Teaching How to Give Stirs Doubts in Business Schools

Economist M. Frances Van Loo takes issue with the old Wall Street maxim that the business of business is business. Good works should matter too, she believes.

The professor at the Haas School of Business at UC Berkeley has for years aimed to drive a little kindness into its hard-as-nails MBA education.

Last fall, her newest course, “contemporary philanthropy,” suggested ways that an emerging generation of dot-com millionaires could capitalize on its newfound wealth to improve society on a scale never before seen.

Her first class speaker: actor and philanthropist Paul Newman.

Van Loo, who established the school’s nonprofit and public management program a decade ago, also has taught a popular undergraduate course on the philanthropy practiced by the world’s cultures--demonstrating that charity is no longer solely the domain of “rich old European men.”

But the professor’s compassionate approach has long drawn sighs from colleagues who view her classes as more pop curiosity than fundamental to a business education. With the arrival of her contemporary philanthropy course, some suggested that any further emphasis on such personal charity risks giving the school a “softie” reputation.

“There’s this underlying belief that these courses are unnecessary,” said Van Loo, a 58-year-old tenured professor, who in 1985 won a university distinguished teaching award.

While Van Loo dismisses the complaints, the continuing doubt among her colleagues suggests a trend taking place at many of the nation’s top master’s of business administration programs. Teaching philanthropy is not unheard of, but it is surprisingly rare in MBA programs. There are 91 colleges and universities with concentrations of three or more courses in philanthropy or the management of nonprofit businesses, but only eight of those concentrations are at graduate business schools, according to a study by the Center for Public Service at Seton Hall University. There are 330 MBA programs nationwide.

“Few business schools offer courses in philanthropy--even broad overviews that show how giving fits into the wider scheme of things,” said assistant professor Roseanne Mirabella, one of the writers of the Seton Hall study. “But more students are realizing they want this. And business schools will have to respond.”

Indeed, the need to teach the art of generosity to young business school graduates is greater than ever--especially in today’s barnstorming economy, many professors say.

Take the Silicon Valley. Though home to about 75,000 millionaires, the high-tech center has long been considered the domain of the cyber-selfish. A recent study featured in Fortune magazine showed that a quarter of the Silicon Valley households with incomes of more than $100,000 donated only $500 apiece or less a year to charity.

Still, many dismiss the idea of teaching philanthropy to MBA students as simply unbusinesslike.

“There’s this sting of resistance at many schools,” said Don Haider, chairman of the public and nonprofit management program at Northwestern University’s Kellogg School of Management. “Nonprofit courses have been around a long time, but some still question them like they did women’s studies. The debate: Are they a legitimate area of study or just a fad?”

Even some students ask how such ideas of social responsibility fit into their education.

“And while schools offer a course or two on nonprofits or philanthropy, they believe students should go out and explore these issues on their own time,” Haider said.

Programs at both Harvard and Stanford offer an array of philanthropy and nonprofit classes. But administrators at those schools stress that generous alumni endowments have made such offerings possible.

“Without endowments, we’d have a harder time offering what we do,” said Sara Tung, assistant director of the Stanford business school’s public management program. “Many schools have to make do with the money they have.”

But even at Harvard, such classes don’t enjoy universal support. “There have been pockets of resistance,” said Allen Grossman, Harvard’s Bloomberg professor of philanthropy.

The chair--established in 1996 with a $3-million endowment from billionaire Michael Bloomberg, founder of the self-named financial information network--supports research and course development in various aspects of philanthropy.

Said Grossman: “As with anything else, change is difficult.”

The need for an MBA-level course on how to give away--rather than make--money came about only recently, Van Loo says.

She had received calls from successful former students asking for advice on choosing charities--including one from a professor friend seeking guidance for her own son.

“Her oldest son was a successful Microsoft executive, and he began asking his mother how he could do some good,” Van Loo says. “He was confused by his choices: whether to become a big brother, set up a foundation or give to a sprinkling of groups.

“Many newly rich executives didn’t come from families with money to give away. So they don’t have the background training.”

Giving has become more complicated, she says. While people once donated to their local church or the United Way and relied on them to make the hard choices, many now want more involvement.

In the East Bay alone, there are 34 AIDS-related nonprofits. “So how do you choose?” she asked. “You search your heart about what causes mean something to you. Then you do your homework.”

Her contemporary philanthropy course asks students: “Have you considered what you would do if you were suddenly rich?”

The class offers an overview of the history of personal philanthropy, as well as the specifics of giving, including such options as donor-designated trusts and establishing charitable foundations or nonprofit agencies.

“We look at how students might best handle a career with significant financial rewards but with few spiritual or emotional returns,” Van Loo said. “Maybe you do your day job but say, ‘OK, every Saturday I’m going to volunteer at a soup kitchen.’ ”

The class also features mentors from the world of nonprofit giving--including Newman, whose $120 million in donations from his line of Newman’s Own foods has helped fund several camps for seriously ill children and other causes.

“Students were curious about why he gave and his response surprised them,” Van Loo said. “He said he was raised in a modest family and when you’ve been lucky enough to have the advantages he has had, you share with people. I think that sank in.”

In class, Van Loo’s students recount their own stories of how they learned to give as children.

One woman said when she was a child her mother made her pick out toys she no longer used so they could be donated to the poor. Then she accompanied her mother to the homes of recipients so she could see the joy they brought.

Others told of how their parents took them to homes for the elderly. Talking with lonely, often-forgotten strangers, they instantly saw the results of their compassion.

In Van Loo’s cross-cultural philanthropy class, students discuss how many societies choose volunteering over writing checks. Many U.S. immigrants assist newly arriving countrymen by helping them find jobs and apartments. “The goal,” she said, “is to create a community within our society.”

At Berkeley, Van Loo has found mixed support for her academic vision.

Associate Dean Ben Hermalin says the Haas program at Berkeley has accommodated Van Loo’s course direction, although only a minority of students have responded to her courses.

“Given our small faculty, the concern is that it would be better to have Fran teach more mainstream courses, for which we have far more demand,” he said.

Many colleagues have gone so far as to suggest that such emphasis on philanthropy could weaken Berkeley’s ever-important business school rankings, which place it solidly among the nation’s top 20 programs, though not as high as university officials would like.

“How to give away your money; my view is that it’s not a great focus for a business school,” said Haas School professor Severin Borenstein, an expert on energy resource economics.

The national rankings--compiled by business magazines that consider such factors as starting salaries of graduates and whether they land jobs with prestigious companies--are seen as critical tools, not only for attracting students and distinguished faculty, but also for bragging rights.

“It’s unfortunate these rankings hold so much sway, but students read them and therefore we have to worry about them,” Borenstein said. “And it hurts our ranking to be viewed as nonprofit oriented.”

Only last September, Dean Laura D’Andrea Tyson--President Clinton’s former national economic advisor--blasted the 18th-place rating the Haas School received from Business Week.

Among other things, the methodology “appears to suffer from a persistent East Coast bias in its survey of recruiters,” Tyson said, noting that no school west of the Mississippi cracked the top 10 in the recruiting category.

Yet, the rankings haven’t seemed to penalize universities such as Harvard and Stanford. They tied for first place in the most recent rating by U.S. News and World Report, although they offer an array of philanthropy and nonprofit classes. (Berkeley’s Haas School finished 10th.)

The support Van Loo has lacked from colleagues she has found in her students.

Many say her courses have enriched the Haas School’s reputation as a place where students can use their MBAs to make a difference.

“I’m the director of an arts agency in a major city,” said Rich Newirth, now cultural affairs director for the nonprofit San Francisco City Arts Commission, “and I wouldn’t be here if weren’t for Fran Van Loo.”

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Frequently Asked Questions

Some frequently asked questions on how to be more philanthropic, according to UC Berkeley business professor M. Frances Van Loo:

* Worried your donation will go toward overhead and not to the most needy?

There are organizations that evaluate nonprofits on the basis of such criteria as administrative spending. One group, Philanthropic Research Inc. (https://www.guidestar.org) posts the IRS tax returns (Form 990) for most U.S. charities.

* Are there other issues to consider before writing a check?

Yes: Do you want to be publicly identified? Some donors want to avoid solicitations from other organizations. Do you want to press your charity to achieve a particular goal, such as adding a new program or building a new wing? If so, make it clear your contribution is contingent upon this happening.

* Can you be philanthropic without giving money?

Yes: Consider giving “gifts in kind.” Recycle old computers and software to groups that can put them to use in school classrooms. Donate old clothing. Buy groceries for an elderly neighbor.

* What if I’m too busy to volunteer?

Even if you work an erratic schedule, most nonprofits will accommodate you. Volunteering is the best way to give something back to your community without writing a check and can help you meet people with similar interests and values.