January 15, 2016

Crafting your legacy: A Cautionary Tale

On the evening of January 19, 1955, CBS aired the first installment of a television drama called The Millionaire. The show centered on a semiretired industrialist named John Beresford Tipton, who anonymously bestowed million-dollar gifts (that's $8 million, in current dollars) on seemingly random and always unsuspecting individuals. To the viewing audience, Tipton (obscured by a high-backed leather executive chair) remained only a raspy voice and besuited right arm: a shadowy figure who handed over a cashier's check to his executive secretary, Michael Anthony, for delivery to that week's recipient. John Beresford Tipton seems to have acted entirely alone. There were no family members, no trustees, and no staff other than Michael Anthony involved in his philanthropy. Nor did he have either repeat grantees or any ongoing relationships with the objects of his generosity. This is not the way philanthropy works in the real world.

As a real-world philanthropist, you almost certainly will have others around you. You may have a spouse, or family members, or interested friends, or professional advisors, or all of the above. If you've created a foundation, you have trustees and probably at least a few staff members. If you are the leader of a large foundation, it's likely that you have a significant staff to manage—each with his or her own set of values, beliefs, and related opinions that may or may not be well synchronized with the benefactor's or your own. All these people have their own ideas about what is worth doing, and why. Being clear about your values will make it much easier to achieve alignment. It will force differences of opinion to the surface, and perhaps head off trouble down the road.

In the trust indenture creating the Duke Endowment, which benefits Duke University and several other educational institutions, as well as communities in North and South Carolina, tobacco magnate James Buchanan Duke required that the entire endowment document be read aloud annually at a trustees' meeting. He believed that the document captured his intentions, what he valued, and he wanted it to continue to shape the trustees' deliberations and decisions indefinitely.

Achieving clarity around your philanthropic values and beliefs doesn't always come easily or naturally. Human nature often encourages us to avoid confrontation, especially with family members and close friends. Surfacing your personal beliefs and then talking about them with others can be a messy, emotional, tiring process, one that's likely to be imperfect, at best. This is a discomfort well worth bearing, however, because the costs of ambiguity on this front can be extremely high.

Consider what happened to a philanthropist we know, whom we'll call Chester. Like most of us, Chester has definite views about public policy and political preferences that reflect his values, beliefs, and worldview. Unfortunately, he did not realize the link between his political orientation and his philanthropic values until much too late in the day.

Chester first funded his family foundation over a decade ago, when he was still working long hours in business. As the foundation grew, Chester recruited a former employee, Alan, to serve as president. At first, Alan worked directly with Chester, helping him respond to charitable requests, coordinate trustee meetings, and manage existing grants. However, Chester's corporate responsibilities were incredibly time consuming, and, without explicitly thinking about it, he gradually delegated more and more authority to Alan, while simultaneously further empowering his family-dominated board. Because of scheduling conflicts, he was sometimes unable to attend board meetings, and he rarely read all the details embedded in the hefty board books.

Alan, meanwhile, designed high-level program strategies, which the board endorsed, for the foundation's priority areas: public health, education, and the environment. He hired a team, and they worked hard to bring exciting funding requests to the trustees. Over time, the foundation dramatically increased its annual giving, and Alan clearly came into his own as president.

Then, rather abruptly, Chester retired. He was burned out and had decided to devote his remaining years to philanthropy and service. He hoped to leverage his foundation's work by applying his energetic hands-on approach to its grant making, and infusing his deeply held conservative beliefs into everything his foundation did. Exerting a positive influence on public policy would be his philanthropic legacy.

There was, however, a little problem: neither Alan nor the staff shared Chester's values and politics. They were more liberal, as were two of Chester's three children (all trustees), a situation he had largely chosen to ignore. His family foundation, now fully funded with his hard-earned money, had apparently taken on a life of its own.

Chester faced a Hobson's choice: accept the status quo and thus forfeit his desired future; or fire everyone and endure the collateral damage to his family, his reputation, and his foundation. By not confronting the central question of how his values and beliefs should be reflected in his philanthropy, Chester had created a serious problem for both himself and many others.

We said earlier that being clear about your own values is what makes it possible for others to work effectively with you. Here we are making the flip side of that same argument: ambiguity makes it harder for others to work effectively with and for you. Ambiguity will make it harder to make key strategic decisions downstream: identifying a real opportunity, as opposed to a diversion, for instance; or selecting the right grantees.

These problems will only compound as time goes on, especially in the absence of a living donor. Based on our observations, what happens next is highly predictable: Adrift in ambiguity, decision makers "split the difference." Less and less money goes to more and more recipients. Processes (such as the grant-making cycle) take on a life of their own. The result, in most cases, might be summed up in the phrase "satisfactory underperformance." Things are still getting done, but without as much impact as would otherwise be the case.

And while everyone involved may be feeling good about what they're doing, that does not necessarily mean they're actually doing good. In contrast, clarity enables others to honor your intent, while simultaneously responding to the needs of their own time. The Alfred P. Sloan Foundation offers a fine example. The foundation has long had a focus on promoting public understanding of science. Did Sloan, the guiding genius behind General Motors, contemplate the possibility that his foundation might one day be helping to produce plays dealing with scientific topics? Perhaps not. And yet, more than a dozen plays (including the acclaimed dramas Copenhagen by Michael Frayn and Proof by David Auburn) have been staged with help from the Sloan Foundation. Alfred Sloan, we think, would be quite pleased.

Excerpted from: Thomas J. Tierney and Joel L. Fleishman, Give Smart: Philanthropy That Gets Results, (Public Affairs, 2011)
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