Philanthrocapitalism -- Not for the Faint of Heart

Over the past decades, there have been countless stories of donors who are bringing a new level of strategic consideration to their giving. Even I, who track such stories every day and fervently want to believe they are true, wonder if they amount to hype perpetuated by the media, or the real deal. Last week's New York Times Magazine did a great job of bringing together stories about some of these folks, dubbed megacapitalists. My favorite was about Herb and Marion Sandler. Of the business sense that enabled them to amass their fortune, Joe Nocero writes:

They also absolutely reveled in doing things their way, and over time, they became convinced that their way was the right way. There was some self-righteous nose-thumbing to this: occasionally Herb Sandler would testify before Congress against bank practices that outraged him. But they also cared a lot about surrounding themselves with strong, self-confident managers and giving them responsibility. They weren’t afraid of trying things the industry had never tried before. Though they rarely acquired other S.&L.’s, when they did, they undertook a tremendous amount of due diligence. And certainly their track record would seem to justify their confidence in their approach: during their tenure, Golden West’s stock rose at an annual rate of 19 percent, a remarkable long-term record.

Then Nocero describes, point by point, how they bring that same approach to their progressive philanthropy:

What was it about Human Rights Watch that attracted them? To the Sandlers, it was the model of a well-run nonprofit. It was effective. It didn’t waste money. It issued meticulous reports that tracked its results. And it was run at the time by Aryeh Neier, whom the Sandlers trusted. (Neier now runs Soros’s Open Society Institute.) In other words, it was run on the same set of principles as Golden West Financial.

And how did they come to that conclusion? Because they did at least as much research into human rights organizations as they did when they were thinking about making an S.&L. acquisition. And so began their pattern.

“They are keenly interested in the management of nonprofits, and they are struck by how badly managed most of them are,” says Chuck Lewis, the founder of the Center for Public Integrity, an investigation-oriented nonprofit that got a few small grants from the Sandlers a few years ago. “They have almost a fetish about it. They have an absolute infatuation with focusing on management. Who are the leaders? What is their background? Is it getting bigger or smaller? They rigorously chew over what they are about to do, much more than others do.

Being called out as "philanthrocapitalistic" is one of those things that folks with big money increasingly seek and/or welcome. But as Herb and Marion make clear, being accused of such a thing not only costs alot of money, it also requires a great deal of time and effort.

Susan Herr

Posted at 1:17 AM, Mar 20, 2008 in High Net Worth Donors | Permalink | Comment