Lewis Cullman

PHILANTHROPIST AND AUTHOR

 

Reprinted from the issue dated June 10, 2004

 

 

 

A Seasoned Perspective on Giving

Veteran philanthropist outlines ways to spur change

 

By Rebecca Gardyn

New York

 

 

While many men his age would already have left this city and its cold, snowy winters for a sunnier retirement spot, Lewis B. Cullman isn’t a typical 85-year-old. Not only is winter his favorite season, but he staunchly believes that retirement is a colossal waste of time.

 

“I don’t understand people who can’t wait to retire,” says Mr. Cullman, a multimillionaire businessman turned full-time philanthropist. “They go to Florida, get drunk, and play golf. To me, that’s not living. If you don’t have a reason to get up in the morning, you might as well be dead.”

 

Indeed, while Mr. Cullman, who has just published his memoir, Can’t Take It With You: The Art of Making and Giving Money, sold the last of his business ventures almost five years ago, he continues to come in each morning to his sprawling glass-enclosed penthouse offices in midtown Manhattan.

 

In between attending meetings of the numerous nonprofit boards and committees on which he serves, Mr. Cullman spends his time conducting research on new charitable programs, talking with fellow donors, and figuring out how best to distribute the remainder of his fortune. “I probably work harder now than I did when I was in business,” he says.

 

He and his wife of 41 years, Dorothy, have donated more than $223-million and countless hours to charitable organizations over the years. Their giving so far has been focused primarily on cultural, educational, and scientific charities in the New York metropolitan area.

 

Time Limits for Foundations

 

Most of the couple’s giving is done through the Lewis B. and Dorothy Cullman Foundation, which employs one full-time and one part-time staff member and holds about $65.6-million in assets. After the Cullmans die, all of the money left in the fund will be distributed within a year, and the foundation will cease to exist.

 

Mr. Cullman built his fortune through the buying and selling of businesses, including the Orkin Exterminating Company and the calendar giant At-A-Glance. Over the years, he has applied his business savvy to his philanthropic work and developed some strong opinions about how the charitable world should operate.

 

In his book, he outlines his views, in the hope of spurring change. Among them:

 

  • Foundations should be required to spend all their assets within 50 years after their creation. “So much of the vast wealth of America is tied up in sterile private foundations that exist primarily for their own self-perpetuation,” he says. In his book, he advocates changing the tax laws to limit the lifespan of a foundation. “Sure, the average life of private foundations would be reduced accordingly,” he writes. “But would the wealthy be less likely to create and fund them? I don’t see why.”
  • Charitable gifts should have a few strings attached. “My gifts come with stipulations and restrictions -- not many and not complicated -- because I don’t want them to disappear into some general money pool where I can’t follow their progress,” he writes.
  • Donors deserve recognition. Mr. Cullman says his and his wife’s names appear “on quite a number of walls and over quite a number of doors in and around New York City,” although the order of their names depends on which one of them has the stronger interest in a project. While his wife “has never much liked all this naming,” says Mr. Cullman, he has “come to believe that with great commitment, a little recognition is due.” He has even taken steps to ensure such recognition is permanent. “Too many institutions in their greed and need -- and sometimes plain obtuseness -- end up being disdainful of the people who support them,” he writes. “If some institution wants to rip Dorothy’s and my name off a wall after we’re dead and gone, I want it to have to hire a damn good lawyer to break the faith.”
  • Doing good doesn’t have to mean “taking a vow of poverty.” Mr. Cullman says he and his wife still enjoy some luxuries in life, including owning a time-share in a private jet “to carry us in comfort whenever we travel.” He adds: “Our giving hasn’t been an exercise in self-denial or doing without.”

 

“While I’m Still Alive”

 

Mr. Cullman credits his mother for helping to shape his views on philanthropy, including the idea that it’s better to give money away while still alive than to give it as a bequest. “She’d say: ‘What do I care what people have to say about me when I’m dead? I might as well get some pleasure out of giving and helping people while I’m still alive,’” he says.

 

His father, Joseph Cullman Jr., ran the family’s lucrative tobacco company, Cullman Bros., and fully expected all of his five children to follow in his footsteps. Most of them eventually did. (The eldest, Joseph Cullman III, served as CEO of Philip Morris from 1957 to 1978.) But Lewis Cullman, the youngest child, never developed a taste for tobacco. He wanted to be a weatherman.

 

Mr. Cullman become a meteorologist in the Navy during World War II, and eventually ran his own weather-forecasting company. And to this day he remains fascinated by the weather, especially snow -- he is still an avid skier.

 

But he built his fortune by spotting good ideas before they became big financial successes. As an investment adviser in the early 1960s, he started the Incubation Fund, which invested in companies that were starting out or just going public. Many of the companies the fund invested in are today household names, including Denny’s Restaurants and Samsonite.

 

Mr. Cullman is also credited in financial circles with being one of the first to employ a strategy of buying and selling companies that later became known as a “leveraged buyout.” In addition to Orkin, which he bought with two partners for about $1,000 in 1964 and sold shortly after for several million dollars, Mr. Cullman bought the company now known as At-A-Glance, one of the nation’s largest manufacturers of calendars and appointment books. He paid $13-million at the time, but when he sold the company in 1999 to the Mead Corporation, the price tag was $550-million.

 

A big believer in serendipity, Mr. Cullman takes only partial credit for his financial achievements. “I think opportunities come into every human being’s life,” he says. “Some people recognize those opportunities and take advantage of them, while others don’t and just let them go by. Fortunately, I’ve been smart enough to take advantage of the lucky breaks that have come my way.”

 

A Team Effort

 

Just as he found significant financial success by investing in small, lesser-known companies, Lewis and Dorothy Cullman -- “We really are a team,” he says -- have always tried to apply the same principles to their charitable giving. “We’re not ones who like to give to what one might call ‘recognized charities,’” he says.

 

Indeed, it was through a simple dinner-party conversation that he learned about his very first philanthropic pet project: the American Chess Foundation. Founded in New York in the early 1950s, the charity’s original purpose was to develop championship chess players for world competitions.

 

But the group later changed its name to Chess-in-the-Schools after a fellow board member and a chess coach had the idea to shift the mission and use chess as an educational and motivational tool for students at schools in poor neighborhoods.

 

Mr. Cullman says he was immediately convinced the idea made sense, and he put his energy into finding the money to make it happen. In 1990, when the group held its first major fund-raising event tied to a U.S. Chess Federation dinner, Mr. Cullman called nearly everyone he knew, asking them to donate. The effort helped the group bring in nearly $250,000.

 

“Lewis was really the one who pushed the idea of bringing chess into the schools as a teaching tool, and although he was met with a lot of resistance from the board in the beginning, he never gave up on the idea,” says Marley Kaplan, president of Chess-in-the-Schools, who has collaborated with Mr. Cullman for the last decade. “If it hadn’t been for his constantly challenging the everyday business of what the organization was doing, this program would never have gotten off the ground.”

 

Indeed, even today, Ms. Kaplan says that she is on the telephone with Mr. Cullman at least once a day.

 

“Not a day goes by that he doesn’t have an idea about a new donor, or how to interest a current donor in doing more, or some way for us to get more recognition,” she says. “He is tirelessly working for us.”

 

The Cullmans have put $9.3-million of their own money into the chess program, which has taught the board game to some 38,000 children in 160 elementary and junior-high schools in New York City.

 

Earmarking Big Gifts

 

While the Cullmans prefer supporting small charities, they have also made major donations to several of New York’s largest and most recognizable charities. When giving to a large organization, however, the Cullmans almost always earmark their gifts for specific projects.

 

For instance, rather than make a blanket donation to the New York Public Library, the couple donated $10-million to establish the Dorothy and Lewis B. Cullman Center for Scholars and Writers at the Humanities and Social Sciences Library. The program, now in its fifth year, offers 15 fellowships annually to scholars, journalists, and other writers, providing them with work space at the library and funds for projects that use the library’s resources. Mrs. Cullman says she saw a need for a facility that would link the scholarly and creative worlds with the general public.

 

The Cullmans have given more than $30-million to the library’s research affiliates, and devoted many hours of their time to the organization.

 

While having such hands-on donors can sometimes be a mixed blessing for a charity leader, Paul LeClerc, president of the New York Public Library, says the Cullmans “are involved in the right kind of way.”

 

He explains, “By that I mean that they care deeply about the organization itself and the programs in which they invest. As is the case with sophisticated donors, they like good reporting and knowing how their money is being spent. But they also have a great deal of trust in the library’s administration to do the right thing with their gifts, so they don’t get involved in micromanaging.”

 

Mrs. Cullman serves on the library’s board, as well as several others, while Mr. Cullman currently serves on five nonprofit boards.

 

Says Mr. Cullman: “When you really get involved with these organizations, when you’re on committees and on boards, right there in the trenches, you quickly see what the shortcomings are, and what the needs are.”

 

He adds:“If you’re just learning about an organization’s needs from some development officer with a sales pitch, it’s meaningless.”

 

Making the Meetings

 

This hands-on philosophy gets Mr. Cullman to board and committee meetings early and often.

 

“Lewis is incredibly dedicated to the causes we support,” says Mrs. Cullman. “Sometimes I feel like if I don’t make every board meeting, it’s not the end of the world,” she says. “But Lewis won’t miss a meeting for anything. It doesn’t matter if it’s at 7:30 a.m. or 7:30 p.m., he’ll always be there.”

 

Mr. and Mrs. Cullman also try to use their generosity to encourage the same from others.

 

When, for example, Mr. Cullman learned that the Neurosciences Institute -- an arm of the Neurosciences Research Foundation, in La Jolla, Calif., that supports research on memory, thought, and other biological brain functions -- faced a major budget shortfall in 2000, the Cullmans stepped in and announced what they called a “drop-dead charity challenge” in which they would make a $10-million gift contingent upon the organization’s raising an additional $15-million by June 2005.

 

The organization has currently raised $9.5-million of the matching funds. Says Mr. Cullman: “To me, that’s making our $10-million work about as hard as it can, in all the most useful ways.”

 

Frustrated by Flaws

 

It is precisely Mr. Cullman’s conviction that good work can be done with the proper management of funds that has made him so frustrated by what he considers to be the flawed tax policies that govern private foundations today. He says he is on a crusade to change current tax law, which requires foundations to spend a minimum of 5 percent of their assets each year on grants and related expenses.

 

“The job of a foundation is to be a depository of funds and to make grants to grantees,” he says. “It’s inconceivable to me that a foundation can start out with $50-million and end up with $1-billion if it is giving money away.”

 

But Mr. Cullman recognizes that his goal of requiring foundations to distribute all their assets, including the original principal, within 50 years of their creation will be a hard sell.

 

“I don’t know if things will ever change,” he says. “The grantees can’t say much because they’re scared of being blacklisted, and many big donors are related to or are on the boards of these private foundations, so they don’t want to rock any boats.”

 

Foundations, he says, “are considered to be right up there with apple pie and motherhood. People say, How dare you criticize these do-gooders? Well, I don’t think they’re such do-gooders. They could do a lot more good if they were really doing what they were set up to do.”

 

Recent news articles alleging improper spending, lavish travel, and excessive compensation on the part of foundation trustees and executives, however, may begin to sway public opinion, he says. “When the Enron scams took place, the first reaction from people was that it was just an isolated case, and before you knew it there was WorldCom and Tyco. Next came the mutual-fund companies. I really think that the next big scandals will come out of the private foundations. If the public gets enough disclosure, enough transparency, more people are going to start asking the right questions.”

 

Until then, Mr. Cullman plans to continue talking to his peers about his views, and writing articles, like his critique of foundations in The New York Review of Books in September 2003. “I’ll make as much noise as I can, for as long as I can,” he promises.

 

And Mr. Cullman shows no signs of slowing down anytime soon. As he states at the end of his book, “Every phase of my life has brought something new and exciting. Who knows what the next decade might hold.”

 

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Copyright © 2004 The Chronicle of Philanthropy

philanthropy.com Reprinted with permission.