In the 1985 movie Brewster’s Millions, Richard Pryor played a bewildered heir who has to spend $30 million in thirty days in order to inherit a fortune ten times that size. Brewster gets to work, moving into a luxurious hotel suite and hiring staff at exorbitant rates. But he finds the job is much harder than he thought, especially after he accidentally makes his pile of money even bigger from business investments.
Any number of philanthropists have learned the same lesson that Brewster did in the movie: Giving away large amounts of money isn’t easy. And the more money you have, the tougher it is to get rid of.
“Let’s say you have $10 billion,” one donor told me. “And you stick it in municipal funds that earn 3 percent. That’s still $300 million a year you’re making.” Of course, many wealthy investors make much higher returns, and any number of billionaire philanthropists have seen their fortunes rise by huge leaps in the past decade.
Giving away lots of money is especially hard for donors who are gunning to make systemic changes in society—and aren’t interested in tossing big chunks of wealth overboard by writing nine-figure checks to Harvard or the Met. If you want to have that deeper kind of influence with your money, you need a strong vision and strategy; you need to find the right leverage points and identify the best people to invest in.
Few major philanthropists can do this alone. They need help, which often means building a foundation.
Much has been written about the American foundation since it was invented over a century ago. One way to think about such institutions, at least early in their life cycle—when the original donor is still alive—is that they are incomparable vehicles for amplifying the influence that wealthy private citizens can have over society.
You don’t fully appreciate this until you walk around a foundation created by a living donor, and see rows of offices filled with people working to advance that person’s vision. It’s hard for most of us to imagine hiring dozens, or hundreds, of professional staff to carry out any grand ideas we may have for reshaping society. (Bill and Melinda Gates now have some 1,400 people working at their foundation.) Yet the super-wealthy are setting up new institutions like this all the time, with enough money to hire top executives and experts from different fields. That’s another thing unfathomable to most of us: that we could have former university presidents or cabinet secretaries or award-winning scientists on our own payroll.
Major philanthropists aren’t just empowering themselves; they are empowering those who work for them—people who suddenly find themselves in charge of big resources that can be used to make things happen. These new agents of wealth have a unique kind of power, insulated from the whims of voters or shareholders, even as they wield influence on a par with some elected officials and corporate CEOs.
Foundation executives and program officers have long been familiar figures in the nonprofit world. Most have typically worked at legacy operations, where the original donor is long gone. And while that remains true today in raw numbers, more of these people now work for living donors who are involved in a hands-on way.
When wealthy people first get involved in philanthropy, they often spend some time floundering around. They tend to give reactively, as Jim and Marilyn Simons did at first. They put money here and there. They get advice from different people. They experiment. “We just sort of noodled it out ourselves,” Jim said about the early years of the Simons Foundation. Some philanthropists never move past this stage. Their giving may remain pretty informal even as the dollar amounts get bigger and bigger, and some actively resist institutions that could become “bureaucracies,” as the hedge fund billionaire Bruce Kovner put it.
Other philanthropists, though, find themselves hankering for more help getting money out the door in a smart way. They start looking for somebody who can turn a grab bag of giving into a real philanthropic operation, one that is focused and strategic. For the Simonses, that person—and a “paradigm shift”—came in the form of Gerry Fischbach, the research veteran who knew how to deploy money in search of scientific breakthroughs.
For John and Laura Arnold, it was Denis Calabrese.
Calabrese first met John Arnold at an event on education in 2010, and later got to talking to the couple about funding in this area. “What became clear to me is that they were dissatisfied with investments in education which were not going to produce systemic change,” Calabrese told me. They weren’t jazzed by the idea of building one charter or even ten charter schools. They “were wondering if there was a way to do something more lasting and systemic.”
The Arnolds had started their foundation two years earlier, and their giving was pretty uncomplicated. They were big supporters of KIPP charter schools, and among the biggest backers of the Houston Food Bank. But when they met Calabrese, they were already starting to think more strategically—and ambitiously—about philanthropy, with an eye on grantmaking that could foster permanent changes. “I don’t think they had terminology for it. They just had this instinct,” said Calabrese
Calabrese has a diverse background. He’d gone to Rice University in Houston, and then been drawn into politics. “I wanted to change the world,” he said. Calabrese worked in Congress, eventually becoming chief of staff to Republican representative Dick Armey in the 1990s. He grew jaded on Capitol Hill, coming to believe that Beltway politics “was not the way to change the world.” So he returned to Texas and became a consultant, working with a range of clients, both corporate and nonprofit, on policy and communications. He became adept at pulling different levers of power—from lobbying and grassroots advocacy to litigation and advertising campaigns. Often, he was a hired gun for business clients fighting regulation—or prosecution. When Enron collapsed in 2001, Calabrese led the PR effort for ex-CEO Jeffrey Skilling, serving as his spokesman. (Skilling would later be convicted on federal felony charges related to Enron’s demise.)
There are no standard qualifications for becoming a foundation president. While some such leaders emerge from the inside, after years climbing upward in foundations, the majority are recruited from outside philanthropy. Calabrese had never worked in a foundation, but he knew this universe. Some of his clients over the years had been foundations and major donors, and usually he was the guy telling these funders to think more strategically. What he liked about the Arnolds is that they already got it, and the couple and Calabrese began a series of conversations about how they could focus their giving more sharply to advance systemic changes. One criteria for such change, the three agreed, was that it would have to be scalable, so that it could have a large impact on society. Another is that it would have to be sustainable, to endure without ongoing philanthropic support.
The next big question, though, was how the Arnolds should pursue this goal. Was a traditional grantmaking foundation even the right vehicle? And, if it was, “would it be possible to assemble a group of people who would think about things in a more structural way as opposed to an incremental way?”
These conversations led to Calabrese’s being named the first president of the Arnold Foundation in September 2010. He also became the third member of its board. Tightly held governance is not uncommon for foundations, even big ones. The Gates Foundation has just four trustees: William Gates Sr., Bill, Melinda, and Warren Buffett. In the early twentieth century, when John D. Rockefeller was petitioning Congress for a charter to create the first foundation, a top nonprofit leader of that time, Edward Devine, argued the charter should only be granted if public officials had some say over the selection of board members. The idea never went anywhere and has rarely been raised since. Foundations answer only to themselves.
With Calabrese in place as president, the Laura and John Arnold Foundation began to take shape. Within a year, it had a growing staff and swanky new offices in an office tower in downtown Houston. “I’m not the person who figures out what the ideas are,” Calabrese said about what he brought to this effort. “I’m the one who if you tell me what the status quo is, and where you’re trying to get to, I try to figure out the strategy to get there. The communications needs. And all the other stuff.”
As the new president of the Arnold Foundation, Calabrese saw his job as advancing the overall goal of systemic change, while other senior staff brought expertise in specific issues. Three years into the job, he was making nearly $700,000. That level of pay is common for the head of a midsize foundation—and arguably quite generous for running an entity with no real bottom line, no competition, and no fear of ever going bankrupt. On the other hand, as the philanthropy expert Fay Twersky has written, after interviewing dozens of foundation CEOs, these jobs are harder than they look. Such executives must be able to “tend to their board of directors, to manage their organization internally, and to drive their foundation to make an impact externally. By their own reckoning, few CEOs are equally successful in all three domains.”
After John Arnold closed his hedge fund, he and Laura were both in the office all the time. The Arnolds see their active role as an advantage. “It allows the staff to take more risks, ironically,” John told me. “Foundations get very conservative after the founder passes, and you have a professional staff that answers to a third party board.” He went on: “Our role is to push the staff to take risks. We’ll sign off on it. So whenever we have projects that aren’t successful, we’ll have our name on it, too….So it’s not ‘you’re fired.’ It’s ‘Okay, that didn’t work. Let’s add that to the feedback loop and figure out how to do this better next time.’ ”
When he was managing a hedge fund, Arnold’s job was to carefully monitor the risk-taking of his traders—to make sure that hungry staff paid on commission didn’t get reckless in their pursuit of big gains. “On the foundation side, it’s the opposite,” he said. There are few big upsides to risk-taking in a grantmaking environment for staff, in terms of rewards—but some obvious downsides if things go wrong. Along with Calabrese, the Arnolds wanted to ensure a different dynamic, one in sync with their belief that philanthropy “should think big, take risks, and be aggressive and highly goal-oriented.”
As the Arnold Foundation expanded, it was soon staffed with a core group of experts. Philanthropists have a major edge in recruiting talent, offering salaries higher than what nonprofits or academic institutions pay. The biggest allure for those joining foundations is having the resources to help advance causes they care about. The initial focus was education, criminal justice, and pension reform—issues that the Arnolds were already interested in before Calabrese came along. But the agenda quickly expanded to include other issues, including health care, scientific integrity, and inequality. The foundation opened an office in New York City, and eventually one in Washington. More staff were hired. In 2012, the foundation gave out $40 million. In 2014, it gave out $85 million. In 2015, it gave out $185 million.
Foundation expansion can take on a momentum of its own, once more senior staff start to come on board. With new people come new ideas for doing more things and giving away more money. Initiatives proliferate, along with people to carry them out. Was the growth of the Arnold Foundation an example of what many donors, like Bruce Kovner, fear—that staff would create their “own agenda,” with a result of “mission drift”? Calabrese didn’t think so. The expanding agenda had its own logic, he said, which was pretty simple: “As we learned more, and talked to more people, we started to get interested in other areas.”
Philanthropists with ambitious, complex goals for influencing society are likely to feel the strongest need to build up major foundations. If you’re trying to achieve breakthroughs in science, as the Simonses are, you need expert help. The same is true if you’re on a quest for paradigm-shifting solutions to stubborn public policy problems, as the Arnolds are—although even as their foundation added staff, it remained lean compared to some older foundations that, over time, have developed ever more infrastructure.
Then there’s a donor such as Bill Ackman, who—like the Arnolds—is looking for the big score, impact-wise, with his philanthropy but has still resisted creating much of an infrastructure. Ackman does his giving with the help of just a few staff working at his hedge fund offices overlooking Central Park in Manhattan. He echoed Kovner’s fear that foundations can “become horrible bureaucracies.” Ackman’s day job involves managing billions of dollars and making frequent bets that hinge on understanding complex issues and data. The key to success, he believes, isn’t having staff studying things to death—but asking the right questions to see whether an idea, and the person behind it, can succeed. “I don’t think overhead is particularly productive,” he told me.
Eli Broad is another philanthropist with large ambitions who hasn’t built a large organization. “I don’t believe in huge staffs,” he said. One reason he cited is that it’s easier for a donor to shift direction, pulling the plug on certain lines of grantmaking, if you don’t have to deal with internal constituencies. Quite a few other top philanthropists who’ve emerged in the past decade or two think the same way, including Herb Sandler, who’s hired few staff at the Sandler Foundation even as it gives tens of millions of dollars away every year. Sandler talks about the formula for high-impact philanthropy in ways similar to Ackman: It’s all about betting big on the right people working the right leverage points with the right ideas.
Like many new philanthropists who focus their giving narrowly and strategically, Sandler tends to scratch his head at how many big legacy foundations operate: slicing and dicing their grantmaking budgets across hundreds of nonprofits, most of which never achieve the scale that’s needed to have impact. In fact, that approach is really not so surprising at foundations with large program staff who develop their own agendas, forming attachments to certain work and grantees. Also, when a foundation has a lot of staff, each with their own pet interests and professional networks, more nonprofits have routes to land a grant—as well as an ally inside to defend that grant at renewal time. There are good reasons that newer philanthropists worry about creating bureaucracies.
Many top philanthropists don’t have foundations at all. Sanford Weill and Denny Stanford, for example, have both given away over a billion dollars without much help from permanent staff. A proliferation of consulting firms, along with full-service donor-advised funds and intermediaries like New Profit, makes it easier than ever to engage in large-scale grantmaking without building up a foundation of one’s own.
On the other hand, some lean funders have run into big problems with their approach. Ackman put $25 million into the bid to reform Newark schools based on a pitch from Cory Booker. He believed in Booker and saw the bet as about “investing in a person.” Some better staffing might have been helpful here.
The Arnolds’ operation, as it evolved, landed in between the poles of bureaucratic and lean. It’s a substantial organization, yet one determined to remain nimble—and to keep up the momentum. This is not a foundation designed to exist in perpetuity. The Arnolds’ goal, along with so many younger donors, is to give away all their money while they are still living.
Plenty of living donors still favor traditional foundations that have limitless lifespans and embrace an ethos of stewardship. Amos and Barbara Hostetter are a case in point. They are part of the Boston Brahmin elite, or what’s left of it—a world that frowns on big egos and brash pronouncements. Amos attended a prestigious private school before going on to Amherst and Harvard—and then making his fortune in cable television. Barbara became a pillar of Boston’s nonprofit world, sitting on multiple boards. The couple live in a mansion on stately Beacon Hill and embrace a more restrained vision of how philanthropists should operate. They aren’t in a rush to deploy their multi-billion-dollar fortune in an urgent push for systemic change. Rather, they have aimed to endow a foundation that will exist in perpetuity, providing a steady flow of resources to improve life in Boston and New England.
The Hostetters started their Barr Foundation in 1987 and for years moved slowly in their giving. That pace is common for many older donors who accumulate their wealth over decades and, as they age, gradually ramp up their philanthropy. An advantage of this approach is that there’s plenty of time for trial and error. “We didn’t start with being the smartest people in the room,” Barbara once said. “We knew we had a good learning curve ahead of us.”
For many years, the Hostetters kept their giving anonymous, quietly becoming one of the biggest funders in Boston as they funneled grants to the arts, education, and more. Even after they went public with their giving, the foundation kept things quiet, with a modest staff overseen by low-key executive directors who reported to the couple. But the foundation steadily grew in size, adding more staff and programs. By 2013, it had assets of $1.6 billion, making it the biggest foundation in New England.
Barr became more influential in Boston as its money flowed everywhere. It was among the city’s biggest private funders of education, as well as the arts. In 2010, emerging from behind the scenes, it announced a $50 million initiative to reduce carbon emissions by backing work on energy efficiency and public transportation. All the while, Amos Hostetter cultivated other levers of influence as a mover and shaker in local business circles, as well as a campaign donor and advisor to politicians. He and Barbara were prototypical super-citizens.
The Hostetters’ path to influence may have been low-key and modest (they rarely spoke to the media), but it was highly effective. Among other things, their wide power network made it easier for the Barr Foundation to do things in collaboration with partners, such as city government or other foundations. Barr would come to forge an especially close relationship with the Klarman Family Foundation, a more recent arrival to Boston philanthropy, which is piloted by the hedge funder Seth Klarman and his wife, Beth—who share the Hostetters’ keen interest in the local arts. In 2013, Boston Magazine ranked Amos and Barbara Hostetter among the twenty-five most powerful people in the city.
At some point, the couple decided it was time to take their foundation to the next level. For all the money they’d given to Barr, they had even more sitting on the sidelines, another $3 billion or so. While they never commented on their plans for that wealth, the foundation was an obvious destination—assuming it had the capacity to handle such an expansion.
The Hostetters began to scout around for a top-tier executive to run Barr. One candidate who emerged was Jim Canales, then president of the James Irvine Foundation in California. Canales, still in his forties, had spent almost his entire career at Irvine. He’d ascended the ranks quickly at the foundation, a top regional funder, becoming its CEO in 2003. Along the way, he’d become a subtle thinker about foundations, and saw their CEOs as leaders who manage key “tensions” within the institution. There is a natural tension, Canales told me, between “constancy and change”—having staying power on a set of issues, but also taking on new things. As well, there’s a tension between tackling urgent challenges and having a long-term perspective. A foundation needs to be focused and strategic, Canales believes, but also flexible.
When he was first approached about the Barr job in 2013, Canales wasn’t interested. He was happy at Irvine and a lifetime native of San Francisco. Canales had grown up in the city in a lower-middle-class family, with divorced parents. His father was a cab driver, his mother a waitress. He was raised mainly by his great-grandmother, who was from Nicaragua and spoke only Spanish. As a student at a Jesuit high school, Canales got interested in public service, but even through college and graduate school, at Stanford, he never aspired to work in foundations. “I don’t think it’s necessarily a career path that one thinks about: ‘Oh, I’m going to become a professional philanthropist.’ ” Few young people—and, indeed, few Americans—know the first thing about the rarefied realm of grantmaking.
Canales went into teaching after Stanford and, in his mid-twenties, stumbled into a job at Irvine by accident, through a connection with its president, Dennis Collins, who hired him as a special assistant in 1993. Within ten years, after holding several positions at Irvine, Canales was running the place.
Beyond feeling settled in his life in the Bay Area, Canales wasn’t interested in the Barr job because he’d heard stories about the difficulties of working with living donors or family members. Over half of all U.S. foundations are controlled by families, and “crazy,” is how one veteran consultant described to me the dynamics at some of these institutions. Canales was more diplomatic, a trait he’s known for, referring obliquely to “the history, and the relationships that exist” at foundations controlled by living donors and/or their heirs. He preferred working in a more professionalized setting where there “aren’t other layers or agendas or relationships at play.”
Still, Canales agreed to meet the Hostetters for lunch when the couple was on a visit to San Francisco, to offer advice about Barr’s governance. During that conversation, and in more talks that followed through the fall of 2013, Canales found the Hostetters “thoughtful and strategic,” and grew excited about their vision. For one thing, they didn’t want Barr to be a family foundation; rather, their goal was to gradually expand the board, beyond just the two of them, to include a majority of outsiders. Barr’s new president would be the first addition, and that was a second thing that excited Canales: the Hostetters were really looking for a partner, one who could take the foundation to the next stage, past its adolescence, as Barbara described it.
The Hostetters also liked Canales, with his seasoned views on how foundations should operate. The couple had been funding in the same core areas for many years and weren’t looking for a radical makeover. What they wanted was a more strategic foundation that delivered higher impact—but in a style consistent with how the Hostetters had long operated. Here, too, the couple felt confident about Canales. “His values are akin to our own,” Barbara would tell a reporter. “He believes in humility and collaboration and partnerships in philanthropy.”
Given Barr’s big footprint in Boston’s civic life, these values aren’t just a matter of personal taste. They help reduce the chance that the foundation’s growing local power will invite a backlash. After all, who are Amos and Barbara Hostetter, whatever their good intensions, to have so much influence in a city that led the way in rejecting dynastic rule by Britain’s royal family?
The more Canales thought about leading Barr, the more he was drawn to the idea. “It was really about building something,” he told me. “It wasn’t a start-up, but it was about taking something…to its next level as an institution.” Canales’ husband, a doctor, would have plenty of opportunities in Boston, with its many hospitals. So, finally, Canales said yes. A press release announcing the hire said he would “lead a strategic planning process to explore how Barr might grow over time, leveraging its local work, taking good ideas to scale, and extending its impact regionally, nationally, and internationally.” His salary was $700,000 a year, a nice bump up from what he’d been making at Irvine.
As it turned out, Canales’s first order of business after arriving at Barr in 2014 was streamlining its work, not expanding it.
Foundations can evolve haphazardly in their early years, especially if the donors behind them circulate widely and aren’t good at saying no. Also, once a nonprofit starts getting support, and comes to rely on that money, it becomes hard to cut the cord. Grantees can accumulate over time, spreading a foundation too thin and dissipating its impact. By the time Canales arrived at Barr, it seemed as though it was funding every major nonprofit in Boston—sometimes without a strong strategy driving that blizzard of grants. The foundation had also started a global program, jumping into a vast new area.
Canales launched a planning process aimed at getting a handle on things. The global work was the first to go, with that program soon shutting its doors. As the internal discussions went on, Barr decided to really double down on Boston and New England, rather than expand nationally. That was an important choice, and a disciplined one, since many funders hanker to operate on a grand stage where they can shape federal policy. Even with over a billion dollars in assets, though, the Hostetters and Canales saw that the foundation would likely have a larger impact by remaining a big fish in a small pond.
The streamlining continued. Barr was especially overextended in its education giving, and Canales worked to sharpen the focus in that area. Here, he said, “we really did take a step back. We wanted to see if there was some particular zone where Barr could have a unique impact.” The new strategic plan called for helping young people develop the skills and critical thinking needed to succeed in future careers, a grantmaking strategy Canales had earlier brought to Irvine.
As Barr’s planning was wrapping up, Canales wrote in a blog post that education would be the “area of biggest transition” for the foundation. That kind of language strikes terror in grantees. And, sure enough, some education-related nonprofits that had long gotten Barr grants soon discovered that this support would be “winding down”—another phrase that stalks the nightmares of nonprofit executives.
The foundation world is famously genteel, even as strong disagreements roil beneath the surface. Canales embodies that civility, and he wielded a scalpel and anesthesia, not a meat cleaver, as he streamlined and professionalized Barr. As a foundation lifer, Canales also exhibits the cautious instincts that philanthropoids often are criticized for. The new Barr, like the old, wouldn’t be gunning for disruptive or systemic changes. Instead, Canales talks soothingly about the foundation’s melding the roles of “steward” and “catalyst”—language that very much reflects the Hostetters’ sensibilities.
That approach might not yield the kind of big near-term impacts that many younger funders aim for these days, but it’s attuned to the downsides of billionaires treating society as guinea pigs as they throw around money in search of breakthroughs. While new entrepreneurial funders talk with pride about their willingness to take risks, veteran funders like Canales know that such risk-taking can jerk people around. At one point, Canales wrote a blog post saying that while Barr embraced risk, it was mindful that screwups by the foundation could “burden the very people it is our mission to serve.” To Canales’s careful way of thinking, the key in pushing the envelope is “balance.”
Another difference between Barr and a place like the Arnold Foundation is that it’s being designed to exist in perpetuity. This choice tends to be more common among donors who are loyal to a place, as the Hostetters are to Boston—where, presumably, extra resources to address problems will always come in handy. The perpetuity model also syncs up with the couple’s stewardship view of philanthropy—one that stresses the need to nurture key institutions and people over long periods of time.
This model means that Barr will be limited in its ability to place truly big bets, since it has to husband its resources. But perpetuity offers a path to influence that’s compelling in its own way. In decades to come, or centuries, Barr’s endowment is likely to grow many times.
The Hostetters may be powerful in Boston today. But long after they are gone, their money might be speaking even more loudly in the city and region than it does now. In effect, Barr is immortal.
In the 1990s, when he had a net worth of several billion dollars, George Soros—already a major philanthropist—often said that he wouldn’t leave a foundation behind when he died. Soros shared the common fear that such institutions tended to grow bureaucratic and ineffective. His goal was to give away all his money during his lifetime—or even sooner, at one point saying that he’d wind up his philanthropy by 2010.
This turned out to be overly ambitious. Even as Soros gave away more and more money, with grants going to every part of the world, he kept getting richer at an even faster rate. His legendary Quantum Fund averaged annual returns of over 25 percent. By 2005, with a net worth of $7 billion, Soros announced at his seventy-fifth birthday party that he wouldn’t try to give away all his money after all and would leave a foundation behind. It was a wise decision—since a decade later, even with Soros’s annual giving running over $900 million a year, his fortune had grown larger still, to $24 billion.
Soros’s sprawling Open Society Foundations (OSF) is the largest and most complex foundation ever created. It has branches in thirty-seven countries and is involved in an endless array of issues. Although Soros is best known for his activities in the former communist bloc, his foundation now operates throughout Africa, as well as in the Middle East, Latin America, and parts of Asia. OSF also funds throughout the United States.
Soros started giving in the late 1970s, and greatly stepped things up in the 1980s as he sought to weaken totalitarian rule in the Soviet bloc. Once communism collapsed, he pivoted to the next challenge of making sure the new nations that arose embraced the ideals of an open society, which to Soros meant that everyone should be heard in public life and no one should have a monopoly on the truth.
In 1993, Soros hired Aryeh Neier to run his foundation and to lead its expansion into other parts of the world, too, including the United States. For nearly twenty years, Neier and Soros were a dynamic duo, divvying up the planet’s problems, with Soros charting OSF’s work on economic development and higher education, while Neier—who had co-founded Human Rights Watch—took point on rights and political development. Together, the two men built a formidable philanthropic organization—but one also known for its fragmentation and maddening, jerry-rigged qualities. Outsiders found it hard to understand the place; grantees and staff often had the same complaint. Even board members didn’t always know where grant money was going. In fact, no single board had full authority over the entire foundation.
Soros knew there was a problem. And when he named a new president in 2011, after Neier retired, he told the New York Times: “We have a very complex organization. It has become too complicated, and it needs to be streamlined, to become more unified.”
The stakes were high in taming OSF. Soros, now in his eighties, wouldn’t be around forever, and it was critical to build a foundation where he wasn’t the glue holding things together. One bleak scenario was that Soros’s far-flung philanthropic operation could splinter after he dies. “It could be like the former Yugoslavia,” a former OSF executive told me.
The larger picture was that Soros’s life work of advancing open society wasn’t going so well. During the 1990s, Soros had been widely celebrated for his foundation’s role in bringing down communism and encouraging the spread of democracy. By the early twenty-first century, though, history was moving in the opposite direction, with many countries led by authoritarian rulers. In the former Soviet bloc, OSF grantees were coming under new pressure from repressive regimes. Hard-fought gains by the foundation were slipping away.
Soros, who became more active in his foundation after retiring from his hedge fund, had no intention of ceding the fight in whatever time he had left.
The new president of OSF was Chris Stone, whom Soros called an “outsider insider.” Stone had come to know OSF well, as both a grantee working on criminal justice reform and an advisor to the foundation. When he was tapped to lead OSF, he was teaching at Harvard’s Kennedy School, and he came across more as a brainy academic than as the guy you’d hire to wrangle an organizational octopus, much less to go up against, say, the thugs who run Turkmenistan.
But Stone was a seasoned nonprofit leader, who earlier ran the Vera Institute of Justice, and while at Harvard, he had spent much time thinking about management as director of the Hauser Center on Nonprofit Organizations. Stone’s mission at OSF was to build a foundation that, as he told me, was “working with a meaningful budget” designed to advance “a meaningful strategy that is clear and expressed,” which the board had “a meaningful role in shaping.” While those goals were elementary, they’d be a huge step forward for a foundation well known for its creative chaos. And they’d ensure that OSF could carry forth Soros’s vision when Soros himself was no longer active.
That vision has always included a strong appetite for policy combat, along with a willingness to engage in controversial causes that other funders steer clear of. For example, no philanthropist has done more than Soros to soften America’s drug laws. Soros got behind that cause in the mid-1990s, funding a new drug policy think tank and bankrolling the push for medicinal marijuana, widely seen as a bridge to legalization. Today, two decades after Soros began his push—and many tens of millions of dollars later—several states have legalized pot, and more are likely to follow.
OSF was also the first major foundation to get behind same-sex marriage. From 2000 to 2005, a pivotal period in the marriage equality fight, OSF invested millions in LGBT rights organizations. This early money, some of which went to back state-level fights, like a 2005 legal challenge in Iowa, was arguably more important than the bigger money that came in from other funders later on. OSF grants also went to frontline activist groups fighting for immigrants and, later, to Black Lives Matter.
As early as 1996, before Soros had become a bogeyman of the American right, the New York Times would write: “While other foundations and philanthropists are more comfortable healing the sick, housing the poor or feeding the hungry, Mr. Soros is unabashed in pursuing a political agenda.” The Times described Soros as a billionaire who “redefines charity,” but it couldn’t have predicted just how influential his model would come to be over the next two decades. In some ways, Soros’s activist giving marked the start of today’s modern era of big philanthropy by living donors.
OSF’s biggest focus has always been overseas, where it’s backed efforts to attack government corruption, support dissidents, and champion the right of persecuted minorities, like the Roma of Europe and the Rohingya of Burma. It’s funded Palestinian groups challenging Israeli policies in the Occupied Territories, and financed a long-running effort to combat the immense graft and abuses around extractive industries, such as oil. Endless grants have flowed to youth activists, human rights lawyers, and documentary filmmakers. At some point or another, nearly every justice and rights group on almost every continent has gotten OSF money.
And the plan, as George Soros faced his mortality, was to keep that spigot open forever. Embracing a perpetuity model, OSF would be a lifeline for contrarian voices until, potentially, the end of time.
Soros had never endowed his foundation. It was always a pay-as-you-go operation, which is not uncommon among living donors. Soros preferred to keep his money in his hedge fund, which kept scoring huge gains even after he officially retired. In 2013, the first year after Soros stepped down from actively running it, his fund—now basically an outsized family office, led by his son Robert—returned gains of 24 percent. Soros himself made $4 billion that year.
While Soros has not signed the Giving Pledge, Chris Stone said that the board and staff have “every expectation that the bulk of his fortune will be left, one way or the other, to the foundation. And we are building an organization capable of governing and deploying that resource as responsibly as possible to fulfill his mission.” Assuming all goes as planned, though, OSF will someday have one of the biggest foundation endowments in the world.
After three years in what was surely one of the toughest jobs in philanthropy, Stone had made good progress toward unifying OSF and streamlining its operations. The foundation has put in place a stronger system of board governance, as well as a unified budgetary process. Soros himself was more involved with the foundation than he had been in years, talking with Stone nearly every day and traveling to the foundation’s local offices. Even in his mid-eighties, Soros thought nothing of setting off to Ukraine or some other faraway place to see for himself what was happening. Still, Soros didn’t micromanage Stone and remained committed to the long-term shift of authority to OSF’s governing board. While his children sat on that board, they didn’t have a majority voice. The idea was that the post-Soros OSF would be run by a collection of eminent leaders, not the Soros family.
After Stone’s hard labor, the foundation was still a place where, occasionally, the left hand didn’t know what the right hand was doing, but those days were coming to an end. For all its past achievements, OSF was being bolstered and reshaped to possibly wield even more influence in coming decades—and maybe for centuries beyond.
Not long before George Soros abandoned his quest to give away his fortune while still living, Chuck Feeney got serious about doing exactly that. In 1984, Feeney had transferred all his business assets to his foundation, The Atlantic Philanthropies, which operated anonymously for years with a small staff. In 2002, the foundation announced it would cease all grantmaking within a finite period of time—2016 to be exact. At the time, its endowment stood at $3.5 billion, which was hardly an insurmountable amount of money to dump overboard.
Flash-forward to 2015. With the clock ticking down, Atlantic still had hundreds of millions to dispose of. And the man charged with getting rid of the money, Chris Oescheli, Atlantic’s CEO, was under a lot of stress. “To do this well is not an easy job,” he told me.
By this time, Atlantic had long ago emerged from the shadows and Feeney himself had become an iconic figure in modern philanthropy. He’d been the subject of a biography, The Billionaire Who Wasn’t, and of numerous articles about the odd rich guy “trying to go broke,” as Forbes put it. For years, Feeney had stood out as an evangelist for “giving while living,” in his catchy phrase. “I see little reason to delay giving when so much good can be achieved through supporting worthwhile causes today,” Feeney once said. Now that same logic was being widely embraced by many new funders, especially in the tech world. Young philanthropists like Dustin Moskovitz and Sean Parker share Feeney’s belief that a donor could have the most impact by front-loading their giving in the form of big bets—and that foundations were most effective when the clock was ticking. Tim Gill, the LGBT funder, is also among those tech funders who have set a sunset date for his foundation. “If you’re talking about social change, your objective should be to improve the lives of people as dramatically and as soon as possible,” Gill told me. His husband, Scott Miller, added: “It’s given us the mind-set that we need to act fast. These foundations that go on in perpetuity—where do they get a sense of urgency?” The Gill Foundation’s own impatient, forward-looking posture is a key reason it’s been so effective at advancing LGBT rights faster than anyone had once thought possible.
Eli Broad is another funder who’s been in a hurry and can’t think of any reason to leave the job of giving away his billions to someone else. He told me: “If you have the resources, and you have the talent, you should use it—rather than leaving it in a foundation, with people who don’t have any idea of what the founder wanted.”
The debate between continuing in perpetuity and spending down sooner is almost as old as modern philanthropy itself, although it’s been getting a lot more attention lately as new funders sort out their plans. At one of the annual convenings of the Giving Pledge members, the staff organized a panel that featured voices on either side of this issue.
Long before Feeney popularized giving while living, the early-twentieth-century philanthropist Julius Rosenwald preached the same gospel—with a remarkably similar slogan, “Give While You Live.” The founder of Sears, Roebuck, Rosenwald’s name is now largely forgotten precisely because he didn’t emulate contemporaries like John D. Rockefeller and Andrew Carnegie in creating a permanent foundation. Yet Rosenwald may have had as much impact as either philanthropist because of what he did do, which was to sink a lot of his fortune into helping build 5,300 schools for black children throughout the South. It was the kind of huge up-front capital investment that a more cautious foundation, mindful of preserving its endowment, would never have made. But Rosenwald’s cash and boldness had a transformative effect on African-American chances in the Jim Crow South, where his schools educated the likes of John Lewis, who helped lead the civil rights movement long after Rosenwald was gone.
Chuck Feeney never found a leverage point quite that profound. But the staff at Atlantic was very focused on systemic change, and the imperative to spend down meant they had the resources to put lots of money behind bold efforts to redirect public policy—and society. In 2009, Atlantic became the single biggest backer of hard-hitting advocacy to help enact the Affordable Care Act, with a $27 million gift to the progressive coalition Health Care for America Now (HCAN). That grant was made by Gara LaMarche, the foundation’s CEO at the time, who’d perfected the art of using money to shape policy during his many years leading George Soros’s U.S. giving.
Chris Oechsli, who succeeded LaMarche in 2011 as Atlantic’s CEO, had spent time in the U.S. Senate, as a top aide to Democrat Russ Feingold. His main background, though, was in business—as well as in working with Feeney and Atlantic over many years.
Oechsli found the job of winding down Atlantic difficult not just because the clock was ticking ever more loudly by 2015, but because the foundation had grand ambitions for how to deploy its final millions. It aimed to make a series of big “culminating grants” to nonprofits that could keep achieving important gains long after Atlantic was gone—what Oechsli called “champion organizations.” According to one planning document, Atlantic’s goal was to build on its previous grantmaking with the hope of “catalyzing transformative, systemic change” in the fields and countries where it had worked for years, including the United States. The overall aim of such change was greater equity, and to “enhance opportunity for people who have unfairly been denied that opportunity,” Oechsli said.
The culminating grants would be on the order of $10 million to $20 million, the kind of money that most nonprofit CEOs could never even dream of getting. But how would Atlantic decide which groups got these transformative gifts? “There are more champions than we can possibly support,” Oechsli sighed. “But we’re trying really hard to identify those institutions that can make a lasting impact.”
That challenge—of who to bet on—is a familiar one for foundation CEOs. Few such executives, though, had ever faced such an intense deadline for deciding where to put their chips. “It’s complicated and stressful,” Oechsli told me.
Some choices were easy. A large culminating grant went to the ACLU, which was founded nearly a century earlier and was widely admired by funders for its skill at engaging legal and policy contests. Atlantic’s big infusion of cash, $10 million, would specifically aim to bolster the ACLU’s advocacy powers, including at the state level, where so many key issues were decided.
Another culminating grant went to the Center for Budget and Policy Priorities, for over thirty years a stalwart defender of U.S. government programs to aid the poor. Few Beltway groups had done more to beat back conservative efforts to “drown government in the bathtub,” as Grover Norquist famously put it. Yet the center did have a major weakness: It had never been very good at generating new policy ideas or reframing debates over the long term. It was more of a finger-in-the-dike operation than an effort to redirect the river, which is what places like Heritage and Cato were focused on. Atlantic’s huge grant aimed to help the center do a better job playing offense—promoting new ways to reduce poverty, as opposed to just blocking the latest round of Draconian cuts.
To transform America’s health-care system in a more equitable way, Atlantic gave a culminating grant to Community Catalyst, a Boston-based group known for its advocacy of progressive health-care policies, including its extensive work to help implement the Affordable Care Act in the face of fierce GOP opposition. The money would fund a new push to empower consumers using the health system. Much of it would go for investments in advocacy and leadership. Separately, Atlantic gave over a million dollars to Community Catalyst’s 501(c)(4) arm, which could engage more directly in political battles.
Atlantic’s big grants kept flowing through 2015 and into 2016, when it announced $200 million in investments to create a community of leaders that can promote equity on a global scale. Nearly half of that money went to establish a new Atlantic Fellows program at the London School of Economics and Political Science. The larger half, $106 million, was a fifteen-year grant to create the Atlantic Institute, which the foundation said will be a “nexus” for the fellows to collaborate as they work to make the world a better place.
“Change is always about people,” Oechsli told me about this new effort, launched as the foundation got ready to finally wrap up its grantmaking. The idea, he said, is to create a “community of actors” that will have a big impact on equity challenges worldwide. Oechsli said Atlantic hoped to help shift the global narrative on this issue, “retelling the story about what’s unfair and biased.”
That’s a lofty goal, even for a funder as aggressive as Atlantic. Will Feeney’s billions ultimately have as much impact as Julius Rosenwald did, or as contemporaries like George Soros do? It’s too early to say. But it’s hard to recall a more urgent quest for influence than Atlantic’s spend-down push over the past decade.
In 1910, when Edward Devine argued that the proposed Rockefeller Foundation should have to abide by certain constraints, one of them was a limited lifespan: He said the foundation should have to dissolve after one hundred years. That idea, along with a limit on the foundation’s size and a public role in selecting its trustees, was incorporated into a bill put before the U.S. Congress in 1911. Such was the hostility to Rockefeller, though, and the fears of a powerful foundation, that Congress rejected the proposal. The Rockefeller Foundation would later be incorporated in New York State with none of the conditions that Devine had proposed. Nor would such stipulations be applied to the tens of thousands of foundations that were subsequently created.
Today’s critics of philanthropy fixate often on perpetuity, which some see as prime evidence that foundations are accountable to no one—not even, eventually, to the people who created them. Rather, they become shadowy entities on autopilot—amassing ever greater wealth and wielding enormous clout even as they answer only to themselves.
All that may be true. But forcing foundations to spend down is hardly a way to limit the influence of private money over public life. On the contrary, as we’ve seen, living donors in a hurry can be far more aggressive in trying to reshape public policy. If all philanthropists were compelled to act as Chuck Feeney has, it’s likely that philanthropy’s influence in U.S. society would actually be much greater. That could be a good thing, to the extent that more resources are focused on big problems, like climate change or poverty. Or it could be a bad thing, as public debates increasingly become a clash of philanthropic titans, with ordinary Americans sitting on the sidelines.
As for which model of giving the majority of new donors will actually embrace, that remains to be seen. The spend-down approach is certainly popular right now, especially among younger tech philanthropists like Mark Zuckerberg. Down the line, though, as these donors find out how hard it is to unload big money quickly and effectively, they may revisit the idea of leaving behind foundations—just as George Soros did.
Whatever the case, one thing is clear: It’s not just the new philanthropists who are wielding more power these days. It is those they are deputizing to dispose of their wealth, a group whose ranks are fast expanding as more foundations are born and grow. In coming decades, this segment of America’s elite class will loom ever larger in national life.