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October 20, 2019Cart

Business

by Westchester County Business Journal
by WCBJ

Nonprofits still grieve the death of philanthropist Patricia Lanza, and the loss of donations

The death of Patricia Lanza in 2014 left many in the Westchester philanthropic world bereaved by the loss of a beloved friend and stunned by the discovery of just how dependent they had become on her generosity.

Lanza gave away millions of dollars, especially to groups that helped children and to church missions. But after her death, donations from the Lanza Family Foundation declined dramatically.

The foundation will soon increase its contributions, said her son, Louie Lanza, though not at the same level and not necessarily to the same charities. Now, the foundation will focus on “the list.”

“You’re not on the list when you don’t live up to your end of the bargain,” Lanza said.

Restaurant owner and hospitality entrepreneur Louie Lanza, shown here in Peekskill, has inherited a family foundation and legacy of giving from his mother, Patricia. Photo by Bill Heltzel

In her last year or two, he said, his mother realized that some organizations had not produced the expected results and some people had taken advantage of her. They talked about a few organizations she wanted the foundation to continue supporting.

Patricia Lanza was born in Salt Lake City, the child of a military family that moved around a lot. She met Frank Lanza in San Francisco, where she worked as an executive secretary for the FBI.

They raised three sons, Anthony, Louis and James. Frank Lanza often traveled for work, so she ran the household. The family referred to her as “the hammer.” She was highly organized, paid attention to details and held high expectations.

She was a student of the Bible, her son said, and practiced its principles. “First and foremost, she was a good Christian.”

Frank Lanza co-founded L-3 Communications Holdings, a defense contractor, and in 1996 the couple started the Lanza Family Foundation. He died in 2006 and she began giving away more and more money. How much is anyone’s guess.

The suddenness of her death at 80 caught local nonprofits short.

During the last three years of her tenure as president, from July 2011 through June 2014, the foundation contributed $7.5 million to 53 organizations. More than half of the money went to 28 Westchester groups.

Under her sons, the foundation has donated $537,000 to 21 organizations in two-and-a-half years, including about $400,000 to 16 local groups.

Pat Lanza’s largest local recipients were the Women’s Research and Education Fund in Rye, $778,750; El Centro Hispano Inc. in White Plains, $690,000; Legal Services of the Hudson Valley in White Plains, $600,000; Youth Voices Center Inc. in New Rochelle, $600,000; New Little Branches preschool in Yonkers, $540,000; and Grace Church Community Center in White Plains, $300,000.

“People thought the money was coming forever,” Louie said.

It wasn’t.

Among her top 10 recipients, the money stopped flowing to all but El Centro Hispano and Wheelchair Charities in Jackson Heights, Queens.

Several programs have closed or reorganized on a smaller scale. Legal Services of the Hudson Valley, for instance, shut down its children’s advocacy unit and transferred services to other programs. Youth Voices, a character education program, now serves about half as many youths as before.

“I never thought the money would stop coming,” said Michael Arterberry, president of Youth Voices. “I never planned for a rainy day, because to plan for a rainy day would be inconsistent with her generosity.”

“You need to understand that a donor can unexpectedly pass away or they can switch gears,” said Laura Rossi, executive director of the Westchester Community Foundation. “We advise nonprofits to diversify their funding sources. It’s basic risk management and good governance.”

Pat Lanza poured money into the family foundation annually, including $6.7 million during her last three years. But she gave away so much that the year-end net assets barely grew, to $1.4 million from $1.2 million.

The foundation has since received $11 million from her estate, and net assets stood at $12.4 million as of the end of last year.

Her generosity was even more dramatic than the foundation numbers indicate. She wrote personal checks “left and right,” said her son.

Yonkers Partners in Education was one such organization, receiving about $500,000 over four years for scholarships.

“I didn’t even realize there was a foundation,” said Wendy R. Nadel, executive director. “There was no paper trail. No board. No applications. No contract. No commitment letter.”

The Westchester Children’s Association sued the Lanza foundation last month, claiming that Patricia Lanza had personally pledged a $500,000 matching grant in 2013. When it tried to collect, Louie Lanza responded in an email, “We are no longer in the position of giving large single donations like my mother once did.”

His mother did not believe in estate planning, he said. She gave away money on a handshake, without formal agreements.

Her generosity became an accounting nightmare. For three years the estate and foundation have been under IRS audit, Lanza said, and enormous time has been spent on untangling the finances.

The examination has uncovered questionable situations. A California minister, for example, used $50,000 from his Westchester benefactress to buy front-row season tickets to Los Angeles Lakers games.

Patricia Lanza financed about $8.1 million in mortgages and loans that pay 1 to 2 percent interest. Such low-interest loans are not sustainable, her son said, because the IRS requires foundations to distribute 5 percent of the value of their net assets annually.

And some loan recipients are not even making payments.

He said a minister who insisted on speaking at his mother’s funeral billed the foundation for $5,000 in speaking fees.

“We’re cutting some of those folks off,” Lanza said. “They’re not the real deal.”

In the last year or two before his mother’s death, Lanza said, he was not active in the foundation so he doesn’t know why many charities got checks. When people implore him to keep giving to them, he has to be the “bad guy,” delivering the hard message that less money will be handed out, or telling them, “I don’t know who you are.”

So who made “the list?”

Six organizations have received donations under both regimes. Those six, Lanza said, are “good guys” his mother wanted to continue supporting.

Ranked by the size of donations for two-and-a-half years under his tenure, and compared with his mother’s last three years, they include:

• Town of Greenburgh youth programs, $155,000, versus $209,000 during the last three years of Patricia Lanza’s leadership.

• El Centro Hispano, $75,000, versus $690,000.

• Wheelchair Charities, $75,000, versus $256,000.

• Habitat for Humanity of Westchester, New Rochelle, $75,000, versus $175,000.

• Marine Corps-Law Enforcement Foundation, New York City, $40,000, versus $15,000.

• Bob Woodruff Foundation, New York City, $5,000, versus $30,000.

Lanza said the foundation will soon be able to give away about $500,000 a year. Besides his mother’s list, he wants to concentrate on Westchester and Putnam counties, where he works and lives and where he can see where the money is going.

His favorites include police and fire organizations, arts groups and, especially, veterans’ groups, “to help the people who fight for our country.”

Instead of just writing large checks, he wants to help organizations run fundraising events and become self-sufficient.

Meanwhile, in the nonprofit world, memories of Pat Lanza are still fresh.

Nadel, of Yonkers Partners in Education, said Pat Lanza was not a sophisticated philanthropist, in the sense of building a large organization. “But she was a philanthropist
in the purest sense of the world. She got joy out of giving. She wanted to improve
the world.”

“She was a rare, rare person,” said Thomas Gabriel, chief development officer of Legal Services of the Hudson Valley. “We are all devastated by her passing.”

“And we are devastated by the void left in the nonprofit community.”