Last of three parts
"It could be a kiss-off gift," says the cultural leader of a $10,000 check that had recently arrived in the mail. It would be a nice chunk of change for any Philadelphia arts and culture group, this 10K, except when you realize that the donor who sent it is worth several billion dollars.
Relatively speaking, it's the same as someone with $100,000 in the bank sending a check for $3.
This donor hasn't emerged as one of Philadelphia's great philanthropic leaders, despite his capacity. The region does not want for wealth - both new wealth being earned as well as family fortunes changing hands - so the question many are asking is whether new generations will be as generous as the last one.
Is new leadership hiding in plain sight? H.F. "Gerry" and Marguerite Lenfest, after all, were only moderately active philanthropists before selling the family cable business, after which they decided to spend the rest of their days giving away most of the proceeds. "There's a lot of wealth in the area, but a lot of it is with younger people who have not come into the giving mode," said Gerry Lenfest. "They need education, and persuasion."
With a larger-than-ever arts community uncertain that there is enough generosity to support what's been built in the last two decades, leaders are wondering who today's incipient philanthropist-leaders are. How can they be engaged to become catalysts for the city's continued development as a center of arts and culture?
"We always have new generations of wealth, but you have to know where it is and figure out strategies to cultivate it, and that takes a lot of very creative work," says Eileen R. Heisman, president of the Jenkintown-based National Philanthropic Trust, a donor-advised fund with $1.8 billion under management. "I think there is actually a lot of wealth, but we don't live in a very flamboyant community, so people don't necessarily use it to put their names on things and it's somehow harder to unearth it. There is always new money coming in. I mean, a generation ago, who heard of Josh Kopelman?"
Kopelman has become an object of fascination to some professional fund-raisers in town - not just for who he is (founder of half.com, which sold to eBay for $350 million in 2000), but for what he represents: new wealth with a presumed long life of making more. He also doesn't appear to be waiting to amass his ultimate fortune before dipping a toe into philanthropy, having established a foundation. He declined to speak about his interests.
There are others like him - venture capitalists who are being courted by cultural organizations and other charities seeking long-term relationships. But old money, too, still flows generously in Philadelphia, and it is trickling down. Nationally, an estimated $41 trillion in bequests will pass to post-baby-boom generations in the first half of the 21st century, according to a 2013 survey by the Johnson Center for Philanthropy in Grand Rapids, Mich., and the consulting firm 21/64. Since an estimated 73 percent of all charitable giving comes from individuals, the effects of this wealth transfer are expected to be enormous.
"This $41 trillion that will change hands very soon . . . will have a greater impact on philanthropy than anything we've ever experienced," says arts consultant Nancy Burd.
The process already is underway locally, where money has been and will be passing into the hands of heirs to fortunes made in condensed soup (Hamilton), pharmaceuticals (McNeil), Plexiglas and other materials (Haas), soft drinks and malt beverages (Honickman), and cable television (Lenfest and Roberts).
If previous generations innately understood the importance of orchestras and museums and gave to them from a sense of noblesse oblige, their children and grandchildren, coming of age in an era of corporate hegemony, have other priorities.
"They think of philanthropy very differently," says Burd. "They want to get involved in an organization, not be backseat drivers. In the old days, donors attended performances and maybe sat on a committee. These people today want to be part of the decision-making process. They want to help run the business. They want impact."
By definition, they often are distinctly uninterested in perpetuating the status quo.
"I think the challenge is not the prospects or who has the capacity, it's what they choose to support and with what intention," says Robert Capanna, former executive director of the Settlement Music School and now a director at Prudent Management Associates. Newer donors, he says, "don't want so much to support an institution as much as an idea or a cause. And if you are an arts and culture organization you are at a disadvantage. They want to support things they want to support rather than those that exist already."
"They are initiative-focused as opposed to civic-minded," says R. Andrew Swinney, president of the Philadelphia Foundation. "Because the entrepreneur is a businessman, he says, 'Tell me how your organization is either improving lives, changing things, or being the most cost-effective.' It's a business mentality that is taking hold of philanthropy. So it's, 'Don't just tell me you serve 3,000 kids - tell me the impact you had on those children. What are the outcomes?' "
In the arts, benefits often play out in ineffable ways, and over many years. How do you measure the impact of funding a string quartet's visit to an elementary school? Which tools could detect the meaning of an initial point of contact between a teenager and a Duchamp?
At least one Philadelphia nonprofit is responding to the corporate clarion by changing its business model. The Philadelphia Zoo is working toward a goal of covering 100 percent of its operating expenses with earned income (from the current percentage in the mid-80s), while reserving philanthropic gifts for capital projects.
Such a model would make the zoo less vulnerable to the fluctuating economy - the dips in philanthropy and endowment market values that come with recessions, says president and CEO Vikram Dewan. He concedes that no earned-vs.-contributed income model is foolproof. Greater reliance on attendance, for instance, puts the zoo's budget at the mercy of the weather.
"There certainly are risks that are posed by heading in that direction, but they are more the kinds of things we can plan for than guessing where the equities market is going," said Dewan, adding that the greater emphasis on earned revenue is a message resonating with donors.
Along with sharply different expectations, new donors are bringing innovative models of giving. Philadelphia has not always been at the leading edge, though some novel ideas have succeeded here.
"There are certain trends overall that can help people be far less pessimistic than they might be about the [passing of the era of] Lenfest and Annenberg," says Katherina M. Rosqueta, founding executive director of the University of Pennsylvania's Center for High Impact Philanthropy. "One is that in a lot of ways across the country philanthropy is less about great families endowing major institutions, both because of demographic shifts and new tools for giving, and more about the democratization of philanthropy."
There are, simply, more ways to give than ever before. Whether democratization leads to an actual increase in philanthropy remains to be seen.
Some methods take advantage of new technology. Museums have started experimenting with placing some text-to-give signs around the building - providing donors a way to give spontaneously upon interaction with the art inspiring the impulse. The Philadelphia Museum of Art will try out the format in November, with text-to-give signs in various galleries.
"Groups are using Kickstarter campaigns to get the kind of money for which I used to get grant applications," said Olive Mosier, director of arts funding for the William Penn Foundation.
In a variety of ways these days, donors are doing it for themselves. Building on a model that started in Cincinnati, Impact 100 Philadelphia is a group of women who pool their resources, each contributing a minimum of $1,000, and then give grants of up to $100,000 to groups working with underserved populations.
Recent awards have gone to the Anti-Violence Partnership of Philadelphia and Urban Tree Connection, Commonwealth YouthChoirs, and the Village of Arts and Humanities in North Philadelphia.
In its first five years, the all-volunteer group has given away nearly $1 million.
Larger funders are also pooling their assets around a common cause. The Edna McConnell Clark Foundation has embraced a concept called aggregated capital in which a number of philanthropies come together to tackle a particular issue.
"This is taking off all over the place, and it's really powerful, because grant-making is no longer exclusively local," Burd said.
The Pew Charitable Trusts has been throwing its money into a hat and passing it around to other donors for years. Pew, in fact, changed its legal designation nearly a decade ago so it is no longer a pure grant-giving organization, but also a grant-getting one.
"Philanthropy is about leverage," said Pew president and CEO Rebecca W. Rimel.
Leverage is exactly the aim of the Asian Mosaic Fund, which exists under the umbrella of the Philadelphia Foundation. As a "giving circle," the fund collects money from shareholders, who, in exchange for donating $250 or more, have a say in how the money is spent. Shareholders' money is matched by larger funders, such as Asian Americans/Pacific Islanders in Philanthropy and the Philadelphia Foundation.
Grants have gone mostly to human-services organizations like Boat People SOS and the Cambodian Association of Greater Philadelphia, but also to the Asian Arts Initiative and Wilma Theater.
Crowdfunding models, like Kickstarter and USA Projects (created by United States Artists), hold enormous potential for arts groups. Crowdfunding platforms of all kinds, not just for arts and culture projects, raised $2.7 billion in 2012, according to Crowdsourcing.org, and are forecast to grow in 2013 to $5.1 billion.
"If what we've been used to is relying on a handful of big institutions, the potential [of new models] is quite great," says Rosqueta.
Crowdsourcing, however, failed to rescue New York City Opera. A recent Kickstarter campaign fell well short of the $1 million goal the company said it needed as part of its larger $7 million campaign to keep going. Sept. 28's performance of Mark-Anthony Turnage's Anna Nicole was expected to be City Opera's finale.
But the singularly startling evolution in philanthropy has been in the growth of donor-advised funds. With the muscle of mutual fund giants like the Vanguard Group and Fidelity, individuals can set aside as little as $5,000 in an account and receive an immediate tax credit, while directing the gifts to charities later.
Donor-advised accounts held by Fidelity Charitable alone granted money to 77,000 nonprofit organizations in 2012 for a total of $1.6 billion in gifts, according to the mutual fund's most recent report. That's 24 percent higher than the previous year. The number of grants that donors give has nearly tripled in recent years, from 154,000 in 2003 to nearly 429,000 in 2012. Arts and culture received about 7 percent of the total.
Contributions to donor-advised fund accounts nationally grew to $9.64 billion in 2011, according to the National Philanthropic Trust.
Much of this money moves around online. To meet donors where they do business, Fidelity unveiled a new widget that enables them to direct a donation from their charitable accounts while on a particular charity's website. The Boston Symphony Orchestra and Museum of Fine Arts were among the early partners.
Innovative models of giving like crowdfunding are enormously attractive - not only for the cash potential, but also for producing a kind of social frisson among a group that can also drive attendance and loyalty.
But for old-fashioned transformation, nothing beats the impact of a few enormous checks. Warren Buffett and Bill Gates made "Giving Pledges" public in 2010 - a commitment to give away most of their wealth before they die - and since then more than 100 other billionaires have signed on, including Michael R. Bloomberg, George Lucas, Ronald O. Perelman (son of Philadelphia businessman and philanthropist Raymond Perelman), and Facebook chairman Mark Zuckerberg.
Philadelphia fund-raisers frequently talk among themselves about some notable adherents to a decidedly more retrograde mind-set: a few nonagenarian billionaires who seem to be showing signs that they've decided to take it with them.
Says Burd, diplomatically: "While some of the wealthiest individuals in the nation live in this community, they have on average a far lower philanthropic profile than comparably affluent individuals in other major cities."
Not so William A. "Wally" Loeb. A former elementary school teacher and owner of a Lancaster campground, Loeb, 79, moved to Center City more than two decades ago to be near his mother, and to "take advantage of all the cultural opportunities." With no children of his own and a deep interest in the arts, he set up two funds with the Philadelphia Foundation that today award about $18,000 a year to four groups.
That model, outsourcing some of the logistical tasks of being a donor, "allows a small philanthropist like myself the ability to operate," and he has become personally involved with many of the groups he supports. "It has given me a great deal of pleasure."
With the "democratization" of philanthropy, the Giving Pledge of billionaires and widgets that makes it easier to give than ever, it might be expected that overall U.S. charitable giving would be going up. In fact, according to Giving USA, Americans gave $316.2 billion in 2012. That's about 2 percent of the gross domestic product, which is approximately where it has sat for several decades.
While local philanthropy in the last era was dominated by a few big names - Lenfest, Annenberg, Pew - arts leaders see a new paradigm taking shape: a larger, more diffuse group of philanthropists. There was a time not long ago when, in times of crisis and opportunity, Philadelphia turned to a group of leaders who could and did respond. They were a loose-knit and unofficial assembly of business, government, and old-money types - Robert Montgomery Scott, Willard G. Rouse 3d, Richard A. Doran, G. Stockton Strawbridge, W. Thacher Longstreth. Their day jobs were divergent and they didn't always agree with one another, but their abiding interest was in furthering the health and vitality of the region.
They also had the ear of the city's big money.
All are gone now. Who are those leaders today?
"It's not at all clear there is a successor group. In Philadelphia there are not those go-to people anymore," says Capanna, the former Settlement Music School executive director.
"You can identify some individuals, but the sort of quartet or the six or 10 that you could name 10, 15 years ago, they don't exist anymore," says the Philadelphia Foundation's Swinney. "I think it's in part because we've to a great extent lost the civic-mindedness of the old families. By that, I mean people who are concerned about the community as a whole."
It doesn't help, he says, that many dominant Philadelphia businesses were once run by executives from families with long histories here. Now, he says, corporate Philadelphia is run by executives who are involved while they are here, but might be just passing through.
"It's not just the money," Swinney says, "it's also the leadership, because the leadership is fairly weak across government and across the corporate sector. We're a branch town except for Aramark and Comcast, and look at how visible they are. So the leadership issue is almost as important as the money, because if you have leadership saying we as a community have to do this, then they can encourage others to do it."
Several observers are confident that a large group is standing by, ready to take action when the need arises.
"There will be other people of wealth who will appear," says Heisman, the National Philanthropic Trust's president. "At this particular moment in time there's a vacuum. You won't know who they are until they are tested."
That test, the arts community might argue in a rare chorus of accord, has arrived.