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//Sinners and Saints: Weighing a Donor’s History and Where the Money Came From

Sinners and Saints: Weighing a Donor’s History and Where the Money Came From

 photo: r.classen/shutterstock

photo: r.classen/shutterstock

We’ve seen a slew of big gifts flowing to regional universities as of late. More often than not, these gifts find stalwart donors who made their fortune in "legacy" industries supporting schools far from affluent coastal enclaves.

Sometimes the donor’s backstory is bland and uneventful. Then there is the case of Dean Buntrock.

Buntrock, the founder and former chairman and CEO of Waste Management, Inc., made a $21.4 million donation to the St. Paul, Minnesota-based Luther Seminary. The gift, which represents the largest single donation in the seminary’s history, will cover tuition and living expenses while enabling students to finish their degrees more quickly. The donation also includes a year of planning and resources to add faculty and staff.

Buntrock said the seminary’s pilot program "is designed to inspire and support innovating leadership development churchwide. It will attract exceptional candidates from across the nation who show potential to be spiritually strong, theologically faithful, and entrepreneurial innovative."

One of the byproducts of the higher ed philanthropy boom—and the rise of private giving writ large across American society—is the inconvenient fact that sometimes incredibly generous donors bring serious baggage to the table. Dean Buntrock is a case in point: In 2005, he achieved the distinction of getting hit with the largest fine ever imposed on an individual in an S.E.C. accounting fraud case. 

I’ll delve into his backstory momentarily. But first, I’d like to look at how the donation interfaces with some of the more timely trends across the current higher ed giving space.

Accelerated Degree and No Debt

Many big higher ed gifts earmarked for leadership development or workforce training seek to meet a specific demand, whether by building the "leadership bench" or strengthening a school’s STEM offerings. By accelerating the development of church leaders, Buntrock’s gift fits into this framework.

A few years back, the Evangelical Lutheran Church in America published a report exploring future trends for "supply and demand for clergy." Its authors found that the number of clergy serving congregations declined from 9,105 to 6,868 between 2005 and 2014. In addition, in 1988 the average age of the clergy roster was 46. In 2013, it increased to 54. The study concluded:

The church needs more persons who will consider ordained ministry and become ordained pastors. Clearly, those concerned about the future of the church should seek out and encourage people they believe might be good pastors and open to the call. Programs to do so should be encouraged and supported by the church.

Buntrock’s gift aims to do precisely that by getting needed pastors into the field faster. The part about covering students’ tuition and some living expenses certainly doesn’t hurt either.

One of the long-held virtues of the residential college experience is that it immerses students in a stimulating and collaborative learning environment. A steady stream of recent gifts to residential schools suggests that donors remain enamored by this model.

But tuition keeps climbing while the student loan debt has reached epidemic proportions. Donors remain understandably reluctant to address the root causes of these problems, so in an attempt to split the difference, they typically fund more immediate and practical avenues of support, namely through scholarships or by waiving tuition entirely.

By covering students’ tuition within an accelerated time frame, Buntrock’s gift, according to Luther Seminary, "enables students to “complete their degrees more quickly while ensuring that they take on no new personal debt."

A Complex Backstory

Born in Columbia, South Dakota, Buntrock co-founded Waste Management in 1968 in Chicago. In 1971, the company went public. By the 1980s, Waste Management’s revenue was $800 million and by the mid-1990s, revenue was over $10 billion with operations in 21 countries.

In terms of Buntrock’s own philanthropy, he is a long-time benefactor of Lutheran higher education. Previous gifts include a $26 million donation to his alma mater, the Northfield, MN-based St. Olaf College, to build a new student center, now called the St. Olaf Buntrock Commons. Currently a Senior Regent, Buntrock was elected to the school’s board in 1972 and served as chairman from 1986-1995. Buntrock has also sat on the boards of the Chicago Symphony Orchestra and Terra Foundation.

But the story doesn’t end there.

According to Mother Jones, Buntrock was appointed to the National Wildlife Federation’s (NWF) board in 1987. Environmentalists found this to be a peculiar choice. In the early 1990s, the EPA levied a $3.75 million penalty against a Waste Management hazardous waste incinerator in Chicago for violating rules governing the burning of toxic PCBs.

Around the same time, Waste Management began giving handsomely to environmental groups, including the National Audubon Society, the Trust for Public Land, and the NWF. In an August 1991 article, the Post-Tribute pegged the company’s total yearly donations to these groups at $1.1 million. Three years later, NWF executive director Jay Hair arranged a meeting with EPA administrator William Reilly and Buntrock. 

Afterward, Reilly weakened some EPA waste-disposal regulations that affected Waste Management.

Meanwhile, in 2002, Buntrock and other corporate officers were indicted by the Securities and Exchange Commission on multiple counts of fraud from 1992 through 1997. Presenting himself as a "pillar of the community," Buntrock was, according to the SEC, the "driving force" behind the fraud, reaping more than $16.9 million in ill-gotten gains "from, among other things, performance-based bonuses, retirement benefits, charitable giving, and selling company stock while the fraud was ongoing."

As part of the 2005 settlement, Waste Management agreed to pay $26.8 million, while Buntrock and three former executives agreed to pay a total of $4 million. Buntrock paid $2.3 million, which, as noted, was the largest fine ever imposed on an individual in an SEC accounting fraud case.

Neither Buntrock nor his fellow executives admitted nor denied wrongdoing.

His tenure at Waste Management ended with the board refusing to pay out $40 million in pension money and deferred compensation. Buntrock subsequently sued the company and two board members, claiming them mismanaged his company, causing its stock price to plunge, and withholding his pension money.

Weighing Opportunity Costs

This may all seem like water-under-the-bridge stuff, and to some degree, it may very well be. Philanthropy has always been a messy business. A mega-gift frequently comes with an accompanying Pandora’s Box of complex questions. To what extent should organizations weigh a donor’s character? Or the sources of his or her wealth? How long should disgraced donors like Steve Cohen or Michael Milken or the Sackler family be kept in the doghouse? Should universities return their gifts? Scrub their names from campus buildings? And so on.

These questions date back to the Gilded Age. (After all, John D. Rockefeller and Andrew Carnegie certainly weren’t angels.) But we seem to be asking them far more frequently as private giving has seeped into all corners of American life. As a result, universities, in particular, need to remain vigilant.

As the recent scandals involving the Koch brothers, the Sackler brothers, and Harvey Weinstein all suggest, schools may sign up for a Faustian bargain in which the opportunity costs—bad PR, a tarnished reputation, alienated donors jumping ship, angry students and faculty, a viral social media backlash—outweigh the financial benefits of that transformative mega-gift.

On the 10th anniversary of the SEC fraud suit, the Manitou Messenger, the student newspaper of St. Olaf College, which, as you may recall, received a $26 million donation from Buntrock for its student center, published an editorial entitled "Buntrock Unworthy of Leadership." It reads:

The fact that the Board has not impeached Buntrock, now 82, speaks to the lost souls who have been at its helm. The Board of this Christian college is in bed with a criminal. It is unconscionable that Buntrock’s name remains attached to the student center and the college’s most prestigious merit-based scholarship. It is an abomination that needs to be rectified.

Luther Seminary, the recipient of Buntrock’s recent $21.4 million gift, is also aware of Buntrock’s history, and comments from a school spokesperson suggests it is trying to nip any potential backlash in the bud. Heidi Droegemueller, Luther’s vice president of seminary relations, said that the Lutheran faith recognizes that "we are all 100 percent sinners and 100 percent saints."

Of Buntrock, she said, "We see him as a person transformed by the power of God’s love."

2018-08-07T09:46:32+00:00 August 7th, 2018|Categories: Nonprofit News|