Life has improved for thousands of the region’s sick, poor, and disenfranchised since proceeds from the 2002 sale of the Red Sox enriched a charitable foundation created by the team’s late owner, Jean R. Yawkey, by $375 million.
In the 15 years since that windfall, the charity, known as the Yawkey Foundation II, has paid or pledged more than $350 million in charitable grants, improving conditions not only for the homeless and hungry but uplifting Boston’s lifeblood medical, cultural, and educational institutions. The nonprofit has meanwhile amassed $420 million in assets, ensuring that generations will benefit from its giving.
But the Yawkey foundation has cast a shadow on some of its good work by fostering an insider culture in which trustees have funded one another’s special interests, taken sizable fees, and engaged in practices that then-state attorney general Tom Reilly tried to prevent when proceeds from the sale spawned the largest charitable fund in New England sports philanthropy.
Reilly, concerned that the foundation, formed in 1982, was managed as what he described as a “closed little club,’’ negotiated a governance agreement in 2002 that required the charity’s leaders to abide by best practices for private nonprofits.
However, in 2005, Reilly granted the foundation’s request to terminate the agreement, and the Yawkey trustees have since acted in a number of ways contrary to the rules and spirit of the now-defunct document as well as philanthropy’s highest standards, according to nonprofit watchdogs.
The foundation has abolished an antinepotism rule and another provision that set term limits for the board’s chairman. It has also steeply increased the personal compensation paid to its trustees and management executives. Some have taken home millions of dollars since the Sox sale.
A Globe review also found that, notwithstanding Reilly’s criticisms of Yawkey grants to organizations with ties to its trustees, the board has granted more than $84 million to such entities, nearly one of every four dollars it has paid or pledged since the Sox sale.
Supporting yoga retreats, for instance, was never a Yawkey priority until 2006. But shortly before Justin P. Morreale, the charity’s longtime attorney, joined the Yawkey board that year, the foundation gave $250,000 to the Kripalu Center for Yoga and Health in Stockbridge, where Morreale learned to teach yoga and created a scholarship program. He then served on Kripalu’s board from 2008 to 2011. In all, the Yawkey foundation has given the Berkshires retreat $500,000 for scholarships and yoga instruction for prison inmates since 2006.
Similarly, the John F. Kennedy Hyannis Museum banked $95,000 in Yawkey grants from 2006 to 2011 while Judy Walden Scarafile was a Yawkey trustee and her husband, Peter Scarafile, served on the museum’s board.
Another example of the Yawkey foundation’s insider culture involves the Rev. Dr. Ray Hammond, a physician and widely respected civic leader who joined the board in 2002 as one of the charity’s six new trustees. Since then, the Yawkey foundation has made grants to at least six organizations with ties to Hammond that the charity had not previously funded.
Hammond himself helps to run two of those Yawkey-backed nonprofits out of his Bethel AME Church in Jamaica Plain: the Bethel Institute for Social Justice and the Generation Excel Youth Development Program.
The Bethel Institute was launched in 2009 with a $100,000 bequest from the Yawkey foundation. It was the only charitable funding the organization received that year.
From 2009 to 2012, the institute accepted $725,000, 58 percent of its $1.25 million in total grants during the period, from the Yawkey foundation while Hammond sat on its board.
Similarly, Hammond’s Generation Excel received $825,000 in Yawkey grants from 2005 to 2014, about 19 percent of its $4.3 million in charitable receipts, while the pastor served as a Yawkey trustee. Hammond drew $210,000 in personal compensation from Generation Excel — $30,000 annually for seven years, while the organization was accepting Yawkey money.
The Yawkey foundation said none of the transactions involving Hammond, Morreale, and Scarafile violated its conflict-of-interest rules because board members with ties to those organizations did not propose the grants or discuss them with other trustees, and recused themselves from voting on the requests.
“In all our grantmaking activities, we adhere to well-recognized procedures and best practices that guide the operations of private foundations to ensure we avoid conflicts,’’ the foundation’s president, James P. Healey, said in a statement issued through the public relations firm Weber Shandwick. “We are fully transparent about all our grants in our public filings, our published annual report and on our website.’’
While no one has questioned the virtues of Hammond’s church-related organizations and their array of social service projects, the transactions between the Yawkey foundation and his charities drew special notice from nonprofit watchdogs. The personal compensation to him from Generation Excel stood out to them as especially unusual.
Pablo Eisenberg, a founder of the National Committee for Responsive Philanthropy and a senior fellow at Georgetown University’s Center for Public and Nonprofit Leadership, said the transactions raise questions about whether Hammond or the Yawkey foundation violated a federal regulation against self-dealing.
“Even if it’s not technically illegal, it doesn’t pass the smell test to me,’’ Eisenberg said.
Hammond, in an interview, said he has not engaged in any self-dealing; the Yawkey board offered similar assurances in a prepared statement. Hammond said he complied with the foundation’s ban on trustees seeking funding for their own organizations because the donations were sought by grant writers for his nonprofits, not by him.
Attorney General Maura Healey, whose office regulates nonprofits in the state, declined to comment on the transactions.
Hammond expressed surprise when the Globe informed him how much personal compensation he received from Generation Excel. But he asserted that every dollar paid to him came from funds donated by other charities.
“We try the best we can and go to great lengths to make sure there is no funny business or double-dipping, none of that,’’ Hammond said.
The Yawkey board praised Hammond as “a tremendous asset’’ in shaping the foundation’s giving, particularly through “his deep understanding of the challenges facing inner city youth.’’
Hammond, who graduated from Harvard when he was 19 and received his medical degree from Harvard Medical School at 23, formed the Bethel church with his wife, Dr. Gloria White-Hammond, in 1988. He has spent decades working with community leaders, government officials, and private-sector institutions to help disadvantaged youths.
Nonprofits connected to another Yawkey trustee, Charles I. Clough Jr., have received some $38 million in Yawkey grants since the Sox sale. Clough, a Boston College trustee who serves on the investment committees of the Archdiocese of Boston and Boston Children’s Hospital, was on the Yawkey board when it approved grants of $19 million to BC, $15 million to the Campaign for Catholic Schools, and $3 million to Children’s Hospital since the Sox sale.
Clough also has connections to Laboure College, which has received $1 million in Yawkey grants since the Red Sox sale. The Yawkey foundation said all the transactions involving Clough’s related organizations were legally and ethically proper.
Mrs. Yawkey, in her will, gave the trustees wide discretion in distributing the charity’s funds — latitude that has enabled them to fund one another’s favored nonprofits.
A select few private schools, for example, have benefited from ties to one of Mrs. Yawkey’s close advisers, former Sox vice president and treasurer William B. Gutfarb, a longtime member of the Yawkey board. Gutfarb’s alma mater, the Eaglebrook School in Deerfield, has received $175,000 from the Yawkey foundation since the Sox sale.
Gutfarb also attended the Dublin School in New Hampshire, which has received $30,000 in Yawkey grants. In addition, the Yawkey board has given to private schools Gutfarb’s children have attended: $130,000 to Fessenden, in Newton, and $20,000 to Tenacre, in Wellesley.
The grants are unusual because the Yawkey foundation rarely funds private secondary schools that are not faith-based or serving disabled people. Asked why its giving to traditional private schools has gone almost exclusively to those connected to Gutfarb, the foundation said only that the Eaglebrook donations began in 1986 when Mrs. Yawkey was alive, and that they provide scholarships for minority students.
The foundation’s support for Gutfarb-connected schools was first reported by the Boston Herald in 1999, and it has been ongoing.
The Yawkey foundation attributed its high volume of trustee-related giving to the addition of six new board members in 2002. The expansion was meant “to ensure that there would be broad community representation on the board, especially in the area of grantmaking,’’ the foundation stated. “It was, therefore, inevitable and desirable for new organizations to be funded once new trustees were appointed.’’
The board’s chairman, former Sox chief executive John L. Harrington, has held the role since 2007, despite the foundation agreeing, in the 2002 governance document, that its chairperson would serve no more than one year at a time.
Term limits are considered a way for trustees to effectively share power and are enforced by an estimated two-thirds of the nation’s nonprofits.
The Yawkey board enabled Harrington’s 10-year tenure by abolishing term limits after the governance agreement ended in 2005. The charity has since developed its own governance policy, which it is not required to file with the state or make public.
As for Harrington’s lengthy tenure, the board said he is specially qualified to carry out the wishes of Mrs. Yawkey and her husband, Thomas A. Yawkey. He bought the Sox in 1933 for $1.2 million and left the franchise to his wife when he died in 1976.
Harrington, who joined the Sox in 1973 as treasurer, helped run the club until Mrs. Yawkey died in 1992. He then managed her estate and served as the team’s president until a group led by John W. Henry bought the team in 2002 for $660 million. Henry now also owns the Globe.
The Yawkey board said of Harrington’s decadelong chairmanship that it “values the leadership of people who knew the Yawkeys and their charitable preferences and encourages them to serve on the board as long as they are able.’’
The 2002 governance agreement also contained an antinepotism provision that barred family members of trustees from joining the Yawkey board. Yet the foundation has since elected Harrington’s daughter, Debra M. McNulty, as a trustee.
McNulty’s appointment was appropriate, the foundation stated, because she “grew up spending a lot of time with Jean Yawkey and knew her very well.’’
“Mrs. McNulty was selected due to her personal understanding of Jean’s philanthropic practices and priorities, as well as her educational and professional background in business and financial services,’’ the board said.
McNulty has been paid about $20,000 a year to sit on the Yawkey board. She has been able to draw compensation because the Yawkey charity is among a small minority of foundations that pay their trustees — a practice that has previously come under scrutiny from regulators and lawmakers since the Sox sale.
State Senator Mark C. Montigny, a New Bedford Democrat, has filed legislation that he said would bar nonprofits such as the Yawkey foundation from compensating trustees.
“If they believe in the charitable work, the people on the Yawkey board should get satisfaction enough from contributing to it and being part of the Yawkey history,’’ Montigny said. “There shouldn’t be any pay for it.’’
The attorney general also frowns on the practice.
“Missions, as opposed to financial gain, should motivate nonprofit boards,’’ said Emily Snyder, Maura Healey’s spokeswoman. “As such, we discourage compensating directors.”
Thomas Yawkey himself opposed paying trustees. In his will, he dedicated $20 million to forming a charity, now known as the Yawkey Foundation I, and stated that “any individual trustee of the foundation shall serve without compensation.’’
The Yawkey board asserted that he prohibited paying his foundation’s trustees because at the time they were drawing salaries as Sox employees.
In Jean Yawkey’s case, she instructed in writing that her trustees be paid, and their compensation has escalated since the Sox sale. In the five yearsbefore the sale, Yawkey trustees received about $7,000 a year to sit on the board.
Since Harrington became the board’s chairman in 2007, trustees have received an annual average of $26,000 for working one to four hours a week, according to the board’s tax returns. Harrington has received an annual average of about $41,500.
Harrington and his associates have prospered another way. In the months after Mrs. Yawkey died, Harrington and Gutfarb, the executors of her estate, created a company, Boston Trust Management Corp., to run the Yawkey foundations — a move that was reported at the time.
They did so with Mrs. Yawkey’s approval, and while there is nothing illegal about the arrangement, Harrington, Gutfarb, and their associates have drawn large sums from the firm since the Sox sale.
Gutfarb and James P. Healey, the former Sox vice president for broadcasting, each took nearly $4.8 million in compensation — an annual average of $369,000 — from Mrs. Yawkey’s foundation between 2002 and 2015, the most recent year for which the information is available. Another former Sox employee, Maureen H. Bleday, received $2.7 million over 10 years, and Harrington was compensated $1.1 million over four years before he ended his paid management role in 2006 at the age of 70. Healey and Bleday remain on the payroll.
The foundation said the compensation is determined by its trustees and based on annual studies by outside consultants. The corporation operates on a break-even basis, according to the Yawkey board.
The Yawkey charities are unusual because they were created by a wealthy couple who had no children together and left their fortune in the hands of advisers rather than relatives.
The charities qualify as private foundations because they are funded by the couple’s money and do not solicit public donations.
However, the foundations are widely viewed as community trusts because so much of their wealth was derived from Sox fans. That distinction contributed to Reilly’s decision to press for the governance agreement.
In a 2002 letter to the foundation, Reilly’s staff cited “very serious concerns’’ about how the Yawkey trustees had “carried out their fiduciary duty’’ to follow the highest standards of philanthropy.
By 2005, though, Reilly had softened his stance. He sent the board a letter commending the trustees for “carrying out the foundation’s mission in a way that benefits the diverse communities that need help’’ and granting the charity’s request to end the governance pact. Reilly declined to be interviewed.
At its best, the Yawkey foundation has transformed lives and institutions throughout the region. Its largest grants since the Sox sale have gone to the Dana-Farber Cancer Institute ($30 million), a signature charity of the Yawkeys, and Massachusetts General Hospital ($25.4 million), where Mrs. Yawkey was treated for a stroke before she died.
Tracking some of the foundation’s most impactful giving requires little more than following the Yawkey name, from Dana-Farber’s Yawkey Center for Cancer Care to Mass. General’s Yawkey Center for Outpatient Care, to Boston Health Care for the Homeless’s Jean Yawkey Place and many more clinics and centers bearing the family name.
The foundation also has helped to mitigate the legacy of racial intolerance the Sox earned during the Yawkey era, when the team snubbed the first generation of black major leaguers, including Jackie Robinson. Since the sale, the board has made major investments in Boston’s minority community, including distributing much of its $31 million in scholarships for the disadvantaged to city residents.
Needy children have benefited from the foundation’s $15 million commitment to build and renovate Pope John Paul II Academy in Dorchester and Mattapan and to renovate the St. Peter’s Teen Center in Dorchester.
Thanks to the foundation, children swim in the Yawkey Aquatic Center at the Salvation Army Kroc Center in Dorchester. They play at the Yawkey Club in Roxbury. They receive child care at the Yawkey Konbit Kreyol Center in Dorchester. And patients of all ages receive health care at the Dimock Center in Roxbury, which has received more than $3 million in Yawkey support.
“At a time of great income inequality, we are immensely proud of our record in assisting underserved communities,’’ James P. Healey said.
Adding Hammond to its board was one way the foundation made good on that goal.
Hammond acknowledged the public’s concerns about charities appearing to favor organizations of special interest to trustees at the expense of other similarly worthy organizations. When he began serving on nonprofit boards decades ago, he said, many foundations were “the fiefdoms of banks, wealthy business people, and people from the religious community, who in many cases were not directly engaged’’ in the communities they served.
Over time, nonprofits elected trustees who are intimately engaged in helping their communities. Those trustees often represent many interests, Hammond said, and, despite their best intentions they can find themselves vulnerable to scrutiny because of perceived conflicts.
At times, he said, “You’re between a rock and a hard place.’’