Philanthropy’s Responsibility to Place

This article originally appeared in Philanthropy Daily on December 4, 2018.

It’s one of the enduring themes of American literature. If I grow up in a small town, should I stay there or move to a big city?

But this is also a theme in the history of philanthropy. If a foundation is based on a fortune built in one city, should the foundation support that city or should it be a national organization with no ties to a particular region?

New Yorker writer Larissa MacFarquhar explores this question with her profile of Orange City, Iowa. (I’ve written about MacFarquhar’s work twice, discussing her profile of Ford Foundation president Darren Walker and her critique of effective altruism)

Orange City is in the northwest corner of Iowa, and it’s not near anything; to get to the interstate takes an hour and “until recently” you couldn’t get there on a four-lane highway. But the town has six thousand people, 16 churches, and an unemployment rate of under two percent. The downtown is thriving, and $160,000 buys you a four-bedroom house.

The Dutch founded Orange City, and the city still boasts of its proud Dutch heritage. In the local schools, the first half of the alphabet in a classroom goes from A-U, because there are so many names beginning with “Van” that they take up the lower half of the alphabet. Orange City prides itself on its annual tulip festival, and the city’s chamber of commerce is in a building that looks like a windmill.

Of course Orange City, like many small towns, has limitations. There are a lot of businesses and plenty of jobs, but most of the businesses are fairly small, built by entrepreneurs who wanted to stay in Orange City. Sometimes people are trained for work that a small town really can’t provide. Lynn Lail, for example, trained as a medevac nurse, but lives in Texas rather than Orange City because “being a medevac nurse in Iowa would have been boring.”

Politically, Orange City is conservative. (Fire-breathing Republican Steve King represents it in Congress.) But it’s also tolerant. Latinos have moved in in recent years to milk cows and butcher hogs, but they get along with long-time residents. Steve Mahr runs the town’s only coffee shop, and once posted a rainbow flag outside his place when gay marriage became legalized, saying, “WAHOO! CONGRATS LGBTQ FRIENDS!” One woman told Mahr he’s lost her business because gay marriage was immoral, but she came back, because there wasn’t another coffee shop in town.

The debate over small towns vs. big cities matters in philanthropy because I believe the best foundations are all rooted in a particular place. They may have national programs, but they were founded by donors from a particular region who wanted their wealth to serve that region.

The Bradley Foundation limits some of its grants to Milwaukee and Wisconsin. The Daniels Fund largely serves the four states surrounding Colorado, because its creator, Bill Daniels, made his wealth in Denver. The Duke Endowment is limited to funding organizations in North and South Carolina. The Conrad N. Hilton Foundation has always had some grants for deserving organizations in southern California and Nevada.

Foundations who lose their past lose their purpose, and the organizations that seek to undermine donor intent not only try to abandon a donor’s ideas but also any geographic restrictions on how a donor’s money is spent. Perhaps the most obscure case in my book, How Great Philanthropists Failed and How You Can Protect Your Legacy, concerns the Buck Trust in Marin County, California. Beryl Buck left her money to be administered by the San Francisco Foundation. She had seven percent of the stock of Belridge Oil, which sold to Mobil in 1979 for $3.6 billion, which made her share worth $253 million.

In 1983 the San Francisco Foundation sued to break the Buck Trust and allow its wealth to be used in the entire Bay Area, instead of just in Marin County. In 1986, after an eventful trial dubbed “the Super Bowl of probate” the San Francisco Foundation lost and the Buck Trust became the Marin Community Foundation. But Judge Homer Thompson ruled that three new national nonprofits based in Marin County—an institute for research on aging, an anti-alcohol institute, an educational research organization—had to be created, even though there was no evidence that Beryl Buck favored the creation of these nonprofits. These nonprofits acquired 20 percent of the Buck Trust.

Another nonprofit, formerly a foundation, that has abandoned its roots is the Pew Charitable Trusts. When the Pew Trusts began to drift away from their founders’ values, they drifted away both from their founders’ ideas in public policy and religion and from the founders’ commitment to Philadelphia. Indeed, after Pew was transformed from a foundation to a nonprofit after 2003, it built up its presence in Washington and decreased its presence in Philadelphia, although Pew still retains a vestigial presence there. I have read that with the departure of the Pew Charitable Trusts to Washington and the Annenberg Foundation to southern California there are now very few foundations left to serve Philadelphia’s needs.

That is a shame. Foundations, like individuals, flourish best when they are rooted in a particular place. Every large city has poor people who need to be helped, parks that can be preserved, arts organizations that can be supported. In every city, there’s work for foundations to do.

Larissa MacFarquahar shows that the residents of Orange City are largely happy because they have firm roots in their community. Foundations, too, function best when at least part of their wealth is spent to serve the community where their founders made their wealth. Perhaps the problem of donor intent is not just one of severing a foundation from their founder’s ideas, but also of snapping the ties between a foundation and the city where the donor’s wealth was created.

Martin Morse Wooster†

Wooster was a senior fellow at the Capital Research Center. He is the author of three books: Angry Classrooms, Vacant Minds (Pacific Research Institute, 1994), The Great Philanthropists and the Problem of ‘Donor…
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