Restricted Gifts Too Restrictive? Ask San Diego and then ask Detroit.

Joan Kroc, the widow of Ray, the founder of McDonald’s, left $1.8 billion to the Salvation Army in 2003. Kroc required the Salvation Army to build 30 community centers around the country.

The gift included an $30 million in construction costs and a $30 million endowment per center. From the beginning the Salvation Army questioned whether this was enough money to fund Kroc's ambition plan. It decided to ask each community to raise $21 million more as a condition to receiving a center. Only a third of raised only about a third of what it thinks is required.

Kroc's $1.5 billion-dollar dream was big and these were to be no ordinary community centers. San Diego's center was completed in 2002 at a cost of $87 million. It has three aquatic pools, an ice skating arena, skate park, and 600-seat theater.

The Kroc center in Salem Oregon will open in September. It cost $40 million. It is a 92,000-sq.ft. facility that has two swimming pools - one deep enough to certify scuba divers, a rock climbing wall, computer labs, a gymnasium, a dance studio, commercial kitchen, and a 300-seat auditorium. Construction is underway for a $129.5 million project being built in Nicetown, Pennsylvania.



But the dream hasn't worked out in other areas. The financial climate since her death has changed considerably; only a few centers have been built. Two others are scheduled to open soon; at least two have been canceled. The endowment fund itself has lost 14% of its value and some of the intended communities have been unable to raise additional funds.

San Francisco Joan Kroc Center (left)

In addition to the financing problems, the plan has created divisions within the Salvation Army itself. There were fears that the organization might prove to be incapable of running such big operations and the centers were moving it away from its real mission "to preach the gospel of Jesus Christ and to meet human needs in His name without discrimination." To date that mission is carried out through youth camps, alcohol rehabilitation, elderly services, and Christmas charity services, to name a few.

Activists in Detroit are angry at the Army for scuttling their project. They claim the center is sorely needed and that the poor economy is more of an excuse. The real problems stem from bad fund-raising and a lack of interest from the Army itself.

Charitygovernance.com thinks the trouble is gifts that are too restrictive. Big donors should be more cautious when making gifts. Kroc was generous and well intentioned, but she had an agenda that she tried to impose on the Salvation Army.

It's one thing to direct your money to promote certain things and provide some guidance, but Kroc's bequest was to complex and detailed a program. She liked the Salvation Army enough to believe they would be good stewards, she should have trusted their judgment. "While we always acknowledge the right of donors to make the gifts, we also have always questioned whether such gifts are wise. Donors are lousy at predicting the future, as we have seen time and again."

Though she couldn't have predicted this economy and maybe overstepped on what the Salvation Army is comfortable with, a lot of good has been done so far. And it's not over yet.

Open:
San Diego, Omaha, Ashland, Oh, Atlanta, Couer D'Alene, Idaho.

In progress:
Grand Rapids, Memphis, Salem, Camden. Other sites are planned for Biloxi, Dayton,
Honolulu, Kerrville, TX Philadelphia, Quincy, IL, Augusta, GA, Boston, Charlotte, Chicago, Green Bay, Greenville, SC, Guayama, Puerto Rico, Long Beach, CA, Louisville, KY, Norfolk, VA, Phoenix, AZ, South Bend, IN, and Staten Island, NY.

Reader Update: Construction has now been started on the Kroc Centers in Biloxi, Mississippi and Kerrville, Texas.