May 2009

Eli Broad & David Bohnett Cause/Effect

For these two giants of philanthropy, giving money to charity means investing in the social good  coordinated by Nina Kotick / photographs by Frank W. Ockenfels 3

Eli Broad and David Bohnett

Some shrink when they see him coming. Maybe it’s the height, the silver hair, the intelligent, piercing eyes. More likely it’s the power of the stride, the determination in the walk, the purpose in the direction. And yes, the eyes. They call him Eli, and everyone knows it’s that Broad guy.

The story is public knowledge: Michigan accountant (youngest CPA in Michigan history, of course) whose multi-billon-dollar fortune started with housing (as in, the Broad in Kaufman & Broad) and then in insurance (SunAmerica). Also public knowledge is that Eli is all about giving away money with Edye, his wife of 54 years, through two foundations that have $2.1 billion in assets.

Donating is Eli’s main occupation—a passion, actually, maybe even a compulsion. But he gives money the same way he makes it: carefully, thoughtfully and with a focus on effecting change throughout the worlds of science, art, medicine and education. Near and dear to his and Edye’s hearts are funding charter schools, improving compensation plans for teachers and bolstering the frontlines of stem-cell research. Put simply, they want to better people’s lives.

What the public may not know, because he rather revels in his image of being a curmudgeon, is that there is another Eli. Just under the surface is the most loyal friend and the kindest boss, a man so passionate about impacting lives every single day of his life that even while traveling he is signing checks—often on the spur of the moment—to send to those he has read about who really need them. Everywhere he goes, he is in touch with movers and shakers (there is no one Eli can’t get on the phone—in the span of five minutes, he is catching up with Michael Bloomberg, Lawrence Summers and Arnold Schwarzenegger), while basking in the life he has made.

Maybe not as well known is David Bohnett, but that’s not because he isn’t a force. Don’t let the unassuming demeanor fool you. He has an unwavering determination to right wrongs, a very big heart and a fierce intelligence. Bohnett did, after all, cofound geocities.com—in 1994, very early in the Web game—a pioneer in social networking, e-commerce and user-generated content. Geocities, whose IPO on the Nasdaq happened in August 1998, was bought by Yahoo! for $3.6 billion in 1999.

Bohnett took that fortune and became one seriously committed philanthropist. Today, he heads the Beverly Hills-based Baroda Ventures LLC (with investments in stamps.com, wireimage.com and netzero.net), is CEO of ovguide.com (an online video guide), chairman of the board of the L.A. Philharmonic and a trustee of both amfAR and LACMA. He donated $2 million to the No on 8 campaign and remains a champion of next-generation leadership at Harvard’s Kennedy School of Government.

His humanitarian goals mirror his Internet pursuits. He invests where he can actually improve lives, empower individuals and build viable communities in meaningful ways. He lives with his partner, Tom Gregory, in an architectural masterpiece filled with contemporary art, one-of-a-kind design masterpieces and Tom’s mind-boggling collection of autographed photographs of Hollywood legends.

Broad and Bohnett, who have known each other for five years, sat down in Eli’s conference room, where the two avid contemporary-art collectors smiled at 25 Chuck Close etchings and prepared for a meeting of the minds on everything from school rivalries to personal convictions.

UP CLOSE AND PERSONAL
David Bohnett: We went to rival schools. I went to the University of Michigan [for an MBA in finance], you went to Michigan State. Eli Broad: I wasn’t smart enough to get into the University of Michigan.
DB: [Laughs.] I don’t remember reading that about you.
EB: I think the public may see me differently from what I am. People don’t know I’ve got a deep social conscience. I’m a child of the Depression, born in 1933. My parents were very liberal in their social views.
DB: I suppose they also don’t see your sense of humor.
EB: Well, they see me as very serious, very determined, with a take-no-prisoners attitude and so on. I am determined. The only thing they don’t know about me—some do, some don’t—is I’ve had the uncanny fortune to get to work with great people, whether at KB Home, SunAmerica or at our foundations.
DB: What else?
EB: They don’t know how self-critical I am with whatever I do. I’m very demanding of myself. Someone once said, “You’re a sore winner.” Even if we accomplish something, I say, “Okay, we’ve done that—now where do we go?” I started as a young CPA earning $6,740 a year, then we began our home-building company with nothing, and it went public—one of the few. And every step of the way, when someone says, “Look at what you’ve done,” I say, “So what! We’re here now, but where are we going?” I think I’ve had the ability to really get people to do more than they ever thought of doing. And you?
DB: I think people just know me. I’m very passionate about Los Angeles. I’m a social-justice kind of guy, and I look for ways for people to feel connected to what’s going on. I get a huge kick out of seeing people come to a concert or a museum. I came out here to go to USC. I had never seen the school—I was 18, I had two suitcases, and I got on a plane from Chicago and arrived not knowing anybody. I used to go to concerts at the Hollywood Bowl, sitting way back on the benches because that’s all I could afford. And now, to have a leadership role in the L.A. Phil is such a privilege. I take it as a huge responsibility and hope I can find ways for others to have similar opportunities to connect with our community.

WHY GIVE?
DB: I think—and tell me if I’m right—that you don’t read the newspaper for the business section. You read it to see who needs help.
EB: Well, if you ask why I do what I do—I want to make a difference. I don’t just want to maintain the status quo. I want to help people, to work with institutions or create ones when they don’t exist.
DB: So when you think there’s a hole in something, you can step in.
EB: Yeah. Look, whatever we do has to pass three tests. One, will it make a difference 30 years from now? Two, if we don’t do it, will it happen anyway? Three, are there people who can really make it happen?
DB: I think one of the common threads in having started and run companies, you and I, is you make a difference when you build a company, and you make a difference when you choose how to give away your money. I’m looking to fund technology that helps people help others. I just looked at my portfolio, and in 10 years I invested in 25 companies. Nine were failures, nine were successes, and seven were a wash. So you have to be prepared to fail if you want to make a difference.
EB: Especially in philanthropy.
DB: Absolutely. My foundation, through amfAR, invests in early-stage HIV and AIDS research. And I’m temperamentally suited to it. I’m on the board, and I’ve told the chairman, Kenneth Cole, we need to find people who are temperamentally suited to the work—which means not fazed by failures.
EB: Philanthropy is activism. Our role is to do things others are not willing to—to take those risks, especially ones government can’t. Not all philanthropists are activists. Some of us are more active than others. I kid around that neither Bill Gates nor I worry about getting fired. Many great foundations that have professional management with senior grant officers are afraid to make mistakes.
DB: Right. You’re not going to find corporate people who have a risk tolerance to really engage in the institution. That’s the bottom line.
EB: If the government were to spend several billion on some education initiative and failed, they would read about it in the Washington Post or New York Times and be criticized. I don’t worry about failure.

DISNEY MAGIC
DB: You and I met through our involvement in the opening of Disney Hall. That was the beginning of my involvement with the Phil, although I have been a fan for 30 years.
EB: My wife, Edye, is a great lover of symphony and opera. I go from time to time. I really got involved with Disney Hall, as you know.
Getting it done was both exciting and difficult. This project started with a $50 million gift from Lillian Disney more than 20 years ago, and after six or seven years, they hadn’t raised any money. The cost had gone from the original estimate of $85 million to $200 million plus, so we had to raise a lot of funds. But we’re very proud. When people ask what it cost, I say it’s priceless. No city in the world has a better symphony or symphony hall than Los Angeles. And your leadership, David, together with [president and CEO] Deborah Borda, is probably the strongest leadership of any cultural institution in any city today.
DB: It’s a good example of how a building can inspire philanthropy. Getting Disney Hall up and running, instead of getting caught up in a lot of bureaucracy, we just had to focus on making it happen—this is required of all cultural institutions.
EB: It’s one of the reasons Esa-Pekka stayed, and, of course, it’s one of the reasons we now have Gustavo Dudamel. And when he makes music, it really is different. His impact on our community will be huge.
DB: He gives us an opportunity to attract an audience that would not necessarily have been exposed to the music before.
EB: Disney Hall brings a great deal of attention to our city, you know? Los Angeles, in my view, is one of the four great cultural capitals of the world, yet we get only 2.5 million to 3 million cultural visitors a year. New York, London and Paris get 10 million or 15 million.
DB: Why do you think that is?
EB: If you line it up, we have more cultural institutions than New York or London, and people don’t realize that. We have great visual arts. The problem we have is one of perception: People think of Los Angeles as the Academy Awards, the Grammys and the film and entertainment industries, which has really tossed a blanket over the culture. But we’re breaking out of that.

SAFETY IN NUMBERS
DB: Eli, you and I collaborate on promoting gun safety and curbing the trade of illegal guns. Very few organizations do that: the Joyce Foundation in Chicago, yours—and that’s it for the most part. People feel that they can’t make a difference. What we’ve done is look for ways to enforce the laws that are already on the books and take guns out of the hands of criminals.
EB: I think people are fed up with school shootings. All the violence we have in our society—like that 11-year-old Pennsylvania kid shooting his father’s pregnant girlfriend in bed. It’s uncivilized. We used to call it gun control. David, you and I have a passion for seeing that change, and we give money to places that work toward gun safety. So we wanted to partner with someone, and we chose Mike Bloomberg, whom I’ve known for many years, and our commitment is writing a check for gun safety and letting him decide who gets it, because he’s got the standing for it.
DB: There’s enough legislation that isn’t being enforced, and we can make a huge difference just by going down that path.
EB: Because you can’t do things politically in a foundation, we’re also involved in supporting candidates who believe in gun safety, who want to get rid of assault weapons. I think that’s going to happen.
DB: What frustrates me is there are like-minded people who don’t have a way of working together. Reasonable people don’t feel like they have a voice, so we try to build a larger membership base with some of these groups to counter what many perceive as the brick wall of the NRA.
EB: And then there’s the gun-show loophole. Felons are buying guns at gun shows. I mean, if you look at what’s happened recently in Mexico, those weapons come from here. It’s just not civilized.

THE DEMOCRACY BUSINESS
DB: I have been talking with Mayor Villaraigosa—and anyone who will listen—about proposition reform. I think that when we try to effect social change, the proposition system in California works against us.
EB: I think we have a dysfunctional government not only in the state but in the city and county. California’s present problems are a result of all of the propositions that have passed. We don’t even have an open primary, though we finally got a redistricting initiative approved, and hopefully that will make a difference. We’re one of several states that needs two-thirds majority to pass the budget. So we have political paralysis.
DB: In a way, these propositions bypass our government, no? If you look at the amount that gets spent on proposition campaigns that could be used for social good—$83 million was spent on Prop. 8 alone! And that’s money taken out of the system—it’s a missed opportunity to do other things. Ridiculous. As philanthropists, we have the power to at least start a dialogue.
EB: It’s not only money that you and I have. It’s relationships, and whether it’s in Washington or Sacramento or here, we try to get people to do the right things. You don’t support politicians in their elections if whoever’s seeking money only has a goal to stay in office or get in office. You have to pick the people who are going to do the best job.

TRUE HIGHER EDUCATION
EB: This is the golden moment for education reform in America, and the reason is you have a secretary of education who is closer to the president than any secretary has probably ever been. So we have gone ahead in New York and Denver and set up better compensation for teachers, and for the first time, we are able to pass legislation to give differential pay to math and science teachers in California. You now have several movements out there: Democrats for Education Reform and the Education Equality Project, with people like Joel Klein involved. Republicans and Democrats now want to change education. Secretary Arne Duncan has a $160 billion budget, so we’re hoping to see some great things happening next year.
DB: People think we just need to give kids computers, but you’re more concerned about teacher incentives and educating kids from the beginning. It’s the same way for amfAR—giving and treating, and the bottom line is, if you get sick, you have some treatment. It is a very basic philanthropic philosophy.
EB: People are frightened of change. If you talk about K-12 education, it’s the same right now as it’s been for the past 100 years. Our kids are getting everything they need, but no one wants to make a break from what’s been done before, whether it’s the calendar, how we use technology, seniority provisions [for teachers]—all sorts of things that need to be changed. For example, I’m very concerned with the types of teachers kids get in the inner cities, because most collective government unions provide them the choice to teach where they want or what they want. So the kids who need the best teachers don’t get them. And when you try to change any of these things, you get big opposition. I worry about where our country is today and where it’s going to be in 10 or 20 years. What’s our role going to be? I see what’s happening in China, what’s happening in India, what’s happening in other parts of the world—and we’re just not keeping up in education.
DB: It’s got to be rewarding to know you’re doing something about it.
EB: It is very rewarding, though my wife and I differ. She looks at it one child, one person, at a time. I look at it from a broader perspective. I’m interested in changing systems for good. And I see what can happen in education reform. Thousands and thousands of children are going to have better lives because of some of the things we do.

MEASURING SUCCESS
DB: We realize we have to sow a lot of seeds to find the successes we’re looking for, and we put accountability metrics in place so we know when we need to pull the plug and when to invest in things that are going to be successful. I was very fortunate to get involved very early on with the marketing aspect of the L.A. Phil, and I said, “We have to put some metrics in place so we know exactly where we are.” And the organization was ready for that. That’s no different from what you do every day in the business world.
EB: If you’re an entrepreneur, you’ve got to take risks—otherwise, you’re not an entrepreneur. But I’m more concerned with taking risks that make sense, measuring those risks and seeing big rewards. We are looking for a return in all our philanthropic investments—returns not always measured in money. There are all sorts of ways of measuring. In my view, there’s a big difference between philanthropy and charity.
DB: How so?
EB: Charity is giving money away to good causes. Philanthropy is investing for the social good—whether it’s for education, science or the arts. You have ways of measuring whether those investments are paying off. In the arts, for example, I’m a populist. If we make an investment in the arts, I want to know if we’re educating a far broader public. In science, are we improving the human condition? In education, have we improved the student-achievement gap between income and ethnic groups? Will it make our country more competitive?
DB: Right. And you have to be true to yourself. Not everyone is going to agree, but so what? If you build coalitions of people, if you have a creative sense, if it’s something for the public good, just go after it. I am very inspired by your work, Eli, by the Resnicks, by Kenneth Cole—people who really spend time and effort and money to make a difference. Everybody has the opportunity to change people’s lives—anybody at any level. If you want to change someone’s life, go work at a soup kitchen once a week. I think in this economic climate, it’s more important to give people a sense of participation. We’re only going to lift ourselves out of this collectively.