Death by Philanthropy

Life isn’t easy for Tom Teschendorf, a 74-year-old stroke survivor who is sole caregiver for his wife Mary Jane, a 66-year-old with both Alzheimer’s and multiple sclerosis. But the Brookfield couple gets much-needed help from the Helen Bader Foundation. Bader funding allows a volunteer to stay with Mary Jane when Tom needs relief from the stress of caring for her.

Yet such aid won’t be available forever. Created in 1991 from the fortune of Aldrich Chemical Company co-founder Helen Bader, the foundation annually gives $7.5 million to metro-area causes. But the organization plans to spend down its assets by 2021 and close its doors. Several other local funders, including the Fleck Foundation and the Faye McBeath Foundation, will also sunset as soon as 2014.

“That’s a very sobering concern from where I sit,” says Doug Jansson, Greater Milwaukee Foundation president. He says Milwaukee, already deficient in numbers of foundations, can’t afford to lose any.

“Who replaces $12 million overnight?” asks Donors Forum of Wisconsin President Deborah Fugenschuh. That’s the combined spending that will be lost (out of $205 million total foundation funding in 2005) as these foundations expire.

But others are more optimistic. “As some foundations spend down, others are created,” says Susan Price, who tracks family foundations at the national Council on Foundations in Washington, D.C. “We see philanthropy in general growing.” Plus, these foundations’ impact will continue long past their demise, she says.

For instance, the Bader and McBeath foundations helped create the University of Wisconsin-Milwaukee’s Institute for Nonprofit Management, offering the state’s first graduate program for nonprofit leaders. Bader grants provided $5 million to UWM for an endowed chair in gerontology and planted seeds of inner city economic development that may blossom in years to come. Meanwhile, the Faye McBeath Foundation, created in 1964 with McBeath’s inheritance from her uncle, Lucius Nieman, founder of The Milwaukee Journal, has helped build numerous Medical College of Wisconsin programs with some $4.1 million in funding.

A foundation’s creator or overseers sometimes plan its spend-down in order to preserve its original mission, which can be distorted by later generations. Foundations are sometimes used to pay lucrative staff salaries and high trustee fees, an issue that has generated criticism in Congressional hearings on foundations.

A well-planned death can also allow a foundation to spend more money sooner, when it may cost less to address a social problem. The Fleck Foundation, which grants scholarships to children, takes this approach. “Education in the city of Milwaukee is at a crisis point,” says trustee Andy Fleckenstein, 75, who created his foundation in 1995 after selling Fleck Controls, a Milwaukee manufacturer of water softener valves his father founded. “We don’t see any reason not to put all our resources into helping kids get a good education now and not in 10 or 15 years.”

The nation has many unmet needs that immediate foundation funding could help solve, says Pablo Eisenberg, senior fellow at the Georgetown Public Policy Institute and a founder of the National Committee for Responsive Philanthropy. The committee has called for all foundations, even those planning to last forever, to pay out more than the federally required minimum of 5 percent of their assets annually.

But spending down isn’t always good. Sometimes a foundation’s creator plans its demise merely because he or she wants to control where all the money goes, Eisenberg notes, which may result in philanthropy with a very narrow vision.

Meanwhile, even as some foundations move toward their sunset, newer groups such as the Argosy Foundation and the Kern Family Foundation have arisen. More will follow as the intergenerational transfer of wealth helps create more foundations.

But Jansson still worries about losing even one foundation that can help the community. “The problems facing cities like Milwaukee,” he warns, “are not going to disappear anytime soon.”