Bush-Inspired Charity Shadowed by Questions : Philanthropy: Charges of wasteful spending practices dim success of the Points of Light Foundation.

By GLENN F. BUNTING

Jan. 9, 1995 12 AM PT

TIMES STAFF WRITER

WASHINGTON —

Throughout his presidency, George Bush persistently promoted his “1,000 Points of Light” campaign as the antidote for hunger, homelessness and poverty.

The slogan, coined during Bush’s acceptance speech at the 1988 Republican National Convention, grew in popularity to become a signature of his Administration. Six days a week, Bush honored someone--a so-called Point of Light--for performing exemplary volunteer work.

“Points of Light,” beamed a White House press release, “are the only solution to our social problems.”

In 1990, while declaring that solutions to some of the nation’s most vexing problems lay in the hands of ordinary citizens and organizations--not huge government bureaucracies--Bush launched a private, nonprofit foundation to motivate every American to engage in community service.

Today, the lone remnant of the Bush initiative has the look of a wasteful, Washington-dependent operation. So far, the Points of Light Foundation has received $26.6 million in federal funds--more than half its budget--while incurring a wide range of costs that amount to questionable spending, according to experts on volunteerism.

An examination of financial records by The Times shows that $22.3 million has been spent on glitzy promotions, consultants, salaries, travel and conferences. The expenses include $5.5 million to produce a television advertising campaign and $1.4 million to host a celebration of community service.

By contrast, only 11% of the foundation’s budget has been spent to provide grants for volunteer efforts across the country.

The foundation has fallen well short of private fund-raising goals and attracted scant scrutiny from Congress. Moreover, little oversight has been exerted by chief executives from Arco, Disney, IBM, Time Warner and other corporations that answered Bush’s call to guide Points of Light. Several prominent directors lost interest and rarely attended board meetings, records show.

Despite early plans to remain a small organization, the Points of Light payroll has more than tripled to $4.1 million. Foundation President Richard F. Schubert, who was hired after he resigned under pressure as head of the American Red Cross, is paid $160,000 annually. A 13-member executive management team receives average salaries in excess of $80,000.

“It’s crazy,” said George Romney, the former Michigan Republican governor and one of 13 original foundation directors. “I think they’ve built up too big a budget. I’ve indicated my alarm and the need to cut back.”

Susan J. Ellis, an expert and author of nine books on volunteerism, added: “There’s been tons of money wasted, just wasted . . . and I don’t think they can show a lot of people have volunteered.”

From the outset, top leaders of the foundation vowed to phase out their reliance on government money. Instead, the organization has grown increasingly dependent on federal funds. Congress awarded Points of Light a 30% increase in federal appropriations in August after the foundation raided $551,000 from a reserve account to meet its expenses. A $6.5-million annual subsidy is expected to provide about two-thirds of the foundation’s future budgets.

The increase was secured by Sen. Barbara A. Mikulski (D-Md.), a former neighborhood social worker and ex-chairwoman of a Senate Appropriations subcommittee that doles out federal money to independent agencies. A supporter of the foundation’s work, Mikulski pledged in June that “no matter how skimpy my appropriation is, I intend to fund the Points of Light to stay the course, to keep the momentum going and to keep this energy and this vitality for sure.”

The foundation has tried to build a national service infrastructure through a combination of promotions, publications, conferences, training seminars, recognition awards and financial grants. Proponents say Points of Light provides critical support for a network of 501 local volunteer centers spread across the country.

“I think they are having an impact,” said Sue Vineyard, who publishes a national newsletter on volunteerism. “They are answering a need that has been around a long time.”

In response to questions submitted to his Houston office, Bush praised the foundation. He said the staff and directors “deserve a lot of credit for the good work they have done through the last few years. As many of our nation’s problems persist, I am grateful that the Points of Light Foundation is finding more and better ways for Americans who want to serve their communities to do so.”

Foundation administrators said they have produced impressive results given the short time Points of Light has been in existence and the daunting task of solving serious social problems. They cite such accomplishments as co-sponsoring an annual “Make A Difference” day that attracted 527,000 participants last year, encouraging more than 3,000 businesses to enlist their employees in community-service projects, starting a pilot program in six cities--including Los Angeles--that has recruited 4,000 families and soliciting $136 million in free TV air time to promote volunteerism.

“Do something good,” implore the award-winning ads. “Feel something real.”

However, Points of Lights officials concede they have no hard evidence that their efforts have led to an actual increase in community service. In fact, volunteering nationwide has dropped 6% since 1989, according to a recent Gallup Organization survey. A nationwide Times Poll taken last summer found only 1% of American adults who engage in volunteer work said they were motivated by the Points of Light Foundation to do so.

The group’s headquarters is located three blocks from the White House in a registered historic building that is decorated with ornate fireplaces and gleaming brass chandeliers.

“It’s a facade,” said Marva N. Collins, founder of the Westside Preparatory School for inner-city children in the Chicago area and an original Points of Light director. “I think that is all it perhaps was ever intended to be.”

Many Democrats are equally skeptical. From the start, they have viewed the volunteer initiative as politically opportunistic for a Republican Administration that was widely criticized for lacking a domestic agenda. On at least one occasion, House Democrats tried to eliminate the foundation’s funding.

In a thinly disguised attempt to curry favor with the Clinton Administration, the foundation furnished access to an estimated 4,000 registered volunteers in the Washington-Virginia-Maryland area for the purpose of soliciting their help with inaugural festivities in late 1992. Looking back, Points of Light executives said, they now recognize the mailing was a mistake.

“This is not (confronting) serious social problems, which is what our mission is about,” said Robert K. Goodwin, the foundation’s executive vice president.

President Clinton energized the Points of Light movement last year when he agreed to continue its government subsidy at Bush’s request, according to White House sources. Even though the foundation is independent and nonpartisan, it has always been closely linked in the public’s mind with Bush, who served as its honorary chairman until he left office in January, 1993.

Since then, the Points of Light Foundation has faded into relative obscurity.

“I’m unclear what their current status is,” said Sara L. Engelhardt, president of Foundation Center, a New York organization that assists nonprofit groups in their quest for financial support. “I don’t know what they exactly do.”

The Points of Light Foundation once enjoyed a level of support that most nonprofit groups can only dream of: The personal endorsement of the President of the United States and the full backing of the White House.

The commitment on Bush’s part was unprecedented. He initially proposed a whopping $200 million over four years--half in taxpayer funds and half in private contributions.

A key Bush image-maker, Las Vegas marketing consultant Sig Rogich, conceived of a “Points of Light” song and recruited country music star Randy Travis to sing it. The song climbed to No. 3 on the country music charts, and about $50,000 in proceeds went to the foundation.

What’s more, the President enlisted captains of industry to join the board of directors, assuring instant access to money and power.

Several Republican directors responded with hefty donations. The largest contributor was New Jersey philanthropist Raymond G. Chambers, a loyal Bush supporter who became one of the nation’s wealthiest men as a pioneer in leveraged buyouts. His Amelior Foundation provided $2.5 million. Coca-Cola gave $1.8 million, IBM donated $917,000 and Arco pitched in $500,000.

Just when the Points of Light Foundation gained the visibility and momentum necessary to become the centerpiece of Bush’s “kinder and gentler” domestic agenda, the White House pulled an about-face.

Under pressure to keep a lid on federal spending, the Bush Administration scaled back the original $25-million annual government subsidy to $10 million. Democrats in Congress further reduced the grant to $5 million per year.

The foundation came nowhere near reaching the initial $25-million annual fund-raising goal. Apart from the few corporate directors who provided generous contributions, the foundation raised only $439,579 during the first 18 months. Moreover, since 1990 it has collected $26 million from the government and $16 million from donors, despite plans to raise $3 in private contributions for every dollar in public funds.

The foundation also encountered difficulty attracting board members to meetings, forcing it to change bylaws so that only one-third of the directors were needed to reach a quorum.

The chairman of the board, retired Time Warner executive J. Richard Munro, said he was “enormously frustrated” by the lack of commitment on the part of several directors. He criticized some corporate CEOs for joining Points of Light “only because they could visit the President.”

The turn of events proved discouraging for some board members who joined Points of Light with high hopes of turning community service into a national priority. Three directors--Marva Collins, Red Elk Banks, a counselor for Native American youth, and Gray Panthers founder Margaret E. Kuhn--all said in separate interviews that they resigned from the board last year because the foundation had become a waste of time and energy.

“It was very disappointing,” Kuhn said. “Advocacy is completely out of their bounds.”

The foundation began its work with a bang in April, 1991, when it sponsored a national festival in 18 cities over a two-week period. The event culminated with an elaborate ceremony on a sun-splashed White House lawn. The “National Celebration of Community Service” was a massive undertaking that involved hundreds of hours of preparation to line up VIP guests, speeches and entertainment complete with music, balloons and fireworks.

The tab: $1.4 million.

Several foundation board members said the costs of the celebration were never scrutinized.

“I saw that as nothing more than a party, something that seemed to me to be a relatively extravagant waste given our limited amount of resources to begin with,” said Banks, the former director.

The board was informed by a memo from Schubert that the celebration “put many, many very important and legitimate concerns and interests on the back burner.” This included delaying ambitious start-up plans to develop specific volunteer programs.

In deciding to bankroll the celebration, foundation executives said they knowingly took the risk of being labeled a “public relations machine.” They insisted that galvanizing public attention on the importance of volunteer service was a necessary first step in promoting community service.

“The notion from the beginning,” Schubert said, “was if you recognize and celebrate good people, it will cause other people to ask: ‘Why can’t I make a contribution?’ ”

Since then, Schubert maintained, Points of Light “has really buckled down” by focusing scarce dollars on essential volunteer programs.

Nonetheless, financial records indicate a pattern of liberal spending:

* In 1990, the New York-based international consulting firm McKinsey & Co. was hired to write an initial strategic plan for $250,000. The report is rarely consulted. Recently it took officials at the foundation several weeks to locate a copy.

* Since 1992, Points of Light has spent $7 million on professional service fees, primarily for promotional work and consultants. Among the costs were $495,888 to three individual consultants, $311,534 to a Minneapolis public relations firm and $67,880 to a speech writer for Schubert. The foundation paid $24,000 in 1993 and 1994 for four celebrities to address volunteers on the value of donating their time.

* The foundation ran up $4.7 million in travel and conference expenses, including a two-day seminar for volunteers at the exclusive Lansdowne golf and tennis resort in Leesburg, Va.

* Points of Light has paid $66,473 to the influential Washington lobbying firm of Clohan & Dean over the past two years, even though the foundation’s government contract says it “shall not engage in lobbying or propaganda for the purpose of influencing legislation.” Clohan & Dean lobbyist William Blakey said he was hired to represent Points of Light before members of Congress and protect the foundation’s federal funding. Spokeswoman Barbara Lohman said Points of Light “simply wouldn’t characterize (Clohan & Dean’s) work as lobbying in any way.” She called it “information sharing.”

* The foundation paid $375,078 in 1991 and 1992 to outfit its offices with new furniture and equipment. The cost, which officials said was heavily discounted, approached $10,000 per employee. Points of Light executives said they will probably move next year from their current location in downtown Washington because they cannot afford a steep rent increase.

* The Points of Light payroll has increased from about $1 million and 21 employees to $4.1 million and 58 staffers since concerns first were raised about high salaries at a 1991 congressional hearing. Foundation officials said they hired a consultant who determined that their wages were in line with other nonprofit organizations.

The foundation hired Schubert as its president and chief executive officer in late 1990 and agreed to pay him the same $185,000 annual salary he had received 18 months earlier as head of the American Red Cross, an agency with 25,000 employees and a $1.5-billion budget.

In the year before Schubert resigned from the Red Cross, the agency suffered unprecedented safety and financial problems that included the release of several thousand pints of blood not properly tested for AIDS and hepatitis. Schubert acknowledged “failures of the system at every level” in a teleconference with Red Cross officials.

At Points of Light, Schubert has taken voluntary pay reductions on two occasions. He now gets $160,000 annually.

Schubert defended all of the expenditures, saying he has tried to build a “class organization” that pays competitive wages.

Several board members said in interviews that they were unaware of some expenses and troubled by others. In response to these concerns, the board recently created a finance committee to closely monitor spending practices.

The Rev. Edward A. Malloy, president of the University of Notre Dame and an original foundation director, assured his colleagues at a September board meeting that government funds have been well spent.

“I’m willing to defend this use of the money versus other uses of federal money,” Malloy said. “Generally, it’s been a lean and mean operation.”

Throughout its existence, the Points of Light Foundation has struggled to explain what it does. Even members of the board of directors have difficulty articulating the foundation’s raison d’etre.

One director expressed concerns at a March, 1992, meeting that the mission had the look of “fog soup.” Another recently said: “I have trouble identifying how the Points of Light Foundation works in communities in which we live.”

The initial strategic plan called for Points of Light to engage every American in community service. In all, the foundation introduced about 90 programs to enhance volunteerism.

Points of Light officials now acknowledge that their original goal was too ambitious. The current emphasis, outlined in a new strategic plan through 1997, is not so much to enlist more recruits as to produce a greater return from the work of volunteers.

Points of Light began delivering hands-on volunteer services on Sept. 30, 1991, when it merged with the National Volunteer Center, a network of more than 400 service outlets in large and small communities.

The foundation also has distributed about $4 million in grants, mostly to various volunteer centers, to attract families, youths and other targeted groups to community service.

One way the foundation has tried to direct more traffic to volunteer centers is through its heavy investment in producing and televising public service announcements.

Foundation officials estimate that more than 70,000 viewers have responded to the ads. But they have no idea how many of the callers ultimately volunteered.

The heavy investment in public awareness is defended by Points of Light officials.

“It all relates to telling the public that there is some reason for continued faith, that total cynicism is not warranted and that we can be a part of the solution,” Schubert said.

Of the 501 volunteer centers nationwide, 376 pay $200 in annual dues to belong to Points of Light. The membership entitles each facility to publications, annual conferences, training seminars, educational materials and access to research and professional networking opportunities. Over the past year, the foundation has sponsored 34 regional meetings that attracted nearly 300 volunteer-center directors and selected leaders in their communities.

“Volunteer centers are stronger than they were, and there are more of them,” Romney said. “But they are not as strong as they ought to be. They ought to be as visible as the postal office and as well run as a good business if we are to solve our problems.”

The latest strategic plan assumes that Points of Light will continue to rely heavily on taxpayer funds for the next three years, despite misgivings by some directors who want the foundation to become financially self-sufficient.

The group hopes to launch another TV ad campaign, collect data on the rate of volunteerism, develop a research center to identify how individual citizens can better solve problems and establish 60 new volunteer centers nationwide.

“There was a lot of cynicism about (us) at the outset,” Schubert said. “We have passed those tests. I think we’re in a position now to move ahead significantly.”

Others are less sanguine.

“The Points of Light has a challenge to define what its niche is,” said Pablo Eisenberg, chairman of the National Committee for Responsive Philanthropy. “What is it supposed to do? How does it increase volunteerism? Those kinds of questions aren’t being answered.”

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The Public Relations Bill

The Points of Light Foundation spent $1.4 million on its first major event--a kick-off promotion spread over two weeks in 18 cities. To help promote the “National Celebration of Community Service,” the foundation paid $108,979 in staff wages to the Washington public relations firm of Hill Knowlton. The memo below shows that Hill and Knowlton billed Points of Light between $235 and $80 per hour for the work of 32 employees.

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Where the Money Goes

The Points of Light Foundation, despite its plans to remain a lean organization, has continued to expand since its inception in 1990. Most of the foundation’s $35.8 million in expenses has gone toward salaries, travel and professional fees that largely paid for public relations and promotional work. Only 11% of the overall budget has provided direct assistance to volunteer efforts across the country.

Expenses 1991 1992 1993 1994 Total % (in millions) Salaries .9 2.5 3.2 4.1 10.7 30 Professional fees 1.4* 1.3 1.9 2.3 6.9 19 Travel and conferences .3 1.0 1.4 2.0 4.7 13 Volunteer grants .2 1.1 1.2 1.5 4.0 11 Other 2.1 2.5 1.9 3.0 9.5 27 Total 4.9 8.4 9.6 12.9 35.8 100

1994 figures are preliminary, 1991 figures for nine-month period

*estimate

Source: Points of Light Foundation annual reports

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Comparing Pay

The Points of Light Foundation pays an average of more than $80,000 per year to its top 13 employees. The chart below shows that Points of Light provides higher salaries and has fewer employees than other nonprofit social welfare organizations with similar budgets.

Organization: Points of Light Foundation, Washington, D.C.

Annual budget: $11 million

Top executive salary: $160,000

Salaried employees: 58

Average salary: $45,040

Organization: Recording for the Blind, Princeton, N.J.

Annual budget: $13.8 million

Top executive salary: $143,500

Salaried employees: 123

Average salary: $28,000

Organization: Assn. of Junior Leagues International Inc. New York

Annual budget: $7.4 million