Such empty promises have made nonprofits wary of some very generous pledges in the past year, and caused them to occasionally resort to fairly unsubtle background checks. It was a surprise to Melissa Berman, president and CEO of Rockefeller Philanthropy Advisors in New York, when she received a call a few months ago from an administrative staffer at a high-profile nonprofit–she declined to specify which one–conducting a reference check on a well-known donor who had offered a large gift.

"This was a little unusual," Berman says. She does understand the need to ask, however. "Many relationships between donors and nonprofits are based on really heartfelt and deeply seeded commitments and values and passions," she notes. "And all of that is great, but when it comes time for this to be converted to a large amount of cash that’s going to be paid out over a period of years–when the donor and nonprofit are going to have their names tied together for a long time–then it’s time to be pretty explicit about it."

More often, questions about a potential donor’s character and solvency come up subtly and informally in conversation among philanthropist peers. The idea of a formal reference check is also a new one to Lewis B. Cullman, who has been examining the facets of fund-raising through peer pressure, matching gift strategies and other tactics for a book he is writing. At 87, Cullman, former chairman of Cullman Ventures in New York and author of Can’t Take It With You: The Art of Making and Giving Money, has a long history as the kind of patron who, along with his wife, Dorothy, develops long-term relationships with nonprofits, a particularly desirable quality to charities in these uncertain times. Their names turn up around New York’s cultural centers, such as the American Museum of Natural History’s Cullman Hall of the Universe and the New York Public Library’s Dorothy and Lewis B. Cullman Center for Scholars and Writers. The Museum of Modern Art plans to open the Lewis B. and Dorothy Cullman Education and Research Building this year.

TOP VIEW: The Vilars and Kozlowskis of the philanthropic world have put recipients in the sticky situation of having to second-guess the ability of large donors to live up to pledges. Nonprofits are increasingly eager to develop long-term relationships with their donors, but when a new pledge is made, they just might have to call friends of the donor and ask overtly for a character reference.

If Cullman did know of a philanthropist peer who was having financial problems, he says, "I suppose I should" be forthcoming about it. He believes a degree of wariness may be prudent in some cases; he has certainly seen that, as he puts it, "people who make it fast may lose it fast."

Though a long-held family fortune could also dwindle, it has been a few quickly–sometimes dubiously–earned fortunes that have left certain nonprofits with gaping holes in their financial statements. There was a time when a nonprofit could wait until the gift was in hand to report it as income, but since 1995 the Financial Accounting Standards Board has required nonprofits to report promised gifts as income; thus their books will indicate a loss if a pledge fails to materialize. Some organizations have instituted policy changes because of problems. Take Vilar’s alma mater, Washington & Jefferson College in Washington, Pa. Even as his company was falling, Vilar had reportedly promised $18.1 million toward a new technology center; as late as summer 2003 it was referred to in the college’s campus news as the Vilar Technology Center. The college will not reveal what portion of the gift he provided, but the school had to take out a loan in the form of a bond for the balance, says John Plante, vice president for development and alumni relations, and the school is still raising funds for the building. The college now has a rule that campaigns for new buildings must raise 90 percent of the cost, instead of the prior 70 percent, before it will break ground.

Some nonprofits are also specifying under what circumstances they would offer a naming opportunity, as well as what circumstances might cause them to refund money or remove a name. A criminal conviction is one such cause. Last August, Seton Hall University removed the name of alumnus Dennis Kozlowski, former chairman and chief executive of Tyco International, from its business school building and from the library’s rotunda–at his request, according to the school. Kozlowski was convicted last June of grand larceny, securities fraud, conspiracy and falsifying business records. The building is now called Jubilee Hall.

*Vilar’s attorney, Jeffrey Hoffman, did not respond to questions by press time.

"Many times people need a little prodding," says Mark Volpe, managing director at the Boston Symphony Orchestra. "And then, if there really is a problem, you have a discussion and you work through it." Financial staff review outstanding pledges, and if a donor is late, staff will follow up and diplomatically ascertain the problem, Volpe says. If there is a bigger issue, they work through it. The first step is to ask when circumstances might change, then do what any business does and work out a payment plan. Litigation is usually a bad idea. "If they’re not paying you because they don’t have the money, winning a lawsuit doesn’t help," Volpe points out.

The first step is to ask when circumstances might change, then do what any business does and work out a payment plan. Litigation is usually a bad idea.

To avoid being caught in such a situation, nonprofits are increasingly devoting staff resources to keeping an eye on news of major donors and their company’s activities. But even before the media gets wind of trouble, friends and business associates of an affluent donor might have a glimmering of something amiss, as well as insight into the reputation of a potential donor and whether this is a person who is likely to exaggerate finances. Hence the incentive to call. Although most sophisticated nonprofits accept that reversals of fortunes can happen, "If someone’s in trouble, people know about it," Volpe says. "Their peers know about it."

Therefore, philanthropists may face questions about their peers as charities increasingly scrutinize new donors. "I don’t think anyone likes to talk about it in polite company in quite that sense, but in some measures, at that level of giving, it’s no different than somebody at a private equity company checking out a potential investor," says Hildy Simmons, a former head of the Global Foundations Group at JPMorgan Private Bank in New York who now works independently with donors as a philanthropic advisor. "You want to know who you’re doing business with."

Elizabeth Harris is a staff writer for Worth.

Illustration by Jm Frazier.