One year after the collapse of Bernie Madoff’s Ponzi scheme wrought havoc in the world of philanthropy, especially Jewish philanthropy, it is great to read an optimistic book about what philanthropy can achieve by a leading Jewish donor. “Where the soul meets a business plan” is the philanthrocapitalistic subtitle of The Art of Giving by Charles Bronfman, of the Seagram distilling dynasty, and Jeffrey Solomon, who runs Bronfman’s foundation.
Targeted at wealthy donors, the book offers a guide to approaching philanthropy that is packed with homely, practical advice drawing on the lessons of the two men’s several decades of experience. From teasing out the donor’s passion, to deciding whether to set up a permanent legacy or spend out, this is a must-read for anyone getting into major giving.
The Art of Giving is not a book of grand policy statements or high controversy. However, as stalwarts of the New York Jewish philanthropy scene, their comments on the Madoff scandal, which cost many foundations dear when their investments with the con man disappeared in a puff of smoke, are particularly insightful. The Bronfman Foundation, they recount, had been approached to invest with Madoff, whose money management business had offered spectacular returns on paper, until it crashed. They declined to invest because, as they say, the returns Madoff was offering “defied reason” and the lack of transparency about the firm triggered alarm bells. “Word-of-mouth and social connections cannot replace proper investigation and tough questions” is their withering judgement on those foundation trustees who failed to do the same rigorous due dilligence.
“Prudence is the watchword with nonprofit investment policy”, the authors counsel. The (irrational?) exuberance of recent years about spectacular endowment growth allowed foundations to believe that they could have their cake and eat it – having lots of money to give away while protecting the real value of the endowment to keep giving in perpetuity. In less confident economic times, perhaps donors need to make the choice between today’s needs and tomorrow’s rather than assuming they can meet both. Given the depth of the crisis and the slump in giving, now might be the right time for others to follow another of Bronfman’s examples, by commiting to spend down their endowment, rather than give away only the legally required minimum of 5% a year. Bronfman expects to have spent everything in his foundation by 2016, which, he says, seemed a long way off when he and his late wife Andrea decided to do it back in 1986, but seems rather close at hand now.