News and analysis
September 08, 2016

Nonprofits Fret as Clinton Foundation Plans to Transfer Programs

J Pat Carter, AP Images

Hillary Clinton and Donna Shalala share a laugh while speaking at the University of Miami in February 2014. At the time, Ms. Shalala was the university’s president; she now leads the Clinton Foundation, which will undergo major changes to its programs and leadership if Ms. Clinton is elected to the White House.

Clinton Foundation President Donna Shalala said Wednesday that the organization has largely solidified plans to terminate, reconstitute, or hand off the bulk of its international programs if Hillary Clinton is elected president. It would be a major undertaking — the political context is without precedent, for starters — and has some nonprofit leaders worried.

"I think that this whole thing is going to work or not work depending on how good they are going to be at transferring these relationships," said Carine Roenen, head of Fonkoze Foundation in Port-au-Prince, Haiti, which has worked with the Clinton Foundation. "If they really do it well, they can actually start working with and find other intermediaries who could pick up some of the work that it has been doing. Probably not all of it."

Ms. Shalala, who took the helm of the operating foundation in June 2015, said she and colleagues are moving through its portfolio program by program to ensure, where possible, continuity of services and financial support from donors. They have a strategy for "90 percent of the portfolio that we believe needs to be transitioned," she said.

"We will be making announcements as we’re going along," Ms. Shalala said during a telephone interview with The Chronicle. "But we have to be very careful because we shouldn’t be presumptuous about the campaign. We’re not that arrogant."

Ms. Shalala declined to state whether the Clinton Foundation would add to or change the makeup of its board if Hillary Clinton is elected president. When asked if naming a prominent conservative or Republican to the board might help to defuse partisan criticism, she said the foundation has always been a nonpartisan organization.

"Many of our donors are Republicans, including Donald Trump," Ms. Shalala said.

Former President Bill Clinton announced last month that the foundation will stop accepting donations from corporations, foreign governments, and foreign citizens if his spouse wins the November election, cutting off tens of millions of dollars in revenue.

The foundation had total revenue of $337.9 million, including $217.8 million in donations, in 2014, according to its most recently available audited financial statements. The organization says its work has helped 11.5 million people in the developing world get access to HIV/AIDS treatment, dramatically reduced the cost of malaria drugs in nine countries, and spurred thousands of commitments from corporations and others to address social problems. The charity has earned high marks with third-party ratings groups. For example, nonprofit watchdog Charity Navigator gives the organization four stars, its highest rating.

On Wednesday, Ms. Shalala restated plans to spin off some of the Clinton Foundation’s international programs, handing them to existing nongovernmental organizations or foundations or establishing new 501(c)(3)s to carry on the work. She cited the Clinton Giustra Enterprise Partnership, an antipoverty project paid for by Canadian mining mogul Frank Giustra and Mexican telecommunications billionaire Carlos Slim, as one example of work that would be done under a newly created charity.

The foundation has already said it will terminate the Clinton Global Initiative and that this month’s convening of the annual meeting — for years a magnet for nonprofit, corporate, and government leaders — will be the last. The initiative will continue to operate CGI University, an affiliate program for young leaders. The foundation will also still run Bill Clinton’s presidential library in Little Rock, Ark.

Worldwide Review

Ms. Shalala declined to give details on the future of other programs should Ms. Clinton wins the election, saying specifics will be forthcoming.

"When a foundation, whether it is an operating foundation or a grant-giving foundation, decides to phase out a program, or to transfer it to another partner, it takes some time to do that," Ms. Shalala said.

The goal is to make any changes "responsibly and ethically, and with a real sensitivity to the people we are helping all over the world," Ms. Shalala said. She cited the work of MacArthur Foundation President Julia Stasch as an example.

"When she came in, she phased out a bunch of programs, and if you look at her statements, there were multiple-year grants to phase out those programs, to make sure that the programs not only had good homes but that they could survive and continue," Ms. Shalala said.

Conflicts of Interest

The Clinton Foundation has been a target for brickbats from Republicans, who claim it has served as a vehicle to enrich the former first family and that its donors received beneficial treatment from the State Department when it was led by Hillary Clinton. Nonprofit leaders expressed some sympathy for the foundation’s defensive posture, but also criticized it for not moving fast enough to guard against conflicts of interest, or even the appearance of conflicts of interest.

"I think they were wise; I think they would have would been wiser to do it sooner," Jane Wales, a vice president at the Aspen Institute focusing on philanthropy and social innovation, said of the changes.

The Clinton camp could argue that if the foundation was to forgo foreign donations for charity work, Republican nominee Donald Trump should forgo foreign investment dollars for his business ventures, Ms. Wales said. But she added, "This is a matter of perception, It is not a matter of reality, so making a reality-based argument doesn’t get you very far."

CharityWatch President Daniel Borochoff said he worries that what he considers undue suspicion about the Clinton Foundation will cast a pall over other nonprofits. Then-Secretary of State Hillary Clinton meeting with a major donor does not mean corrupt dealings are taking place, he said, noting that the Clintons take no salaries from the foundation.

"There is so much criticism leveled again the Clinton Foundation that could be leveled against every charity, or many charities," Mr. Borochoff said.

Ms. Roenen of the Fonkoze Foundation, which has received about $92,000 from the Clinton charity since 2014 to run two literacy and skills-training programs for impoverished women in Haiti, said it would be a pity to see the organization give up its international work. She said the Clinton Foundation has been especially good at facilitating partnerships among nonprofits.

"They had just started getting to know some of the more solid grass-roots organizations and providing them with support, not just for programs, but also to strengthen institutional capacity, which I thought was an excellent way of doing things," Ms. Roenen said.

One of the biggest potential losses if the Clinton Foundation’s Haiti programs are cut loose is its staff’s institutional knowledge and learning, she said.

"Our survival doesn’t depend on them, but I hope for those more vulnerable partners they have, they will be able to use their network and contacts to make sure someone picks up the thread of their work," Ms. Roenen said.

Fresh Scrutiny

In recent weeks, the Clinton Foundation has faced a fresh wave of scrutiny and criticism of its donor rolls, specifically whether foreign and corporate contributors sought favors or access to the politically powerful Clintons.

The heat dates back years.

In April 2015, the same month Hillary Clinton formally announced her candidacy for the Democratic presidential nomination, the foundation said it was implementing a number of changes to increase transparency. It agreed to release an online donor database and publish quarterly reports on contributions; suspended Clinton Global Initiative events abroad; and stopped accepting donations from foreign governments except for a half dozen countries that had previously funded foundation programs and have friendly ties with the United States.

Now, the foundation is again pushing back, while also preparing for major changes in case of a Hillary Clinton victory. In addition to restricting its fundraising to U.S. foundations (not including those affiliated with corporations) and U.S. citizens and permanent residents, Bill Clinton said last month that if his wife is elected he will step down from the board.

"The process of determining the Clinton Foundation’s future if Hillary becomes president has not been easy," Mr. Clinton said. "It’s an unprecedented situation, so there’s no blueprint to follow."

The Clintons and foundation executives have resisted calls to shut down the organization entirely. Those urging such a move are "know-nothings," Ms. Shalala said Wednesday. She said doing so would be irresponsible.

The foundation’s nonprofit partners "would expect no more or no less from us [than] to manage this carefully so that the beneficiaries don’t get hurt. So the work continues," she said.

The organizations that would take up some of the Clinton Foundation’s programs are based in the United States and abroad, and are all well-known, Ms. Shalala said. The conversations with those groups have "gone very well," she said, noting that many of them are longtime partners. That planning is being led by Maura Pally, senior vice president of programs, and the heads of each of its initiatives.

Send an email to Megan O’Neil.