Charitable foundations provide essential support to the fine arts, education, social services, and other philanthropic endeavors in the United States. These foundations thrive based on their capacity to generate donations and funds from individuals, companies, family endowments, and other institutions. Ranging from small community and nonprofit entities to sprawling organizations — the Bill and Melinda Gates Foundation has an endowment of more than $37 billion, for example — foundations play a pivotal role in the solicitation and distribution of charitable funds.
Unfortunately, though, two recent cases serve as cautionary tales about the ways that famous founders can rally critical support for a cause, but also contribute to its undoing.
In 1997, having survived cancer, cyclist Lance Armstrong created the Lance Armstrong Foundation (LAF) to support others afflicted with the disease. Through parties, races, memberships, and other initiatives, the LAF funded survivorship programs, education, research, and support services.
At the same time, Armstrong’s success and repeated Tour de France wins gave hope to survivors and publicity to the foundation. In 2004, the sale of tens of millions of yellow LIVESTRONG wristbands expanded the organization’s reach and power. In 2009, the LAF became known as the LIVESTRONG Foundation.
Throughout this time, Armstrong denied the steady stream of allegations that he illegally used performance enhancing drugs. This fall, amid the weight of mounting evidence against him, Armstrong suddenly decided to stop officially challenging the allegations. He was summarily stripped of his seven Tour de France titles, dropped from endorsement deals, and banned from the sport of cycling for life; he also stepped down as chairman of the foundation that he had helped launch.
Another recent case illustrates a similar fall from grace. Wyclef Jean, a well-known musician and member of the hip-hop group The Fugees, established his foundation in 2001. Known as Yéle Haiti, the organization provided scholarships, meals, school funding, and other resources. It grew exponentially following the devastation of the 2010 earthquake in Haiti thanks to subsequent fundraising appeals from Jean via social media.
Despite financial success, the organization closed this summer amid allegations of mismanagement, including the failure to submit tax returns, nepotism, improper transactions, and nonexistent and underwhelming services. One of the more galling claims was that expenses included payments to Jean for performing at his own charity’s fundraiser, though at “less than market value.” For his part, Wyclef Jean has pushed back against the critics, calling it a “crucifixion” and ascribing problems to a few personnel and organizational growing pains. He also cites the long-standing problems facing Haiti and notes that his is not the only NGO to struggle to make progress there.
On the surface, Yéle Haiti and LIVESTRONG may have little in common: The first is shuttered, the second survives; the first was widely accused of poor management, the second is not. But both had charismatic and passionate founders and were intended to address compelling and timely needs. Their failures hurt not only their employees and potential beneficiaries, but also their donors and the philanthropic community as a whole. The big names that drew donations in the beginning also drew exposés at the end.
As with the William Aramony scandal at the United Way and the more recent backlash against the Susan G. Komen Breast Cancer Foundation, high-profile failures such as the Lance Armstrong and Wyclef Jean cases create cynicism and distrust.
If wearing a yellow wristband originally signified respect for a heroic athlete and cancer survivor, does wearing it now signify support for a liar and cheat? To the extent that fame brought people and dollars to LIVESTRONG, will infamy drive them away? Perhaps. But for those who identified more strongly with the mission than with the founder, the commitment likely will endure. How many supporters fall into each category remains to be seen, but both the benefits and perils of high-profile leadership are evident now.
Donors who contributed to Yéle Haiti because they were fans of Jean’s music and were moved by his appeals on Twitter, may not notice the charity’s closing or be perturbed by the allegations of misconduct. Others, though, take notice, unfairly equating Yéle Haiti’s downfall with successful celebrity work in the region (see: Sean Penn) or elsewhere (see: Angelina Jolie). For more casual observers, these failures fit into an overall narrative: that money is wasted by charities and that those who lead them have flawed or suspicious motives. With competition for donations high and resources low, fundraising is already hard enough. Skepticism just makes the job more difficult and diminishes the return on investment.
Not everyone should start a foundation and not everyone should lead a foundation. But this does not mean there is no place for the famous in the work of foundations. Many worthy causes that already exist struggle in anonymity and could benefit from the involvement of a high-profile champion. Concerned celebrities can develop fiscal sponsorship arrangements or partner with community foundations to channel their gifts through established and reputable entities.
If they insist on starting from scratch, stars should make sure that professionals are hired to advance their cause. Assigning clear and appropriate roles to the founder and to the administrative leadership will help protect against conflicts of interest and insulate the mission if the star sponsor turns out one day to have feet of clay.
©2012 Institute for Global Ethics