Legacy Bequests: Dead Donors and Dying Nonprofit Organizations
Reality Check
I have been a close observer of the American Right wing for over half a century. I have seen organizations come and go, but more often, I have seen organizations come, peak, go into maintenance mode, and then bump along, with money coming in from ever-older donors and especially from the last wills and testaments of former donors.
Legacy donations have always been important to every nonprofit organization. The most obvious legacy donations in the history of Western civilization were the deathbed donations of rich men, mostly landowners, who finally decided that it was time to buy a little favor with God. So, they called in a priest, and they transferred land either to the church or to one of the monastic orders of the church. The church built up an enormous legacy of land throughout the Middle Ages. Those legacies came into the church for 1,000 years. Then, Renaissance states started to confiscate these lands. The practice went on from Henry VIII in the early 16th century until the triumph of the Soviet Union in the middle of the 20th century.
INFLUENCE FROM BEYOND THE GRAVE . . . MAYBE
Legacy donations are made by people who have decided that they want to extend their ideas beyond the grave. They believe that their children have received sufficient capital from them, so that it will not harm the children when some of the legacy money is handed over to some nonprofit organization. For very rich people, this is a good idea. Unless a person's heir has the same kind of vision and moneymaking ability that his entrepreneurial parent possessed, the legacy is likely to be frittered away. It is better to promote one's ideas beyond the grave than the self-destructive personal habits of people who happen to be your genetic heirs.
The problem with legacy donations is simple: the organization that receives the donations is only marginally less moribund than the person who is 6 feet under. The organization maintains a shell, in a zombie-like fashion, but in fact has passed over the great divide between life and death decades earlier. It maintains the same letterhead. It may maintain the same headquarters. It may still publish its monthly newsletter. But the founder is gone. His vision is gone. His innovative efforts have become bureaucratic. The new managers may or may not sing the old songs, but they certainly do not write any new songs or offer creative new arrangements for the old songs. They draw their salaries, and they go through the motions of extending the founder's vision, but in fact the organization is no longer competitive in the world of ideas.
It is understandable how this happens. Most nonprofit organizations do not survive the first five years. Of those that survive the first five years, very few of them survive the next 30 years. If the innovator was a young man who launched the organization, by the time he is close to retirement age, if the organization even exists, he now has what old men love to have: secure income in retirement. Instead of taking a low-paying pension, he simply stays on. The organization turns into what in effect is an old age retirement home with 30 staff people and one resident. He still draws a paycheck, as if he were contributing anything of value to the organization, other than serving as a figurehead. His presence no doubt is comforting to his aging peers, who will then leave a legacy in their wills. He functions in much the same way as a greeter functions, or at least functioned a generation ago, at a Las Vegas gambling casino. He is the functional equivalent of Joe Lewis.
There comes a time institutionally to transfer the assets to a new organization, and then move on. I did this in 2002 with the Institute for Christian Economics. But I never drew a paycheck, 1975-2001. Founders who still take a paycheck from the organization do not want to move on. They want to stay right where they are. They like the illusion of driving a car, even though it is the equivalent of a Lincoln touring car from 1980. It still starts. It still gets from point A to point B. It requires an enormous amount of maintenance. It is getting difficult to find spare parts. But it is suitable for driving in a Fourth of July parade.
MOSES' LEGACY
In the final chapters of the book of Deuteronomy, we read of Moses' transfer of leadership to Joshua. He is the last man standing of the exodus generation. All of the other people, age 20 or above, who had departed from Egypt, had died in the wilderness.
Moses reminded this generation of the history of the last 40 years, and he called them to maintain the law. The law, meaning the written law, which God had given to Moses on Mount Sinai four decades earlier, would be the inheritance of Israel.
In Chapter 32, we read of this transfer of leadership.
Then Moses called Joshua and said to him in the sight of all Israel, "Be strong and of good courage, for you must go with this people to the land which the Lord has sworn to their fathers to give them, and you shall cause them to inherit it. 8 And the Lord, He is the One who goes before you. He will be with you, He will not leave you nor forsake you; do not fear nor be dismayed." (vv. 7-8)
Immediately after this, he laid down the law on the public reading of the law, which was to take place every seventh year. It was clear from this that the transfer of inheritance was fundamentally a transfer of law. In other words, it was the transfer of the organizational foundations and the moral foundation of the nation of Israel. Then, in Chapter 32, we read of Moses' blessings on each of the tribes. This was a recapitulation of the blessings given by Jacob/Israel in the final section of the book of Genesis.
[Note: the chapter divisions were provided by the Archbishop of Canterbury, Stephen Langton, in 1227. More than anyone else, he had been the primary author of the Magna Carta a dozen years before. Few church officers have ever matched this twin legacy in Western civilization.]
Then, in chapter 34, we read of the death of Moses. This was a fitting departure. He had reminded the people of the success of their venture. He warned them against abandoning the basis of their success, namely, obedience to God by means of obedience to God's law. He transferred visible authority to Joshua. He blessed the tribes, and then he died. We should all be so blessed in our departures.
Moses had an advantage over most founders. He had violated God's specific command. He had tapped the rock twice with his rod, when God had told him not to. God told him that his punishment was this: he would not enter the Promised Land (Numbers 20:7-11). He knew that he would not be able to hang on to either power or authority. He knew that he would have to transfer this authority. He did this in a public event. But there was no legacy from the oldsters. All the rest of them who had been age 20 or above at the time of the exodus were already 6 feet under. There would be no legacy from them. Moses was their legacy to Israel, and he passed on this verbal legacy to the next generation.
A STRATEGY FOR LEGACY DONATIONS
It is imperative that people with a lot of money to give away, and who have designated that a large part of this legacy be transferred to one or more organizations, monitor very carefully the actual performance of the organizations.
The standard approach for rich Americans is to leave a big chunk of money to the college that gave them their degrees. They vaguely remember how important college was to them, and they have paid no attention to what goes on in the classrooms. This was why William F. Buckley's attack on Yale University in 1951, God and Man at Yale, so upset the trustees of Yale. He exposed what was actually going on in the classrooms, and they feared greatly that this would cost them legacy donations. They really had nothing to worry about, because it was the fond memories of boola-boola, not memories of footnotes and term papers, that were the basis of these legacy transfers of wealth.
Old men and especially their widows are not interested in examining the actual performance of the organizations which are likely to receive the legacies. They have no idea about what it takes to run these organizations. They have no good idea of how much influence nonprofit organizations are having, because there really are very few meaningful criteria of success in the world of nonprofits. This is especially true of nonprofit organizations that are in some way connected with the spread of new ideas.
Legacy donors designated this money, based on their memories of youth. This is the boola-boola phenomenon. They remember being young and involved in the great ideological battles of their youth. The organizations that gave them sustenance in these years were able to retain at least token financial support by these grown-up ideologues. But the men in middle-age really never paid much attention to what the most favored organization was doing. It held a few meetings, but nobody could say exactly what the results of the meetings were. It issued newsletters, but it was not clear that anybody read the newsletters. Ever since about 1995, the organization may have had presence on the Web, but there are few indicators, at least accurate indicators, of how well these organizations have done in terms of web traffic. There are not many nonprofit organizations in the realm of ideas that continue to expand traffic on the Internet. These days, Web traffic is just about the only relevant metric of success for an ideological organization. Any ideological organization that cannot show increased traffic to its website is treading water. It is surviving on the legacy donations. It is not affecting young people's thinking. It is probably not affecting middle-aged people's thinking. It is merely going through the motions. Its directors have a form of tenure. But nothing is happening. The money is going down a rat hole. It is a digital rat hole.
The basic problem is this: people with a vision have little money, and people with money have little vision. People with money also do not go to the trouble of investigating the success or failure of nonprofit organizations to which they were committed in their youth, and to which they have offered token support through the years. These outfits are now going to inherit a significant percentage of their wealth through legacy endowments.
A good way not to get skunked on a deal like this is to have the organization set up a particular project. Put up about 10% of the money you plan to leave to the outfit. The money from the legacy then will go to this project, which has a separate bank account, and which has very specific uses for the money. You will request specific reports, including the size of the bank account. If there is visible success, donate another 10%. But always assume that the bank account will be looted by other projects, or used just to meet overhead. Here is the rule: no overhead costs. All of the money goes to the project. The individual who makes the arrangement then gets to monitor the success of the project prior to the donation in the will. If the organization is unsuccessful in getting at least token support and rising Web traffic from the project, the individual then tells the head of the organization: "Close, but no cigar."
I have never heard of anybody doing this, but this is what should be done.
Old men with fond memories of battles long passed are suckers for an appeal to a legacy donation, especially if the Internal Revenue Service offers some kind of present tax benefit for making the legacy donation. When you combine the IRS, fond memories, a lack of attention to detail, and tenure-seeking bureaucrats running the organization, you have a formula for wealth transfer on a massive scale. The money is going to go down a rat hole.
The donors really don't care. The widows don't pay much attention. The children grouse a lot. But nothing changes.
Before you give any money to any organization based on fond memories of the great battles of the past, find out about the great battles of the present. Find out about the strategy of the organization regarding the likely battles of the future. If there is no strategy for the present, and especially if there is no strategy for the future, don't write any more checks. It is as simple as that. Stop. Give the money to some traditional charity, such as the Salvation Army or Goodwill, and let it go at that.
CONCLUSION
Never let your money subsidize an empty shell that is occupied by tenure-seeking bureaucrats who have lost the vision of the founder. There is always some new organization that might offer hope. When you see an organization where the transfer of power has led to institutional water-treading, that organization is finished. Nobody is going to be able to resurrect it from the dead.
Let the dead bury the dead, but not with your money.
A lot of people who will read this, and who will say to themselves, "This must apply to some organization other than my favorite charity," had better carefully re-examine their favorite charities. "A sucker dies every minute."