Billions Served. McDonald's Heiress Joan Kroc Took Her Philanthropy and Super-Sized It

Author: David Montgomery


It would begin with the mysterious blonde’s presence in the audience, or in the seat beside you on the airplane, or on the telephone calling from somewhere. Asking questions. Inquiring after the fate of the world, or a sick hummingbird.

Then suddenly would come the knock at the door, the unexpected envelope — the $500,000 camouflaged as a holiday card for public radio, the $1 million delivered to the hotel room for AIDS research, the $15 million in anonymous checks of $2,000 apiece distributed like candy to flood victims . . .

And so one of the great American fortunes was being spent down, one surprise at a time, a seemingly whimsical redistribution of treasure.

If you had more than $2.3 billion, how would you get rid of it?

On a spring day two years ago, when making surprise gifts of staggering sums was still pure fun for the Big Mac billionaire — before she felt the deadline pressure of terminal cancer — Joan Kroc stood briefly before a crowd of Salvation Army officers and San Diego dignitaries.

At 73, her hair was perfectly coifed and golden, as she had vowed it always would remain golden, one way or another. Her voice was a fresh gust from the Minnesota heartland that she had never completely left in spirit.

“I’m sure this is something that Ray would have liked me to do,” she said, invoking her late husband, the brash milkshake-machine salesman who built the empire called McDonald’s. He died in 1984. “And I’m sure he’s looking down — ah, I hope he’s looking down ,” Joan Kroc added, causing the audience to guffaw.

“I am a maverick salvationist,” she said.

The occasion was the June 2002 opening of the Salvation Army’s $90 million Ray and Joan Kroc Corps Community Center in east San Diego. Kroc herself was not a churchgoer, though she believed in God, nor was occupying such a spotlight her custom.

The former teenage mother and cocktail club pianist was as surprised as any of her girlfriends in St. Paul, Minn., or Rapid City, S.D., that she had become one of the wealthiest women in America. The maverick salvationist proved to be a maverick philanthropist, too. She gave away money the way the non-rich fantasize it should be done: no fanfare or foundations, no red tape or robber baron formality. Just the unexpected personal proffer of $1 million to prevent nuclear war, $3 million for a homeless shelter, $100 tips to the immigrants at the drive-through inquiring if she’d like fries with that . . . All the better if the lady in the blue Mercedes got away with her Filet-O-Fish (and a burger for her King Charles spaniel) without being identified.

The style echoed nothing in the history of giving so much as that 1950s television show “The Millionaire,” with the shadowy benefactor and his astounded beneficiaries. In her early days of wealth she set up a foundation, like most fabulously rich philanthropists. But she shut it down — too much paperwork.

She never read pitches from fundraisers: If you asked Kroc, you did not receive.

She got her ideas serendipitously. The name of her yacht and her jet was the same as her giving style: Impromptu.

Like “the Millionaire,” St. Joan of the Arches, as her friends called her, might have remained in the shadows, not well known beyond San Diego. But her will — she died in October, about three and a half months after being diagnosed with brain cancer — revealed she had just slipped $2 billion under some more doors, including another $1.5 billion to the Salvation Army, the largest gift ever to any charity; and $200 million to National Public Radio. In death, she emerged into the light of the annals of American philanthropy.

*’No Fuss, No Feathers’
  • p. There she was in the audience.

“I noticed in the front row about five seats off center was this rather handsome blond lady,” recalls the Rev. Theodore Hesburgh, former president of the University of Notre Dame. It was April 1987, and he was in San Diego lecturing about how to educate students to be peacemakers in the nuclear age.

“She was paying rapt attention. After the talk she got up right away and came up to the podium and said, ‘Father Ted, I really appreciate what you’re trying to do to prevent nuclear war, and I really believe in that and I’m going to help you.’ Having said that out of the blue, she turned around and walked away.”

Hesburgh asked his hosts who the woman was. “Joan Kroc,” they said, to which he replied, “Who’s that?”

Hesburgh heard nothing for six months. Then Kroc called and asked for a tour of Notre Dame, where he had started a peace studies program but lacked funding. A few weeks later Kroc called and said she’d pick up the tab, $6 million.

“It was just like that — simple,” Hesburgh says. “She was very modest about it. No fuss, no feathers.”

Over the years, Kroc gave another $14 million, then left $50 million in her will. She also gave $30 million, plus $50 million in her will, to found a peace institute at the University of San Diego.

Peace and nuclear disarmament were among the first causes Kroc bankrolled after her husband died. “I fear that President Reagan shares with the Moral Majority the belief that Armageddon is near,” she told the Los Angeles Times in 1985. " . . . I just think it’s time to quit this b.s. People are frightened and they just feel powerless, and I’m trying to tell them that they’re not."

A few years later, Jimmy Carter was starting up the international work of his Carter Center, and Kroc invited the former president to lunch.

“She said, ’I’m going to give you 100,000,’ " Carter recalls, "and I was feeling very pleased to get $100,000, but then she finished the sentence by saying, ’ shares of McDonald’s stock.’ "

Carter could hardly wait for lunch to end to check the value. “I had barely got separated from her when I dashed to a newsstand, bought a copy of the San Diego Union-Tribune, and looked up McDonald’s stock. It was $36 a share” — a gift of $3.6 million.

Peace and disarmament weren’t the only causes that caught Kroc’s fancy.

One day she read in the Los Angeles Times about Mathilde Krim, founder of the American Foundation for AIDS Research.

“It’s still a little mysterious,” Krim recalls. “The next morning I received at my hotel a little envelope, and it contained a million dollars. And I almost fell over.”

Once a sick hummingbird landed in Kroc’s yard. A member of her staff brought it to the San Diego Zoo, where it was nursed back to health. Kroc gave $100,000 for the zoo’s hummingbird enclosure. Then she gave $3.3 million for a big-cat habitat. When the zoo needed to pick up a clouded leopard from Ohio, the cat flew first class on Impromptu.

“She loved surprising people and seeing the reaction,” says Dick Starmann, a former McDonald’s communications director who became her friend and philanthropic adviser. Her delight “was almost impish, in a very nice way.” Before making a gift, she’d say, “Boy, we’re going to knock their socks off!”

But she had a no-nonsense edge. She withdrew an offer of Western art when a group in Rapid City missed her deadline to open a museum. Sometimes in a business meeting she would sense she was being patronized or schmoozed. "When she walked out of the room, she’d say, ‘They thought they were dealing with a dumb blonde,’ " says Starmann. “And she’d wink.”

In April 1997 Kroc watched televised reports of the flood that inundated Grand Forks, N.D., and East Grand Forks, Minn. She offered $2,000 of immediate assistance for each affected household as families awaited government and insurance money. Local officials were sworn to secrecy and publicly referred to the donor as the “Angel.”

At the height of the crisis, Pat Owens, then mayor of Grand Forks, didn’t have a change of clothes and had gone on television wearing jeans two sizes too small. Later, when Kroc made a secret visit on Impromptu, Owens asked why she had decided to be so generous.

Kroc replied: "Well, I was watching this little mayor on television in her tight jeans, and I said, ’I’m going to help this little fox,’ " according to Owens. “Her generosity put a jump-start on the recovery.”

Kroc’s name eventually leaked, but she continued to refuse recognition. East Grand Forks intended to place a monument thanking her in front of the new city hall a few years ago, but on the day of the unveiling, Kroc insisted officials remove her name from the inscription and thank all the “angels” who helped in ways large and small.

She “was a common woman who had been brought up in Minnesota with common values and who appreciated common people,” says East Grand Forks Mayor Lynn Stauss.

Once Kroc was flying to Minneapolis via Chicago to be with her father, who was dying in a hospice. The woman sitting beside her was Doris Howell, a San Diego doctor traveling to a medical conference.

The two women talked all the way to Chicago. Howell dreamed of launching the first hospice program in her city. Kroc ended up giving $18.5 million to start the San Diego Hospice, plus $20 million in her will. She used to drop by unannounced with flowers for patients and families. Once she got a letter from a dying psychiatrist.

“It is 3 a.m. at the San Diego Hospice,” Alan Bergsma wrote, “and I am personally, eternally grateful to you. This began as one of the worst, miserable, wretched days of my life — nausea, vomiting, severe pain — as sick as I have been in 12 years of cancer. . . . Now I am in my first day at Hospice. It is a delightful, caring place beyond what I ever expected.”

Bergsma died seven days later.

*Laying the Foundation

This is not the way most billionaires give away money.

“Let us erect a foundation, a trust,” declared John D. Rockefeller a century ago, “and engage directors who will make it a life work to manage . . . this business of benevolence properly and effectively.”

Rockefeller, Andrew Carnegie and others in the golden age of American philanthropy set the pattern with large foundations to exist forever, donating as little as the 5 percent annual minimum required by the tax code. (Most of the rest of their fortunes went to found big institutions — universities, research institutes, medical schools.)

Rockefeller had given the equivalent of $2.9 billion in current dollars to the Rockefeller Foundation by 1929; it’s still worth about $3 billion, distributing about $160 million a year and $12 billion since the beginning. Carnegie’s foundation — Carnegie Corp. — began with the equivalent of $2.2 billion in 1911. It’s worth $1.8 billion now, donating about $80 million a year and $1.6 billion since its creation.

They have been outstripped by the top foundations today, including the Bill&Melinda Gates Foundation, worth $27 billion; Lilly Endowment, $11 billion; Ford Foundation, $11 billion; Robert Wood Johnson Foundation, $8 billion; W.K. Kellogg Foundation, $6 billion, according to the Chronicle of Philanthropy.

Creating a foundation that will survive you means that more money can be given away over time. Rockefeller executives speak of “generational neutrality”: As dire as the world’s needs may seem now, they’ll probably be as serious in generations to come, so better to spread giving over the long term.

On the other hand, a foundation eats up some of the fortune in administrative costs and puts off until tomorrow much of the good it could do today.

After Kroc’s bequests to charity and an undisclosed sum to her family (which includes her daughter, granddaughters and great-grandchildren), the proceeds from McDonald’s will be gone.

“It gets the capital assets into the hands of a nonprofit doing the work,” says James Allen Smith, professor of philanthropy at Georgetown University. “It probably means that the good will be done sooner, rather than have it deferred and doled out at 5 percent a year.”

“She’s basically saying, ‘Look, rather than creating a foundation to guard my assets and spend them wisely, I’m going to give them to the organizations that have proven themselves to me over the years,’” says Paul C. Light, a scholar of nonprofits at New York University. “That’s a wonderful, gracious gift of confidence to those organizations that is quite rare today.”

Kroc also broke with tradition by giving so much — $1.5 billion — to a social service organization like the Salvation Army. The biggest gifts traditionally have gone to universities, museums and the like.

But there are precedents. Her whimsical spirit recalls Paul Mellon endowing not only great museums but underwriting obscure books and beautiful parks for the public who, he said, needed nothing so much as “a good five-cent reverie.”

As a woman donating her husband’s fortune with independent vision, Kroc echoes Margaret Olivia Slocum Sage, said to be the richest woman in America a century ago with $63 million. The widow of tightfisted financier Russell Sage supported women’s rights, relief agencies, hospitals and universities and created a foundation dedicated to social reform research.

In specifying that the Salvation Army use her $1.5 billion to build 25 or 30 centers for recreation and arts, Kroc also sounds a little like Carnegie, whose thousands of libraries also were conceived to provide access to opportunity. And Carnegie, of course, was a peacenik, too, creating the Carnegie Endowment for International Peace.

Another advantage of a foundation is that the staff may bring a more professional — and less impromptu — approach to the business of giving. Still, Kroc’s impromptu style frequently masked a more studied approach.

For years, Kroc had been warming up to the Salvation Army with gifts of increasing size. The Army’s religious side was less important than her sense that the Army used money effectively, according to her associates. She decided to do something in San Diego’s neglected neighborhoods and asked Army officers to plan a community center. She would check in and urge them to dream bigger. One day the local top officer, Col. Don Sather, got off the phone and stopped by a colleague’s office looking ashen. “She wants to add an ice rink,” he said. If the center was successful, she wanted to try the concept nationwide, her associates say, but the Army didn’t know that.

The $200 million bequest to National Public Radio also followed careful consideration. Though Kroc was a regular listener, she quizzed NPR President Kevin Klose at length. She sent Starmann to pore over NPR’s books.

She surprised Klose with a holiday card in 2002 containing $500,000 for NPR; then, seven weeks before she died, she told him they were “going to do great things together.”

He had no more idea what that meant than did the Salvation Army.

The two biggest gifts Joan Kroc ever gave — to the Army and NPR — were stunners, but they were not impromptu.

*Equipping the Army

One day last month at the center in east San Diego, Haley VanBaale, 6, paints her version of a familiar masterpiece. The center’s fine arts instructor has taught techniques of line and color. Haley’s public school doesn’t have a regular art program.

“I mean, they’re doing a Chagall!” says her mother, Penny VanBaale.

On the ice rink, Brett Ryan, 13, glides at top speed, practicing spins, lutzes and single axels. He started skating on a lark after the center opened. One of his older brothers wanted to learn to skate but never could because the nearest rink was too far away. Brett’s progress has been exceptional, says instructor Wanda Guntert. He already has placed well in competitions. Will he continue all the way to the Olympic trials?

“Depends if I get a double axel,” says the boy, smiling and panting.

Instead of secondhand clothes and soup lines, the complex of beige stucco and green glass has the amenities of a fancy boarding school: 12-acre campus, three swimming pools, skateboard park, athletic field, rock-climbing wall, gym, library, computer room, theater, music and art classrooms, plus a church. About 1,700 people visit daily; a third of the families receive scholarships off the $35 monthly fee.

It’s a smorgasbord of opportunities Kroc did not enjoy growing up during the Depression in St. Paul. She wanted children, especially, to unlock talents they might never have had the chance to discover.

Ice skating was one thing you could do in St. Paul. One winter a girl named Joan Mansfield won a city skating competition. The experience taught her the thrill of achievement through hard work. So did studying the piano, which would pay off more than she could imagine.

Her father was a railroad telegraph operator, her mother an accomplished violinist who made sure her daughter got piano lessons. At 17 Joan married a young Navy veteran, Rollie Smith, and the following year they had a daughter, Linda.

She kept up her piano playing. One night in 1957, when she was in her late twenties and working in a restaurant piano bar, Ray Kroc walked in to talk business. Kroc had been building his burger chain for just a few years, and Joan’s boss was interested in a franchise. Kroc, a piano player himself, noticed the woman at the keyboard.

“I was stunned by her blond beauty,” he recalled in his 1977 autobiography. “Yes, she was married. Since I was married, too, the spark that ignited when our eyes met had to be ignored, but I would never forget it.”

He was about 25 years older than Joan, but the spark was mutual. “When Ray and I met, we both knew that someday we wanted to get married. It was unspoken, but it was there,” Joan Kroc told author John F. Love for his 1986 book, “McDonald’s: Behind the Arches.”

She agonized about getting a divorce, but her mother was against it and her teenage daughter said, according to Love, “If you marry him, forget that you have a daughter.” Ray divorced his wife anyway, and instead married John Wayne’s script assistant.

Coincidentally, Joan’s husband saw a future in McDonald’s. He and Joan moved to Rapid City to open a restaurant. At a McDonald’s convention 11 years after Ray and Joan met, they reconnected. They played songs on a hotel piano and talked all night. They each got divorces and within six months were married. (Joan Kroc remained on good terms with her ex-husband, who remarried and died a few weeks before she did.)

Immediately Joan Kroc was vaulted into new social circles, but she’d still take the McDonald’s jet back to Rapid City and pick up her girlfriends for weekend adventures. “Her personality never really changed,” says Barbara Eilers, who owned a fur shop in Rapid City.

The Krocs were formidable personalities who sometimes clashed, often over politics. Ray was conservative, Joan liberal. “All you wanted to do in that situation was stay out of the line of fire,” says Starmann, her adviser.

They had separate foundations to give money away, and sometimes their gifts were at odds with each other. Ray gave $250,000 for Richard Nixon’s 1972 re-election. Joan later gave $1 million to the Democratic Party. Ray supported trade schools and disdained liberal arts colleges. Joan, who never went to college, established peace studies programs.

But that piano bar spark continued to flash. “You can tell people that are happy with each other,” Starmann said.

They both gave heavily to children’s charities. And when he died, he trusted her to do as she pleased with his fortune.

One of her choices was the Salvation Army center, which she said Ray, an old bell-ringer himself, would have appreciated.

During the first concert in the facility’s theater, Kroc took a seat at the $125,000 grand piano and played as Tony Bennett sang “Our Love Is Here to Stay.”

And when the rink was completed, Kroc was one of the first to put on skates and glide across the perfect ice.

*Giving Till the End

Kroc’s neighborhood McDonald’s was six miles from her $14 million house.

The house was on seven manicured hilltop acres in Rancho Santa Fe, just north of San Diego. It had marble floors and was hung with paintings by Renoir, Remington and Norman Rockwell. Beside one of the telephones was a hand-made music box from a resident near East Grand Forks.

To reach the McDonald’s, she drove past thoroughbred horse farms and turned left at polo fields, until she reached a typical suburban San Diego shopping center done up in stucco with palms in the parking lot.

“She came in twice a week,” says supervisor Steve Naegele.

She’d take her great-grandchildren out to the play area.

“The Christmas before last she came in and passed out $100 bills to our crew,” Naegele says.

Or she’d pull into the drive-through lane in her blue Mercedes and leave a $100 tip. She liked the Filet-O-Fish, or, on Sunday mornings, a Sausage Biscuit and Diet Coke.

“And a hamburger for her dog,” says assistant manager Greg Wise.

“One time we had to park her,” confesses Naegele, meaning the drive-through food wasn’t ready and — gulp! — the big boss’s widow had to wait in a parking space.

“She said, ’It’s okay, honey. I understand.’ "

On social occasions she often was escorted by Phil Bifulk, a retired Minneapolis business executive whom she had known growing up and met again later in life. As much time as they spent together, he still lived in Minneapolis.

“She’s been a dear sweetheart of mine for 14 years, and we kept a low profile. I’ll respect her privacy,” Bifulk said, declining to be interviewed. Kroc’s daughter, Linda Kliber, also declined.

She kept her cancer diagnosis a secret from all but a close circle. “She didn’t want pity,” says her friend Maureen O’Connor, former mayor of San Diego and widow of the founder of Jack in the Box. "I said, ‘Joan, you’ve lived 29 lives and we’re going for the 30th.’ She said, ‘I know that, honey. I’ve had a wonderful life. I’d just like a few more years to see my great-grandchildren grow up.’ "

She began planning her last rush of giving, one more round of surprises.

“She said to me last summer before she passed away, ’Aren’t they going to be surprised!’ " recalls Starmann.

She personally invited the speakers for her memorial service, including Hesburgh and Carter.

The ceremony was held outside the University of San Diego peace institute, in a cliff-top garden overlooking the Pacific Ocean. In the program was printed one of her favorite quotes, by Dwight Eisenhower: “Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed.”

A granddaughter read from a letter Kroc had sent a few years before, on the young woman’s 21st birthday.

“I want you to believe that a life of service is a happy one to lead,” she wrote in part. "Serve others joyously and your reward will be great; carry with you the message of charity and brotherly love. . . .

“Amount to something! Vow to be more than a parlor ornament. Vow to be something that will place your name among the annals of the givers.”

Staff researcher Bobbye Pratt contributed to this report.

2004 The Washington Post Company

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