By Marianne Lavelle
The Bielfeldt Foundation has made its mark on central Illinois, funding Peoria's zoo, a new riverfront recreation center, the symphony, youth groups, and a University of Illinois-Urbana-Champaign athletics building. But one recipient of Bielfeldt largess has received almost as much money as all of the hundreds of the foundation's charitable grant recipients put together: the Bielfeldt family.

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Over its 17-year existence, while doling out $25 million to charity, the Bielfeldt Foundation has paid $21 million for investment advice to its founder, commodities trading whiz Gary Bielfeldt, his son, and the family money management businesses, the Peoria Journal Star reported this fall. The family's investment expertise hasn't exactly helped foundation assets to swell; in fact, they've fallen to $12.8 million from a peak of $50.5 million in 1995, the newspaper reported from an analysis of the organization's tax records.

It's not illegal for the same family that enjoys a large tax deduction for establishing a foundation to also receive considerable payments from those same funds. But it's the kind of cozy set-up that, seen time and time again, has rankled critics both inside and outside the charity sector. Reports of self-dealing, excessive pay, and murky finances--the same kind of corruption that has made headlines in corporate America--have shaken the nonprofit world in recent years. In a sense, the troubles are even more vexing in these organizations, because there are fewer legal constraints and less oversight. Even if the problems afflict only a minority, some critics fear that a crisis of confidence threatens all philanthropic groups.

Cash crunch. "The major ingredient nonprofits have going for them is the public trust," says Pablo Eisenberg, senior fellow at Georgetown University's Center for Public and Nonprofit Leadership. "The money depends on people's trust; without it, the dollars stop coming in."

United Way of the National Capital Area learned this the hard way. It lost many of its largest corporate sponsors after an audit uncovered that the organization's longtime director took more than $1.5 million in questionable payments over his 27-year tenure. Other executives had charged the charity for tens of thousands of dollars' worth of personal purchases. This Washington, D.C.-area scandal echoed the 1992 crisis that hit the national umbrella organization, United Way of America, when its president, William Aramony, was convicted of stealing $1.2 million from it.

The Nature Conservancy, the world's largest environmental group with $3 billion in assets, has struggled to restore its image after a series of articles in the Washington Post detailed sweetheart business and land deals the organization made with members of its own trustees, governing board, and advisory council. The conservancy says it abandoned such transactions, and it has set up an independent board of outsiders to advise it on governance issues. But a Senate Finance Committee probe is ongoing.

Private foundations--nonprofit corporations or trusts endowed by a single donor, usually a family or a corporation, for the purpose of giving grants--have faced increasing scrutiny. In one notorious case, the James Irvine Foundation, a major donor to arts, education, and social programs in California, is cutting back on staff and programs after years of lavish spending on executive pay, perquisites, and a new headquarters, the San Jose Mercury News detailed in an investigation earlier this year.

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