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January 31, 2013

Identifying Connections Between Founders and Foundations

Dr. Arthur Allen, associate professor of accountancy, is currently studying the connections between a private foundation and its founder. Is there an integral connection between the name of an organization and the style with which that individual runs the foundation that might be jeopardized when the founder is no longer around?

“When you have founders like Bill and Melinda Gates, who gave a lot of their money to get their foundation started, we would expect them to be particularly passionate on those philanthropic issues,” Allen said. “What we want to know is, if the founder has passed on such as Henry Ford, is that going to make them less efficient? Are they going to start spending more money on administration?”

Allen is also looking at the connections, intelligence and business acumen that someone like Bill Gates brings to the table, to see if the personal touch of the founder is significant to its originally intended goals.

In a similar study, Allen is taking a closer look at how executives of foundations are compensated, and in turn, how big donors may want to be involved in how their contributions are spent.

“Some founders may believe that they are able to pass on their values, and some of them have decided to spend down their foundational monies in their lifetime. Warren Buffett was concerned enough about that to ask Bill Gates to spend the money he donated as he is giving it.”

Allen and his colleagues have presented papers on their work at the American Accounting Association’s annual convention.