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Philanthropic Critic : Assaying Foundations on Their Policies of Giving

December 06, 1985|DAVID JOHNSTON | Times Staff Writer

Waldemar Nielsen studies reverse alchemy. That's what happens when entrepreneurs give away their gold to finance leaden ideas.

Nielsen, who is widely regarded in foundation circles as America's preeminent philanthropic critic, is fascinated by how men whose bold actions create great wealth often turn into wimps when it comes to giving their money away.

"Big money for small ideas," Nielsen says about the state of foundation grant making in America. Most large foundations "simply don't have the ideas, leadership, courage and convictions on a scale comparable to their assets."

Nielsen's harshest criticism is leveled at the W. M. Keck Foundation, the largest in Los Angeles and 15th largest in the nation, which he calls the worst big foundation.

In a new book titled "The Golden Donors: A New Anatomy of the Great Foundations" (E. P. Dutton; $25), Nielsen assays the quality of philanthropy at America's 36 largest foundations, which together have $22 billion in assets, about one-third of the assets of all 23,770 foundations in America.

Nielsen, 68, also alleges flaws and follies at such prominent institutions as the Ford Foundation, the nation's biggest, the Rockefeller Foundation, long acknowledged as the most prestigious, and the MacArthur Foundation, which financed his new study.

Nielsen, a former Ford Foundation officer and New Yorker writer, is the philanthropic consultant to Atlantic Richfield and has advised such wealthy people as J. Paul Getty and the Hall greeting card family on how to establish their philanthropies. (Nielsen said he urged Getty not to create an operating foundation, saying it would distort world art prices, but his advice was rejected.)

Nielsen first examined the state of philanthropy in "The Big Foundations," a 1972 book that stirred winds of change in the rarefied air of many major foundations. The book infuriated many foundation trustees, and is widely believed to have cost a few foundation executives their jobs, but it also has won praise for its long-term effect in prompting major improvements at many foundations, notably California's James Irvine Foundation, which 13 years ago Nielsen called "one of the four warts on the face of philanthropy."

His new book, written in an Olympian voice and relying heavily on unnamed sources, has also upset many foundation trustees and executives. But more than a dozen leading nonprofit executives and trustees told The Times that despite what each regards as serious flaws in Nielsen's approach, they believe "The Golden Donors" will have an important long-term impact on the grant-making policies of major foundations.

Nielsen calls the $500-million Keck Foundation "a low-grade foundation controlled by persons with low standards of philanthropic responsibility . . . (which since being activated in 1980) has been continuously embroiled in controversy, litigation and scandal."

'Worst in Country'

He wrote that "judged by its record (through mid-1984 the Keck Foundation) was the worst big foundation in the country."

Thomas M. Reed Jr. of Braun & Co., the public-relations counsel for the Keck Foundation, said there would be no comment.

Nielsen criticizes oilman Howard B. Keck, 72, the president of both his late father's foundation and the trust that finances it, for taking "hoggish" fees.

Howard Keck, whose personal wealth Forbes magazine estimates at $260 million, received $705,000 last year from the Keck Trust, which finances the foundation. Hanna & Morton, the Los Angeles law firm of his son-in-law, James P. Lower, received $203,000.

Keck has received $2.6 million in fees as a charitable trustee and Lower's firm has received $765,000 in legal fees in the past four years under an agreement negotiated with the state attorney general's office. The fees were approved by a Los Angeles probate judge, standard procedure with charitable trusts.

Nielsen notes that while the fee negotiations were under way, Gov. George Deukmejian accepted about $185,000 in contributions to his gubernatorial campaign from Howard B. Keck and a brother, who has since died, who was also to share in the trustee fees. Deukmejian returned the contributions when they were disclosed by The Times.

The fees were challenged by Howard B. Keck's sister, Willametta K. Day, who declared herself "outraged by her brother's audacity in seeking these outrageous fees." Day tried to get the foundation board to investigate the fees, but, Nielsen writes, the Keck Foundation board "dominated by Howard Keck rejected them all."

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