PHILANTHROPY: A Case of Self-Help

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In her battle to persuade U.S. hospitals to try her physical-therapy methods for treating infantile paralysis back in the early 19403, the late Australian-born Sister Elizabeth Kenny suddenly found an enthusiastic backer in Minneapolis' Mayor Marvin L. Kline. He was the prime mover in getting the Sister Elizabeth Kenny Foundation, Inc. set up in Minneapolis in 1943. In 1946, after upstart Democrat Hubert H. Humphrey ousted him from office, Republican Kline became the foundation's executive director.

Last week, after a four-month investigation, Minnesota's Attorney General Walter F. Mondale jolted Minneapolis with a documented report on financial shenanigans in the foundation under Marvin Kline's stewardship. Said the Mondale report: "Mr. Kline dominated and controlled the foundation to an extent that he was enabled to derive unconscionable personal profit from his position." Major findings in the report:

¶ Over the years, Kline upped his own salary from $12,500 a year to $48,000. Annuity and pension-plan payments, special funds, etc. ran his compensation for 1946-59 to a total of $773,013—not counting the car he charged to the foundation or his expenses-paid trips to Europe, Latin America, Russia, Australia.

¶ In 1952-59 a Chicago direct-mail firm named Empire Industries, Inc. (later reorganized under various names) raked in $19.5 million in donations under a fund-raising contract with the Sister Elizabeth Kenny Foundation. Of this $19.5 million, Empire kept $11.5 million for fees, commissions and expenses, turned over only $8,000,000 to the foundation. Boss of Empire: Abraham L. Koolish, presently under indictment in Chicago on a federal charge of mail fraud (raising funds for a phony charitable organization that was supposed to help disabled war veterans but never did).

¶ Minneapolis Public Relations Man Fred Fadell got $24,700 a year from the foundation, also collected fat payoffs from Empire Industries and its successors—a total of $344,300 from 1951 to 1959. Fadell split the take from Empire with ex-Mayor Kline, giving him a total of $113,750, plus a piano. For a while, Fadell also had Kline's son and daughter on the payroll of his public relations firm. It was obvious from Attorney General Mondale's report that the foundation's board of directors, made up of prominent businessmen and civic leaders, had been derelict in its utter failure to oversee the foundation's finances. Admitted former Board President R. Bruce Reinecker, a Minneapolis printing executive: "We put considerable trust in Marv Kline. Obviously, it wasn't justified."