Donors Discuss Accountability and Their Motivations for Giving

Evelyn H. Lauder, senior corporate vice president of the Estée Lauder Companies, in New York, recently decided to phase out her gifts to a nonprofit group because she felt the organization did not spend enough on its charitable programs. After reading the group’s publicly available financial statement, she found it had $27-million that had not been used for its work that year.

“I have minimized my gift and started weaning contributions,” said Ms. Lauder, who declined to name the organization. “When you are working on research and it’s health-related, you want to spend every penny you can for researchers, especially now at a time when the federal government is reducing its budget drastically.”

Speaking last week at Milano The New School for Management and Urban Policy here, Ms. Lauder told the 500-person audience that the Breast Cancer Research Foundation, a New York charity she founded in 1993, values quick action: If researchers don’t spend the first half of their grant in six months, they don’t receive the second payment.

Ms. Lauder, who has helped raise $160-million for the foundation, took part in an hourlong session that included three other high-profile donors discussing how they choose what organizations to support and how philanthropy could be more effective.

She was joined by Alphonse Fletcher Jr., chief executive officer of Fletcher Asset Management, in New York; Agnes Gund, former president of the Museum of Modern Art, in New York, and heir to a Cleveland banking fortune; and George Soros, chairman of Soros Fund Management, in New York.

Among them, Mr. Soros, whose wealth is estimated at $8.5-billion by Forbes, gives away the largest sum each year, about $400-million through his network of foundations. Last month, one of them — the Open Society Institute, in New York — directed $1-million to help pay for medical treatment of uninsured people who developed health problems after helping with the cleanup following the 2001 terrorist attacks in New York.

“Those people sacrificed their health for us and they are not properly looked after,” said Mr. Soros. But the gift, he added, does not represent a “typical” contribution. “My giving is much more inspired by a political philosophy of an ‘open society,’” he said. “Most of my spending tends to be more controversial than that.”

As part of the family that runs a multibillion-dollar cosmetics company, Ms. Lauder said she has to step carefully around divisive charitable causes and supporting political candidates. Most of the $7-million to $8-million she estimates she and her husband, Leonard, donated last year went to noncontroversial causes. Typical gifts from the couple go to organizations such as the Whitney Museum of Art, where Mr. Lauder serves as chairman, and the Central Park Conservancy, both in New York. Forbes magazine estimates that Mr. Lauder is worth $2.9-billion.

Ms. Lauder said a donation she made to a gun-control group was once mistakenly sent from the Estée Lauder Companies and not from her family foundation. That resulted in a swarm of angry letters from customers threatening to return their purchases and boycott the company for its stance. Ms. Lauder said she wrote back to each person, explaining the gift as an effort to keep guns out of the hands of mentally unstable people.

However, Ms. Gund has no qualms about tackling controversial causes or taking less popular stances on how philanthropy should operate.

Ms. Gund, who reports she donated $10.5-million last year (what she said was two-thirds of her income), has hosted fund-raising events in her home for organizations working on behalf of gays and lesbians, and has spoken out against the permanent repeal of the estate tax, which would minimize taxes for the survivors of deceased wealthy people.

In addition, Ms. Gund said foundations ought to exclude administrative costs when calculating whether they meet the federal requirement to distribute 5 percent of their assets each year. “If the 5 percent includes overhead, it is too little for foundations,” said Ms. Gund. “I know the big foundations don’t like that and a lot of people here don’t want to hear me say that, but it’s really not enough.”

She said her foundation, the AG Foundation, in East Liverpool, Ohio, does not include administrative costs when determining whether it has met the federal rule, even though it is legally permissible to do so. The foundation had assets of nearly $29-million in 2004, according to the most recently available public records, and gave $3-million, with its biggest gifts supporting cultural organizations.

However, Ms. Gund has now found herself the subject of a controversy at the Museum of Modern Art, where she served as president from 1991 to 2002. Last month, The New York Times reported that Ms. Gund and several others, including David Rockefeller, made donations to a tax-exempt trust that supplemented the pay of the museum’s director, Glenn D. Lowry.

The New York State attorney general’s office asked the museum for additional information on the arrangement, and was satisfied with its response, The Times reported. However, some former government regulators questioned the arrangement, noting that the museum might have broken laws about making gifts to individuals.

The museum, however, told The Chronicle in an e-mail message from its spokeswoman, Kim Mitchell, that its actions and those of the trust “were entirely legal, ethical, and properly disclosed. Payments and compensation were fully reported on tax forms filed by the trust, the museum, and Mr. Lowry, who paid personal income tax on all compensation he received.”

Ms. Mitchell said the trust was created 12 years ago to help recruit Mr. Lowry.

Mr. Fletcher, who called himself “the small fish” among the four donors, nonetheless made a splash three years ago when he announced that he, along with his foundation and his company, would provide $50-million to commemorate the 50th anniversary of the Supreme Court’s Brown v. Board of Education decision and to further its goals.

While Mr. Fletcher, whose company manages $350-million in assets, declined to say how much of the gift has been paid, he said all of it will be allocated in the next few years. He has so far donated $3.2-million to Columbia University Law School, in New York, to endow a professorship, and will soon announce the third round of $50,000 fellowships for people whose work advances a more equal society.

Mr. Fletcher, who is black, said he dislikes it when groups that help black people ask him to give large gifts because of his race.

“I’m all for helping black organizations, but my gifts aren’t limited to black organizations,” he said in a follow-up conversation after the panel. “The broad goals of Brown v. Board of Education aren’t limited to only blacks. Those goals are to create equal opportunity for all people.”

When organizations working to help people from minority groups complain to him about the lack of big gifts from black donors, Mr. Fletcher recommends forming business relationships with minority-owned groups in order to attract contributions.

Drawing the Line

Other speakers weighed in on what makes them rebuff or embrace a charity. “If people call me up and bug me too much, I really get mad at them,” said Ms. Gund. “You have to draw the line somewhere. You can’t always say yes.”

Mr. Soros has stopped his support for some organizations, including one that he founded, the Central European University, in Budapest. “If I just kept funding them, they would never be able to become an independent university and get their own funding,” he said. “I have endowed them fairly generously and now they must stand up on their own.”

Ms. Lauder talked about what works to interest her in a group. At Memorial Sloan-Kettering Cancer Center, in New York, where she is a board member, she gets invited to a small lunch two or three times a year with several doctors. “The intimacy of being with these physicians is very motivating to help support them,” she says. The breast center at Memorial Sloan-Kettering is named in her honor.

While all four donors have made multimillion-dollar gifts, several highlighted the importance of smaller donations to lesser-known groups. In its work overseas, the Open Society Institute often makes grants of as little as several hundred dollars, said Mr. Soros: “Particularly in poor countries, a little money can go a long way.”