Case Studies in Giving Feed

Richard and Kathy Fuld, Virtuous Wealth Under Siege


The head of failed US investment bank Lehman Brothers has told Congress that he took home about $300m in pay and bonuses over the past eight years.

Yes, but he and his wife, Kathy, were also quite philanthropic:

A foundation set up by Richard S. Fuld Jr., Lehman’s chairman and chief executive — the Kathy and Richard S. Fuld Jr. Family Foundation — gave away about $5 million in 2006. The Fulds are still on the philanthropy scene, and are among the co-chairmen at the New York Public Library’s annual gala on Nov. 3. But it is too early to forecast their future role, given the changing economic environment.

He does have good taste and moves in good company.

"Carnegie Hall is delighted to present its second Medal of Excellence to Richard S. Fuld, Jr.," said Sanford I. Weill, chairman of Carnegie Hall's board of trustees and honorary chair of the gala. "For over a decade, Dick's firm leadership has contributed to the growth and prosperity of Lehman Brothers and maintained its standing as a top global finance firm...."

Kathy Fuld, a Trustee at the Museuam of Modern Art, is, apparently, selling some of  pieces from her art collection for $15 - 20 million. She calls the end of Lehman "profoundly sad," and emphasizes that her art purchases were made carefully over time:

“I have a budget, and I buy very slowly,” she said. “A lot of looking, seeing and thinking goes into every decision. It’s a very old-fashioned way to collect.”

Who is the writer who might do justice to such virtue? Henry James? Edith Wharton? Petronius? 

Billions for Dogs as the Lesser of Evils

Ray D. Madoff in an Op Ed in the NY Times:

THE latest news from the Palace, that Leona Helmsley left instructions that her charitable bequest of as much as $8 billion be used for the care and welfare of dogs, rubs our noses in the tax deduction for charitable gifts and its common vehicle, the perpetual private foundation. Together these provide a mechanism by which American taxpayers subsidize the whims of the rich and fulfill their fantasies of immortality.

Should there be a law against, say, establishing a perpectual foundation to care for dogs, or to maintain a useless monument to some long dead Pharonaic donor? Do we as tax payers get to second guess the donor's charitable purpose? Within what limits? And if we do start decreeing what is and is not suitable, where does that tend? Will the ACLU Foundation be ruled out? NAACP? Act Up? Code Pink? Heritage? Hudson? Harvard and Yale? (since they are so rich)?

I am inclined to prefer a society that gives donor's wide sway in just how idiosyncratic their philanthropic efforts might be. Better that wild diversity than a government bureau with political appointees ruling gifts in and ruling gifts out.

I can see the rationale for encouraging gifts for the benefit of the poor, but I wonder if that does not become yet another excuse for defunding government programs and shifting the burden to individual donors, who may in turn slough it off, and decide to keep their money in the family, further concentrating dynastic wealth.

How to discourage billions to dogs? Well, that is what satire is for, and other forms of public contumely and shaming. Shame on Leona for her poor judgment! But let her have her folly.   

The Case of the Isolated Heir

Case Study

Melinda Norman (in this fictional case study) has been active in the community since the 1960s. Let's say she lives in large Southern city. She has been a steady funder of the Women's Foundation, Planned Parenthood, the Community Foundation, and a shelter for battered women. Melinda describes herself as sitting in the living room eating buttered scones while her father and brother work in the Counting House, making and managing the family fortune. Recently she has been divorced. Her income comes to her from alimony, and a trust fund run by her former husband's business partner. Her father owns an oil drilling company, along with a real estate development company. He has a family foundation named for his wife, now deceased. Melinda, and her brother, sit on the grants committee. Melinda's charitable funds consist of what she can spare from her trust income and from the payments she gets pursuant to her divorce, plus whatever she can influence through the foundation. Let's say her annual philanthropic budget is $50,000 a year.

When we talk to Melinda about her vision and values, about her sense of what she wants to preserve or change in the world, she is very clear. Given that clarity she makes good use of her philanthropic dollars. But what of the "Counting House," as she calls it? When we ask about her net worth, or about her potential inheritance, she may be uncomfortable. What does she own? Well, a house, furnishings, two cars, clothing. The rest, including a shared family vacation home, even her boat, is owned by a trust she does not control. As for the family business and the finances of her father, around all that is silence. She says she first found out how wealthy she was when she read an article about her family in a regional newspaper. To her shock she found that she, her brother, and her father are among the wealthiest people in the South. In her world, polite women don't talk about money; and they leave business affairs to the men. To make things a little more tense, Melinda is a pro-life activist. Her father is an Evangelical Christian, who gives mightily to the church. She and he are in constant conflict over foundation grants. Melinda's brother has positioned himself as his father's steward. 

How, then, do we conceptualize comprehensive planning for Melinda? How do the advisors to her father conceptualize her future role as inheritor? What say will she have as to form and timing of her inheritance? Will her father leave money to the foundation, knowing that she will lobby for progressive grants? Will he put her brother in charge of the foundation? Will he spend down his resources, giving to the Church, to prevent Melinda from giving it later to progressive causes? If the family system matters, the interplay of these forces, who is the client? Melinda? Her father? Brother? Or, do we take the family system to be the client?

Philanthropy as Play Money

It sometimes feels that philanthropy for some wealthy families is play money given to an heir or spouse, to keep him or her happily engaged, while the real financial action is elsewhere. Getting a shared vision for family and society that encompasses the entire family and its entire financial system may call for a family meeting or family retreat. In any case, getting a vision to control all the family money, not just the giving budget would seem to be critical if we are to maximize family harmony, financial efficiency, and social good. Whose vision will prevail? "Mine," says Melinda. "Can you get an appointment with Father, please, and straighten him out?"

The Emergent Profession of Wealth Coaching

In the world of multi-generational wealth, a new profession is emerging, that of Wealth Coach. These Coaches, sometimes trained as pyschologists and often as Life Coaches, and sometimes heirs themselves, do not presume to have financial expertise, but they may work with people like Melinda to deal with what some call "the dark side of wealth." My hope is that the Wealth Coaches will encourage open communication, and not simply take heirs like Melinda aside to reconcile them to their plight. Only (so it seems to me) by closing the open loops with advisors and other family members, are these heirs likely to emerge as the leaders they very well should be. 

For John Yoo: Creating A Values-Based Plan for a Better Life in a Better World

Johnyoo "John, if you were King for a Day, and could have any Constitution, or form of government, you wanted, what would be it be? Plutocracy? Autocracy? Monarchy? Dictatorship? Keep the Constitution on ice to protect it, while we declare martial law?"

For my fellow Values-Based Consultants to Wealth and Power, please note the way I begin with a vision building open ended question to get the the client day dreaming in an expansive mood. I watch as John's eyes dilate with pleasure, and his body shifts and relaxes into an open stance. I get him talking, less and less guarded, to build confidence and trust. As a subordinate, he may not always get the benefit of the interlocutor's full attention. So, I lean forward to show him that every word he speaks is fascinating and profound. As his guard drops, I can begin to see the rising energy of his great dream, his fantasy, of which he himself may not even be fully conscious.  Then, did you notice how I pivot right into to my list of closed ended questions? When I tick of each form of government, I watch what we call for "tells," the little signs than indicate we are getting closer to the heart of the matter.  I see him lick his lips as I say, "Dictatorship," and see his flash of teeth as he smiles fleetingly, before reassuming his dignified legal persona. I see his eyes glint. Perhaps he rises from his chair, opens his collar, and begins to pace and mutter and gesticulate. When I get to "martial law" I know I have him as a client. I know what gets his motor running.  I go on to clarify his preferred role under martial law. Head of the Secret Police? Chief Justice of the Kangaroo Court? The legal role seems best, judging from his modest demurral, "Well, I would certainly think my name would be on the short list, though I would be one of many qualified candidates, I am sure."

Now that I am clear on John Yoo's vision of a better life in a better world,  it is my job to come back with a plan. Sometimes it will be a business solution; sometimes we will go with social capital markets; sometimes we will work through Fox News, talk radio, or some other media outlets; sometimes we will go with a Think Tank, like American Enterprise Institute, to lay down the talking points; sometimes we will work through a nonprofit organization of experts, like The Federalist Society; sometimes we will go out to autocratic donors and raise money for ordered liberty as we might call it; sometimes we will work with scholars to draft legislation, waiting for some crisis, some terrorists event, or natural disaster, to drive it through Congress in a heated rush. Sometimes, of course, we when the enabling legislation has been passed piecemeal, and the pieces are in place, and we have a good pretext, based on some unforeseen event, we just go with the military option, jail and torture or opponents, suspend the Constitution to protect it, and do whatever we damn well want with the legal sanction provided by John Yoo, or some other qualified person, from the highest court in the land. Who would stop us at this point?

In this way, with proper planning and hard work, even a kid from Korea, who starts out with nothing, can get the world he wants, right here in America.  It is a great country. As a values-based planner, I am glad to play a small role in helping my clients' dreams come true.

The Conrad Black Chair of Christianity and Culture

Financial Post:

In 1999, Lord Black donated $1-million to Toronto's University of St. Michael's College to establish a namesake chair in Christianity and Culture. Eight years later, the chair has not been filled, leading to speculation that his legal status is holding up the process.

I wonder if I could get our mutual friend, Joseph Fosco, to toss my hat in the ring. 

Paris Hilton Gets Screwed Out of Her Inheritance

Well, $5 million is not bad, but I am sure Paris Hilton would have preferred the full $100 million.  Charity will benefit from the $2.3 billion going from her grandfather to charity.  This story will become a moral fable, I am sure, told over and over by philanthropic counselors to wealthy parents. I asked Missy Proctor, Senior Advisor to Heirs in Wealth Bondage, for her advice to her peers. "Wait to make the porno of yourself until after you get the old fart's money," she said, "or wear a mask like I do." Sounds like a prudent plan to me.

Inspired Philanthropy: Collaborating for The Commonweal

Competing or Completing? Beyond Planned Gifts as Transactions

In 2002 Robert Sharpe wrote an interesting article for Trusts & Estates, "Competing or Completing? Balancing the roles of various professionals in planning charitable giving maximizes the benefits for all."  I would like to second the spirit of his piece, while recommending that we as diverse professionals go beyond collaborating on specific "gift transactions" to collaborating on an overall legacy planning process of which the specific gift transaction is but one tactic or strategy. My sense is that such a collaborative process would transform our field for the better, move more money, and make our donor clients much happier and more fulfilled. In the process we advisors and gift planners will do ok too.

When we think of planned gifts as  specific  vehicles, like a donor advised fund, or a charitable remainder trust, offered by both nonprofits and for-profits we might ask, as Robert Sharpe does, whether the two distribution systems are competitors or complements.  Considered in that way, a life insurance agent "selling" a Charitable Remainder Trust payable at death to charity Y is competing with charity X who might have written the CRT payable to them. Likewise, Fidelity might compete with a community foundation for donor advised fund assets.  But let us say that the topic is not promoting a specific gift vehicle, or making a sale, but helping the donor client create an overall plan that is both prudent and inspired. (Prudent means a plan that takes care of the client and the client's family come what may. Inspired means having a positive impact on the community.) How then do the players arrange themselves around that program or process?  A case study may help us get the issues in perspective.

Case Study: Beyond Transactions to Prudent and Inspired Collaboration

Mary and John are worth $10 million, most of it in their closely held business. They are both 55. Both are active in the business and own 100% of the stock. They have two children, Alan and Marcie. Alan is a painter in NYC, barely getting by. He is single. Marcie is married with two children. She is the Comptroller in the family firm.  John and Mary are active in Holy Name Cathedral in Chicago where they live.  They have thought about spending more time working with the Church and less time in the business.  They dream of devoting their lives to working with disadvantaged children, instilling faith and character in children at risk.  Not only would they like to do more volunteering, they wonder if they might fund or endow a program and a facility. A local competitor has been making overtures to the family to sell the business.  Here are the questions on Mary and John's  mind. (These questions have been elicited in part by their lead advisor and in part through their own reflections.)


  • Should we sell, retire, and spend more time on volunteer work with the Church?
  • If we do sell at the proffered price will we have enough to live on for the rest of our lives?
  • Are we protected against major downside risks (death, disability, falling markets, liability, lawsuits, sickness, long term care needs, property and casualty losses)?
  • If we both die tonight, we owe what in estate tax? $3 million?
  • Can we reduce estate taxes in favor of the Church?
  • If we sell out to the buyer, where does that leave Marcie? Will she be out of a job?
  • If we sell to the outsider what will be the capital gains tax?
  • Should we find a way to keep the business in the family?
  • If so should it go to Marcie? And if so what do we give to her brother, Alan?
  • Should we divide our estate half and half for the kids? Or should Marcie get the bulk of it because she has helped us build the business?
  • If we let Marcie run the business when we retire, and she pays us some consulting fees so we have money to live on, and she then runs the business into the ground where does that leave us?
  • Can we afford to do more for Holy Name today? If we sell? At death?
  • How can we structure our affairs so we could do more now, later, and at death for Holy Name, minimize income tax and estate tax, while also taking care of ourselves and our children?
  • How can we balance all this?
  • Where do we start?
  • Who can help us?
  • Should we ask Marcie and Alan what they think? (If only they ever agreed about anything!)
  • Who should be at the legacy planning table when we sort all this out?


  1. Check the questions you think need to be answered by someone.  Put a Y by those you can answer all by yourself from your seat at the table.
  2. Ask yourself which professionals are needed to do justice to this fact pattern? Attorney, CPA, Financial planner who can do a comprehensive financial plan,  financial product salesperson, planned giving consultant, banker, business valuation expert, other?
  3. Is there a logical order as among: goal clarification, fanning philanthropic intent, running financial scenarios, explaining planning concepts (including but not limited to giving opportunities), communicating with children, finalizing the overall plan, implementing products, legal documents, and gifts?
  4. Is the logical order the order you employ in your work with donor/clients?

Observations and Suggestions

  • Most financial salespeople and most gift planners working for nonprofits "pitch" rather than plan. They lead with a solution before understanding the pertinent context. ("Prescription before diagnosis is malpractice.") We as a field have to get past this package sale mentality for larger client/donors who have complex needs and whose potential gifts merit lots of tender loving care.
  • The family above might need a charitable remainder trust, or a foundation, or a donor advised fund, or a charitable lead trust, or an outright gift, or a bequest, but it is way premature to pitch any of those. We have not even finished the fact-finding and goal setting.
  • Well over half the challenge in working with complex situations like the one above are the human dilemmas, not the financial conundrums.  The issues in the case above are those of love and money, of fairness, and the push pull between self interest and giving, between playing it safe for self and family, and doing something wonderful for the Church as soon as possible.
  • To resolve such dilemmas good planning will run scenarios and quantify the possible consequences of all the permutations and combinations of tools, tactics, and techniques, but in the end the family must wend its own way in this "dark wood" of moral and prudential choices.
  • Some family decisions are made with advisors. Others on our knees in prayer, or in the dark of the night, tossing and turning. What is at issue here is the trajectory of many lives.   
  • The family needs an open ear. They need someone they can trust, not just to run the numbers, do the legal work, plead for the needs of the Church, sell financial products, or close various aspects of the "case." They need a friend with an open ear, who will listen as they feel their way through this dark wood.
  • The trusted advisor, or confidant, can be anyone on the team. But the trusted advisor cannot just be a special pleader. He or she will get paid in one way or another, and will represent this or that position at the table, but the trusted advisor rises above his or her professional specialty and his or her way of getting paid, and earns the right to be the trusted advisor by simply listening, processing the information, and allowing the family to make its own best decisions. The trusted advisor may also slow down the process, involve other needed specialists, or towards the end, gently urge the process to a conclusion.
  • The default choice in a case like the one above is for the family to play it safe. They might well say, "Charity starts at home," if the Church is too urgent about philanthropy. Given the parents unresolved dilemmas, given the murk and uncertainty, the most likely outcome is to do not much, or not much right now.
  • If properly planned a case like this could well result in a gift to the Church of several million dollars. But the Church won't get it for asking. They won't get it for pleading. And they are not likely to get it by pitching Charitable Trusts in a vacuum. They need to be at the planning table, or within earshot of it, as the whole plan comes together.

Competition or Collaboration?

  • So, if you represent the Church, as a fundraiser, what is your next move with this family? My sense is that the best move is to presume upon the common bond of religious faith, and the common bond of Holy Name Cathedral, to simply listen. Emerge as trusted advisor, or as confidante, or as an advocate for the fellow parishioner's better angel, the client's best self. Then, convene the team. Stay quietly involved as the team works forward.  Continue to cultivate and to act as sounding board.  As the team plans the options, your role  as  gift planner will come into focus, and you will get your chance to discuss the gift options in the context of the overall plan.
  • If you are tax, legal, or financial advisor, what is your next move, if you are first person to whom these clients turn? Will you or won't you contact the Cathedral? Maybe that will depend on how the Cathedral has positioned itself in town and with you. Do you think of their Stewardship Committee as fellow professionals who will assist in a team effort, or do you think of them as special pleaders with a one track mind, or as well meaning people who have no sense of the proper process, and who are always closing for action prematurely?
  • Ideally, Holy Name has cultivated the professional community and positioned itself as a caring team member. If so, whoever gets the case going will feel at ease involving the others who need to be at the table to do justice to this family's plan.
  • If we all were to operate in this spirit we would do better for our donor/clients and they in turn would do better for their heirs and for the community.

Practical Steps for Nonprofits, Donors, and Advisors

  1. Check out the Resources tab at Inspired Philanthropy.
  2. Appendices A and B outline a simple process for bringing donors, advisors, and nonprofits together in common purpose.
  3. Consider an event or series of events to educate all three groups.
  4. Tracy Gary and I have intentionally put this material out there for all to use. We believe in cooperative advantage and in public goods. We don't want to corner the market on philanthropy. We know that others can adapt these materials to their own communities and make them their own. We want that. Out of such experiments, we want to create an informal learning community so we can uplift giving and givers. The spirit is not unlike "Leave a Legacy."
  5. Per Tracy, the materials in the Appendices go over well with their intended audience. In her words, "They love it and money is moving."
  6. If you do improvise your own approach to the issues discussed above, please share the results with me, either in comments left on the blog or by email, so we can learn together.