Herzfeld Foundation a Family Fiefdom

Herzfeld Foundation offices are located in the Phoenix Building in the Third Ward.

This week’s news that Rob Henken, longtime leader of the Wisconsin Policy Forum, would become a part-time executive director for the Herzfeld Foundation was a surprise. An added surprise for foundation world insiders is that it brings in someone who is not a member of the Haberman family to decide the future direction of the Herzfeld Foundation. For about two decades, family members have gotten paid by the foundation, driving up its operating costs.

The foundation offices are located in the Phoenix Building in the Third Ward. Its money comes from the fortune amassed by Richard Herzfeld, whose family owned the Boston Store, and his wife Ethel. After the death of Richard (in 1980) and Ethel (1997) their assets were added to the foundation they had founded. It essentially was taken over by Bill Haberman, an attorney with Michael Best & Friedrich. He had served as an attorney for the Herzfeld’s, helping them with estate planning and also was a board member of their foundation.

In line with the Herzfeld’s wishes, the foundation makes grants in the areas of “Arts & Culture, Education, and Civic & Community,” as its website notes. Haberman served as president of the foundation’s board, and was paid a salary, though he continued his job as a partner with the Michael Best & Friedrich. And as of September 2002, he added his wife Carmen Haberman as vice-president of the board foundation.

A March 2009 story by Milwaukee Magazine reported that Bill earned $107,617 in 2007 while working zero hours per week according to the foundation’s federal tax form. He told the magazine this was a mistake and he actually worked at least 12 hours per year attending foundation board meetings. Later the foundation’s accountant released a revised tax form showing Haberman actually worked more like 1,000 hours a year, specifically 20 hours per week and later still an amended form by the foundation upped that to 27 hours per week. Carmen Haberman, meanwhile, earned $101,417 as vice-president.

“These salaries contribute to the foundation’s high administrative expenses,” the story noted, “accounting for 21 percent of the budget, compared to an average of 12 percent for similar-sized foundations, data from the Council on Foundations shows.”

By 2009, Bill Haberman was earning $127,000 and his reported hours of work had been increased to 35 hours per week while Carmen Haberman earned $122,500 as VP, with a reported 40 hours of work per week. Meanwhile their two children were also serving as board members: Sarah Haberman was paid $10,000 for a reported two hours of work per week and Fred Haberman $7,500 for two hours per week. All this was in addition to a program director, who was paid $66,167 for 40 hours per week to oversee some $3 million in grants, many to arts groups in Milwaukee.

Fred and Sarah, who do not live in Milwaukee, have each been getting paid $10,000 per year as board members for “nearly twenty years,” said Fred in an interview with Urban Milwaukee. According to their LinkedIn profiles, they are the co-founders (in 1994) of a PR company based in Minneapolis called Haberman where Fred is CEO and Sarah is managing partner. The firm tells “the stories of pioneers making a difference in the world,” its website notes. “Our leadership team embodies the Haberman values, and infuses them into every relationship and project.”

Fred Haberman said the two have considerable experience working with nonprofits and foundations.

In 2010, the foundation added a second full-time staffer, as grants manager, with a salary of $47,294. Yet the weekly reported hours for Bill rose to 40 hours and his pay to $128,900, while Carmen’s pay rose to $124,300. Total administrative and operating expenses for the foundation that year were 32.6% of grants given, compared to 16% for comparably-sized foundations in a study done under the auspices of the Forum of Regional Associations of Grantmakers.

Fred Haberman told Urban Milwaukee the family felt they kept expenses below 1% of total assets, which was recommended by the Council of Foundations. But the Herzfeld Foundation actually spent 1.35% of its assets on operating and administrative expenses that year, meaning it was spending 35% more than the recommended level.

Over the years the pay to Bill and Carmen Haberman continued to rise, to $151,500 and $146,800 respectively by 2015, and to $167,000 for Bill in 2018.

In 2019 Bill Haberman passed away and an obituary by the Milwaukee Journal Sentinel celebrated him for his “nonprofit leadership” and his “contributions all over Milwaukee.”

By 2020 his name was gone from the foundation’s list of payees, with no one listed on the board or staff as working more hours to replace the 40 hours per week Bill Haberman had long been listed as doing. Carmen was still board vice-president, with her pay upped to $151,850. Sarah and Fred were now getting $10,600 each.

In 2021 Carmen’s pay rose to $167,000. In 2022, as her health began to decline, her pay dropped to $46,750, though she was still listed as working 40 hours per week. Meanwhile the foundation, which for years had two staff, has had only one full time staffer since 2021.

As a result, by 2022, the foundation’s administrative and operating expenses, as a percent of grants given, had dropped to 16.9%, down from as high as 32%, leaving it very near the national average (15.9%) for foundations its size. That said, there are Wisconsin foundations that spend far less: Herbert Kohl Charities Inc. gave more than twice as much in donations as Herzfeld in 2022 while its administrative and operating expenses were less than 1% of grants given. The George Kress Foundation in Green Bay gave about $1 million less in grants than Herzfeld that year and and spent just 3.2% of grants given on administrative and operating expenses. There are also Wisconsin foundations that spend more than the national average.

When asked whether Henken will be replacing someone or is an addition to the foundation’s staff, Fred Haberman said “Rob will be replacing, to a degree, my mom and dad.”

Which would suggest a part-time employee will replace the 80 hours of work per week long reported for Bill and Carmen Haberman.