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How do you give away $10 million? You could start adding zeros to whatever checks you are writing to charitable institutions and worthy causes. But if you're going to hand over an eight-figure sum, you'll want more than a thank-you letter and a receipt to show the tax man. Such amounts "raise a question that isn't just material but emotional: How much impact am I going to have?" says Paul Schervish, director of Boston College's Center on Wealth & Philanthropy.
The tricky question for philanthropists is this: In an era of Buffett-sized billion-dollar gifts, when the number of donations that topped a million dollars has more than quadrupled to 2,197 last year from just 423 in 1985, how do you sift through the multitude of good causes to find the place where your contribution can really make a difference?
The key to success is focus, according to Rockefeller Philanthropy Advisor's Melissa Berman, who works with families to develop their philanthropic strategies. She urges families to start not with a particular charity, but with a conversation about values. Does it matter more, say, to support medical research or to embrace the arts? Once you've chosen a cause, search out the underdog. If, for example, everyone is giving to the American Diabetes Assn., you might want to consider supporting a diabetes group that hasn't received much funding. Then, work with advisers you trust--be they philanthropic consulting firms, wealth managers, or friends and colleagues who have experience in philanthropy--to find the best method to put your funds to use. Giving strategies are as diverse as the causes that vie for philanthropic support. Here are five examples of how families and individuals have put their wealth to work.
INTERNATIONAL AID: JIM AND KAREN ANSARA
Six years ago Jim and Karen Ansara launched a $1.5 million charitable foundation. "We would get enthusiastic about a program or a cause and pledge a lot of money, and we wouldn't think about how we were leveraging that organization," says Jim Ansara, who owns Boston-based Shawmut Design & Construction.
So earlier this year, when he sold 70% of his company to his employees, he and his wife took a much different approach to giving. Instead of donating through their foundation, they turned to the Boston Community Foundation, where they started a donor-advised fund. The fund works like a foundation: The Ansaras get a tax break once they deposit funds into it, and they oversee donations that are made from it. However, the community foundation manages the administrative details and helps the Ansaras identify the recipients. The Ansaras also moved their foundation into the community foundation.
The Ansaras already had a clear goal: They wanted to help the impoverished women and children they had seen in their travels to Asia and Latin America. So far, they have made large grants to support operations at just two international aid organizations: the dZi Foundation, which provides education, health, and welfare support to communities in the Himalayas, and Oxfam America. Both 49, they hope to get their children involved, too. Jim brought their 14-year-old son to build latrines in Nicaragua recently, and Karen took their 12-year-old daughter to Ecuador.
MODERN AND CONTEMPORARY ART: KENT AND VICKI LOGAN
Kent and Vicki Logan began collecting art in 1994 during a casual visit to a San Francisco gallery, where they purchased a painting by West Coast artist Mark Stock. Since then they've added 900 pieces to their collection. After Kent, now 62, retired from investment banking in 1999, the Logans moved to Vail, Colo., and built a private gallery next to their home.
Earlier this year, they bequeathed their collection, along with their house and private gallery, to the Denver Art Museum. They will also put $10 million in an endowment to fund the museum's department of modern and contemporary art. Why Denver? It isn't a center of contemporary art, but that's precisely why the Logans chose it. "We could give it to the Museum of Modern Art in New York, but it already has the definitive, world-class collection," says Kent Logan. In Denver, Logan saw a perfect opportunity. In 1999, even as the local economy struggled, the city sold municipal bonds to help erect a new building for the museum. The Frederic C. Hamilton building opened in October, proof that Denver takes its collections seriously.
EDUCATION: COLEMAN FUNG
When Coleman Fung left Hong Kong for New York at 16, he had little money and few worldly goods. He worked his way through school at the University of California at Berkeley and later founded software company OpenLink. Though Fung, 48, who lives in East Williston, N.Y., has always been charitable, this year, as his business grew, he decided it was time to scale up his philanthropy. Many funding advisers say that folks giving more than $10 million should look seriously at starting a family foundation over a donor-advised fund because their resources will allow them to set up a staff to operate the foundation, and they'll have more autonomy. In May he seeded a foundation with $18 million.
Fung focuses on education for poor kids. Already, he has funded several grants, including one to the Bronx Preparatory Charter School. He gave $75,000 to the operating fund and another $75,000 to send students to university summer programs. Says Fung: "I find niches where I know I can make a difference. If I can help one kid to turn his or her life around, that's a great return."
A private foundation has proved to be a lot of work. Fung, who is divorced and has children ages 15 and 12, spends about 5% of his time visiting potential grant recipients. Two friends help him with foundation responsibilities, and he relies on Foundation Source, a company that allows givers to outsource the administrative duties they might ordinarily hire staff to handle. But Fung isn't complaining. "As an immigrant, I don't take things for granted," he says. "Giving back is part of it."
REAL ESTATE: THE SOBRATO FAMILY
Silicon Valley office space is some of the most expensive square footage in the world. But for 28 nonprofits, some of the fanciest Valley digs are free. They work out of a 110,000-square-foot Milpitas (Calif.) office park that real estate developer John and Sue Sobrato, both 67, and their three children donated to a community foundation in 2002. On Nov. 29, the Sobratos unveiled the finishing touch: a 4,000-square-foot conference center they built as part of the office park. A family foundation provides about $200,000 a year for maintenance of the facility.
The Sobratos give away buildings annually. Some, like the nonprofit center, are left intact. Others are then sold by a charity or a community foundation, and the funds are dispersed. It's a philanthropic strategy that's cash-efficient, says John Sobrato. "If you sell something to raise the cash, you have to pay capital-gains tax," he explains. But donate it first, and the charity or foundation gets the pretax value.
MEDICAL RESEARCH: LEE AND JANE SEIDMAN
When Lee Seidman began selling his network of Cleveland area car dealerships five years ago, he and his wife, Jane, decided to get serious about giving. So he called up the nonprofits that had depended on the Seidmans for small, reliable gifts and increased the contributions tenfold. Then he told each group, "Don't call me for another 10 years."
Instead, the Seidmans decided to make a gift that would make a substantial difference to the Cleveland area, where they had raised their six children. Lee, 74, had been treated for pneumonia at the Cleveland Clinic as a young man, then later he had allergy tests and, at 35, underwent a routine operation. His wife has been a patient there as well. In May they made a $17 million pledge to establish the Jane H. and Lee G. Seidman Chair in Functional Neurosurgery. The pledge will also create a fund to support new brain-related technology.
After paying the education expenses of their nine grandchildren, the Seidmans hope to give away the remainder of their wealth. "We don't want to leave millions of dollars in our estate to be taxed," says Lee. "And I am having a lot of fun."
By Jessi Hempel