The Land Of The Handout

Ted Turner made it seem so simple. The market's up, and the world's needs are greater than ever. So why not kick off a new golden age of giving? But our culture of charity is more complicated than Turner might think.

THE DAY AFTER TED TURNER announced his billion-dollar gift, Irene Scott walked into a doctor's office in San Mateo, near San Francisco. She is an 83-year-old black woman who started going to Dr. James Hutchinson back in the 1950s when he was the first African-American doctor in the county--and the only one who would treat her even when she couldn't pay. Now, she thought, it was time to ""do the right thing'' by him. Without a word, she handed him two envelopes. One was her payment for her last bill; the other contained a $1,000 check for a scholarship fund he had set up for local medical students. That contribution represented more than a month's income for Scott; she gets $115 from her late husband's pension and $736 from Social Security. She had been saving up to make the gift for four years.

Irene Scott and Ted Turner may not have much in common, but they are fellow members of a huge American club, the Philanthropists. We are a nation of givers. Last year we dipped into our pockets and pulled out no less than $150.7 billion--as much as the entire gross domestic product of a big country like Turkey--which we handed out to charitable causes. No, this isn't the doing of gigantic foundations like Ford and Rockefeller: 80 percent of that money came from individuals. And, no, it doesn't just come from the rich: about 70 percent of allAmerican households contributed (chart). There's no escaping the brutal truth: the nation famous for capitalism red in tooth and claw, the epicenter of the heartless marketplace, is also the land of the handout.

It's not really such a paradox. Both ourentrepreneurial economic system and our philanthropic tradition spring from the same root: American individualism. Other countries may be content to have the government run most of their schools and universities, pay for their hospitals, subsidize their museums and orchestras, even insome cases support religious sects. Americans tend to think most of these institutions are best kept in private hands, and they have been willing to cough up the money to pay for them. Of course it has also helped that America is a place where great wealth ac-cumulates in private hands and often remarkably quickly. As Ted Turner pointed out, his pledge to the United Nations simply represents the appreciation of his stock portfolio over the last nine months.

Wall Street's amazing boom over the last three years, which has created $4 trillion in new wealth, has encouraged some philanthropoids to imagine that we stand on the verge of a golden age of giving. ""Turner stuck a real marker on the board, a real challenge for other multibillionaires to live up to,'' says Peter C. Goldmark, president of the Rockefeller Foundation. We may be facing a new charitable gusher, but the historical record urges caution on this score. For the last 30 years--in good times and bad, when the effective tax deduction for charity was high and now that it is much lower-- total giving as a proportion of gross domestic product has never deviated much from 1.9 percent, and overall individual gifts as a proportion of our personal income have also hovered around just the same percentage.

The totals may not have changed, but there has been a profound shift in what might be called the spirit of philanthropy. Roughly a generation ago, people who had large amounts of disposable income tended to have been born into a tradition of chari-table giving. They gave--to colleges, to museums, to hospitals--because they thought these were worthy causes and because they felt an obligation to devote some of their money to good works. There was, to be sure, a stuffy aura of noblesse oblige about the process and an elitist clubbiness to the boards of trustees of the institutions that benefited from their largesse. But the money rolled in, and good works were done.

Starting in the '80s, a new generation of rich Americans came to the fore, harder-headed and less schooled in philanthropic tradition. They were still willing to give, but they wanted to see concrete results. They also wanted to target specific causes. This could cause some awkward conflicts. Earlier this year, playwright Larry Kramer, who founded the activist AIDS group Act Up, wanted to endow a chair in gay studies at Yale, his alma mater, and possibly build a gay and lesbian student center on campus. Yale declined the money, saying that gay studies was too narrow a field for a permanent professorship. Left unspoken was an undoubted reluctance to let a rich alumnus tilt the curriculum with his gift.

Increasingly, too, donors want to apply tough business standards to their gifts to make sure their money is being put to effective use. Stephen Peeps, who until recently was the associate vice president of devel-opment at Stanford, recalls that his office had to deploy a whole new set of arguments to attract the younger breed of donor: how agift could spur advances in technology, how an investment in fellowships would resultin a richer flow of Ph.D.s to local companies. In short, he says, ""we had to translate theuniversity's aspirations into language meaningful to the businessmen of Silicon Valley.''Peter Hero, director of The Community Foundation of Santa Clara County, is another fund raiser wise in the ways of the cyberrich. ""They're business people, after all,'' he says. ""They want to give their money away with the same intelligence and intensity that they applied to making their money, and that's different from 100 years ago.''

The result has been a rise in a kind of rifle-shot philanthropy--gifts aimed at a specific cause. The same impulses are at work in corporate philanthropy. IBM, the nation's top corporate giver ($92.7 million in 1995), used to scatter its donations. Then in 1993 it surveyed its customers and employees to find out where they thought its money could best be put to use. The answer was education, so the company now devotes almost all its charitable budget toeducation initiatives. And Coca-Cola has committed $60 million to the Boys & Girls Clubs of America over the next 10 years, in return for which it obtains a nice hunk of ""cause-related marketing'': Coke vending machines and Coke-logoed scoreboards are now going up in many of the 1,900 Boys & Girls Clubs across the country.

THE NEW FLOW OF CORPORATE bucks and now the torrentof cash from high-profile in-dividuals like Turner and George Soros have tended to submerge what used to be the main force in the American philanthropic world, the foundations. There are now more than 40,000 of them in this country, and they are still hugely munificent, but their impact and even their reputation are not what they used to be. Partly this is justa matter of relative size: they don't loom so large because university endowments and government social spending, for example, have both grown so fast in recent decades. Gone are the days when Rockefeller led the way to a number of medical advances, such as finding a cure for hookworm and a vaccine for yellow fever, or when Ford money sponsored the green revolution in agriculture. Their critics say that the big foundations also suffer from philanthropic scle-rosis--a waning of vision and an excessof political correctness--which robs them of real creativity. ""They are like governments,'' complains a former official of one of the largest foundations. ""They are frequently arrogant, and they seek to impose their own views on so many things . . . I think the situation is a scandal, frankly.''

Much of the criticism comes from people who are unhappy with the social causes that some foundations began to embrace 30 years ago. Robert Brustein, artistic director of the American Repertory Theater, complains that foundations ""force theater to think of social ends instead of excellence.'' He cites the Lila Wallace-Reader's Digest Fund, which has set up a $45 million program for resident theater with the following goals: ""To expand their marketing efforts, mount new plays, broaden the ethnic makeup of their man-agement, experiment with colorblind casting, increase community outreach activity and sponsor programs designed to integrate the theaters into their communities.'' Brustein has called this ""coercive philanthropy.''

To a degree, the foundations relish such attacks. As Rockefeller's Goldmark says: ""Foundations should do things that make contemporaries politically uncomfortable. That's the only way change can occur.'' Turner's gift to the United Nations, hardly the most popular institution in the land, arguably falls into that category. More important, his generosity may herald, if not a golden age of giving, at least an age in which giving is a bit less calculating than it has been in recent years. Stephen Peeps thinks he can discern such a trend. We may be returning to the ""higher road,'' he says, in which philanthropy is valued for its own sake and not for the donor's greater glory or a project's cost-effectiveness. ""The public has a moral compass,'' as Peeps puts it. And Ted Turner, who has a knack for spotting wind changes, may have shifted us onto a new tack.

Charitable giving-and the stock marekt-are at historic highs. After Ted Turner's challenge, will the country's rich open their wallets even wider? The current state of philanthropy in the United States:

Foundation/corporate giving PERCENTAGE OF GRANT DOLLARS BY SUBJECT, 1995 Education 25% Human Services 17 Health 17 Arts & humanities 12 Social sciences & religion 4 International affairs 4 Science & technology 5 Environment & animals 5 Public/society benefits 12 SOURCE: THE FOUNDATION CENTER

Top Foundation Givers 1996, in millions Ford Foundation $348 Robert Wood Johnson Foundation 267 W.K. Kellogg Foundation 253 Pew Charitable Trusts 180 Lilly Endowment 167 J.D. & C.T. MacArthur Foundation 146 Atlantic Foundation and Trust 140 Andrew W. Mellon Foundation 114 Rockefeller Foundation 107 Annenberg Foundation 89 SOURCES: NEWSWEEK RESEARCH, THE FOUNDATION CENTER

Top Corporate Givers 1995, IN MILLIONS IBM $92.7* Microsoft Corp. 73.2* Johnson & Johnson 72.8 Eli Lilly and Co. 71.9 Hewlett-Packard Co. 71.2+ General Motors Corp. 69.2 Philip Morris Cos. Inc. 68.0 Pfizer Inc. 60.4 Bristol-Myers Squibb Co. 56.0 Exxon Corp. 55.4 *FISCAL YEAR RENDING 6/30/96. +FISCAL YEAR ENDING 10/31/95 SOURCE: TAFT CORPORATE GIVING DIRECOTRY, 18TH EDITION

Household Contributions Percentage that Gave Average Gift 1987 71.1 $790 1989 75.1 978 1991 72.2 899 1993 73.4 880 1995 68.5 1,017 SOURCE: INDEPENDENT SECTOR

1996 Top Philanthropists 1996 DOLLARS, PHILANTHROPIST IN MILLIONS George Soros $350 L. S. Skaggs 155 Bill Gates 135 Walter Annenberg 128 William Hewlett 100 SOURCE: FORTUNE MAGAZINE

Ted Turner's gifts through the Turner Foundation GRANTS APPROVED IN 1997 TO DATE A SAMPLING OF PAST RECIPENTS Habitat $5,486,000 Smithsonian Population 2,530,000 Bat Conservation International Water/Toxics 1,818,000 Planned Parenthood Energy 1,729,000 Greenpeace Russia Miscellaneous 1,395,000 Rocky Mountain Institute SOURCE: TURNER FOUNDATION

THE BIG PICTURE SOURCES OF DONATIONS BY PERCENTAGE Individuals 79.6% Foundations 7.8 Bequests 6.9 Corporations 5.6 ALLOCATION OF DONATIONS BY PERCENTAGE Religion 46% Education 13 Health 9 Human services 8 Arts, culture, humanitites 7 Foundations 6 Public/society benefits 5 Environment, wildlife 3 Unallocated 2 International affairs 1 SOURCE AAFRC, GIVING USA 1997