Ellen Malcolm, an IBM heir, still remembers being flush with embarrassment the time a colleague rushed into the board room of the National Women's Political Caucus to announce that an anonymous donor had just made a large contribution to keep the organization afloat.
"I was mortified. I said, 'Breathe, Ellen, breathe,' so no one can tell it's you," the 37-year-old District resident said recently, recalling how she hid her wealth and her donations from most of her friends until late 1980. "I didn't know how they'd react to having some midlevel person in their organization being one of their biggest donors."
Now more forthcoming about her vast assets, Malcolm is one of a growing number of sons and daughters of corporate America who have dug into their family fortunes to fund so-called alternative foundations that promote social change, not charity.
The offspring of Levi-Strauss, Knight-Ridder, ALCOA, Du Pont and Sears Roebuck fortunes were schooled in the antiwar and civil rights protests of the 1960s, and are channeling their money into socially and politically conscious organizations concerned with antinuclear action, women's equality, lesbian rights, prison reform and racial discrimination.
In the process, their efforts are changing the face of the giving world and drawing increased interest from the men and women who control the vast resources of the nation's 22,000 private foundations.
"Our parents give to the symphony and we give to the Symphony Tenant's Organizing Project," said 35-year-old baking heir George Pillsbury, referring to a neighborhood activist group in Boston that was the recipient of a grant from the Haymarket People's Fund. Haymarket, which gives away about $400,000 a year in small grants, was set up 10 years ago by a core group of seven, including Pillsbury, department store heir Mark Dayton, and David Crocker, the great grandson of the founder of the investment firm of Paine, Webber, Jackson and Curtis Inc.
Once dismissed by more traditional foundation officials as a flaky "flour child," Pillsbury is now known as one of the grand old men of alternative philanthropy. He gave away most of the $400,000 he inherited in a lump sum on his 21st birthday and has parted with about $1 million in the last 12 years. He said he has trust funds left "in the million range."
"We're not trying to divide the pie, but change the recipe of the pie," said Pillsbury. "I want to spend my money to change the system that created this fortune."
Pillsbury currently is head of promotion for the New York-based Funding Exchange, one of the most effective of the alternative foundations. Begun in 1971 with one small group of founders and less than $25,000, the Funding Exchange today oversees one national and 15 local foundations, including the Common Capital Support Fund in the District and The Liberty Hill Foundation started in Los Angeles by his sister Sarah. Last year, the foundations doled out $4.2 million to mainly locally based projects that were generally too small or controversial for traditional foundations.
A new Baltimore chapter expects to begin giving out grants next fall.
"I don't feel guilty about my money," said publishing heir Cary Ridder, a 33-year-old District resident and a founder of Common Capital Support Fund. "But I do think I should do something for the world with it."
For Ridder, her position on the fund's board of directors is a middle ground between her days at Stanford University during the peak of anti-Vietnam war demonstrations where her militant housemates practiced target shooting, and a childhood in McLean with nannies, maids, nurses, cooks and gardeners.
"This is not a way to be rebellious, but a way to work back to the center . . . ," said Ridder, executive director of the Alliance of Nonprofit Mailers. "There is so little money in Washington that actually goes to Washington area projects . . . . We can fund innovative programs that the more conservative foundations wouldn't touch with a 10-foot pole." Among those District organizations that received grants last year from Common Capital were: Blacks Against Nukes, Gray Panthers, Coalition Against the Marcos Dictatorship, Deafpride Inc. and Washington Women's Self Help, one of the city's few free health clinics.
"When they the alternative foundations first began to emerge in the '70s some people considered them to be the radical fringe of philanthropy" said James Joseph, president of the Council on Foundations. "But now they are just recognized and accepted as part of the pluralism of philanthropy."
Indeed, Pillsbury, along with another baking heir, Obie Benz (of Sunbeam Bread), were included this month in Esquire Magazine's special issue, "The Best of the New Generation; Men and Women Under Forty Who Are Changing America." Benz, 35, created the Vanguard Foundation in 1972 in San Francisco, the first alternative foundation set up by children of the wealthy.
Many in the world of giving say the influence of these new foundations is larger than the $3 billion they pass out annually, a relatively small amount in the larger world of traditional foundations. The new organizations finance groups that would have great difficulty getting money anywhere else. They have brought wealthy young people into a process that typically starts at the end of one's life with a will. And, say some, they have guided the philanthropic mainstream into more progressive grantmaking; recently, some 300 foundation executives formed the Network of National Grantmakers to bring social issues to the attention of the foundation establishment.
"Most foundations operate as a result of an endowment that they receive from someone after their death and they tend to be governed by older members of the family or outside trustees with considerable interest in the field of philanthropy," said Joseph. The youthfulness of this new group of philanthropists, he adds, "has been a healthly development."
Despite a national climate that appears hostile to progressive causes and a pending threat of federal tax deduction changes that could scale back the amount of charity donations, Funding Exchange Executive Director June Makela said the alternative foundations seem stronger than ever.
"One of our big advantages is that although many of our people give away money for tax reasons, their primary reason for giving seems to be they are very concerned about social change," said Makela.
Ellen Malcolm, great-granddaughter of one of the founders of IBM, inherited her money when her father died six months after her birth. Raised in Montclair, N.J., as a Republican with a mother who was active in the Junior League, Malcolm's political and social conversion came during her college years when she was a student at Hollins College in Virginia. There, Malcolm became close friends with a couple of "liberal professors" who introduced her to activist politics.
"It was a real eye-opener," said Malcolm, who later campaigned for Eugene McCarthy at the same time her mother was running for a local Republican committee seat. Given access to her money at 21, Malcolm closely guarded the secret of her wealth for the next dozen years. She held a variety of midlevel jobs in progressive political organizations, including a position as a field organizer at Common Cause.
In 1979, Malcolm founded The Windom Fund, which has doled out more than $1 million over the last five years. Last year, The Windom Fund gave away about $350,000 to small groups predominantly concerned with women's issues and voter registration, including the Self-Help Center for Women Ex-Offenders in the District, the Gender Gap Coalition in Chicago and the El Paso based-La Mujer Obrera, a newsletter for Chicana factory workers. Malcolm finished a graduate business degree last May so she could work full time managing her investments "more aggressively" to "make more money to give away more money."
Bob Friedman, echoing a common sentiment of his peers, says he "went through a period of feeling very guilty" during college. A founder of the Common Capital Support Fund and an heir to the Levi-Strauss fortune, Friedman was educated at Harvard and raised in affluent Hillsborough, Calif., but now lives in Takoma Park and heads the Corporation for Enterprise Development, a think tank studying structural unemployment.
In making a decision to give away about half his income every year, Friedman said he felt he couldn't "have the convictions about social justice that I felt" and keep all his money, knowing "that in no sense did I deserve the luck of having money."
As a result of such feelings and a commitment to changing the power structure, the young donors have relegated much of the decision-making about which organizations get grants -- an average of $3,000 each -- to community activists. "It is clearly unfair that we have money . . . so this is one way to learn to share power," said Friedman.
The giving is not always one-sided. Many of the donors also get emotional support from their foundations. Meetings and workshops often evolve into discussions of the responsibilities of wealth and the foundations frequently publish guidelines on investment decisions. One of the bibles of the alternative foundation movement is "Robin Hood Was Right, A Guide to Giving Your Money for Social Change," published by Vanguard.
Vanguard has also provided a job for Du Pont heir Paul Haible, 35, who came into a $1 million trust fund when he turned 21. "It came about the time of the Kent State killings," Haible recalled recently. "I had been thinking of leaving the country because of the draft. Suddenly I wasn't who I thought I was. Now I was hooked into all these lawyers and accountants."
Haible, in an inteview with USA Today, also said he felt repelled by the source of his wealth, which derived from chemicals and armaments. Haible's solution has been to work full time at Vanguard and give away "hundreds of thousands of dollars."
Now firmly established in the foundation world, the alternative organizations are branching out to try to reach donors who have made their money rather than inherited it. Sixty-nine alternative foundations now successfully raise money in the work place.
"We are trying now to get to people who simply make good salaries," said Betsy Krieger, a social worker who inherited what she calls a "small amount of money" and one of the founding members of Baltimore Common Wealth, an associate chapter of the Funding Exchange. Among the Baltimore founding members are a community planner, another social worker, a lawyer and a professor.