The Clinton Foundation Reveals Its Donors: Should You?

A fundraising foundation has two world-famous founders, a global network of generous donors, and a track record of grantmaking success. One of the founders plans to run for higher office, and the foundation makes the decision to be highly transparent about its donor base to ensure that there can be no suspicion of undue influence on the potential candidate. End of story.

Unless your founders happen to be Bill and Hillary Clinton.

Over the past several weeks, Foundation Center has been approached by numerous reporters asking — in some cases literally — "There's smoke, right? What about a fire?" Our response has been an immediate "No," followed by an explanation as to why the Bill, Hillary & Chelsea Clinton Foundation in fact represents a model of transparency when compared to other grantmaking public charities. (Unlike private foundations endowed by a single donor or donor family — think Ford Foundation — grantmaking public charities like the Clinton Foundation sustain their work by raising funds from a variety of donors.)

[Review] 'The Chocolate Trust: Deception, Indenture and Secrets at the $12 Billion Milton Hershey School'

Would you be concerned if you knew there was a charity that served only a couple of thousand children each year even though its asset base was  the same size as the Ford Foundation's? Would you wonder what that charity, three times the size of the largest U.S. community foundation, did with the money it accumulates and doesn't spend each year? Would you wonder who benefits from it? 

Bob Fernandez, a reporter for The Philadelphia Inquirer, wondered all that and more about the $12 billion Hershey School and decided to do some digging. The result is The Chocolate Trust (Camino Books, 256 pages; $24.95/paper, $9.99/ebook).

The book is important not simply for what it reveals about the trust, about those who have profited from its sometimes questionable practices over decades, and about the kids who have been neglected as a result of those practices. The Chocolate Trust also is a cautionary tale for anyone who thinks nonprofits can self-regulate or rely on local and state government authorities who too often are ethically compromised and politically constrained to keep them on the straight and narrow. 

First, a little history. In 1909, Milton Hershey, who had started a chocolate company and set out to build a town for its workers, established the nonprofit Hershey Industrial School, a residential facility to serve young, fatherless, white boys. In 1918, a few years after Hershey's wife, Kitty, died – they never had children and had no heirs – Hershey transferred his land and other assets to his "orphanage," making it a very wealthy entity indeed.

Hershey stipulated that those assets were to be managed by the Hershey Trust, part of a for-profit bank, and he retained a significant measure of control over the school's operations by reserving to the bank the right to appoint its board members. In simple terms, the bank controlled the school's assets and operations, and Hershey owned the bank – the reverse of standard operating procedure in the charity world, where donated assets typically are controlled by the charity to which they have been donated. 

Most Popular PhilanTopic Posts (May 2015)

A sharp commentary on the transformative power of "open" board policies, an impassioned plea for more funding for basic research, a persuasive discussion of the relationship between brand and impact, and great posts on engaging and managing donors — the things people were reading on PhilanTopic in May were as varied and compelling as the weather here in NYC. We think Samuel Clemens would approve...

• How Nonprofit Branding Strengthens Impact: Part 1 (Matt Schwartz)
• What Does It Really Mean to Be an Engaged Donor? (Derrick Feldmann)
• True Board Engagement: How Openness and Access to Board Conversations Has Changed 'Creating the Future' (Karl Wilding, Justin Pollock)
• What Is Donor-Centered Moves Management? (Claire Axelrad)
• [Infographic] 10 Traits That Make Nonprofits Great (Horatio Alger Association)
• Investing in Fundamental Science: A Grantmaker's Perspective (Harvey V. Fineberg)
• Creating a Culture of Mentorship Among Young Professionals — It Starts With Senior Management (Peter Sloane)

What have you read/watched/listened to lately that made you think? Share your finds in the comments section below, or drop us a line at mfn@foundationcenter.org.