boston.com your connection to The Boston Globe
SPOTLIGHT REPORT | CHARITY BEGINS AT HOME

How to be a philanthropist -- or just look like one

Some trustees take credit for donating other people's money

At first glance, Bert Degheri fits the profile of the classic American benefactor: A retired investment banker, he is a wealthy resident of California's Newport Beach.

And like many philanthropists, his generosity has been rewarded -- chiseled in stone, in fact. His name is engraved on a new arts center at the prep school he attended, a tribute to his $1 million donation to the project. The sprawling alumni center now under construction at the University of San Diego will also bear the Degheri name, thanks to a $5 million grant.

But Degheri didn't spend his own money on those gifts. The checks came from a foundation created by his late aunt and uncle, a New Jersey couple who ran a religious-goods business -- and whose family name was O'Toole.

Degheri took control of the $56 million Theresa & Edward O'Toole Foundation in 1999, after a cousin who had been running it died. He has changed its mission dramatically, largely abandoning the foundation's historic focus on churches and aid to the poor in the New York area. His West Coast alma maters are now at the top of the donation list.

A Globe review of giving by private foundations found numerous trustees directing foundation assets to causes that bring them personal prestige. Some have accepted naming rights and public honors in return for donations. Others have steered large sums to their own favored causes.

Such decisions often go unchallenged. The world of foundations, despite the billions of dollars at stake, is virtually unregulated. And institutions seeking major gifts are quick to offer up flattering rewards, like naming rights. Of the benefits trustees reap from running foundations, building a personal legacy with another person's money may be one of the most tempting, and enduring.

In Massachusetts, one well-regarded nonprofit changed its name in 2001 -- after receiving an anonymous $2 million gift -- to honor a prominent Boston lawyer, Hale and Dorr attorney James D. St. Clair, who had died earlier that year. The money, the Globe found, came from the Amelia Peabody Foundation of Wellesley, where St. Clair's daughter and son are trustees.

The Peabody foundation has been a major source of funding for what is now the James D. St. Clair Court Public Education Project, which educates children and adults about American justice. St. Clair's daughter, Margaret N. St. Clair, succeeded her father as the foundation's co-managing trustee in 1997. And his son, Thomas B. St. Clair, assumed his father's seat on the board when St. Clair retired.

In a written statement, the Amelia Peabody trustees defended renaming the project, saying, "Many public programs and facilities are named after individuals who did not fund them directly." They said the idea to rename the program came from the Boston Bar Foundation, which initially sponsored the court education project.

In its request for Amelia Peabody money, the Boston Bar Foundation proposed renaming the court education project after St. Clair "to honor the lifetime achievement" of the renowned attorney. The $2 million awarded over four years is one of the largest grants ever made by the Peabody foundation.

Joan Lukey, a Hale and Dorr attorney who was a Bar Foundation trustee when the grant proposal was made by a fellow trustee, doesn't recall whose idea it was to seek to rename the project for St. Clair.

"I wish it was my idea, but it wasn't," she said.

Some experts in charitable practices find such transactions troubling.

"It's highly unusual, and it would certainly be a transaction that would raise eyebrows and raise questions," said Deborah S. Hechinger, CEO of BoardSource, a national group that specializes in best practices for nonprofit boards.

Taking personal credit for gifts does not violate IRS rules against self-dealing, Hechinger said, because the trustee receives no monetary gain. "But it's still problematic," she said. "There is a sense that an individual is getting inappropriate credit . . . for something that the foundation is in fact doing."

Degheri, of the O'Toole Foundation, admits he's taken the foundation in a new direction: "As far as I was concerned, when it came my turn, I was doing it my way," said Degheri, who took a $187,000 trustee fee last year, five times what his cousin had earned.

Asked why he chose to put his own name on the new building at St. Francis High School, Degheri said, "I thought it would be nice to have my name on it since I went to school there." His aunt's maiden name was Degheri, he said. Just as Degheri's name was inscribed for posterity, the name of James C. Slaughter was attached to a hall at the University of Virginia Law School. Slaughter, a trustee at the Horace W. Goldsmith Foundation, directed $4 million to the school from the $720 million foundation established by his late stepfather, Horace W. Goldsmith, a Depression-era brokerage firm founder.

Richard L. Menschel, another Goldsmith trustee, said it was rare for board members to accept naming rights. "We have named very, very few things," he said. But he thinks it's ethical to accept such honors, as long as the source of the money is disclosed, as the foundation and the school have done.

In many cases, the grant recipients are eager to credit the trustees who write the checks. That proved to be the case more than once at the University of Virginia Law School.

In its annual report for 2002, the school listed Leland C. Selby, a Greenwich, Conn., attorney and alumnus, as the most generous donor from his 1969 class, crediting him with a gift of more than $20,000. Selby directed $50,000 to the law school between 2001 and 2002, but the money didn't come from his own bank account; it came from two Connecticut foundations he oversees as director, the Richard D. Donchian Charitable Foundation and the Henry E. Niles Foundation.

David Ibbeken, who runs the law school's fund-raising and alumni office, said that in the cases of Slaughter and Selby, honoring living trustees rather than the deceased donors was appropriate.

Of Slaughter Hall, Ibbeken said, "We made a proposal to the Goldsmith board, and we asked them for the authority to name it for Jim, who had been quite helpful to us over the years and had held a number of leadership positions at the law school."

Asked why the law school gave Selby personal credit for donating someone else's money, Ibbeken said, "We give `soft credit' to individuals who have made donations possible through foundations."

The University of Arizona went so far as to rename a program for an alumnus who directed gifts from a foundation where he serves as a trustee.

The $462 million H.N. and Frances C. Berger Foundation, based in Palm Desert, Calif., has been a generous donor to the university, funding projects that include the Berger Entrepreneurship Program at its business school. All the gifts have carried the Berger name, as the late banker and homebuilder H. Norwood Berger stipulated.

But last spring, after receiving a $3 million Berger grant, the school announced a new name for the business program: the Chris and Carol McGuire Entrepreneurship Program. The couple are both graduates of the school, and Chris McGuire is a director and employee of the Berger Foundation.

Professor Gary D. Libecap, director of the university's Karl Eller Center, which runs the program, said in an interview that the school and the Berger Foundation board wanted to honor the McGuires. Berger Foundation officers, including McGuire, declined to be interviewed by the Globe.

Michael Rezendes of the Globe staff contributed to this story.

Charity begins at home
The investigation
related graphics
Follow-ups
contact information
Spotlight Report The Boston Globe Spotlight Team would like to hear from readers who have information about this issue. The Spotlight telephone number is 617-929- 3208.

Confidential messages can also be left at 617-929- 7483.

The e-mail address for the Spotlight Team is spotlight@globe.com

Foundation tax returns are available for public viewing at www.guidestar.org
SEARCH THE ARCHIVES
 
Today (free)
Yesterday (free)
Past 30 days
Last 12 months
 Advanced search / Historic Archives