June 01, 2015

Flouting Conventional Wisdom: an Influential Donor’s Legacy

The death last week of Randolph (Randy) Richardson, who headed his family’s foundation in the 1970s and ’80s, went largely unnoticed, but he was an unconventional donor who had a significant influence on philanthropy.

His grant making played a key role in advancing ideas, such as supply-side economics and an anti-Communist foreign policy that supporters as well as critics credit with moving American government in a more conservative direction. But his legacy applies to all grant makers — especially his belief that good grant making was essentially a process of finding talented people with great ideas and giving them money and freedom to run with them.

I worked for Randy when he led the Smith Richardson Foundation, whose endowment came from his father, the businessman who built the company that sold Vicks VapoRub and other health-care products.

Randy was by no means a public-policy expert. In fact, he left high school to fight in World War II and to a large degree educated himself through a lifetime of reading history, economics, and philosophy. Nor did he ever hold public office or take a particularly active role in politics. To the contrary, he was frequently as skeptical of the sincerity of public figures with whom he agreed as those with whom he disagreed. While he served as a director of several family companies, he spent his working life trying to create small businesses in industries as different as publishing and mariculture.

But if Randy did not have the academic, political, or corporate credentials often associated with foundation leaders, he did possess several convictions about philanthropy that shaped the work of the Smith Richardson Foundation and enabled it to have an impact far greater than a comparatively modest budget of a few million dollars annually might have predicted.

He liked to say that philanthropy’s goal was to "find good people who are going our way and support them."

Not for Randy were such currently fashionable nostrums as "strategic philanthropy," "grand challenges," and "capacity building" or their earlier equivalents.

For him, a good grant was one that provided funding to a promising scholar or organization that was too little known or held views too far from the mainstream to get support from other donors. (Martin Feldstein and Michael Boskin, two future chairs of the President’s Council of Economic Advisers, were among many who benefited from Smith Richardson’s support early in their careers.) What ultimately mattered for successful philanthropy, in other words, were not the visions and ideas of a foundation’s directors, staff, and consultants but those of its grantees.

Although he expected nonprofits the foundation supported to show results, Randy knew these could not be simply or precisely measured. Much of the foundation’s money, for example, went to think tanks like the American Enterprise Institute and magazines such as The Public Interest, which had relatively small numbers of followers but the right ones: policy makers and opinion shapers who could be persuaded by well-researched and well-argued articles and books. That might take many years, which meant a foundation’s funding needed to be long term, not continuously under review in pursuit of greater impact, as advocates for "effective philanthropy" urge.

Nor did Randy attach much value to "transparency" in grant making. To be sure, he understood and accepted the responsibility of foundations to be accountable to the public (The Congressional investigations of philanthropy during the 1960s were never far from his mind.) But apart from fulfilling legal requirements, he saw their obligation more in terms of what they did than in how they were run.

The foundation’s governance was largely in the hands of Richardson family associates and scholars whose judgment Randy trusted. Its grant agreements told recipients they could not publicly acknowledge the foundation’s support unless their institutional rules required them to do so. And directories pointed grant seekers not toward the foundation’s program officers but to its back office, which usually replied with polite turndown letters.

To some, both in the 1970s and now, these procedures embody the kind of elitism and secrecy that is harmful for foundations to practice. But a good case can also be made that they enabled the consistency of purpose and freedom for focused staff work that permitted Smith Richardson to pursue its mission more efficiently and better serve the public.

However, as mindful as Randy was of their public responsibilities, he never wavered in his belief that foundations were products of the private sector, the fruits of entrepreneurs like his father, and ought to be especially concerned about its health. This was not a new idea in American philanthropy; Andrew Carnegie, for one, subscribed to a version of it. But by the 1970s, it had been challenged by the notion that philanthropy’s real ally was the public sector and that its aim should be to develop and promote new government programs to fix societal problems. Indeed, the concept of a "nonprofit sector" began to gain currency at this time, in no small measure to underscore its distinctiveness from the private one.

The Smith Richardson Foundation also sought to influence public policy, not with the goal of expanding government but of "empowering people," in the phrase one of the projects it supported used.

Throughout Randy’s tenure as its president, this was the unifying theme of its grant making. He championed efforts that ranged from studying ways to deregulate sectors of American industry and increasing school choice to assisting Soviet-bloc human rights groups and fostering economic development in Latin America. Though characterized by critics as a disguised way of advancing the interests of the well-to-do, it remains the essence of a "conservative" approach to philanthropy, which could as justifiably have been termed a classically "liberal" one.

Along with colleagues in other foundations, Randy Richardson played a big part in developing this approach, which while still a minority view, has been gaining adherents in the grant-making world, especially among new entrepreneurs. His life is a reminder that, perhaps particularly in philanthropy, success often comes to those who are willing to flout the conventional wisdom.

Leslie Lenkowsky is professor of public affairs and philanthropic studies at Indiana University and a regular contributor to these pages. From 1976 to 1983, he was research director of the Smith Richardson Foundation.