Moving into the Philanthropy Big Leagues
Seventy-one billion, seven hundred million.
That is the total amount of money given or pledged over the past five years by BusinessWeek's 2008 list of America's 50 Most Generous Givers. But numbers rarely tell the whole story. While reporting BusinessWeek's philanthropy special report over the past six months, reporters Aili McConnon and Lawrence Delevingne spoke with many of the givers about topics ranging from why they give to how the economy has affected their charity this year.
Below are edited selections from BW's conversations with four newcomers to BusinessWeek's 2008 list of 50 Most Generous Givers: Peter Peterson, co-founder of the private investment firm Blackstone Group and former commerce secretary under President Nixon, who gave $1 billion this year to establish a foundation that promotes fiscal responsibility; William Barron Hilton, co-chairman of the Hilton hotel chain, who pledged late last year to give away 97% of his wealth—some $1.7 billion— to his family's humanitarian foundation; Harvey Najim, chairman and CEO of Sirius Computer Solutions, who has pledged $200 million since 2006 to help disadvantaged children in his hometown of San Antonio, Tex.; and Mortimer Zuckerman, the real estate mogul, editor-in-chief of U.S. News & World Report and publisher of the New York Daily News, who has given $100 million to the Memorial Sloan-Kettering Cancer Center and millions more to educational, cultural and archaeological causes.
What inspires you to give now?
Najim: I had everything I wanted in life—a boat, jet skis—I didn't want anything else. When I realized that Sirius was going though [a] recapitalization, I said that's a lot of money. I don't need that money. I'm not spending what I have. So that's when I decided that I should start a foundation. Then I had to figure out what's the one thing the foundation should focus on and for me it was all about kids.
Peterson: I'm the son of Greek immigrants who came over at the age of 17, and I'm the lucky, lucky recipient of the American dream and I have a great gratitude for that. I'm perfectly aware my life would not be possible in any other country in the world…I've continued to be very concerned about the cultural problem we have in this country which is essentially, live in the moment, deny the future, forget the future, consume now, I want it all, I want it now and I don't want to pay for it. And you see that expressed in so many ways. Not only the deficits [have risen] but the savings rates have plummeted. So after watching the first several years of this decade, I continued to believe it was a major problem. And then the other event that was decisive was our public offering of Blackstone. Since I am deeply concerned about the long term, I wondered about setting up a major foundation which focused on long term issues because we've really got an aggravated case of short-term-itis in this country and that troubles me a lot.
Hilton: Last year when Hilton Hotels Corp. was acquired by a private equity firm and Harrah's Entertainment, the successor to the Hilton Gaming, was acquired in a similar transaction, I pledged my personal proceeds of those sales to the Conrad N. Hilton Foundation. At the same time, I announced my intention to follow in my father's footsteps and leave 97% of my entire estate [$1.7 billion] to the foundation. My father's philosophy, in business and in life, was to "think big, act big, dream big." He came from humble beginnings, and was always willing to help those less fortunate than himself. He taught us that, when you prosper, you give back. We have been steadfast in fulfilling my father's vision over the years. He had a particular respect for the work of Catholic sisters in ministering to young people, and we have funded their work around the world.
Zuckerman: I came to this country from Canada and owed $500 to Harvard Law School when I graduated and I had a six-year-old Chevrolet.
I've been blessed, as the saying goes, and I intend to share it as much as I can, good times and bad times. I didn't think of it in any other terms and I don't think of it in terms of what the exterior economics of the world are. One way or another, I'm going to try and share it as best I can.
How has the economic downturn affected philanthropy?
Hilton: We follow the prudent man investment philosophy. We feel our investments must be well diversified and generally conservative. In spite of the foundation's diversification, assets have been negatively impacted by the current financial crisis. While this may impact our giving in the short term, we will make every effort to see that our key program areas are not overly affected.
Zuckerman: I can't imagine it's not going to have a major effect because [philanthropy] is for most people a discretionary item. There are a lot of people that are going to have a lot less to be discretionary about. So it's going to be very bad. In addition, there is a level of pessimism and a lack of confidence that I have never seen since I've been in business. The confidence factor is just broken to a level that's unprecedented. I don't think it has existed since the end of World War II. It's in regards to where [people] think the economy is and where it's going. If people think their net worth is going to continue going down, they're going to be pessimistic
Najim: It won't affect my charitable giving. I'm not going to let it. It's not an option. But let me tell you where it's hurting: It's the [nonprofit] organizations that my foundation and other foundations give money to. They're the ones having problems getting donations from people.
How involved are you in the giving?
Hilton: The foundation is now led by my son, Steve Hilton, in whom I have the utmost confidence and respect. Steve has been an executive of the foundation for more than 20 years. In 1998, he was made president of the foundation, and added the responsibilities of chairman and CEO in 2005. With the sale of our hotel and gaming interests, the foundation board elected me chairman last year. I work closely with my son to see that our work fulfills my father's vision while ensuring that our foundation remains one of the most progressive organizations in today's world of philanthropy.
Najim: I said to the girls [two daughters] when I started the foundation, I want you to be part of it and I want you to help me run it for the time that I'm alive. I want to transfer knowledge to you so that you know what my thought process is and you guys can run this. I started it and I put the funds in a local San Antonio bank called Broadway National bank, and they have a wealth management group, a department that manages a bunch of foundations. I had them initially help teach me how to run a foundation.
Zuckerman: I was on the board and the president of Dana-Farber [Cancer Institute] when I was in Boston and I have been on the board for over 20 years at Sloan-Kettering so that's one area where I've been extensively involved. In terms of education, the Harvard fellows program, I was involved in it quite seriously. In fact I'd have to say the whole thing was my idea. [The Zuckerman Fellows Program gives scholarships for graduate students to pursue public service degrees.] It's not just writing a check. As far as the archeological work, I've been fascinated by that for literally decades, and still am. I don't want to say I did any of the archeological work but particularly in that part of the world [Israel] it's something I have thought about, studied, walked all around.
How do you select causes?
Najim: I felt that the future of San Antonio and the future of our country was totally dependent upon the kind of job that the elders in the community—and I place myself there— did in reaching out to these [young] people. I felt that the children of San Antonio, the greater San Antonio area, needed a champion, someone who would reach out to them.
It all came back to kids who needed an education, who need pretty basic needs of food, clothing, and shelter. It came to kids who have been homeless or abused or who needed medical treatment or have developmental disabilities.
Hilton: We rigorously examine humanitarian issues to find niches that may have been overlooked, underfunded, and hold the potential for us to make a significant impact. For example, we have helped the Carter Center make great strides in the treatment, control, and elimination of trachoma, a major cause of blindness in many of the poorest and most remote areas of Africa. Through improved sanitation, children are less likely to contract the fly-borne virus. About one-sixth of the world's population lacks access to clean water, and more than twice that number lack adequate sanitation services.
How do you measure results?
Peterson: We've talked about metrics. We have 140,000 people already signed up [for the foundation's events] since we launched in July and we're going for much larger numbers. So it isn't as though I approach this with hubris or anything of the kind. I'm perfectly aware of the fact that this is a very, very demanding job. And it's going to involve getting the young people aware and activated and motivated in ways they haven't been before.
Zuckerman: Some of these results are tangible and some are intangible. I measure my results for example at the Kennedy School [at Harvard University] by meeting the students who are selected as fellows and getting a sense of who they are. I measure the archeological work by seeing the archeological digs. One of them is completed and the other major one is under way and you see it evolving.
Ultimately, we'll measure success by whether there are proposals for entitlements and savings and so forth. And one metric just shy of that is how big and active is the movement to do something about it. One way of conceptualizing this is to say we want to make the political cost of not doing something as high or higher than the cost of doing something. And that's going to be measured by how much public pressure there is. Are we going to see a bunch of young people and their parents in Washington saying "how could you be doing this to us?"
Hilton: We have always taken an entrepreneurial approach to philanthropy, and that influences our definition of success. Perhaps our greatest measure of success is when we nurture a promising humanitarian partner, and build it up to the point where it can sustain itself on its own. The annual Conrad N. Hilton Prize provides $1.5 million in funding to a deserving humanitarian organization that demonstrates innovative and effective methods of addressing social needs. It has had a cascading effect on the recipient organizations, enhancing their legitimacy and recognition, and generating greater levels of funding.
What are some moments that make your giving worthwhile?
Najim: Yesterday I did a site visit to a place called ARC. It's an organization for people who are disabled and have mental disabilities and I had given $225,000 over two years. I went to see the new playground and new facility in here in San Antonio. And to see those kids be able to roll their wheelchair up to the swingset on this playground that my foundation funded and to watch them swinging, is really heartwarming.
Hilton: My father was a great admirer of Helen Keller, and for years, we have supported the work of the Perkins Institute, the school that trained her teacher, Anne Sullivan. In recent years, our friend, Frank Franke, a journalist in Frankfurt, had visited the Sibonile school for blind children in South Africa, which needed lots of supplies and infrastructure improvements. He asked if we could have the Perkins School share its curriculum with the school and its dedicated teachers. We had the Perkins Institute assess the situation at the school, and we ended up funding many of the tools that have helped educate these children and enable them to lead a more fulfilling and productive life. Frank has taken photos of our young beneficiaries, and the joy on their faces reflects the confidence that only a quality education can produce. Since its inception in 1989, the Hilton/Perkins program has provided direct services to over 200,000 children, parents, teachers, and university students.
Zuckerman: The Zuckerman fellows [at Harvard] have an excursion to Washington for a couple of weekends a year, and there's a party for them, which I attend, and they invite a lot of people from the government. [The fellows] each get up and talk a little about their own background and what they're going to do. I have to tell you, it's as inspiring to listen to those 25 students as anything you could ever want to hear.
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