Huge Surplus Amassed by Guide Dog Charity:

	Critics Say Group Sitting On Too Much Wealth

	by David Dietz


	From the Editor, The following article appeared in the San 

Francisco Chronicle, May 12, 1999. No matter how effective and 

beloved a charity is, one is forced to ask hard questions when 

its income completely outstrips its expenses. The following story 

certainly raises such questions about Guide Dogs for the Blind. 

Here it is:


	While many charities struggle to stay afloat, San Rafael's 

venerable Guide Dogs for the Blind never had it so good. The 

school, North America's leading facility for teaming the visually 

impaired with dog guides, has accumulated so much unspent money 

that critics say the operation is abusing its tax-exempt status 

while shortchanging the blind.
	To the chagrin of state charity regulators and some 

benefactors and former students, the school wound up last year 

with more than twice as much money as it needed. It spent $21 

million but still had nearly $24 million left over--at least the 

fifth consecutive year of hefty surpluses.
	With the extra cash year after year, Guide Dogs has amassed 

a bulging endowment that now totals about $200 million, far 

surpassing those of many of the Bay Area's top charities. The 

renowned Haight-Ashbury Free Clinics, for example, does not even 

have an endowment, while the fund at San Francisco's Glide 

Memorial United Methodist Church, another major benefactor of the 

inner-city needy, totals only $16.7 million.
	While Guide Dogs' wealth-building breaks no laws, regulators 

and organizations that monitor charities dislike heavy 

stockpiling of cash. The National Charities Information Bureau, 

which sets standards for giving, advises donors to be wary of 

organizations that generally hold in reserve more than two years' 

spending. Guide Dogs has set aside an amount of money that would 

cover its operations for about ten years.
	"The point is that you shouldn't be accumulating money . . . 

if you're not going to spend it," said bureau spokesman Dan 

Langan. School officials defend the organization's riches, saying 

they are trying to perpetuate the operation and need to hedge 

against investment losses that would harm the endowment. They 

also forecast that the number of students will grow as the 

general population ages.
	"This is acting as prudent managers," said Richard Graffis, 

an investment adviser who chairs Guide Dogs' board of directors.
	But some critics say that the school, which was formed to 

help blinded servicemen during World War II, is run these days 

more like a business than a benevolent, nonprofit organization 

and that it seems more intent on enriching itself than trying to 

determine what more it can do to help the blind.
	"Hoarding doesn't do anybody any good," said Yeoryios 

Apallas, a deputy attorney general in the state Department of 

Justice's charitable trust division. "Given the incredible needs 

of the sight-challenged, I cannot believe that these funds cannot 

be used more effectively."
	The size of Guide Dogs' endowment is all the more startling, 

critics say, because last year the school graduated only 354 

students and did not fill all its classes. It also must compete 

with nine other such schools for a relatively small number of 

	According to the American Federation for the Blind [no one 

at the National Center talked to the reporter, so who knows where 

these statistics actually came from], the nation's blind 

population of 1.1 million is growing only slightly, and fewer 

than 10,000 use dogs. Far more--about 130,000--use canes, 

according to the federation.
	While California law puts no limits on nonprofit 

organizations reserving funds, state regulators operate by the 

standard that charities exist to give away money, not to save it. 

Occasionally officials will put pressure on organizations they 

consider to be violating a public trust. With Guide Dogs state 

regulators raised the enrichment issue once before, in a 1994 

letter. But school officials said they have no knowledge of the 

state's concern and no action was ever taken.
	Particularly upsetting to some critics is that despite the 

size of its endowment Guide Dogs continues to solicit public 

contributions energetically. The school, popular with donors 

since its founding in 1942, took in $16 million in bequests and 

donations last year--a rate of $44,000 a day.
	No one quarrels with Guide Dogs' achievements, which have 

been captured in stories many times. Started in a rented house in 

1942, the school, now headquartered at an immaculate eleven-acre 

campus spotted with willows and Japanese maples, has developed a 

devoted following among former students and donors.
	It has trained 8,000 blind people in the use of yellow 

Labrador retrievers and other breeds--free of charge--then 

continued to support its graduates, affording them free 

counseling and even paying some of their veterinary expenses.
	And the public has responded enthusiastically, giving twice 

as much in 1998 to Guide Dogs as the next-largest training school 

received. Many contributors are spurred by the sight of the 

school's alert and well-groomed dogs being trained on streets 

surrounding the organization's campuses in San Rafael and outside 

Portland, Oregon.
	One of Guide Dogs' strongest defenders is Morgan Watkins, 

associate director of academic computing at the University of 

Texas at Austin, who attended the school and now serves on its 

	"As I sit here and rest my hand on my golden retriever and 

reflect on the many times I've been on campus, I think I can say 

that the services we provide are excellent," he said. "Are there 

ways to improve? There are always ways, and we are trying to do 

that with constant review."
	Critics, however, complain that by soliciting donations at a 

time when Guide Dogs is already earning more money than it can 

use, the school is misleading the public and diverting charitable 

donations from needier causes.
	"It would seem to me that anybody who has more than enough 

revenue from an endowment to run its operation should not be out 

there fund-raising," said Ed Eames, a blind Fresno author and co-

writer with his wife, Toni, of a book on dog guide schools. "When 

do you let other guys get in and get part of the pot?" Besides, 

some researchers say the number of people with visual impairments 

may not necessarily grow as the population gets older.
	Medical advances in areas such as cataract surgery and 

treatment of diabetes, a leading cause of blindness, could reduce 

visual handicaps. And even if the blind population does increase, 

the proportion of the sight-impaired who are drawn to the idea of 

using dogs will not necessarily rise, especially with increasing 

self-sufficiency generated by the computer age, observers say.
	"The fact is we don't really know what's going on," said 

Emilie Schmeidler, senior research associate with the American 

Foundation for the Blind.
	Guide Dogs said it has no evidence to back up its growth 

prediction and is primarily banking on trends. The school has 

begun research to get better answers, officials there said.
	While sympathetic to the charity's desire to save money for 

a rainy day, critics implore the school to attend more to the 

current needs of the blind, even if it means altering the 

charity's charter to branch out beyond dog guide training.
	"The future for a charity is today--to take care of the 

needs of their constituents," said Apallas, the state charity 

regulator. "All they need is to be a little more creative."
	Even Vernon Crowder, a blind Bank of America agricultural 

economist who is an unwavering supporter of the school's work, 

suggested that the organization is squandering opportunities to 

increase the mobility of its students and the sight-impaired in 

	Crowder, who once lost out in a bid to become Guide Dogs' 

chief executive, said the school should consider providing basic 

mobility training for the newly blind, even if they do not choose 

to use dogs.
	He also suggested that the school put its weight behind 

research and development efforts to improve mobility, 

particularly in adapting electronic signs so that they can 

transmit orientation signals to the visually impaired.
	"This is a natural extension of what Guide Dogs is doing," 

he said.
	But Richard Bobb, Guide Dog's president and chief executive 

officer, rejected any likelihood in the foreseeable future that 

the school would branch out, arguing that the organization has 

more than enough on its hands to train dogs and pair them with 

	"Our mission is relevant," he said. Apallas said the state 

has no authority to force Guide Dogs to spend more of its 

resources, but it could raise its concerns with school officials. 

Regulators cited the wealth issue in their 1994 letter, but there 

was no apparent follow-up.
	"Excess revenue accumulated during the year seems high," 

Larry Campbell, registrar of charitable trusts, wrote to the 

school at the time. "Determine if more excess income can be used 

to provide more current public benefits."
	There was no response from Guide Dogs on file with the 

Justice Department, and current school officials said they were 

unaware of the state's inquiry.
	In any event the letter has had no apparent effect on Guide 

Dogs, which has continued to accumulate surpluses.
	As the school's wealth has soared, some of Guide Dogs' 

critics include longtime donors who are now having second 

thoughts about helping the organization.
	"I knew they had an endowment, but I didn't know it was to 

this degree," said Carol Spivak, a self-described dog lover who 

has given generously to the school since 1988. "I think I'll 

reduce what I give."
	Controversy is not new to Guide Dogs. It was criticized 

several years ago for being slow to put blind people on its staff 

and board of directors and for treating some blind staff members 

dismissively. It rejects the accusations.
	Currently five of the school's 235-member staff and four of 

its eighteen directors are blind. There are no blind people in 

top management.
	The school also was caught in a 1994 imbroglio over 

construction of its $14 million Oregon campus. Critics accused 

Guide Dogs of heavy-handedness in winning local government 

approval of the project, and the school, despite its wealth, 

persuaded the state of Oregon to help provide it with a low-

interest building loan from a bank.
	The Guide Dogs' endowment has benefited from the longest 

stock market boom in history. Typically the organization taps 

only endowment dividends for present needs, plowing back all 

capital gains or surpluses.
	Last year Guide Dogs spent about $5 million of its $28 

million in endowment proceeds on operations. To use trading 

profits for continuing needs would be imprudent, school officials 

	The school pays most of its expenses with public 

contributions, which have risen 52 percent in five years, 

according to financial statements submitted by the organization 

to the Internal Revenue Service. Eighty percent of the donations 

to the organization come from bequests.
	Just as revenue is up, spending has increased--particularly 

on overhead.
	With the opening of the Oregon campus the staff has nearly 

doubled, and management costs have jumped 185 percent in the past 

five years. Three of Guide Dogs' top managers earn more than 

$100,000 a year, and Bobb received a 14 percent raise last year, 

bringing his annual salary to $200,000.
	Fund-raising costs have also increased, even as the 

endowment ballooned. The school spent $796,171 on development 

last year, up 10 percent, in line with a campaign to increase 

donations. The $16 million in combined bequests and donations 

received last year was up about 30 percent from 1997.
	"Part of the reason I was brought here is to keep the bar 

high," said Bobb, a former leasing company executive.
	Some of Guide Dogs' competitors yearn to have it so good.
	"We obviously wish we could have that budget," said Don 

Robinson, executive director of Guide Dogs of the Desert, a 

small, innovative Palm Springs-area school that strains each year 

to meet a spending program of just under $1 million. "It's a 

struggle. It's nonstop."
	As Guide Dogs' wealth is scrutinized, critics note that 

England's largest dog guide school was under similar fire four 

years ago, resulting in the British government's drawing up 

strict rules forbidding cash stockpiling by charities while 

asking the public for money.
	Robert Gnaizda, a San Francisco public interest lawyer who 

has sued rich charities, holds the view that organizations like 

Guide Dogs should be subject to periodic state review to 

determine whether they are fulfilling their mission and enjoying 

community support.
	"The state would have much greater authority to look into 

expenses and might take into account if charities hoarded," 

Gnaizda said. "This would be a check against the wealthy getting 





Guide Dogs for the Blind is one of the Bay Area's leading 

charities. Critics say it is too rich and accuse the school of 

operating more like a business.


CONTRIBUTIONS [in millions]

Donations are growing

'94 $10

'95 $13

'96 $19

'97 $12

'98 $16

Annual expenses [in millions] have doubled

'94 $10

'95 $12

'96 $16

'97 $19

'98 $21



Unspent money [in millions] soars

'94 $11

'95 $14

'96 $11

'97 $21

'98 $24



In millions of dollars

'94 $80

'95 $91

'96 $104

'97 $160

'98 $189


Endowment currently totals about $200 million

Figures have been rounded


Chart of Guide Dogs Wealth