Eli Broad, the founder of SunAmerica and homebuilder Kaufman & Broad, has been giving away millions for more than two decades. In the last five years, he and his wife, Edythe, have significantly stepped up their philanthropy in making pledges and grants worth some $1 billion. In an interview with BusinessWeek Senior Writer John A. Byrne, Broad discusses his hopes for making a meaningful difference with his multi-billion-dollar fortune. Following are edited excerpts:
Q: You've been very generous for a long time. Why?
A: I know where I came from. I had the wrong religion, the wrong politics, and the wrong family background. But you're accepted in this country if you have a lot of good ideas and energy. I just don't want to sit here with my money and maintain the status quo. My family and I have been blessed with good fortune in the world of business. We've created quite a net worth. My children, two boys, have more money than they will ever need, and they aren't empire builders. So the question is, "What do you do?"
A lot of people in my position have done nothing. Some have left their money to trustees they never met. I've always been interested in making a difference, and I think that in just about all of our giving, the money is making a difference.
Q: Your first big million-dollar gift was more than 20 years ago, right?
A: As you know, I'm an art collector. Los Angeles did not have a modern or contemporary art museum, although seven other American cities did. I heard all these rumblings that we need one and so on. Most contemporary collectors are long on wind and short on money. They want to give paintings, if anything, and that doesn't build buildings.
So I got involved as chairman of something called the Museum of Contemporary Art. At that time, I think I gave a million dollars, which was a lot more than it is now to me, and raised the rest, and we ended up creating a new institution. It's a first-rate institution with a great collection, and I served as chairman for seven years and have been on the board for another five or six.
Why don't we create a foundation to be a lending library for museums? Today, it has 700 or 800 works in the collection and is lent to 300 venues worldwide. It's a way to share our addiction. That has gone on for close to 15 years.
Q: Your main passion today is education. How did someone with a passion for contemporary art become so interested in public education?
A: Four years ago, in thinking through what are we going to do with our family's wealth, we were listening to one of our wealthy neighbors who said, "He who gives while he still lives, knows where it goes." So I started thinking about what we should do with our wealth.
Being a Midwesterner, I know that many of the middle-class manufacturing jobs that had been at the heart of our economy are either gone or going, and they're not coming back. And at the same time, we went as a nation from an industrial economy to an information economy. That resulted in our having two types of workers: knowledge workers in high demand with pretty good pay or service workers with low pay. That meant the gap between the poor and the middle class was continuing to widen.
It also poses a threat to our nation's economy, because we probably have the worst system of K through 12 education of all the industrialized countries. So we created a foundation, which we funded with $400 million, for the purpose of improving governance and management in large urban school districts.
Q: Why didn't you focus on classroom reform or teacher training?
A: We don't have any expertise in any of the silver bullets: how you teach math or English. Rather than looking from the bottom up, what happens in a classroom, which is very important, I said let's look from the top down. I started looking at governing bodies, mainly school boards, and that got me to a depressing view.
School boards are for the most part made up of political wannabes who see a board seat as a stepping stone for political office, or well-meaning parents who represent an ethnic group or geography, or have some other narrow interests. Few people on them understand what governance is about.
And we met a lot of superintendents, too, and the typical superintendent starts as a teacher and without any training in management, finance, labor relations, logistics, or systems is years later running a huge enterprise. In Los Angeles, for example, it's a $9 million enterprise. We found governance and management an opportunity, and we didn't see anyone doing something in that arena.
Q: This is really a bet on leadership. Do you think it can make that much difference?
A: It does make a difference. The teachers are essentially good and devoted. But it's like having a factory where you've got great workers on a production line, a lousy foreman, a terrible plant manager, a company president who spends his time on the golf course, and a board of directors who micromanage. I don't care how good the production workers are, that is not going to be a successful enterprise.
And it's an analogy I see in public education. You can have great teachers, but if you don't have a good principal, you won't have a good school.
Q: There are, as I understand it, three flagship initiatives in support of education. What are they?
A: We created a center to train urban school superintendents. We have an impressive faculty, and we're graduating our first class in late November. The class is made up of traditional educational people, but half are nontraditional, former military officers and business people. We're now recruiting our second class, and we've got four or five senior military officers -- all generals or admirals -- because the military retires 100 generals a year, and these people are looking for something to do. Not all are made to order for this, but a lot of them are.
Another program trains newly elected school board members. We had our first session in July and brought 23 new board members from 10 different districts. That was a seven-day course, and it had an impressive faculty, including successful superintendents. We had case studies on a number of failing and successful school districts. That worked well, and we want to accelerate that.
The third major initiative is called the Broad Prize for Urban Education. The public is down on public education, especially in large cities like New York. So we said why don't we spotlight some success? Secondly, why not create incentive for school districts to want to be recognized to win a prize? And then once finding a successful school district, why not make them missionaries to share their best practices with other school districts? Houston won the first prize this year [$500,000 in scholarship money for college-bound graduates].
We have a professional staff of seven or eight people, and they are all young. I reached the conclusion, right or wrong, that I don't want people who've been at this for more than 10 years. Why? Because they know all the reasons why you can't do things. We've got a lot of very bright young people. If there's better management, better governance, and public recognition for successful school districts, it will hopefully make a difference.
Q: What's the bottom line for you?
A: To me, it's a way of giving back and helping to create something that didn't exist before.