The Art of Philanthropy

GUEST: Jack Rosenthal
VTR: 11/14/2001

I’m Richard Heffner, your host on The Open Mind, and I’ve always harbored a great interest in and an equal fascination for parsing the decisions made by the people who spend philanthropic dollars

Over the years therefore, the leaders of a variety of foundations have joined me at this table: Franklin Thomas of Ford. Rebecca Rimel of the Pew Charitable Trusts. John Gardner and David Hamburg of Carnegie. Eli Evans of Revson. George Soros of his own foundation. Then during their respective presidencies, Dean Rusk, George Harrah, John Knowles and Peter Go of Rockefeller.

And now I’m pleased that my old friend Jack Rosenthal has agreed to join me from his relatively new perch as President of the New York Times Company Foundation.

Of course, I’ve always known my guest very differently … as a Pulitzer Prize winning journalist for the New York Times, as its eloquent editorial page editor, and as Editor of its Sunday magazine.

But now I have to shift gears, think of him in this different setting … and, indeed, ask him quite frankly just how different is his new responsibility, particularly in light of the pressures that all philanthropies must be feeling in these radically changing times. That’s a mouthful of a question. What’s your answer, Jack?

ROSENTHAL: Well, let me give you two answers because it’s two different questions at the same time. It’s the general state of philanthropy and it’s the state since September 11th, which has created, for us especially … just take the word “neediest” and deconstruct it. We have, for 90 years; The New York Times has conducted an annual neediest cases campaign to help poor people in New York. We’re just about to start our 90th campaign.

But on September 12th we launched a special fund called “The 9/11 Neediest Fund” for victims of the catastrophe. We didn’t want to just sit there and do nothing, be passive philanthropists; we wanted to try to do something. And we thought, gee, we could probably … using the facilities of the neediest cases fund, without having to go through weeks of organization, we could get it up and running … and we did, within 24 hours. I’m proud of that. And we thought we could raise maybe four or five million dollars that might not otherwise get raised for the victims.

Well, within not many weeks, we’re up to $45 million dollars and counting. My guess is we’ll end up over $50. It’s a thrilling opportunity. Amazing generosity on the part of the public. It’s enough not only for us to be able to satisfy the direct needs of victims through our various neediest cases agencies, but also to do some structural things, which Ed be glad to talk about.

But before I do, let me answer the other part of the question, which is the change in philanthropy which 911 has brought beyond this amazing outpouring of public generosity to our and other funds. All of our great fear and our already experience is what’s called “compassion fatigue”.

HEFFNER: “Compassion fatigue.” Nice expression

ROSENTHAL: Or charity fatigue. It’s people who understandably have been so enthusiastic and so wonderful and so generous in the way they’ve responded to our fund and the others for the victims of the 911. Question: will the funds for day-to-day charities, for the poor people of New York who didn’t just become poor on September 11th, will that dry up. Will people regard it as substitution? Or wilt it be an add-on?

HEFFNER: That’s a question. What’s the answer?

ROSENTHAL: Well, so far, and we don’t know yet. We face this in a very peculiar way and the reason I parse the word “neediest” is because our two funds have now collided. It is we stopped collecting actively for the 911 Neediest Fund, as of October 11th. Our regular, annual Neediest Campaign started on November 1st. We’re still getting money for the first … we’re certainly not going to say “no” to people who wish to do that. We’ll accept it and we will honor it and spend it in the way it’s intended. But at the same time, we have our responsibility to the poor people of New York. I’m determined that we do everything we can not to let them became the newest victims of terrors. Because funds will have dried up for them because of all the money that’s gone into the other fund. So we’re bending every effort to try to persuade people and help the public to understand … but just

HEFFNER: Are we … yeah, go ahead.

ROSENTHAL: Well, that just because they’ve been generous for one set of needs, that doesn’t extinguish the on-going needs.

HEFFNER: But you used an expression, “not just passive philanthropy”, and I want to call you on that. What do you mean?

ROSENTHAL: One way to do philanthropy, just as there’s one way to do journalism is to wait for things to come to you. Now, in journalism you don’t last very long if you just sit around waiting for the news to happen. In philanthropy I’ve had the same feeling about active participation. You’re going to wait for people to come and apply to you for money -. you say, “we’ve got this much money, here are all those worthy causes, it’s very hard to choose between one worthy cause and another, so let’s just wait and be judicious in the way we pick our grants.” There’s another way to do it. And it’s to announce to yourself, or to ask yourself and your staff, “What is it that we really care about beyond our normal categories of grants? What issues this year, or this week, or in this country are we really interested in? And where do we want to try to make a difference today?” And go out and look for grants in those areas. Or, better than even to look for grants, for organizations, ask people to invent them. And for me that’s the most fun in the world is to make yourself come to grips with the historical moment and then go and try an effect it for positive ways.

HEFFNER: Do you think that the traditional foundations can be as pro-active as that? Is it appropriate, or is there something about the New York Times Company Foundation? Something about its relationship to its money that is different?

ROSENTHAL: Yes, in the sense that we’re small and have a small staff and have very little bureaucracy. We can turn on a dime if we wish to given a very much involved Board. So I’m pleased that we can do that. But I don’t think big foundations are necessarily precluded from that. The ones I admire the most … think of Susan Berresford at the Ford Foundation. As big as Ford is, you think of the initiatives that they’ve taken and they seem to have another, new exciting one just about every year. So I think its, no I think it’s more a mailer of the outlook, or the philosophy of management than it is of the size of the foundation.

HEFFNER: What’s the obligation of a foundation to the … well, I should back track and ask, how old is the New York Times Company Foundation?

ROSENTHAL: Some version of a charitable arm of the Times has existed for fifty years or more.

HEFFNER: in its present incarnation?

ROSENTHAL: Oh, probably 1955 in its present legal form.

HEFFNER: Okay. Does that differentiate you … the Times Foundation .. from the others that you think of as fairly substantial, moving, active foundations.

ROSENTHAL: It’s not a function of age. And I should say we’re a very small foundation in terms of dollars. But one of the thrilling things about a foundation with this title, with this name

HEFFNER: MmmHmmm.

ROSENTHAL: Many grantees clamor for even small grants from us because to get one that says “New York Times” on it is an imprimatur, its a seal of approval. And it means if they are at all clever they can use it to leverage grants from bigger philanthropists also.

HEFFNER: Are you suggesting that when the New York Times Company Foundation used to make grants to The Open Mind, I used that as leverage.

ROSENTHAL: (Laughter)

HEFFNER: You’re right if you suggest it. Jack, I guess the question that I’ve put to many of the foundation people who have been here has to do with … who elected you? Who elected you to do the things that you do? Shouldn’t there be since generally this is money that is in your control by dint of the income tax laws, by dint of the IRS and its provisions. Shouldn’t there be some public consideration here. How can it be that you might devote yourself to a project that the government has not chosen to interest itself in? Or that perhaps, and I don’t know that this will ever happen with the Times Company Foundation, perhaps you’ll work in an area that runs counter to the … to public policy?

ROSENTHAL: Ahmm … Dick, I have to give you two answers. One is in terms of the immediate present, this huge fund, the 911 Neediest Fund. That’s public money, that’s fifty million or so of dollars contributed from all over the world for people moved by this catastrophe. And in that we feel a scrupulous responsibility to the donors to spend the money in ways they would approve. We’ve … you can guess we’ve been with that size of a kitty … we’ve gotten a whole lot of applications from people. And people’s definitions of “victims” can get to be pretty indirect. We’ve try to apply a reasonable man rule, which is if any intelligent donor would be offended by that, then we’re not going to do it. If they’re accepted. So we try to stay as scrupulous as we can be with respect to the wishes of donors. With respect to the New York Times Company Foundation, which is the on-going institution, we don’t use public money, we use the Times’ money. We get … it’s not even an endowment fund, it’s an amount voted to us by the Times Board each year, so it’s out of the Times’ own income.

HEFFNER: So the IRS doesn’t play a role in this.

ROSENTHAL: There are rules. Foundations, company foundations have to spend five percent … endowed foundations have to spend at least five percent of their endowment each year in order to qualify for tax exempt status. And, we are a 501(c)(3) organization, and that we’re tax exempt and we can give tax exempt funds to eligible organizations.

HEFFNER: Do you have to spend five percent?

ROSENTHAL: No, because it’s not an endowment fund.

HEFFNER: Okay. Which do you prefer, by the way? Where is there more freedom for you? Where do you have an opportunity to do more of the things that you would like to do as a foundation official?

ROSENTHAL: A free-standing foundation set up because of somebody’s bequest or interest in a particular set of charities stilt has a Board and the President of Foundation X has to answer to that Board. A company foundation like ours … I have a Board and have to answer to it and have to, beyond even what the Board says, we all know what the traditions and the culture of The New York Times stands for. And want to work within those traditions

HEFFNER: Okay. I’ve just made a command decision, usually when we do a program here, we know that we’re going to be weeks and weeks, sometimes months away from putting it on the air. Let’s assume we’re going to get this program on the air in a shorter time frame rather than a longer time frame. Let’s talk more about September 11th, 2001. What are the problems that we’re reading about now in the disposition of this money, this vast amount of money that has poured in?

ROSENTHAL: Let me come at that the other way around and say the priorities, or the principles we’ve tried to follow from September 12th are need, speed and administrative costs.

HEFFNER: What do you mean “administrative costs?” You mean have none.

ROSENTHAL: For the Times to pay alt the cost of raising the money, so that every dollar that is raised goes to the victims, or their families. Other funds have knowing that that’s our policy … other funds have since now adopted that, or some variation of it. I think one of the reasons the Times fund has raised so much is because people trust the Times to spend it well. The bigger charities are doing a much better job than the public prints would sometimes have us believe. They work under huge difficulties that we don’t. We’re small and we can turn on a dime. When you’ve got 300 or 500 million dollars you need to have pretty damn clear policies and be able to defend them and describe to one organization why “yes” and why “no” to another. So I don’t subscribe to the easy criticism of the big funds. There are things that they’ve done wrong and that I disagree with. But for the most part I just have respect for how big a job they have.

HEFFNER: How do you define “victims”?

ROSENTHAL: Ahmmm…

HEFFNER: The victims of September 11th?

ROSENTHAL: In several different ways. The nice thing or the convenient and useful thing about the Neediest approach is we normally give our neediest cases money, disperse it through seven social service agencies in New York, who know that have been in business for years and years.

Like the Children’s Aid Society that’s been around almost as long as The New York Times, since 1853. They know their communities and they know how to reach people and they have been in the field from the first day, doing extraordinary work. Victims then meant individuals who needed shelter or food or help finding lost relatives. But it also meant generic things … Phil Coltoff of the Children’s Aid Society, sent away as far as Wilmington, Delaware, to get inhalants and asthma medicine so that both rescue workers and children in the war zone could breathe. That just takes experience and smarts and devotion. So that’s direct aid.

And the joyous thing about our situation now is that because of reader generosity we can meet the needs, in the field, of all those seven agencies, plus the law enforcement agencies who are out meeting the direct, retail, individual needs of people on the ground in the front lines.

At the same time, we’ve got enough money now so that can also look to the structural needs of victims. Get beyond individual cases and we’ve launched four initiations of which we’re hugely proud. One is to help save hundreds, maybe thousands of low income jobs in lower New York, in the war zone. Another is to create after school programs for all those kids who’ve been so battered about in the same sixteen schools downtown. Another is to create a vast cadre of skilled, trained trauma treatment professions who can go out into the community … the professionals tell us to expect a marked increase in the coming months of drug abuse, wife beating, child abuse, alcoholism, as an already stressed, poverty population, with these added new stresses of unemployment or disorientation gets pushed over the edge. So trauma treatment is already and issue, but it will become a bigger one. We’re training 60 professionals in the latest in evidence based trauma treatment and paying them half their salary for a year to go into the community and train others, so that by the time you get through, it would be like Johnny Appleseed, we’ll have a whole cadre of professionals out in the community, in groups and schools, registered nurses and so on, capable of helping the hundreds of thousands of people … and you just start adding up in your head, who were actual people in the building who escaped, or didn’t. Their families, the witnesses, their families … the next concentric circle. You can get up to 200,000 people in a hurry and I don’t mean that 200,000 people will necessarily need heavy-duty psychiatric treatment. But a lot of them will need help from grief counsel all the way to post traumatic stress disorder.

Another area that we’ve, another initiative that we’ve taken, the legal services agency and legal aid society, both sent us proposals. And we went back to them and said, how about getting together? Well, that kind of cooperation is not their normal mode, but I must say within 24 hours, they gave us a joint proposal and it was beautiful and we funded it instantly. We gave them $600,000 on the spot for six months to create, in effect, a law firm … a civil law firm for poor victims of 911, so they could go full service, if they needed a death certificate, or if they had trouble with a landlord, or needed help in filling out some kind of government applications. There is somebody they could go to in each of these agencies’ neighborhood offices. So, both … the short answer to your question is, yes, direct aid to actual direct victims. But also a larger definition of structural aid to a bigger circle of people who I think there’s no question, are victimized by this.

HEFFNER: In a sense then, and quite appropriately, you are becoming a New York City agency.

ROSENTHAL: Ahemm

HEFFNER: In a larger sense.

ROSENTHAL: Not just New York, Dick, because we’re … one of our psychological initiatives, which I haven’t described, we’ll also go to the New York suburbs and to Washington. Where we’re hoping to create as many as 50 groups, psychotherapy groups for victims of that end of September 11th.

HEFFNER: Jack, is there possibly now in your own funding, enough money for that? It sounds as though you’re going into the millions and millions and millions.

ROSENTHAL: Well, we’ve got million and millions and millions

HEFFNER: You have what … $45 … as of this date?

ROSENTHAL: Well, coming up on $50 I would say.

HEFFNER: Okay. And that’s not going to cost much, much more?

ROSENTHAL: No, I think we can do what we’re … gonna project it out. I think we can … we’ve got it planned out so that we will spend what we got.

HEFFNER: Interesting question to me would be, how far out are you going? :You talk about 6 months with

ROSENTHAL: It’s a very good question. The Oklahoma City experts tell us, “you will be surprised”, they say at how many long term needs you discover, that are simply unanticipatable now. Save money for that. And I take that to heart. I want to keep about a quarter of our money in a, in reserve for just that. For instance, when they say there’s going to be an upsurge in alcoholism, or in wife abuse, I regard that as victims. I think we have a responsibility to victims, not just today, in terms of paying the rent and getting the school bills paid and getting the family back in order. But long term, also, because as they say time bombs are going to be going off in people’s heads for a long time, months and maybe longer.

HEFFNER: What about the criticism, Jack … its not mine, but what about the criticism that you are co-opting, I don’t mean the Times, but this gigantic effort, you are co-opting something that the government itself should be underwriting.

ROSENTHAL: It’s the other way around.

HEFFNER: Tell me why.

ROSENTHAL: It’s very hard for private philanthropy to know what to do until public philanthropy makes up its mind. Which government is doing, but it hasn’t done it yet. The airline relief bill that passed within days of the catastrophe contained language that defined victims, originally, as people who were on the airplanes. But the time the bill got passed, the restrictive language got removed, and so anybody was a victim and they were going to offer, instead of having to sue, you could get a million dollars or so, by going to a government board. Well, that legislation still hasn’t finally been enacted, and nobody knows what’s going to come of the government. I don’t doubt the government’s good will, sincerity or dollars.

But, let me give you an example of why that’s not, doesn’t work, and why the question’s upside down. You’re a small business man in lower Manhattan. Say you have 15, 20 low income employees, it’s a small restaurant, or a dry cleaners, or a photo shop. And your business is paralyzed. Either it was destroyed or damaged or it was on a street that was closed. Or, even if the street was open, there’s no traffic on it, you’ve got not business. And you’re now going into a second or a third month of no business. How long can you survive? You’ve still got to pay a sizeable rent; you’ve still got to pay utilities. And you’ve got no money coming in. And here are these poor people who were working for $12 an hour, who need to be paid. The government assistance is nowhere in sight. There’s FEMA and there’s small business loans, and I honor the work that they’re doing, but it takes them time to move.

We’ve started. We put $3 million dollars in. So the only time in my life I’m probably ever be able to outspend the Ford Foundation three-to-one. They began and put a million dollars into it, and we’ve put three million into a fund for grants, outright grants to small business in the zone. To help them weather, it’s gap financing, until the big government money starts. So we’re there first. Government’s there sooner or later, in whatever it decides to do, but somebody’s got to keep those businesses afloat now and keep those jobs a now.

HEFFNER: We’re in a war now, we say. Are we going to be able to sustain this effort? I applaud what has to be your answer to the question, “am I my brother’s keeper?” clearly the Foundation has said, “Yes”. How…to what degree are we going to be able to sustain this. If we’re honest about fighting a war, we know that there are victims…

ROSENTHAL: It’s a profound question. I haven’t dared let myself think about it much because this … September 11th … was Pearl Harbor in the sense that it was a shock, it brought us into a new frame of awareness. And we all responded to it. I think one of the reasons there’s been such a huge outpouring, well over a billion dollars is because everybody in American asked themselves, “what can I do?”. And money was sending in money was something everybody can do. But will that happen for round 2 or round 3 or round 4. I don’t want to think about that, I’ve got enough to think about for the moment. We’re too busy to worry.

HEFFNER: And our time is up.

ROSENTHAL: (Laughter)

HEFFNER: Thank you very much, Jack Rosenthal, for joining me today on The Open Mind. And congratulations on what you’re doing.

ROSENTHAL: Thank you very much, it was a pleasure to be here.

HEFFNER: And thanks, too, to you in the audience. I hope you join us again next time. If you would like a transcript of today’s program, please send four dollars in check or money order to: The Open Mind, P. 0. Box 7977, F.D.R. Station, New York, New York 10150

Meanwhile, as an old friend used to say, “Good night and good luck”.

N.B. Every effort has been made to ensure the accuracy of this transcript. It may not, however, be a verbatim copy of the program.

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