Donations With Strings Attached

I have to admit that when I give to charities, I want some assurance that my money is being used well, so I do a little due diligence around how much of the budget goes to management and administrative fees as a percentage of funds which are earmarked directly for the benefit of the afflicted. What's interesting is an even greater focus towards how philanthropic giving is being used, as mentioned in a recent article in the New York Times.

The article specifically notes how major donors for Catholic schools in New York City are insisting upon, and getting, a more active advisory role in the strategies which their money is helping enable. On one hand, it seems entirely reasonable - the funds are critical to the survival of the institution, and assuming that these benefactors share the common goal with administrators of wanting the best for the schools and the students, why not allow them a seat at the table to influence direction? On the other hand, the transaction may reek of quid pro quo, and the unhealthy assumption that money can and should buy influence. A gift with strings attached, one may say, is not a gift at all, but rather a purchase in the controlling interest of the institution. The argument is that this is not what philanthropy is all about.

An example of this gone bad is the strange case of UConn donor Robert Burton's request to have his $3 million donation returned after he was reportedly angry about not being consulted about the hiring of the new football coach, a situation which was supposedly exacerbated when the Huskies hired former Syracuse coach Paul Pasqualoni, who had apparently clashed with Burton's son who had played on the Syracuse football team. The optics of this make it pretty apparent that Burton felt that his $3 million donation entitled him to something, which brings us back to the question, what is the obligation of institutions to benefactors beyond appreciative recognition of the gift itself?

I'm inclined to think that this is a slippery slope. When funding for the operating budget of any non-profit gets concentrated in too few hands, the owners of those hands might fall into the "take my ball and go home" delusion, where their power and influence, even if well intentioned initially, may ultimately cloud the vision and direction of the organization. This is why strong boards and governance is so important.

Otherwise, as charities begin to enable philanthropists who want to give not just their money, but their advice. Before soon, we'll find that money has found its way to influence not just politics, but the non-profit and religious institutions which no longer can find funding without strings attached - unless there are enough wealthy benefactors who are willing to generously fund non-profits to afford not to enter these Faustian bargains with super-philanthropists.