Mega-Gifts in American Philanthropy · Chernow, Ron, Titan: The Life of John D. Rockefeller, Sr. (New York: Random House, Inc., 1998). 1913 created new incentives for altruism and

G A RY A . T O B I N , P H . D .

J E F F R E Y R . S O L O M O N , P H . D .

A L E X A N D E R C . K A R P, P H . D .

I N S T I T U T E F O R J E W I S H &

C O M M U N I T Y R E S E A R C H ,

S A N F R A N C I S C O

© 2 0 0 3 I N S T I T U T E F O R J E W I S H & C O M M U N I T Y R E S E A R C H A L L R I G H T S R E S E R V E D

Mega-Gifts in American

PhilanthropyG E N E R A L & J E W I S H

G I V I N G P A T T E R N S

B E T W E E N 1 9 9 5 - 2 0 0 0

G A R Y A . T O B I N , P H . D .

J E F F R E Y R . S O L O M O N , P H . D .

A L E X A N D E R C . K A R P , P H . D .

I N S T I T U T E F O R J E W I S H &

C O M M U N I T Y R E S E A R C H ,

S A N F R A N C I S C O

© 2 0 0 3 I N S T I T U T E F O R J E W I S H & C O M M U N I T Y R E S E A R C H A L L R I G H T S R E S E R V E D

Mega-Gifts in American

PhilanthropyG E N E R A L & J E W I S H

G I V I N G P A T T E R N S

B E T W E E N 1 9 9 5 - 2 0 0 0

T A B L E O F C O N T E N T S

Major Findings..........................................................................................................................................1

Recommendations ....................................................................................................................................3

Introduction ..............................................................................................................................................5

Methodology ..........................................................................................................................................11

Data Analysis ..........................................................................................................................................17

Policy Issues ............................................................................................................................................27

Conclusion ..............................................................................................................................................37

Bibliography............................................................................................................................................38

Jewish Mega-Gifts: 1995-2000 ....................................................................................Appendix A 1-12

General Mega-Gifts: 1995-2000 ..................................................................................Appendix B 1-43

L I S T O F T A B L E S & F I G U R E S

Table 1: Total mega-gift dollars and total mega-gifts ..................................................................17

Figure 1: Percent of all dollars to higher education versus other causes....................................18

Figure 2: Percent of Jewish dollars to higher education versus other causes ............................19

Figure 3: Percent of all dollars by cause ..........................................................................................20

Figure 4: Percent of Jewish dollars by cause ..................................................................................21

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Mega-g i f ts are a key part of ph i lanthropyMega-giving is an important component ofAmerican philanthropy. Donors provide bil-lions of dollars annually to non-profitsthrough gifts of $10 million or more. Themagnitude of the highest-end giving is suchthat major areas of society can be seriouslyinfluenced.

Jews are remarkab ly generous g ivers to the genera l soc iety

American Jews are generous well beyondtheir community numbers. Jews made 188 ofthe total 865 mega-gifts, representing $5.3 bil-lion of the $29.3 billion total between 1995-2000. The Jewish community consists of 6.5million, about 2.5% of the overall populationof the United States. Yet, 22% of all mega-gifts and 18% of all monies came from Jews.

Few mega-g i f ts f rom Jewish ph i lanthrop is ts go to the Jewish communi ty

The culture of giving is deeply embedded inJewish communal life. Yet, at the same time,Jewish organizations received a minute pro-portion of Jewish mega-dollars. Only $318.25million from 18 gifts went to Jewish organi-zations or institutions. These gifts constitut-ed only 9.6% of all Jewish gifts and 6% of allJewish monies.

Mega-g i f ts are narrowly d is t r ibutedThe vast majority of mega-gifts and dollarsare concentrated in three areas: education,health, and arts/culture. Together, theyaccount for 86% of mega-gifts and 80% ofdollars.

Higher educat ion rece ives the most mega-g i f tsHigher education captured the biggest pieceof the giving pie. Higher educational institu-tions received far and away the highest num-ber of gifts (367 general, 114 Jewish), repre-senting 56% of all mega-gifts. There were 367gifts to general giving for a total of $9.98 bil-lion. Fifty-four percent of their gifts and 43%of their monies went to higher education.Jews gave $2.57 billion, or 61% of their giftsand 49% of their monies, to higher education.Twenty-four percent of all gifts and 20% ofmonies to higher education came from Jews.

Other fund ing areas are v i r tua l ly ignoredOther areas received little funding, includinghuman services, environment, umbrellaappeals and minorities. Gifts designatedspecifically for minorities were almost non-existent.

Bigger organ izat ions rece ive most mega-g i f tsMost of the organizations that received fund-ing were large, well recognized and presti-gious. Most of the gifts can be classified as“safe” or “risk averse.” There were fewunknown or smaller non-profits in the givinglist.

Tax subs id ized do l lars are f lowing to un ivers i ty endowments

The top ten endowed universities have over$78 billion — more than the GDP of the 75poorest nations combined. Only 42 of theworld’s 200 plus countries have GDPs largerthan the endowments of these 10 schools.Chile, Pakistan the Czech Republic and NewZealand, for example, fall below this mark.

M A J O R F I N D I N G S

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Eva luate the appropr iate a l locat ion of ph i lanthrop i c do l lars

A scholarly and public debate should focuson the appropriate roles of the public sector,private sector, and philanthropic sector inaddressing human service needs, minorityneeds, environmental needs, and other areasof public concern. This report indicates thatsome funding areas are virtually untouchedby mega-donors. Is this the result of access,donor preferences, or other issues?

More research on mot ives for g iv ing shou ld be completed

It is important to have a better understandingof why and how mega-givers choose theirphilanthropies. Are they giving to the institu-tions or people? Are the personal connectionsto professionals, other philanthropists, orbusiness associates, or all of the above? Morestudy on the donor dynamics of mega-givingis required.

Examine lack of mega-g i f ts to Jewish organ izat ions

The Jewish community needs to examine the

dearth of Jewish gifts to specifically Jewish

institutions and organizations. What are the

causes for the disconnection of nearly all

mega-gifts from the Jewish communal struc-

ture? More research about this area is neces-

sary.

Deve lop better mechan isms to l ink funders with potent ia l grantees

Better links need to be developed betweenfunders and potential grantees. Currently,most mega-givers are supporting what maybe considered “risk-averse” institutions andprograms. Some of this funding may be dueto a genuine desire to support such institu-tions, but it may also be a function of lack ofknowledge, connections, and trust in a vari-ety of other less prominent, more grassrootsorganizations. Initiatives should be createdthat help link funders with a wider variety ofopportunities in which to invest their philan-thropic dollars.

More techn i ca l ass is tance to grassroots organ izat ions

More technical assistance to grassroots orga-nizations should be developed through aninitiative of foundations and private donors.Currently, the playing field is not level interms of soliciting support, especially frommega-donors. Small worthy organizationscan hardly compete with the experience, size,and resources of the development offices ofmajor universities, for example. Providingtechnical assistance in fundraising, develop-ment, grantwriting, and so on could helpthousands of non-profits be better positionedto develop the resources necessary to fulfilltheir missions.

R E C O M M E N D A T I O N S

Examine ph i lanthropy to co l leges & un ivers i t ies

Colleges and universities are receiving hugepublic subsidies, not only in the form ofmega-gifts, but also in the form of tax sup-ported philanthropy in general, funds fromstate legislatures, and a myriad of grantsfrom governments at all levels. Given thesize and scope of these infrastructures, it isworthwhile to explore the efficiency of boththe capital infrastructures, e.g., the numberand location of campuses, and the financialand human resources devoted to fund theoperations of thousands of colleges and uni-versities.

Examine the federa l subs idy of

un ivers i ty endowmentsThe tax policies that allow institutions toaccumulate large endowments should beexamined. Currently, all philanthropic dollarsare treated equally. Yet certain institutions,particularly colleges and universities, areusing tax subsidized dollars that are removedfrom the public domain and kept seeminglyin perpetuity. Federal subsidy of the largestuniversity endowments needs to be studiedand debated.

Institute for Jewish & Community Research

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Phi lanthropy as an Amer i can Va luePhilanthropy is an American tradition notclosely replicated in any other country.1

Philanthropy in the United States of Americais one of the great success stories of a democ-ratic society. The philanthropic system inAmerica is unique, structurally as well asphilosophically.2 It flourished in the first fullcentury of the young nation with the creationof such civic institutions as universities,libraries, and museums.

The unique qualities of American philan-thropy bring together a synthesis of thethemes that have built the nation.Philanthropy has strong roots in faith andreligious beliefs. It captures the power ofindividuals coming together as community,often motivated by a distrust of governmentand seeking greater individual autonomy.Further, these efforts have led to substantialand important breakthroughs in every com-ponent of human endeavor.

The unique qualities of American philan-thropy bring together a synthesis of thethemes that have built the nation.

Philanthropy has strong roots in faith andreligious beliefs. It captures the power ofindividuals coming together as community,often motivated by a distrust of governmentand seeking greater individual autonomy.Further, these efforts have led to substantialand important breakthroughs in every com-ponent of human endeavor.

When the Industrial Revolution created vastnew fortunes in railroads, mining, and manu-facturing, American philanthropy was stimu-lated by the sense of noblesse oblige, “theobligation of honorable, generous, andresponsible behavior that is a concomitant ofhigh rank or birth.”3 Contributing financialresources to worthwhile educational, social,and cultural organizations was believed tobring social admiration and divine approba-tion.4 For example, John D. Rockefeller, therichest American of the nation’s first hundredyears, dispensed charity in munificentamounts for the benefit of the poor and thesick.5

The sheer size of the new industrial fortunesand the initiation of a federal income tax in

I N T R O D U C T I O N

1. For comparison of philanthropic traditions around the world, see Warren F. Ilchman, Stanley N. Katzand Edward L. Queen, II, eds., Philanthropy in the World’s Traditions (Bloomington: Indiana UniversityPress, 1998). 2. For a detailed, thoughtful discussion of interplay of philanthropy and philosophy, see Mike W.Martin,Virtuous Giving: Philanthropy, Voluntary Service and Caring (Indiana University Press, 1994).3. Philip Babcock Gove, ed., Webster’s Third New International Dictionary of the English Language,unabridged (Springfield, MA: Merriam-Webster Inc., 2002), p. 1532. 4. For a discussion of American wealth as a consequence of Calvinist ethics, see David Brooks, “Why theU.S. Will Always Be Rich,”The New York Times Magazine, June 9, 2002, p. 88. He notes, “In America,money is promiscuous. Money is ubiquitous. But most of all, money is virtuous.”5. Chernow, Ron, Titan: The Life of John D. Rockefeller, Sr. (New York: Random House, Inc., 1998).

1913 created new incentives for altruism andpresaged the establishment of new charitablefoundations, of which Rockefeller, AndrewCarnegie, Russell Sage and others were thepioneers. These were tied to the desire togive back to society, a convergence of reli-gious, social and psychological forces thatstill characterize American philanthropy.6

Philanthropy mirrors the great sweep andscope of the American economy, which hasproduced unprecedented prosperity. Forexample, between 1982 and 1995, charitablefoundation assets grew by 13.5% annually(the biggest rate of growth ever). If this trendcontinues, even accounting for the currentdownturn (assuming a steady pay out of thefederally-required 5% minimum each year),and without counting all new gifts andbequests, foundation resources alone couldgrow to between $4 trillion and $5.9 trillionby 2035.7 In fact, some individual foundationsnow rival in size the national budgets ofsmaller nations. For example, the Bill andMelinda Gates Foundation, currentlyendowed at $32.75 billion but likely toreceive tens of billions more, could somedaybe paying out $4 billion annually under someestimates. That is almost 20% of the total allo-cations now made by American foundations.

Jewish philanthropy has a special place inAmerican philanthropy. For over a century,

Jews have built a multilevel philanthropicorganization structure to fulfill their commonvision and mission, powerfully driven by along history of faith values which stress giv-ing as synonymous with justice and commu-nal structures, especially in European roots,which were driven by voluntary self-taxa-tion.

Jewish Ph i lanthropyFor the Jewish immigrants arriving at EllisIsland with only the clothes on their backs,the prospect of any of them sharing the privi-leges of great wealth exemplified by theRockefellers must have seemed pure fantasy.And yet, along with their meager baggage,the Jews brought their own noble and power-ful traditions of altruism, including that oftzedakah.8

The assimilation of millions of Jews fromEastern Europe and elsewhere by the UnitedStates at the turn of the last century wouldhave as much of an impact on America as itwould have on the evolving Jewish-American. The achievements of the Jewishpeople in general, and of Jewish philan-thropists in particular, is an impressive storyof leadership and reciprocity, of a people giv-ing back for the precious life and opportunityAmerica had given to them.9


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6. See Robert Wuthnow, Acts of Compassion: Caring for Others and Helping Ourselves (Princeton UniversityPress, 1991). 7. Philanthropy, Jul/Aug 1999, p. 26-7. 8. For some of the philosophies concerning Jews and modern philanthropy, see Lawrence Bush andJeffrey Dekro, Jews, Money & Social Responsibility: Developing a “Torah of Money” for Contemporary Life(Philadelphia: Shefa Fund, 1993); Eli M. Shear and Chaim Miller, The Rich Go to Heaven: Giving Charity inJewish Thought (Northvale, NJ: Jason Aronson Inc., 1998); and Danny Siegel, Mitzvahs (Pittsboro, NC:The Town House Press, 1990) for the role of philanthropy or tzedakah (literally “righteousness”). 9. For a good history of Jewish philanthropy in the mid 20th century see Alfred Jacob Kutzik, The SocialBasis of American Jewish Philanthropy (Dissertation, Brandeis University, 1968); for a valuable work docu-

Mega-Gifts in American Philanthropy

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America’s Jewish community has traditional-ly been extremely successful in its fundrais-ing efforts. Indeed, it has served as a modelfor other communities. Along with otheraffluent Americans,10 Jews have been in theforefront of philanthropy to educational,social, economic, and cultural organizationsof diverse variety, dedicated to improving thehuman condition and enhancing the qualityof life for millions of Americans and for otherpopulations around the world, in spite of thediscriminating barriers they faced until thepost World War II era.11

Jewish philanthropy mirrors the state of theJewish community, reflecting group valuesand structure. How Jews give away money

tells a great deal about the evolving characterof Jewish life in America. Three overarchingcharacteristics of Jewish life are revealedthrough the lens of Jewish philanthropy.First, Jews have become highly integratedinto the mainstream of American society.Second, Jews remain different, in spite oftheir integration. Jewish psyche and behav-ior remains different from the overall society— Jews still practice a different religion,relate to Israel differently, and still largelymarry other Jews (although this trend isdiminishing over time). Third, Jews have notshed their survival fears. Being secure andstill being afraid can cause a major disloca-tion in the philanthropic system.

menting Jewish charities in America, especially in the first half of the 20th century, see Boris Bogan,Jewish Philanthropy: An Exposition of Principles and Methods of Jewish Social Service in the United States(Montclair, NJ: Patterson Smith Publishing, 1969). Although religious doctrine exists suggesting Jews areto give to Jewish causes first, this doctrine in no way indicates that Jews ought to only support fellowJews. In fact, religious tradition requires Jews to support gentiles in need: “’One is required to feed andclothe the non-Jewish poor together with the poor of Israel, this for the sake of the ways of peace. In thecase of a poor person going from door to door, one is not required to give such a person a large gift, butonly a small one. It is forbidden, however, to allow a poor person who asks for charity to go awayempty-handed—you must give at least a dried fig, as it is stated, ‘Let not the depressed turn away inconfusion.’ The point is that [Jews] have the obligation to help everyone in the community, not onlyJews.” Jacob Neusner, Tzedakah: Can Jewish Philanthropy Buy Jewish Survival? (New York: UAHC Press,1997), pp. 25-26. Indeed, the Jewish community has always had a tradition of extending charity to allmembers of their community, whether Jewish or non-Jewish. 10. Much has been written about Jewish economic success. Indeed, there is a long tradition of confusingcapitalism and success within a capital system with the Jewish religion. (See Bernard Lewis, Semites andAnti-Semites: An Inquiry into Conflict and Prejudice, New York: W.W. Norton & Company, 1999).Classically, the propensity to confuse capitalism with Judaism has often been linked to overt and/orcovert anti-Semitic attitudes. A more likely genesis of capitalism is Calvinism. In fact, capitalism, asshown in Max Weber, The Protestant Ethic and the Spirit of Capitalism (Trans. Talcott Parsons. London:Routledge Classics, 2002) was the logical extension of a Calvinist attitude towards work and the role ofsuccess in religious evaluations of worth. Nevertheless, Jews, and particularly American Jews, haveenjoyed a great deal of success in America. While it is difficult to quantify this success, several authorshave provided a useful description of Jews within the context of economic success in America. For onesuch discussion of Jewish economic success, see Steven Silbiger, The Jewish Phenomenon: Seven Keys to theEnduring Wealth of a People (Atlanta: Longstreet Press, 2000). Silbiger writes, “To safeguard and enhancethe health of their community, Jews zealously deploy their wealth and their time for both charity andsocial action. The numbers are incredible considering the small size of the Jewish population. In spiteof the stereotype that they are miserly, Jews happen to be the most philanthropic ethnic group in thecountry. Their ability to organize and utilize economic power has been a prime source of the Jewish-American community’s strength. Their charitable giving not only supports their expanded world com-

Jewish philanthropy reflects both an ethnicgroup and religious group defining its placein American society, while at the same timedefining its own internal direction and self-definition. Indeed, philanthropy is themeans through which much of the communalagenda is debated and decided. Without thestructure of a national “church,” or a quasi-government, the philanthropic structureserves the purpose of representing communalpolicy.

Although data are not available regarding theexact size of total Jewish giving or thepropensity of Jews to give more than non-Jews, a general impression exists that Jewishdollars are an integral part in maintainingAmerica’s non-profit sector. TeresaOdendahl notes, for example, that a dispro-portionate number of the donors she encoun-tered during her research on elite philan-thropy were Jewish, and that this was areflection of broader philanthropic givingand not of her method of identifying wealthydonors. Interestingly, the percentage of her

wealthy donors who were Jewish (28.5%) ishigher than the number of mega-donors,indicating that among major donors whogive donations of less than $10 million, thenumber of Jews may be higher.12

Not surprisingly, given the large Jewish com-mitment to philanthropy, Jewish philan-thropists are credited for many innovationsincluding: the matching gift, developed byJacob Henry Shipp, a leading Jewish philan-thropist in America in the mid-1880s; and thepractice of “calling cards,” an aggressivemanner of fundraising, whereby a profes-sional fundraiser calls out the name andpledge of donors in a public forum and pres-sures them to make or match the gift. Thesetechniques are no longer effective with manyJewish donors.13

The difference between Jewish philanthropyand American giving patterns are increasing-ly blurred, although differences remain. GaryA. Tobin argues that “The Americanization ofJewish philanthropy has taken place. Jews are


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munity; it also helps individual Jews up the economic ladder…It is written in the Talmud: ‘You’re onlyas wealthy as the amount you are able to give…The Book of Leviticus is even more explicit: ‘You areforbidden to reap the whole harvest; a remnant in the corner must be left for the poor.’ ” (p. 39).11. For a thorough discussion of the reasons why wealthy people in general, and Jews in particular,make philanthropic gifts, see Francis Ostrower, Why the Wealthy Give: The Culture of Elite Philanthropy(Princeton University Press, 1995). Ostrower also provides a poignant description of the relative veraci-ty of discrimination. “Religion, especially the distinction between Protestants and Jews, has been amajor source of differentiation among elites in the United States. Furthermore, religion, or ethnicity, hasserved as one of the boundaries excluding Jews from the Protestant-dominated social elite and its insti-tutions. For a historical comparison of Jewish versus Protestant giving, see Frank G. Dickinson, TheChanging Position of Philanthropy in the American Economy (New York: National Bureau of EconomicResearch, 1970). 12. For a historical look at the disproportionate number of Jewish philanthropists, see Teresa Odendahl,Charity Begins at Home: Generosity and Self-Interest Among the Philanthropic Elite (p. 272). “We inter-viewed 40 elite Jewish philanthropists of both central and eastern European descent; they composedover 28.5 percent of our total sample of wealthy people…We did not try to recruit Jews for interviews;they were active in charitable networks in every city we visited.”13. Gary A. Tobin and Joel Streicker. United Jewish Appeal Baby Boomer Philanthropy Study. Maurice andMarilyn Cohen Center for Modern Jewish Studies/Institute for Community & Religion, BrandeisUniversity, 1997.


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now so integrated into the American main-stream, that tzedakah has taken more of acharacter of American philanthropy, and willcontinue to do so, representing less the reli-gious tradition of Jews and more the civil tra-dition of philanthropy in the United States.Philanthropy among Jews mirrors certainaspects of the American system, especiallyamong the very wealthy. … More Jews willmake contributions based on American val-ues of giving; voluntary associations, givingthrough personal choice, and supporting awide variety of causes. They, like otherAmericans, will pick and choose that whichthey want to support, most often philan-thropies for which they have some affinity orconnection.”14 This conclusion is supportedby our analysis of Jewish mega-giving.Furthermore, baby boomer and younger gen-erations of Jews do not conduct their philan-thropy as did previous generations.15 Thereare, according to Gary Tobin, five reasons forthe Americanization of Jewish philanthropy:One, acceptance and integration intoAmerican society; two, fulfilling the Jewishmission of serving larger society; three, giv-ing something back as Americans; four, beingambassadors of the Jewish community; andfive, non-Jewish causes may seem more com-pelling.

Many Jews making mega-gifts to non-Jewishorganizations and institutions such as univer-sities and healthcare may consider these to beJewish causes, even though they are notJewish institutions. Many Jews may feel thatthey are acting out their Jewish impulses bysupporting education or the cure of cancer inany venue. This argument, of course, has agreat deal of credence in that Jewish teachingcalls for both particularistic and universalisticgiving. This notion alone, however, couldnot account for the paucity of mega-gifts toJewish institutions.16

The philanthropy of Jewish business leadersis an important expression of their identity asJews and as Americans. A willingness tocommit large sums of money expresses avision of how the Jewish community oughtto be. Philanthropy is a way for Jews toexpress their cultural affiliation: “For Jews inthe corporate elite, philanthropy andfundraising represented the primary meansof demonstrating commitment to beingJewish.”17 Giving and philanthropy continueto shape the Jewish community.

The Importance of Mega-Gi f ts and Mega-DonorsWhile only a small part of the world philan-thropy (Giving U.S.A.), the mega-gifts, those

14. Gary A. Tobin, The Transition of Communal Values and Behavior in Jewish Philanthropy (San Francisco:Institute for Jewish & Community Research) 2001, p.4.15. op. cit. Tobin and Streicker. 16. The 1999 Tobin study followed-up upon an earlier report which revealed the complexity of suchissues as the orientation of foundations toward Jewish or nonsectarian causes. The authors name this "aclassic Jewish tension—whether to dedicate oneself to the needs of the Jewish community or to those ofthe wider society." Gary Tobin, Amy Sales, and Diane Tobin, Jewish Family Foundations Study (Waltham,MA: Maurice and Marilyn Cohen Center for Modern Jewish Studies/Institute for Community &Religion, Brandeis University, 1996) p.7. Furthermore, the children of major Jewish donors may be lesslikely to favor the Jewish causes supported by their parents. Jack Wertheimer, "American JewishPhilanthropy." American Jewish Yearbook (New York: The American Jewish Committee, 1997).17. Richard Zweigenhaft and G. William Domhoff, Jews in the Protestant Establishment (New York:Praeger Publishers, 1982), pp. 99-100.

in excess of $10 million resonate far beyondtheir proportion of philanthropic giving.Throughout the history of philanthropy, theywere the flagship gifts, starting new institu-tions and initiatives for the betterment ofhumankind. Their donors were the standardbearers who gave others the confidence tofollow the very dreams that philanthropy inits purest represents.

These gifts are sought as the lead gifts forinstitutional advancement and, dispropor-tionately by the society’s leading institutions.They are often donor designed to make abreakthrough — creating new organizationalsettings to improve society or an experimentin societal development. Often, the mega-giftrepresents the beginning of a trend or direc-tion in philanthropy.

Gifts of $10 million and more are becomingan increasingly important segment ofAmerican philanthropy. For the most part,however, they have been the subject of indi-vidual accolades rather than systematicstudy.

Mega-gifts are important on multiple levels.First, a gift of $10 million can make a sub-stantial impact. Large-scale funding in a par-ticular domain will undoubtedly lead toincreased services offered in that area.Second, a mega-gift can instantly give theperception of validity to an institution oreven an entire field. Third, a large gift willoften raise the ceiling for all successive gifts.Mega-gifts set and reset the standards of giv-ing to a particular institution or cause.Fourth, and perhaps most importantly, mega-gifts alone, constituting billions and billionsof dollars, can have a huge effect on society.

Mega-gifts create substantial tax benefits forthe givers. Philanthropy is an extension offederal and state fiscal policy. Therefore, theportion of the gift that would otherwisebecome tax revenue (generally at least 40%,sometimes much more) is a transfer of publicfunds to private investment vehicles.Consequently, philanthropists have a tremen-dous responsibility to provide some kind ofvalue to society through their giving.

Moreover, no attempt has been made tostudy how Jewish mega-giving might differfrom that of the larger pool of such gifts.Given the long and pronounced tradition ofJewish American philanthropy, this oversightis not merely surprising, but conceptuallylimiting. The Jewish community has playedsuch an important role in the developmentand maintenance of American philanthropicinstitutions that an accurate portrayal of giv-ing habits in this country necessitates investi-gating how Jews give.

Yet, little research has been done to under-stand the mega-gift and the mega donor.This effort was designed as a first phase ofexploration in looking at Jewish mega donorsand their choices of beneficence. Beginningwith the quantitative publicly available data,certain beginning understandings could beobtained. However, the authors understandthe need for additional qualitative researchso as to better probe the motivations for thesegifts as well as the selection of recipient insti-tutions. At a time of substantial societal flu-idity, questions of identity and its meaningbecome more significant so as to provide thevarious faith communities and other subsetsof American life the opportunity to betterunderstand the motivations for giving and


10


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their meaning upon each of these sectors. This report examines mega-gifts madebetween 1995 and 2000 and compares generalgiving to Jewish giving. It first looks atoverall giving trends of all Americans, thenfocuses on specifically Jewish giving. Thisresearch will be updated and published on aregular basis. The next volume will be pub-

lished in 2004. General and Jewish mega-giv-ing are inextricably intertwined and ultimate-ly influenced to a greater extent by a sharedAmerican tradition than by cultural differ-ences. Nevertheless, we found important dif-ferences between the giving of non-Jews andJews. This report includes a statistical analy-sis of general and Jewish giving patterns.

13

Alist was compiled of gifts of $10 mil-lion or more made between 1995 and2000 from various sources (See

Appendix A). The list was separated intosamples of general and Jewish donors, withfoundations being Jewish if the principaldonor was identified as Jewish. Using thesesamples, we derived the statistics presentedin this report for both general and Jewishmega-gifts. It is important to stress, however,that this list does not indicate which donorsare considered “most generous,” as some listsof philanthropic gifts do, nor does it indicatewho has given the most money. Furthermore,we do not list the names of the donorsbecause they are not relevant to our analysis.

Two main factors complicated the collectionof data for this study. The first is that there iscurrently no source of complete informationon philanthropic gifts of $10 million or more,and that in the reporting of these gifts, thereis a prevailing tendency towards vaguenessand inaccuracy. Even the best lists of largephilanthropic gifts, including those publishedin the Foundation Center’s Foundation GivingTrends (1999), AAFRC Trust forPhilanthropy’s annual Giving USA report,Slate 60, The Chronicle of Philanthropy, WorthMagazine “Benefactor 100,” and Center onPhilanthropy at Indiana University’s list ofgifts over $1,000,000 are incomplete and oftenprovide conflicting information as to the size,year and inclusion of the same gift. Most ofthese lists claim only to be based onannounced gifts that have appeared in any ofa number of news venues, and they oftenhave different criteria for inclusion. For

example, the Slate 60, Giving USA, and TheChronicle of Philanthropy lists are actually allthe same list, which eliminates their useful-ness for corroboratory purposes. At timesthese sources will list a philanthropist’s totalgiving for the year or indicate only howmuch the donor gave in a particular arearather than providing an itemized list of gifts.In some cases, lack of specific informationhas made it impossible to differentiate giftsby a number of criteria.

Rel iab i l i ty of DataWe have attempted to verify the details ofeach gift through at least two and often threeor four sources. While we cannot claim thateach and every gift of $10 million or more isincluded, we do hold that the sample isindicative of gifts of $10 million or moremade between 1995 and 2000 and that it isadequate for the purposes of the presentanalysis.

Rec ip ient Categor iesAnalyzing gifts on the basis of recipient typepresents the challenging task of defining thecategories into which gifts will be separatedand the guidelines that determine into whichcategory each gift is placed. Many sourcesportray gifts as belonging steadfastly in onecategory or another, not acknowledging thatthe lines between these categories are oftenblurred. When one gives money to a univer-sity for the sole purpose of cancer research, itwould be irresponsible to simply say that thisgift is for education or for health withoutsome recognition that it is in a sense for both.Thus, while the analysis here required that

M E T H O D O L O G Y

each gift be placed into a particular category,and while it was impossible to outline thespecifics of every gift, we attempted wherev-er possible to indicate the subtleties andambiguities of the gifts.

Foundat ion vs . Ind iv idua l G i f tsIt has become so common for wealthy philan-thropists to fund recipient organizationsthrough foundations for tax or other purpos-es that sources often do not bother to indicatewhether this has been the case. We have indi-cated as frequently as possible whether a giftwas made through a foundation or not, buthave otherwise not distinguished betweenfoundation and individual gifts in our analy-sis, in part due to the aforementioned uncer-tainty. We have, however, omitted gifts topersonal or family foundations in order toavoid giving a donor “double credit” — thetransfer of money to the foundation as wellas subsequent grants from that foundation. Amore difficult decision arises when a donormakes a gift to another grant-making institu-tion in the form of a supporting foundationor donor-advised fund or trust. The failure ofmedia outlets, such as Slate, which claims tobe a list of America’s most generous philan-thropists, to distinguish between these kindsof gifts is perhaps the most misleading aspectof media coverage of philanthropy. When agift is given to a grant-making institution, beit a community foundation, a Jewish federa-tion or the United Way, this money may ormay not remain under the “advisory control”of the donor. The money can be given over tothe control of the foundation, most fully asan unrestricted gift, but it is often the casethat the foundation serves merely as a“investment vehicle” for money that thedonor will use for charitable purposes at alater time, possibly dispensing as little as 5%

of the total fund each year. We have madeour best effort not to include this latter typeof gift in spite of the lack of readily availableinformation.

Year of G i f tGifts are sometimes reported when they arepledged and then again when they are paid,which may be one or more years later. It isalso common to see a donor increase the sizeof a gift after it has been reported, which maylead to reporting in multiple years (as well asdiscrepancies over the amount of the gift).We have identified gifts as having been madein the year of their first known announce-ment, including any subsequent augmenta-tions of those gifts. Also, most mega-gifts arepaid over a number of years and publishedannouncements of these gifts rarely includeinformation on the length of the payout peri-od. We have thus made no distinctionbetween gifts paid all at once and those paidover a long period, although in practicalterms the distinction can be enormous.

Jo int G i f tsIn cases where two or more unrelated philan-thropists make a gift, reports rarely indicatehow much was paid by each individual. Forthis reason, we have excluded these giftsfrom the study. In cases where one donor hasmade a single mega-gift to a number of orga-nizations and the actual amount going toeach is undisclosed, we have listed the donorand all recipients.

Withdrawn Gi f tsOccasionally a donor will pledge a gift andthen withdraw that pledge due to dissatisfac-tion with the recipient organization or per-sonal financial reasons. We have removedsuch gifts from the study as they came to our


14


15

attention, but it is quite possible that a fewgifts that appear here have been withdrawn.

Method of PaymentNot all mega-gifts are in cash form. A num-ber of the gifts are highly valued collectionsof artwork, most often given to museums,while other gifts are in the form of stock, thevalue of which will of course fluctuate overtime. For the sake of simplicity, we have notdistinguished between gifts on this basis.

BequestsBequests can be of a very different characterfrom other gifts. Sometimes bequests of $10million or more comprise almost the entiretyof a donor’s estate, whereas other gifts maynot amount to more than 1% of a donor’s networth. Thus the bequests were generallyfrom less wealthy donors. Also, people willoften give to different causes, for differentreasons, just before death than they did dur-ing life. While an analysis of these differenceswould be informative, it falls outside of thescope of this study, for the purposes of whichwe have not distinguished between bequestsand other gifts. Another aspect of bequests isthat they are often triggered many years afterthe donor’s death. In such cases, we haveindicated the year in which the recipientactually received the money.

Unrestr i c ted G iv ing to Un ivers i t iesUnrestricted giving to universities may infact be lower than our data captures. Movingforward, we will have more informationregarding the exact nature and purpose of

gifts made to universities. Currently, howev-er, our heavy use of quantitative data maylead to an under-representation of restrictedgifts made to universities as only qualitativeinterviews with both donors and universityadministrators can provide a more accuratepicture of the extent to which gifts carry nar-row restrictions.

Determin ing Jewish DonorsAnother difficulty was determining which ofthe over five hundred philanthropists wereJewish. After extensive Internet searches ona case-by-case basis, a number of federationexecutives and experts on Jewish philan-thropy examined the list and indicated Jewswho had not previously been identified. Inspite of our best efforts, it is possible that wefailed to identify some of the Jews in oursample and have misidentified some asJewish who are not. In all likelihood, howev-er, the incidences of such misidentificationsare slight enough that they have not affectedthe validity of the sample.

Support ing an In i t ia t ive Versus Mega-Giv ingSome of the philanthropists who have giventhe most within the Jewish community areentirely absent from this study because theyhave given money over time and not in theform of mega-gifts. Programs such asBirthright Israel, that could receive more than10 million dollars from the same donor overtime, are not included as mega-gifts.

17

Mega-gifts, $10 million or more toone institution, are acts of incredi-ble generosity. Each philanthropist

sees his gift as unique. Certainly the donorsdo not view their gifts in the context of allgifts of $10 million or more. Nevertheless, theoverwhelming sums that donors give awayas major gifts each year do reveal specificpatterns. Mega-donors gave a total of$29,308,756,000. Of the 502 mega-givers, 123(24.5%) were Jewish. These Jewish donorsmade 188 (21.7%) of the 865 total gifts, con-tributing $5,260,700,000 (18%) of the mega-gift dollars (See Table 1).

Mega-Giv ing vs . Other G iv ing

Overall, the distribution of mega-gifts ismarkedly different from that of all other giv-ing in the United States. In 2000, for exam-ple, religious organizations received by farthe largest sum of total philanthropic dollars,74%, from the broader public, although only

one of the 182 mega-gifts from that year wentto religion.18 An astounding 57% of themoney from mega-gifts went to education,almost all to private universities and colleges.Institutions of higher learning received 56%of all gifts, becoming the default recipients ofmajor gifts from elite philanthropists, whileother educational institutions received only9% of broader philanthropic gifts.

Educat ion

Tota l G iv ing to Educat ion

Giving to education totaled $16.7 billion.There were 425 general gifts totaling over$13.58 billion, representing 63% of all giftsand 56% of all monies. Jews gave 137 giftsfor a total of $3 billion. While the percentageof overall monies was significantly lower at11%, the overall commitment of Jews to edu-cational institutions in the broadest sensecould hardly be stronger.

D A T A A N A L Y S I S

18. Melissa S. Brown, ed., Giving USA 2001 (Indianapolis: AAFRC Trust For Philanthropy, 2001), p. 154.

Total mega-gift dollars General mega-gift dollars Jewish mega-gift dollars

$29,308,756,000 $24,048,056,000 $5,260,700,00082% of dollars 18% of dollars

Total mega-gifts General mega-gifts Jewish mega-gifts

865 677 18878% of gifts 22% of gifts

Tab le 1 : Tota l mega-g i f t do l lars and tota l mega-g i f ts

Higher Educat ion

Higher educational institutions received farand away the highest number of gifts (367general, 114 Jewish), representing 56% of allmega-gifts. There were 367 general gifts for atotal of $9.98 billion. Fifty-four percent ofgeneral gifts and 43% of general monies wentto higher education (See Figure 1). Jews gave$2.57 billion, or 61% of their gifts and 49% oftheir monies, to higher education (See Figure2). Twenty-four percent of all gifts and 20%of monies to higher education came fromJews.

Within the category of higher education,however, support for various kinds of institu-tions was uneven, with the vast majority ofdollars going to private institutions of highereducation. Three hundred fourteen dona-tions, representing 65% of gifts and 69% ofmonies ($8.66 billion) to higher education,

went to private institutions of higher educa-tion. There were 233 gifts totalling $6.84 bil-lion compared to 81 Jewish gifts and $1.8 bil-lion, representing 71% of all their giving tohigher education. A total of 30% of all gener-al mega-dollars and 34% of Jewish mega-giftdollars were given to private institutions,making them the largest area of educationalgiving. Jews were particularly likely to makea mega-gift to a private university; 43% oftheir gifts went to private institutions.

Although giving to public higher educationwas lower, it was still significant. Togethergeneral and Jewish represented 167 giftsworth over $3.89 billion, which constitutes19% of all gifts and 13% of all monies.General giving represents 13%, or just under$3.15 billion, to public institutions; Jews gave$754.5 million, or 14%, of all their mega-dol-lars.


18

All Other Catagories22%

Health12%

Arts, Culture &Humanities

10%

Public Society Benefit9%

Public/PrimaryEducation

4%

Higher Education43%

F igure 1 : Percent of a l l do l lars to h igher educat ion versus other causes


19

Within higher education, the largest share ofmega-dollars went to medical/health.Medical/health received $3.23 billion, whichis 20% higher than that of the second largestcategory within higher education.Approximately 10% of general giving giftsand monies went to medical/health, com-pared to Jews, who gave approximately 15%of their gifts and monies to this category ofhigher educational mega-giving.

The third largest share of educational mega-giving went to support business. Combined,general and Jewish giving represents 69 giftsfor approximately $1.33 billion. This repre-sents 8% of overall gifts and 4.5% overallmonies, and adjusted for giving to highereducation institutions, 14.3% of gifts and10.6% of monies. Within higher education,business was the sixth largest giving sectoramong Jews. However, within private higher

education only, business was fourth, with sixgifts for $106 million. Of overall gifts to busi-ness, only nine, totaling $157 million, camefrom Jews. The largest of these was a $36 mil-lion gift to Case Western University to con-struct the Weatherhead School ofManagement.

Engineering received the sixth largest shareof all dollars, and the fourth largest share ofJewish dollars, given to higher education.Combined, general and Jewish represented18 gifts for $695 million. Jews alone gave sixgifts for $210 million. Four of these gifts,totaling $165 million, went to public engi-neering, making this category the largestrecipient of Jewish monies to public highereducation (See Figures 3 & 4).

Genera l Educat ion

The category “General Education” captures

Public SocietyBenefit

14%

Arts, Culture &Humanities

21%

Higher Education49%

All OtherCatagories

1% Health6% Public/Primary

Education9%

F igure 2 : Percent of Jewish do l lars to h igher educat ion versus other causes

initiatives and projects which have an educa-tional mandate. It differs from higher andprimary education as general educationdonations are not linked to specific institu-tions, such as universities, high schools, orgrade schools. In other words, general edu-cation captures much of the non-convention-al and/or creative giving in the educationalsector.

General education attracted strong supportfrom non-Jews, but received almost no sup-port from Jews. Non-Jews gave 25 gifts for

just under $2.4 billion to general education,approximately 4% of all general gifts and10% of general monies. Although seeminglysmall, 4% is substantial considering Jewsgave less than 1% of their total monies (one$10 million gift) to general education. The disparity between non-Jews and Jews ispartially explained by looking at the kind ofgiving in this category. General educationgiving often entails developing a program tosupport education in an area independent ofa select institution or level of education. Giftsof this kind were delimited by geography or


20

13.3%

0.1%

0.1%

0.5%

0.7%

0.7%

1.0%

1.0%

1.4%

2.5%

4.5%

4.6%

8.2%

9.4%

10.3%

12.5%

29.5%

0% 10% 20% 30% 40% 50%

Other

Minority

Community Foundations

Federated Charitable Appeal

Animal Rights

Religious Organizations

Youth Development

Private Elementary/Secondary Education

Environment

Public/Primary Education

Human Services

General Education

Public/Society Benefit

Arts, Culture & Humanities

Health Organizations

Private & Public Higher Education 42.8%

F igure 3 : Percent of a l l do l lars by cause


21

area of interest, such as a $10 million gift forscholarships in Minnesota or the $150 millionschool reform initiative. The LillyEndowment was extremely active in this sec-tor, making nine gifts valued at over $442million. Alone the Endowment made 36% ofall gifts and 18.5% of all monies contributedby general mega-givers to general education.However, even excluding the giving of theLilly Endowment, non-Jews still dominatedthis category, making 94.1% of their gifts and99.5% of monies. As a rule, Jews are lesslikely to participate if the giving requires cre-

ating an initiative or is somehow linked to acommunity instead of a university. Below wewill examine other areas of giving were thistrend is borne out, such as environment,community foundations and animal rights.

All but eight Jewish gifts, which total $30million, went to institutions of higher educa-tion, both in the United States and in Israel.Of the other non-higher education gifts, twowent to Jewish high schools in the U.S. whilethe third went to a Jewish CommunityCenter. Gifts to higher education went to rab-binical training, but also to programs in busi-

0.6%

0.2%

0.3%

6.3%

9.2%

13.7%

20.5%

0%

0.2%

0.2%

0%

0%

0%

0%

34.4%

0%

48.7%14.3%

0% 10% 20% 30% 40% 50%

Animal Rights

Environment

Human Services

Minority

Other

Youth Development

Community Foundations

General Education

Religious Organizations

Federated Charitable Appeal

Private Elementary/Secondary Education

Health Organizations

Public/Primary Education

Public/Society Benefit

Arts, Culture & Humanities

Private & Public Higher Education

F igure 4 : Percent of a l l Jewish do l lars by cause

ness, sciences, and women’s studies as wellas endowments and construction projects, avery similar list to that of mega-gifts to secu-lar universities by both non-Jews and Jewsalike. One significant difference, however, isthat these Jewish universities do not have thesame enormous endowments with whichmany elite American universities operate. Inmany cases, particularly in Israel, these uni-versities are just now beginning to developtheir endowments through intensivefundraising. Technion-Israel Institute, whichis thought of as “the MIT of Israel,” for exam-ple, has an endowment of only $169 million,while MIT itself, with an endowment of $6billion, has recently complained of beingunder-endowed.19

Heal th Organ izat ionsHealth organizations captured 86 gifts forapproximately $3.66 billion, 9.9% and 12.5%of overall gifts and monies, respectively.However, the disparity between general andJewish giving to this category was immense.Of the total 86 gifts made, only 13 were fromJews. While this number represents 15.1% ofall gifts, it constitutes only 8.8% of monies tothis category. Total Jewish giving was only$331 million, or 1.5% of overall gifts and 1.1%of overall monies.

The impact of Bill Gates, who gave over $1.4billion during the period of this study, inlarge part explains the disparity betweengeneral and Jewish giving. His giving for thiscategory alone was nearly 5% of overallmonies, representing over a third (38.9%) ofall giving to this category. Even after adjust-ing the data for Gates’ influence, non-Jews

gave slightly more. However, the difference,at least in terms of percent of dollars spent,was small. Without Bill Gates, general givingwas over $1.9 billion to health organizationsor nearly 8% of their monies as compared to6.3% of Jewish monies.

Large gifts were also made by Jews. Two giftsfrom the same donor for $35 million to theWashington University Barnes JewishHospital Cancer Center make up 11% of allgifts to Jewish recipient organizations. As agift intended to combat cancer, given to ahospital affiliated with a large university,there is little to distinguish this gift frommany health-related gifts to secular institu-tions. No gifts were provided for health inIsrael, for Jews in other parts of the world, orfor Jewish immigrants to the United States.

Arts , Cu l ture and Humani t iesAs a category of giving, Arts, Culture, andHumanities (hereafter arts) enjoyed strongsupport, especially among Jews. Combined,general and Jewish giving represented 93gifts totaling just over $3 billion to arts, rep-resenting 10.8% of overall gifts and 10.3% ofoverall monies. General giving was just over$1.9 billion, only 10% of general giving and8% general monies. Relative to their samplesize, Jews directed significantly more to arts:12.8% and 20.5% of all their gifts andmonies, respectively. The disparity betweenthe small number of gifts (24 of the total of 93to this category) demonstrates a strong com-mitment of those who gave. Large gift sizepushed the percentage upward. Viewed fromthe perspective of giving to arts alone, thisdisparity between general and Jewish giving


22

19. American Society for Technion Israel Institute of Technology, Financial Statement as of 9/30/02 (March2003).


23

is even greater. Jews made close to 36% of allmega-dollars to the arts. Adjusted to reflectrelative size of Jews in the American popula-tion, this 36% indicates that Jews are givingat a rate 14.4 times their size.

The largest Jewish gift was a $300 millionbequest to the Metropolitan Museum ofModern Art. The second largest Jewish gift,$50 million, went to the endowment of theGuggenheim Museum. A number of the giftsto museums were in the form of highly val-ued art collections. Notably absent were giftsin support of artist development and experi-mental art.

The only mega-gift to a Jewish arts and cul-tural institution was a $40 million mega-giftto found a new Museum of Tolerance inJerusalem. Gifts to arts organizations inIsrael, like gifts to education there, centeredmore on developing fledgling institutionsthan their counterparts in the United States,although there was certainly no shortage ofgifts to open new business schools and con-cert halls in the United States. Arts and cul-tural institutions in Israel are not nearly asabundant or well funded as in the U.S.Consequently, gifts to Israeli institutions havea far greater potential for meaningful impactin the community.

Publ i c Soc iety Benef i tIt has often been said that the wealthy viewtheir philanthropy not primarily as charity,i.e. helping the poor and disadvantaged,which they see as the responsibility of thegovernment, but as support for institutions,organizations and causes that do not receiveas much government attention. These institu-tions improve the “quality of life” in a com-

munity including museums and libraries. Total giving in this area reached a significantsum of over $2.7 billion. General giving rep-resented 35 gifts for just over $2 billion, andJews made 11 gifts for $722 million. This rep-resents just over 1% of overall gifts andalmost 6% of Jewish gifts.

Among Jewish mega-givers, the Soros family(George, Paul and Daisy) dominated givingto public society benefit. Of the $722.5 mil-lion given to public society benefit, whichrepresents 14% of Jewish mega-gift dollars,$645 million (89%) came from a Soros. Two ofthe gifts went to immigrant issues, $50 mil-lion to fight discrimination against immi-grants, and another $50 million to assistimmigrants seeking graduate education inAmerica. More than anything else, these giftsreflect the empathy that they undoubtedlyfeel for new Americans, having themselvesemigrated from Hungary, and thus appearnot to be indicative of an interest amongJewish philanthropists in immigrant causesor in social service programs of any kind.

None of the other Jewish philanthropistsgave a mega-gift specifically to aid the poor,minorities, or disadvantaged Jews, or for anysocial justice purposes, all of which are typi-cal hallmarks of Jewish philanthropy. Theabsence of gifts to these causes is the clearestevidence that the interests of wealthy Jewishdonors, at least when it comes to major gifts,are more in line with those of wealthy non-Jews than with those of other Jews. Whileexamining only the largest gifts as opposedto the broader giving of these wealthydonors admittedly magnifies the disparitiesbetween their giving and that of other Jews,it is clear that the prevailing trend among


24

these all-important mega-gifts is not touphold values commonly associated withJewish philanthropy.

Env i ronmentWhile giving to the environment was a siz-able 2.5% of overall monies, its supportcame exclusively from general donors.Moreover, their interest was strong, at leastas measured by the size of their gifts. The 22gifts they made totaled more than $720 mil-lion, making the average gift well over $36million. One donor dominated this sectorwith 14 gifts and almost $478 million in giv-ing, including the single largest gift of $175million to the Conserving CaliforniaLandscape Foundation. All but one of thesegifts were made to initiatives in NorthernCalifornia, making them dual purpose intheir nature.

In comparison, Jews made no mega-gifts tothe environment. However, current political

conditions are likely to affect everyone’s giv-ing in this area, with interest keen amongmany Americans to reduce dependency onauthoritarian governments for the supply ofoil.20

Federated Char i tab le Appea lThis sector of giving received only 8 giftsand $198 million, or .9% of all gifts and .7%of all monies. Bill and Melinda Gates gave$30 million to the United Way of KingCounty.

Minor i tyOnly two gifts totaling $35 million weremade to minorities.21 Both gifts were fromgeneral donors. Only .2% of mega-gifts and.1% of monies went to this sector. TheJewish community has traditionally been alarge supporter of institutions and initiativesthat benefit minorities. However, Jewishmega-givers do not seem to follow this pat-tern.

20. President Bush’s State of the Union address demonstrates a possible shift in interest. “In this century,the greatest environmental progress will come about not through endless lawsuits or command-and-control regulations, but through technology and innovation…I’m proposing $1.2 billion in researchfunding so that America can lead the world in developing clean, hydrogen-powered automobiles. Asingle chemical reaction between hydrogen and oxygen generates energy, which can be used to power acar – producing only water, not exhaust fumes. With a new national commitment, our scientists andengineers will overcome obstacles to taking these cars from laboratory to showroom, so that the first cardriven by a child born today could be powered by hydrogen, and pollution-free. Join me in this impor-tant innovation to make our air significantly cleaner, and our country much less dependent on foreignsources of energy.” President George W. Bush, State of the Union Address, January 28, 2003 (source:www.the moderntribune.com).21. Our work does not explore the racial, ethnic, or gender dimensions of the mega-donors. For a dis-cussion of diversity in philanthropy, see Janice Gow Pettey, ed., Diversity in the Fund-Raising Profession,Series: New Directions for Philanthropic Fund Raising (New York: Wiley Periodicals, 2002. No. 32, Winter2001); Bradford Smith, Sylvia Shue, Jennifer Lisa Vest and Joseph Villarreal, Philanthropy in Communitiesof Color (Bloomington: Indiana University Press, 1999), p. 3. They note, “Not only has research on eth-nic philanthropy failed to keep pace with the rapidly increasing size and importance of America’sminority groups, but the cultural dimensions of philanthropic behavior within these ethnic communitiesremain virtually unexplored. All cultures construct reality differently; within each unique cultural com-munity, beliefs and behaviors have meanings that are often not shared or understood by the outsideworld. Some cultural meanings are manifest and easily recognized; others are latent and subtle, requir-


25

Animal R ights

Only one gift of $200 million dollars was

made to support animal rights by a general

donor.

Human Serv i cesHuman services has become an importantsector of general mega-giving, with 11 giftstotaling $1.33 billion. Some examples of giv-

ing to this sector are the Bill and MelindaGates Foundation gift of $40 million to househomeless people in Seattle and a gift of $80million to the Salvation Army of San Diego.General donors made large contributions,making the percent of monies (4.6%) muchhigher than the percent of gifts (1.3%). Jewishdonors did not participate in this sector.

ing systematic observation in order to produce accurate analysis. Thus, the cultural dimensions of gift-giving, financial assistance, sharing, and the distribution of income and wealth all have a variety ofmeanings from culture to culture.” For a detailed discussion of minority giving in the religious context,see Phyllis A. Meiners and Greg A. Sanford, Church Philanthropy for Native Americans and OtherMinorities: A Guide to Multi-Cultural Funding from Religious Sources (Kansas City, MO: CRC PublishingCo., 1995). Some evidence exists that minorities may be less likely to give. Christopher Jencks providesinsight into the potential effects of these variables in philanthropy. Christopher Jencks, “Who Gives toWhat” The Nonprofit Sector, edited by Walter W. Powell (New Haven, CT: Yale University Press, 1987), p.321. He notes, “The Federal Reserve Board survey found that with income and tax status controlled,whites gave 28% more than nonwhites in 1963, but because the survey covered relatively few non-whites, this difference was not statistically significant.” For a discussion of the role of gender in philan-thropy, see Raquel H. Newman, Perception of Factors Relating to Gender Differences in Philanthropy(Dissertation, University of San Francisco, 1995).

27

Publ i c -Pr ivate Partnersh ipA number of serious policy issues may bederived from an analysis of mega-gift pat-terns. First, we must remember that charita-ble giving and the establishment of founda-tions and endowments are an extension offiscal policy.22 Dollars that are tax-deductibleare resources taken out of public sector deci-sion-making and put in the hands of the non-profit sector, private and public foundations.There is both an implicit and explicit under-standing that these dollars are designed tocontribute to the public good and improvethe quality of life in America. These serviceshave been cited in explicit Federal policydirectives that the private sector, includingvarious non-profits, is to be a partner withthe federal government in providing essentialhuman services. These include, among oth-ers, healthcare, education, and public wel-fare.

Furthermore, federal statutes require privatefoundations to expend a minimum of 5% oftheir assets per year. This was intended to bea floor, not a ceiling. The growth of privatefoundation corpora and the unimaginablylarge endowments of some major universitiesindicate that dollars that should be circulat-

ing to support the public good seem to bebanked in perpetuity. It is fair to ask if majordonors are holding up their end of the bar-gain with the public sector. The mega-giftstudy shows that there is a transfer of dollarsto a select number of institutions. Certainly,this represents a relatively small portion ofall philanthropic dollars. Nevertheless, itraises a moral issue about public support forthe huge volume of dollars now within theseemingly permanent control of a select num-ber of institutions. In this sense, the public-private partnership may be failing. Theexplicit understanding that government cutsin human services, for example, would bepartially balanced out by private sector andnon-profit spending, does not seem to becoming to full fruition. Given the hugedevelopment staff of these elite institutions, itis certainly not a level playing field for themyriad of non-profits trying to obtain theirshare of philanthropic dollars, particularlylarger gifts.

Non-Prof i t Sector Staf fFollowing retail and wholesale trade, thenon-profit sector is third largest sector of theeconomy as measured by its contribution tothe gross domestic product.23

22. Michael Porter and Mark R. Kramer, “Philanthropy’s New Agenda: Creating Value,” HarvardBusiness Review (1999): p.122.23. For a discussion of the policy implications of the non-profit economy for other economic sectors, seeBurton A. Weisbrod, The Nonprofit Economy (Cambridge, MA: Harvard University Press, 1991), p. 108.Weisbrod provides a detailed analysis of sources of revenue for non-profits and emphasizes the impor-tance of revenues from sales, thereby underscoring the overlap between non-profit and for-profit enti-ties. He writes, “Supporters of both the non-profits and the proprietary organizations agree that cut-backs in federal funding (beginning around 1980) have led an increasing number of non-profits to seeknew revenue by engaging in profit-making activities; as a result, the two forms of institutions have comeinto growing conflict.” This issue has raised the question of whether non-profits have an unfair competi-tive advantage, given that their returns need not meet the demands of the marketplace.

P O L I C Y I S S U E S

The single largest impediment to its growthlies not in the availability of funds, but instructures that assure their prudent alloca-tion. Non-profit organizations often lack thehuman resources needed to accept and effec-tively manage sums greater than $10 mil-lion.24

One of the paramount tasks of philanthropyneeds to be training people with businessskills and the requisite technical and/or aca-demic backgrounds to facilitate large dona-tions effectively. Top-tier business schoolsshould be more aggressive in training people,as the field is too large to rely merely on thehaphazard entry of one-time entrepreneurs.In the short term, it would be of enormousvalue to create institutions that provide betterbusiness training for non-profit initiatives.

New Weal thThe economic development of the past thirtyyears has made scores of people extremelywealthy. The reasons for this explosion inindividual wealth are complex, and theexplanations controversial, but certainly theyinclude the democratization of capital result-

ing from new forms of financing, largelyfavorable, prudent fiscal and monetary poli-cies, a revolution in technology, and the inter-play with democratic institutions.25

Progressive equity structures have alsoproven a highly effective way of motivatingcreative people to take ownership of theirwork and have made thousands of peoplemultimillionaires. Companies from TheHome Depot to Intel provide generous equitystakes to what they view as their most impor-tant asset — their associates. The relationshipof someone who was born poor to his vastwealth is arguably different than that ofsomeone who has inherited his fortune.26

We predict that this former group of peoplewill give in proportions unheard of in thepast. Unless the philanthropists of the pre-sent actively develop new structures toaccommodate this influx, this money willlanguish in private foundations. While theemergence of “venture philanthropy” may beoverstated, these donors, highly motivated,successful business people, often want to bedirectly involved with the institutions thatthey fund and want to invest in institutionsthat produce demonstrable results.


28

24. Large consulting firms are entering this market. But their success is questionable, as their model pre-supposes a willingness of non-profits and their donors to support their large, often excessive fees.Moreover, non-profits cannot afford the luxury of paying an outside consultant to shield them from the“backlash” of implementing needed change, thereby protecting the “decision maker” from bearing thefull risk of his action. Lastly, consultants are often hired because executives believe “but for circum-stance” these consultants could be a star executive of their company. The prevailing feeling amongmega-donors, often self-made, and nonprofit professionals is more often than not one of skepticism, par-ticularly given the fees involved. For these reasons, it is unlikely that non-profits will look to the worldof large consultancies to provide the service that they indeed need.25. For a critical description of the interplay of wealth and democracy, see Kevin Phillips, Wealth andDemocracy: A Political History of the American Rich (New York: Broadway Books, 2002). 26. Thomas Stanley, The Millionaire Next Door: The Surprising Secrets of America’s Wealthy (Pocket Books,1996); and Thomas Stanley, The Millionaire Mind (Andrews McMeel Publishing, 2000). He demonstratesthat the accumulation of wealth is clearly linked to traditional values such as living modestly and work-ing hard. Consumerism and the conspicuous consumption of goods, mainly to impress one’s peers,appears antithetical to acquiring wealth. These values may or may not be shared by those who are bornwealthy.


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Measur ing Ph i lanthrop i c SuccessIncreasingly, entrepreneurs want organiza-tions that they support to reflect their under-standing of how an effective structure shouldwork. Much has been made of the differencebetween non-profit work and investment.Some obvious differences exist, the mostimportant of which is clarity. Financial deci-sions can ultimately be measured neatly interms of their outcome. The annual return oninvestment meets the targets or it does not.Allocations decisions must be made frequent-ly to adjust for risk so that the level of riskand the level of return remain in accordancewith goals. Nevertheless, in the long term,performance can be measured against thestandards created at the outset.In the non-profit world, it is difficult to quan-tify success as neatly. Nevertheless, goals canand must be articulated and strategies con-stantly adjusted to meet these goals. Giventhat success is not quantifiable in terms ofdollars, goals need to be extremely narrowand short-term. A typical endowment willalign risk and return and set long-term goalsbased upon this determination. Non-profitsneed to clearly articulate their plans annuallyand how they will measure success. In theprocess, they will need to re-evaluate thesegoals in terms of what they are finding in thefield. In this manner, the goals of the non-profit entity become somewhat quantifiable.It should also be noted that serious investorsworry a great deal about their positioningvis-à-vis their goals and about reallocation.These criteria are, in the short term, as impor-tant as their current return on investment.Ultimately, they will be evaluated based onthis return, but in the short term, these morenebulous criteria play an important role.

Risk Avers ionOne aspect of the difference between capitalmarkets, for example, and non-profit institu-tions, is the depth and diversity of institu-tions that are viewed as legitimate vehiclesfor investment. Investors who have deter-mined the level of risk to which they are will-ing to be exposed and the returns they desireare confronted with a plethora of options.Alternatively, non-profit institutions offercomparatively narrow selections. Likewise,although prestige is often cited as the prima-ry explanation for the overwhelming numberof mega-donations to elite institutions, webelieve that risk aversion plays a muchgreater role than is commonly recognized. Agift to Harvard or the symphony exposes theinvestor to minimal risk. The prestige ishigh, and there is a tangible benefit to society.The decision to give to large, highly endowedinstitutions is sensible if we discount themeaning of its effect and highlight risk andprestige as determinate variables. Recentcriticism of giving to endowments has beenintense and, as a result, the prestige of suchgifts is likely, over time, to decline. Criticswill not stem this kind of giving because theydo not adequately address the issue of riskand the associated, but distinct, issue of trust.Risk and trust are important, often-determi-native issues in nearly every financial trans-action. It is fair to assume that they shouldremain at least as important while investingin projects whose success and failure cannotbe as easily measured as in other areas.

Part of the attraction of large, prestigiousinstitutions is they allow mega-givers to

believe they are being risk-averse.27 Studieshave indicated that many major donors whohave been remarkably successful entrepre-neurs, innovators and risk-takers do nottranslate this mentality to their philanthropy.Indeed, many of the wealthiest donors arequite risk-averse. They believe that theyhave worked long and hard for much of theirlife to accumulate their wealth, and they arevigilant in assuring that their contributionsare being used in the best way possible. Thelargest, most prestigious institutions seem tooffer a safe harbor for mega-donors. Thedonor is assured that the dollars will not bewasted, and these major institutions alsooffer unequaled status as high level businesspeople, intellectuals, and community leadersassociate themselves with institutions ofhigher learning.

Non-profits must minimize risk and developtrust with donors. Moreover, they mustaccept that they will be held to higher stan-dard than for-profit entities. These are sepa-rate but intertwined tasks. Non-profits mustadopt standard accounting practices. Underno circumstance should they vary from thenorm regarding such practices. Non-profitstructures inherently bode a level of riskwhich makes the potential philanthropistuneasy. Organizations that increase this riskdo so at their own peril.

Bui ld ing TrustThe role of trust in making financial deci-sions of any kind is important. The institu-tions which garner a disproportionate shareof mega-gifts likely have long relationshipswith their donors. In many cases, these rela-

tionships are intergenerational. Indeed, somenumber of gifts to prestigious universitiescan be viewed as an investment in an inter-generational relationship as they facilitateadmission. Over time, the leaders of theseinstitutions develop and cultivate meaningfulrelationships with their donors. Knowingand trusting the people who lead the institu-tions one supports is extremely important.Few, if any, smaller non-profits have such ahistory of relationship-building with theirpotential donors. They must rely on encoun-ters with potential funders that are muchmore like a sales pitch than a partnership.People who experience a steady onslaught offundraisers are understandably taken abackby yet another request. In contrast, leaders ofprivileged universities, for example, are engaged in an ongoing conversation aboutthe well-being of an institution both partieshold dear.

It is particularly important to encouragemega-donors to commit their time, energyand insights — and not just their dollars —to the initiatives they support. Skills honedin the private sector are no less valuable inthe non-profit world. Moreover, wealthydonors are more able to expand the fundrais-ing base of a non-profit as they can act from aposition of strength, in some cases offering tomatch funds of others. In any case, they canprevent a non-profit from being forced toemploy fundraising techniques that willundermine its long-term credibility.Additionally, non-profits, much like privatebanks, should target people with sizable net-works to enter the world of philanthropy.


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27. For discussion of difficulties in quantifying progress in non-profit sectors, see Robert L. Payton,Philanthropy: Voluntary Action for the Public Good (MacMillan Publishing, 1988), pp. 231-260.


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Phi lanthrop i c Tra in ingOne of the more difficult tasks in developinggreater levels of philanthropic giving is train-ing the mega-wealthy. These donors oftenhave little or no experience in making philan-thropic donations. Moreover, they often donot know how to begin developing their owngiving agenda.

Training people who are leaders in theirindustry and have a net worth of over a bil-lion dollars presents some difficult problems.This clientele will not accept being lecturedto by professionals. They often view theirexperience and success as indicative of anability to analyze any problem far better thana professional working for a salary. For thisreason, a group of super-wealthy philan-thropists is unlikely to convene to be taughthow to donate their money.

Peer GroupsPeer groups of wealthy people can circum-vent these structural teaching problems.While this clientele resists being lectured toby professionals, it enjoys and is open tolearning from peers, who, with the help of anexpert, focus their discussions. Here themodel is one of introducing information andallowing the members of the group to teachone another. Participants often becomeinterested in developing their own projectaround a particular issue that arises, therebycreating non-profit structures capable ofattracting mega-gifts (the two elements oftrust and risk are addressed in this manner).These kinds of groups need to be open to

critical thought and free of direct fundraisingor a preset agenda. They should be formedby people with the requisite social skills andshould exclude people with destructive per-sonalities, regardless of their wealth.

Negat ive Consequences of Mic ro Ph i lanthropyIndividual giving, even with large sums ofmoney, reflects the discrete and particularagenda of the giver. While more dynamicthan a collective effort, individual decision-making can leave whole areas untouched.Individual donors sometimes cover the sameground, albeit perhaps from a different philo-sophical perspective, resulting in over-sup-port of some areas and neglect of others.Jeffrey R. Solomon observes that mega-givingmay result in a disjointed approach to howimportant issues in society are addressed:“…As private philanthropy becomes anincreasingly powerful force, it must act lesslike a group of competing candy stores,whether fulfilling the sweet tooths of thebenefactors or of favored grantees. Instead,envision a philanthropic landscape wheredonors, small and large, share informationand learning, resources and insights, wherechallenges are undertaken on a systemicbasis, where philanthropic partnerships arethe norm and synergy among beneficiaries isthe expectation. Serious funders must takethe lead in creating an environment of seri-ous reflection, recognizing that the inherentpower of the accumulated wealth of thefield...suggests a range of questions for con-sideration...”28 Efforts to organize mega-givers would add needed depth to the finan-cial and human capital of non-profit initia-tives.

28. Jeffrey R. Solomon, “Foreword,” Influence and Responsibility: Jewish Reflections on Community,Accountability, and Philanthropy (New York: Jewish Funders Network), p. 3.

Deve lop ing In i t ia t ivesThe number of mega-gifts may grow as phil-anthropists increasingly develop their owninitiatives.29 In the future, mega-gifts willrequire a number of these kinds of projects.Creating a new project allows the donor tohire the best professionals and to develop anagenda independent of conventional thoughtor bureaucracies. One of the benefits is asmaller infrastructure. Beginning a projectfrom scratch can energize a whole area ofgiving and enlighten others to the possibili-ties of making a difference in a given area.

Leve l ing the P lay ing F ie ldTax laws should perhaps differentiatebetween institutions, such as large privateuniversities, whose endowments are struc-tured to grow infinitely, and projects whichspend directly on the most needy. Perhapsboth kinds of institutions should benefit fromthe tax code. Providing both with the sametax incentives seems, however, questionable.Given the potential role of philanthropy insupporting causes that are experimental andneed to demonstrate their feasibility so thatlarger scale projects can be developed, it isimperative that mega-givers be encouragedto turn their attention toward less known,less prestige-based projects.

Tax law must examine more closely the roleof universities in the marketing, licensingand commercial exploitation of their intellec-

tual property. Not all tax-exempt institutionsare created equal. It is not unreasonable tosay that, above all else, some institutionsalready have enough money, or at least thattheir combined assets and investment incomeis great enough that they do not need thetens of millions of dollars that wealthy phil-anthropists bestow on them each year. Givingmoney to such institutions undermines thefundamental logic behind philanthropy thatthose who have will help those who havenot, compensating, at least in some smallpart, for the staggering imbalance of wealthin our country.

Increasingly, universities seek to maximizethe commercial value of their intellectualproperty. Where the exploitation of a copy-right conflicts with helping the world’s need-iest, the non-profit status granted to a univer-sity should not be forgotten. Companiesunderstandably seek to protect their invest-ments because they are in business to maxi-mize their profits. A non-profit entity whoseexistence is largely the result of beneficial taxlaws cannot simply argue that strict enforce-ment of its copyrights is an extension of itsresearch mandate. Non-profits must be will-ing to enter into arbitration regarding theirintellectual property when it clearly benefitsthe needy, sacrificing profit when needed.Medications for AIDS patients in Africa arean example. Universities in the future willincreasingly confront this problem, as the


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29. There is a need for services to assist in refining and implementing the donors’ agenda of other non-profits, thereby increasing their ability to attract sizable donations. Similarly, such services could providethe infrastructural backbone to philanthropists that have determined the area which they would like tofund but lack the time and/or expertise to evaluate differing approaches. Their independence is essen-tial, as the corrupting power of access to people with billions of dollars should not be underestimated.Such service providers must be in a position to provide sometimes unwanted advice to extremelywealthy people without jeopardizing their existence. Ironically, these kinds of donors will only seek outand trust people whose integrity is unshakable in the face of their wealth and power.


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cost of their patented biotechnology is pro-hibitive for the needy in underdevelopedcountries.

Why Do Mega-Givers Choose Un ivers i t ies?What are the rationales for major donors giv-ing most of their mega-gifts to colleges anduniversities, and most of the others to health-related causes?30 First, large institutions areviewed as the most prestigious. Donors knowthe money will not disappear, and it is notlikely to be mishandled. Second, most giftsto universities and other large, prestigiousinstitutions go for specific purposes — anendowed chair, the creation of a new depart-ment, building a cancer center, and so on.Therefore, even though the institutions maybe quite large, the donors may find a morespecific, manageable piece of the institutionthat they may fund. Indeed, universities arequite adept in segmenting the institution intofundable components, offering greater speci-ficity than large bureaucracies.

Third, most non-profits with lesser reputa-tions have seemingly less stringent fiscalmanagement, and their long-term future maynot be as secure. The investment in smallernon-profits may seem more risky to many

major donors. Fourth, relatively few non-profits are able to break through the profes-sional gatekeepers of foundations to makethe philanthropist aware of most non-profits.Fifth, a gift of $10 million or more could actu-ally overwhelm many non-profits.Individuals choose larger established institu-tions to give mega-gifts in the absence ofknowledge of other possible places to give.Sixth, the efficiency and size of the fundrais-ing and development mechanisms at largerinstitutions can be staggering. Most non-profits do not even have a development per-son; they are struggling just provide serviceson a daily basis. They simply cannot com-pete with large elite institutions.One should not diminish the positive reasonsthat people may choose to give to Harvard orYale. These institutions do represent excel-lence and provide important functions in theeducational landscape. Furthermore, somenumber of these institutions have served thephilanthropist personally in either his under-graduate or graduate years. The individualmay feel that he is giving something back tothat organization. But the reach of theseinstitutions is far beyond educational loyalty.Their enormous prestige attracts individualslooking for a place to make a large donation

30. For a discussion of how giving to higher education is unevenly divided, with elite institutions receiv-ing significantly more than their less elite counterparts, see Michael Rothschild, “Philanthropy andAmerican Higher Education,” Philanthropy and the Nonprofit Sector in a Changing America by Charles T.Clotfelter and Thomas Ehrlich (Bloomington: Indiana University Press, 1999), p. 413. He notes that“…The most important facts about philanthropic contributions to higher education are these: Highereducation is a significant recipient of charity, getting almost 10 percent of total philanthropic gifts. Giftsand grants themselves pay for slightly over 6 percent of the educational expenses of higher education;endowment earnings, the residue of past gifts, provide another 2.3 percent. Gifts and grants to highereducation are distributed quite unequally among colleges and universities. Private institutions enrollless than a quarter of the students but get more than half the gifts. Gifts are concentrated amongresearch universities and private liberal arts colleges. Elite schools like Harvard, Princeton, Stanford,and Berkeley receive a disproportionate share of gifts and grants. Endowments are even more unequal-ly distributed. In 1995, five institutions held 20 percent of higher education endowments. They enrolledless than 1 percent of the students.”

regardless of their personal history with theinstitution. To be on the board of Harvard orPrinceton brings an individual into a net-work of ideas, position and power rarelyfound in most segments of society, and cer-tainly not one to be found in the vast majori-ty of non-profits. While most individualsmay not be consciously seeking such status,it nevertheless may prove to be a very strongmagnet for many donors.

These universities, such as Harvard, Stanfordand Yale, structure their endowments so thatthey are perpetual life funds, meaning theyspend only a fraction of their return oninvestment to meet the needs of the universi-ty. Moreover, their size and prestige hasallowed them to attract some of the world’smost successful money managers.

Univers i ty Endowments Endowments have structural advantages thatare not obvious but equally important. Eliteuniversities are not dependent on theirendowments to meet their daily expenses.Large portions of the endowment can there-

fore be invested in illiquid assets, which havetraditionally provided much higher returns. David Swensen has outlined how he master-fully guided Yale’s endowment to astonish-ing returns on investment.31 While his assess-ment of risk as a critical factor in evaluatingand determining investment strategies hasbecome legendary, some aspects of his strate-gy can, in light of the non-profit status of uni-versities, be viewed critically: namely, whyshould an entity with structural investmentadvantages keep its non-profit status in per-petuity? Swensen argues that endowmentsdesigned to exist in perpetuity are the corner-stone of quality elite education. While theexistence of a strong endowment clearly hasa stabilizing effect on universities, it is notclear that taxpayers should bear the burden.

Structural advantages make the tax write-offswhich donors receive for their gifts seem allthe more questionable. Large universities arein a particularly advantageous position toinvest. Why should the government transferits potential revenue away from people inneed and toward institutions that are capable


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31. The economist Jim Tobin played an enormous role in developing the science of managing a largeendowment for an educational institution. See Charles D. Ellis “Foreword,” David F. Swensen,Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment (New York: TheFree Press, 2000), p. xii. He writes, “Jim Tobin made [an] enormously important contribution to Yale’svery successful endowment management. [He] led a team that designed the smoothing, inflation-responsive spending rule that would link the endowment fund with the university’s annual budget anda rational, continuously adaptive process that works—and is being increasingly adopted by others.Yale’s endowment currently provides 20 percent of the University’s annual budget.” He goes on to note,“Yale’s endowment was just over $1 billion when David Swensen arrived in 1985; it’s over $7 billionnow. During the intervening 15 years — within a rigorous, risk-controlled portfolio structure that hasvery little in bonds, relies almost entirely on outside managers and, during the longest and strongestbull stock market in American history, has been quite deliberately and substantially underinvested inpublicly-traded U.S. equities — David Swensen and his team have achieved an annualized rate of returnfor Yale’s endowment superior to 96 percent of endowments, and 98 percent of such institutional fundsas pensions.” David Swensen recognized that one of the structural advantages of large universityendowments is their relative independence from liquidity. He leveraged this independence, avoidingsuch liquid assets as publicly-traded equities and many forms of bonds, and instead opted to engageprivate equity managers.


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of providing for their own financial needs?Endowments from large, elite universitieshave increasingly become the subject ofscorn. Johanna Berkman wrote in The NewYork Times Magazine on June 24, 2001,“[Harvard’s] endowment...has climbed in recent months to as much as $19 billion — asum greater than the physical assets ofMcDonald’s, The GDP of Ecuador, the networth of all but five of the Forbes FourHundred or, according to the Boston Globe,the endowment of every non-profit institu-tion in the world after the Roman CatholicChurch.”32 The top ten endowed universitieshave over $78 billion or more than the GDPof the 75 poorest nations combined. Only 42of the world’s 200 plus countries have GDPs larger than the endowments of these 10schools. Chile, Pakistan the Czech Republicand New Zealand, for example, fall belowthis mark. 33

Given the current criticism of donations tothe already oversized endowments of eliteuniversities, we would like explicitly to dif-ferentiate between sufficiently endowed andinsufficiently endowed universities.Providing funds for educational institutionshas not become questionable simply becausecurrent fundraising efforts are arguablyskewed in favor of institutions that lack need.Indeed it is important to recognize the crucial

role of an endowment for an educationalinstitution. Endowments allow educationalinstitutions to maintain their academic inde-pendence and integrity. Without these, thelong-term prospects of an educational institu-tion are dim. Identifying institutions whichprovide students with a quality educationand are in need of endowment funds is per-haps a more meaningful way to support edu-cation. These considerations are particularlyimportant for the Jewish community, andperhaps minority communities as a whole.Israel’s elite universities are stellar andarguably under-endowed.

At what point is a university over-endowed?This question has not been addressed proper-ly. We see it as linked to the question ofwhether all universities currently in existenceinherently deserve indefinite support. Inother words, if one begins from the assump-tion that there are too many universities, thenthe burden placed on an endowment shifts.An endowment should protect an institutionfrom sudden unexpected revenue loss. Everybusiness needs a plan for a rainy day.However, an endowment should not removea university from the need to justify its long-term mandate. Traditionally, endowmentshave seen this as their goal. Successful non-profits will, in the long term, be able to meettheir financial needs through continued

32. Endowments have in fact decreased as a result of changing economic conditions, although they arestill quite large. See John L. Pulley, “Another Downer of a Year for College Endowments,” The Chronicleof Higher Education, Jan 24, 2003, p. A23. Smaller endowments have been hit much harder. The averagedecline of all endowments was 6 percent as compared to the S&P 500 loss of 18 percent. Larger endow-ments, those having more than $1 billion in assets, lost just 3.8 percent. Furthermore, contributions touniversities also declined from 2000-2003. Stephanie Strom, “After Years of Cash Flow, Universities Hitan Ebb,” New York Times, March 13, 2003, p. A23.33. See National Association of College and University Business Officers (NACUBO), Press release,January 17, 2002. “College environments beat S & P 500 and Russell 3000 in weak U.S. economy.See WorldBank.org. World development Indicators Database, World Bank, August 2002. Note that theworld bank refers to GDP as GNI.

fundraising. Unsuccessful non-profits willdisappear. Encouraging a policy of perpetualendowment shields institutions from theirown failure. Public monies should supportnon-profits, not institutionalize them. Giventhe numbers of educational institutions inAmerica, this policy is no longer defensible.

Endowments as Measures of Qua l i tyUnfortunately, the accumulation of moneyhas become a perverted measure of quality.For example, the annual report in U.S. News& World Report, “Assessment of Colleges andUniversities,” uses the size of the endowment

as a key criteria for assessing the quality andrank of colleges and universities.34 The logicis understandable: those institutions withmore resources may be able to provide a bet-ter education. However, such an assumptionis not necessarily true at all. Such assess-ments indicate that we are more comfortablein analyzing how much money these institu-tions have, rather than the actual quality oftheir teaching or research. It further demon-strates the obsession we have with accumula-tion — no amount of money is ever enough.35


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34. op. cit., p.21. David Swensen’s argument that the size of a university’s endowment is directly corre-lated to its status seems irrefutable. Swenson provides a highly instructive analysis of the per-studentvalue of the average endowment of the top schools in the country. Harvard, Princeton, and Yale have anaverage endowment per student of over $500,000, whereas the first quartile institutions have an endow-ment per student of just over $300,000. Swenson writes, “Student charges provide the complement toinvestment income. As institutional quality increases, budgetary dependence on student chargesdecreases. Top-quartile institutions rely on student income for 15 percent of revenues, while bottom-quartile universities obtain 31 percent of revenues from such charges, a spread of 16 percent.Interestingly, that spread nearly matches the 13 percent gap between investment income support for top-and bottom-quartile universities.”35. There is some belief that endowments may even engender waste, especially when they are separatelycontrolled or administered within a University structure. Greg Winter and Sara Rimer, “Alumni Pressureto Put Reins on Spending,” The New York Times, February 25, 2003, p. A14.

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The data presented in this study pro-vide a unique look at the highest endphilanthropy. Further research will

allow us to expand upon the results present-ed here. In particular, qualitative data, whichwe are in the process of assembling, is of crit-ical importance. We need to know moreabout the motives, beliefs, and attitudes ofmega-givers. What are the intellectual andemotional forces guiding these decisions?What are the institutional and organizationalsupports and constraints?

To summarize the data, strong trends areobservable among our data, for both generaland Jewish giving. In many cases, generalgiving and Jewish giving is analogous. Inothers, a divergence is noticeable. Privatehigher education is the single largest recipi-ent from both general and Jewish donors.General giving totalled 233 gifts for over $6.8billion, and Jews made 81 gifts for over $1.8billion. The second most popular sector forgeneral giving differed from that of Jews—namely, health, for which general giving gave$3.33 billion. Arts and culture was the sec-ond most popular sector for Jewish gifts,receiving $1.08 billion and 24 gifts, whereas itwas only the sixth most popular area of gen-eral giving. The third most popular area ofgeneral and Jewish giving was public highereducation, receiving $3.146 billion from gen-eral giving and $755 million from Jewish giv-ing.

The data shows that minimal risk-taking inmega-giving reigns in practice, even if mega-givers often preach “thinking outside thebox.” Indeed, conservative giving habits areparticularly pronounced among Jews, whogave no gifts to the environment, human ser-vices, minorities, animal rights, or youthdevelopment and made only a single gift tofederated appeals, community foundations,and general education.

General giving was more diverse. Humanservices received 11 gifts, totaling more than$1.3 billion; the environment received 22gifts, or over $720 million; youth develop-ment received 13 gifts for over $304 million;religion, 13 gifts for over $268 million; animalrights, 1 gift, $200 million; and federatedappeals, 7 gifts, $182 million. Giving tominorities was almost non-existent.

One explanation for the giving patterns ofthe mega-wealthy may be that their surplusincome shifts their emphasis from “duesbased” giving, that is, based on obligations toreligious or other cultural institutions, to adistribution of surplus. Our data does notmeasure small shifts made by mega-givers.Major donors may be saving their “dues”giving for smaller donations and expandingin other areas with their surplus.36

C O N C L U S I O N

36. op. cit. Jencks, pp. 323, 325. “The relationship between income and philanthropic effort…appears tobe U-shaped, with the rich and the poor making more effort than those in the middle.” Jencks dividesphilanthropy into two categories, which he calls “paying your dues” and “giving all your surplus.” Forexample, “paying your dues” is the kind of giving that involves donations to local churches and/or


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Overall, Jewish giving varies greatly from thegiving patterns of most Americans. However,as the sums become larger, giving habits become more similar. We may con-clude that Jewish givers are becoming morelike their non-Jewish counterparts over time,and that this tendency has begun at the high-est levels first. Jews made only one mega-gifts for explicitly religious purposes such assynagogues or religious movements,although gifts did go to institutions offeringrabbinical training. The federation system’sannual campaign has not grown significantlyfor a long time.37 General mega-givers, incomparison, gave thirteen gifts totaling over$268.4 million (1% of their mega-gifts) to reli-gion. Even if the number of mega-gifts toJewish institutions of any kind were to growsubstantially, the vast majority of Jewishmonies would go to secular institutions.

While a disproportionately high number ofJews and Jewish foundations make mega-

gifts each year, it is readily apparent thatJewish institutions and causes are not thebeneficiaries of the vast majority of thesegifts.38 There has already been much specula-tion as to why wealthy Jews so often over-look the Jewish community when makingtheir largest gifts, a phenomenon that is espe-cially surprising considering that overall giv-ing to Jewish organizations has been increas-ing for the last ten years.39

Mega-gifts are a critical component of gener-al American philanthropy and Jewish philan-thropy specifically. This initial study, whichwill be updated on a regular basis, containsas many questions as answers. The examina-tion of mega-gifts raises structural, moral,and public policy issues. The research isdesigned to encourage discussion and debateabout this important realm of philanthropy.

other organizations, which have a tithing effect. “Giving all your surplus” refers to giving only money,which exceeds expenses. He notes, “Church members seem to compromise these conflicting concep-tions of their obligations by giving more as their income rises, but not giving proportionately more. Asa result, the proportion of income allocated to churches declines sharply as income rises.” Our datafound mega-givers give only a tiny portion of their overall giving to religious activities, in stark compar-ison to broader giving. Jencks’ explanation seems to apply to our data as well. 37. The United Jewish Appeal reached its annual campaign peak in 1946. “[It] raised over $100 millionfrom American Jews, ‘in a campaign since legendary for its intimations of Jewish wealth.’” (op. cit.Odendahl, p. 143). The $100 million that the Jewish community raised in 1946 has a current inflationadjusted value of $923 million. A more accurate way to calculate this number, however, would be toaccount for the increase in capital markets and adjust this figure according to their spectacular growth,leading to a number several times larger than the almost billion mark reached by a mere adjustment toaccount for inflation.38. Gary Tobin, Michael Austin, Meryle Weinstein and Susan Austin, Jewish Foundations: A NeedsAssessment Study (San Francisco: Institute for Jewish & Community Research, 1999), p. 16. Tobin notedthat “…an increasing number of Jewish foundations are allocating 50% or more of their annual grant-making to non-Jewish causes.” Our data confirm the trend noticed by Tobin that Jews are increasinglygiving a large portion of their gifts to non-Jewish causes. In fact, mega-donors give overwhelmingly tonon-Jewish causes.39. op. cit. Tobin, The Transition of Communal Values in Jewish Philanthropy.


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Mega-Gifts in American Philanthropy · Chernow, Ron, Titan: The Life of John D. Rockefeller, Sr. (New York: Random House, Inc., 1998). 1913 created new incentives for altruism and