose severance agreement with the foundation forbids him from discussing his departure, has not been easy.

The foundation sought out the actress Jane Alexander not long after she stepped down from her post as head of the National Endowment for the Arts; the courtship included a visit to White Oak. Ms. Alexander confirmed that she had considered taking the job but said through a spokeswoman that she did not want to talk about the reason she declined.

Donald Bruce, 82, a foundation board member who had known Howard Gilman since 1946, gave a clue to a likely reason.

“She wanted to replace the whole board. She said it was like family,” Mr. Bruce said. “Of course we’re like family. That’s why I’m on it.”

Former Columbia University president Michael Sovern was also asked to consider the post, but instead took another offer he received at the same time — to head Sotheby’s, the international art auction house.

While the foundation has been seeking a director and has also been consumed by questions about settling Mr. Gilman’s estate, it has continued giving away money from its $30-million endowment in much the style it did while its benefactor was alive. The list of grantees and amounts given has remained essentially the same. The International Rhino Foundation, for example, received $200,000 in 1999 — the second installment of a five-year pledge. The Center for Tropical Conservation at Duke University received $29,000 for travel, and the use of White Oak for a series of seminars on biodiversity. The Metropolitan Museum of Art got a grant for $10,000 for operating expenses of the Howard Gilman Gallery for photography.

The Gilman Foundation has long been a major supporter of the American Ballet Theatre; the 1999 grant is for $257,000. Mikhail Baryshnikov’s Dance Foundation received $55,000 for general support, $15,000 of which goes to commission a new work.

This year’s Lincoln Center grant would probably please Mr. Gilman, who was known for his hospitality. It is to transport, house, and feed members of the Chinese opera company during their residency at White Oak in preparation for a performance at Lincoln Center.

Mr. Gilman, Ms. Moody fondly recalled, particularly loved sharing White Oak Plantation and seeing people’s reaction to the place. He took a hand in designing each of the 350 structures there, from the dance studio to the dining lodge.

Sometimes Mr. Gilman couldn’t resist the grand gestures that his wealth made possible. He once bought all the orchestra seats (with private, not foundation money) to the musical Phantom of the Opera for a party. But his friends remember him as shy and never self-aggrandizing. He declined an honorary degree from Dartmouth College, from which he graduated Phi Beta Kappa in 1944, because he didn’t want to be rewarded simply for having been a big donor. It was only reluctantly that he accepted an honorary degree from the Juilliard School, in New York.

One naming occasion came after Mr. Gilman’s death. Over the past two years, the only grant the foundation has made that was substantially larger than the typical sums it distributed was one for $5-million, given to the Brooklyn Academy of Music over five years. The money will support the 2,000-seat Howard Gilman Opera House.

The foundation has also asked the founder of the Brooklyn Academy of Music, Harvey Lichtenstein, to become the newest member of its board.

Mr. Lichtenstein said that he didn’t know anything about the questions raised by the attorney general but that he accepted the offer because he had long admired Mr. Gilman.

Mr. Lichtenstein and other members of the board, however, can expect that the scrutiny on the board and their actions will continue.

With $1-billion involved, regulators pay attention, and what might have seemed friendly and casual when Mr. Gilman was alive may now look too cozy. Regulators often look at whether there are independent voices on the board of a large foundation — people who can take a second look at major transactions.

An official in the New York State Attorney General’s Office who preferred to remain anonymous said: “Though it’s not a requirement, we see an independent board that’s active as one line of defense — before us — in terms of preventing things like self-dealing.”

Mr. Bergreen says Mr. Gilman would never have wanted an independent board deciding how to run his foundation.

“The attorney general asked why we didn’t have independent directors,” Mr. Bergreen said. “Howard never wanted independent directors. They’re all people who had some close tie with Howard.”

Furthermore, Mr. Bergreen said, “Howard actually feared having people who had no connection with him involved with the foundation. He specifically didn’t want it in the hands of professionals.”

Some of the people Mr. Gilman placed on his foundation board were not simply friends, but also people who received financial benefit through their connection with the donor. Jeffrey Borer, for example, who was Mr. Gilman’s cardiologist, received $1.4-million in 1998 and $1.3-million in 1999 in Gilman Foundation grants for the New York Presbyterian-Cornell Medical Center Division of Car- diovascular Pathophysiology, of which he is chief.

Board member Luigi Gasparinetti, a former dancer and friend of Mr. Gilman’s for over 30 years, received a bequest of $8-million in the will. Ms. Moody, who was called “Howard’s guardian angel for two decades” by a speaker at Mr. Gilman’s funeral, was left $6-million in the will, and Donald Bruce, Mr. Gilman’s friend of over 50 years, was left $2-million.

Board member John Lukas is curator of the White Oak Conservation Center, while Pierre Apraxine, another board member, is curator of Mr. Gilman’s contemporary art collection. He is a salaried employee of the Gilman Company.

No one has said that those people didn’t deserve jobs or grants or bequests or that they aren’t qualified to serve on the board. But one lawyer who has been closely observing the Gilman situation said he thought the number of close friends and foundation beneficiaries could be unhealthy.

“Everybody here worked for Gilman or got something out of being his friend,” said the lawyer, who asked to remain anonymous. “That’s not necessarily terrible, but it’s a danger.”

The lawyer said he was concerned that, because of the benefits board members received, “They have for the most part shown a lack of curiosity, a failure to raise questions.”

When a reporter left messages with trustees seeking a response, she was advised by Mr. Cropper, the Gilman Company lawyer, that they did not wish to talk.

Howard Gilman may not have stated explicitly how he intended to make sure his philanthropy operated effectively after his death, but he did make his values about giving clear.

A commemorative book distributed at his funeral contained this quote from Mr. Gilman:

“Art collecting might seem to be a self-gratifying but meaningless hoarding if the collector were not sustained by the idea that he is only the transitory custodian of treasures it is his duty to preserve.”

He added: “He can be responsible to his personal pleasure only to the degree that he is able to share it with and preserve it for others.”

Now the question is whether the attorney general of New York will be satisfied that Howard Gilman’s closest associates are following his interest in making sure that his philanthropic bequest is preserved and shared.