Good intention not enough to run charities: experts

NEW YORK Fri Mar 25, 2011 4:23pm EDT

Singer Madonna arrives at the 2011 Vanity Fair Oscar party in West Hollywood, California February 27, 2011. REUTERS/Danny Moloshok

Singer Madonna arrives at the 2011 Vanity Fair Oscar party in West Hollywood, California February 27, 2011.

Credit: Reuters/Danny Moloshok

NEW YORK (Reuters) - Madonna's failed bid to open a school for poor girls in Malawi shows that running a successful charity requires not just good will but also a solid business plan, philanthropy experts say.

The singer, her manager and others have taken over the board of Raising Malawi, co-founded by her in 2006, and scrapped plans for building a school in the southeast African nation, The New York Times reported on Friday.

About $3.8 million had already been spent on plans for the school with little to show for it, the newspaper reported. Madonna, who has adopted two children from Malawi and visits regularly, declined to comment on the Raising Malawi problems.

"Having good intentions and good will is not enough," said Melissa Berman, chief executive of Rockefeller Philanthropy Advisors. "Many of us like eating in restaurants, but that doesn't really mean we're in a good position to start one."

"It's a hundred times harder to start a school than to give money to a school that exists," Berman said. "Doing a start-up is really complicated whether it's in business or nonprofit."

Madonna is not the first celebrity to face challenges in their philanthropy. A school built by media mogul Oprah Winfrey in South Africa has been tainted by allegations of sexual assault, while hip hop artist Wyclef Jean's Yele Haiti Foundation was accused of mismanagement.

There are more than 75,000 active grantmaking foundations in the United States, of which 65 percent have less than $1 million in assets, according to The Foundation Center. These groups gave away nearly $43 billion in 2009.

"The charitable function can't be accomplished without a business-like approach and a good governance approach," said Doug White, of New York University's Heyman Center for Philanthropy and Fundraising.

"These people who come in and say 'I can do it better' tend to have successes in other fields or endeavors and as a result bring an ego to the process that really is misplaced when it comes to assuming they can do a good job putting a foundation or a charitable organization together," White said.

As much as the philanthropic world may hate to admit it, charities needed a good business plan, he said, adding that problems like those faced by Madonna were a common occurrence.

Madonna brought in philanthropic advisers in November to help her overhaul Raising Malawi, the Times reported, and they have suggested that she fund education programs though existing and proven nonprofit organizations.

"This does show how hard wealth allocation and philanthropy truly is," Glen Macdonald, president of the Wealth and Giving Forum, which advises wealthy families on philanthropy, said of Madonna's philanthropic challenges.

"The philanthropic world can't escape the need for good business practices," he said. "Hopefully this can not only be a learning lesson for Madonna, but for others.

(Editing by Xavier Briand)

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