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The Chronicle of Philanthropy

From the issue dated January 26, 2006

Driven to Find a Cure

Former Chrysler executive vows to eliminate diabetes

By Ian Wilhelm

Los Angeles

After almost five decades working in the automobile industry, Lee A. Iacocca earned a reputation for taking business risks that paid big dividends. In philanthropy, he hopes to do the same.

Since 1984, Mr. Iacocca, the former chief executive of the Chrysler Corporation, has spent $20-million through his Iacocca Family Foundation to support innovative, if experimental, research to find a cure for Type I diabetes, an autoimmune disease that affects an estimated three million Americans. Mr. Iacocca's wife, Mary, endured a 34-year battle with the disease before dying in 1983, at age 57.

In recent months, Mr. Iacocca has become more aggressive in his campaign, saying a radical new approach to fighting the disease has made him optimistic that a cure can be found in his lifetime. Through his Join Lee Now fund-raising campaign, Mr. Iacocca is urging the American public and other donors to help raise $11.5-million needed to pay for a series of expensive medical experiments to test the approach.

"We cured diabetes in mice about 18 months ago," he says. "Now here comes the world's greatest translation: How do you do to a human what you did to a mouse?"

While producing a cure in the near future remains a long shot, and he risks hurting his public image if the venture fails, Mr. Iacocca argues that in business and philanthropy, "sometimes you got to bet on the nose."

Turnaround Master

Mr. Iacocca became a famous business leader during the 1980s, when he successfully pulled Chrysler, now known as DaimlerChrysler, out of near-bankruptcy. He persuaded the U.S. government to guarantee more than $1-billion in loans to the ailing company, cut his annual salary to $1 to show his commitment to the turnaround, and eventually paid back the government earlier than expected.

Though he is retired now and living here in Los Angeles, Mr. Iacocca remains an auto executive at heart. During a discussion about his philanthropy, he often sprinkles in anecdotes about Henry Ford II and compares his grant making to building cars like the Ford Mustang, which he designed.

"There's risk when you do a car with 12,000 parts," he says. "It's a marvel when it goes down the line and you turn the key and it works. You have to bring that kind of focus into the medical community and deliver efficiently."

Car makers and philanthropists also have to accept their mistakes, he says. "You have to be man enough to step up and say, 'We just blew $10-million bucks, but that's life.' You don't hit home runs every day with cars or with medical breakthroughs."

While Mr. Iacocca's approach to philanthropy has been shaped by his career in the auto business, the motivation behind his charity is clearly personal.

He recalls the years his wife spent fighting Type I diabetes, which he likens to "Chinese water torture," slowly but effectively draining her life away.

The disorder causes the immune system to kill islet cells in the pancreas that produce insulin, leaving the body unable to convert sugars and starches into energy. It can be regulated with daily injections of insulin, but a diabetic's body pays a toll.

"With 30 years of insulin, I found with my wife, you age from the inside out," says Mr. Iacocca. "You have a vascular system, when you die, of an 80-year-old when you're about 50 years old."

Type I diabetes can lead to severe health problems, such as heart disease, blindness, nerve damage, and kidney damage. (Type II diabetes is a related disorder with similar complications, but affects a larger number of people and frequently can be treated by changes in diet and exercise.)

Technically, Mrs. Iacocca died of a heart attack, but her husband fulfilled her request that doctors list her cause of death as "complications from diabetes," to raise awareness about the disease.

He also promised her he would find a cure for her killer.

To that end, Mr. Iacocca began his giving in earnest by donating the proceeds of his 1984 book, Iacocca: An Autobiography, to establish the Iacocca Family Foundation. The book became an unlikely bestseller, selling nearly seven million copies and generating millions of dollars for the foundation. "I said, 'I'll give every penny I ever make on those books to philanthropy.' I should've saved $1-million for myself," Mr. Iacocca jokes.

A Weekly 'Hot List'

Today, the Iacocca Family Foundation, in Boston, has $43-million in assets. In accordance with its founder's business background, the foundation operates with a lean staff, just five people, and its executive director, Dana Ball, draws up a weekly "hot list" of priorities for the organization, a practice Mr. Iacocca developed during his years as president of the Ford Motor Company.

Mr. Ball says he speaks with the foundation's creator almost daily by phone and visits California once a month to brief him on the organization's activities. "He's actively involved," says Mr. Ball.

Mr. Iacocca also requires that the foundation receive guidance from outside of the family. While he and his two daughters are on the board of directors, he requires that nonfamily members outnumber them.

"We always have more outsiders on the board than insiders," he says. "I started that from business. You want a good active board and not a rubber-stamp board, even if it's family-run."

The foundation has used its largess to support young doctors and scientists at the Joslin Diabetes Center, in Boston, and other hospitals and medical institutions.

According to Kathryn Iacocca Hentz, Mr. Iacocca's older daughter and the president of the foundation, her father formed his own nonprofit group to support medical research that usually was overlooked by the government and other philanthropies.

"It was kind of putting our heart and soul into it and really saying, 'Let's see what other types of research are out there,'" she says.

The approach has earned praise from C. Ronald Kahn, president of the Joslin Diabetes Center and the Mary K. Iacocca Professor of Medicine at Harvard Medical School, a position endowed by Mr. Iacocca. Dr. Kahn says that despite the relatively small amount Mr. Iacocca has donated, compared with, say, the National Institutes of Health, he has pushed diabetes research forward. "When you're rolling dice on a high-risk research project, you don't know how successful it will be," he says. Mr. Iacocca is "willing to take that chance."

Hopeful Sign in Mice

Mr. Iacocca's most recent endeavor is perhaps his biggest bet. The Join Lee Now campaign is recruiting donors to support the unconventional work of Denise Faustman, a medical researcher at Massachusetts General Hospital, in Boston.

In mice, Dr. Faustman was able to treat diabetes in a twofold process: With a piece of protein, she tricked the immune systems of mice with diabetes to stop destroying cells in the pancreas, and with an injection of a relatively low-cost drug that kills white blood cells, she was able to ward off future attacks.

Then, in a surprising and somewhat controversial finding, she discovered that insulin-producing cells in the pancreas of the mice were able to regenerate. Dr. Faustman's discovery went against the conventional scientific thinking that a cure for Type I diabetes would come from transplanting healthy cells or embryonic stem cells into the pancreas.

Her approach, which was at first dismissed by some scientists, has become more accepted. However, many grant makers, including the nation's largest private diabetes research organization, the Juvenile Diabetes Research Foundation International, in New York, turned down her request for funds to test her theory.

William J. Ahearn, the group's vice president for strategic communications, says Dr. Faustman's proposal didn't make it past the organization's review process.

"It doesn't mean it's not good science, it simply means it didn't fit into what we were looking for at that point in time," he says, adding that the nonprofit organization has supported other efforts to explore the so-called regeneration approach that Dr. Faustman pioneered.

After hearing of Dr. Faustman's fund-raising difficulties, Mr. Iacocca — who has provided money to Dr. Faustman for many years — decided to step in and help raise the $11.5-million needed for the initial three years of an experiment to find out if her approach could cure Type I diabetes in humans.

So far, Mr. Iacocca has raised $9-million and expects to raise the remaining funds soon. But the campaign didn't start as smoothly as Mr. Iacocca had hoped. The philanthropist expected to get the money by approaching his wealthy friends. "I said, 'I can raise that $11.5-million in a heartbeat. All I need is me and 10 other rich guys,'" he says.

Mr. Iacocca gave $1-million, but found relatively scant support among his wealthy acquaintances, who said they had their own charitable causes to back.

The rebuttals drove Mr. Iacocca to adopt a "populist" approach: asking the American public for small gifts, primarily through the campaign's Web site (http://www.joinleenow.org) and through public appearances he made. The average donation has been about $75.

He used a similar tactic in the 1980s, when President Ronald Reagan asked him to raise money to refurbish the Statue of Liberty and Ellis Island. For that campaign, Mr. Iacocca helped raise more than $550-million through thousands of contributions, both large and small.

Mr. Iacocca has also received money from his former company, DaimlerChrysler, for the diabetes research. The company's Chrysler Group subsidiary has pledged to donate $1 for each car it sells from November 2005 through the end of this year. The deal is expected to raise about $3-million.

Mr. Iacocca also donated his $1.5-million compensation that the car corporation paid him to appear in five of its television advertisements, including a now-famous commercial in which the businessman plays golf with the rapper Snoop Dogg.

"You go through 50 years in the auto business and my swan song is doing a deal with Snoop Dogg, of all people," Mr. Iacocca says, laughing.

While the philanthropist may joke, at age 81 he clearly is thinking about his legacy.

He is trying to instill an interest in charitable endeavors in the next generation of Iacoccas. He says his parents taught him the importance of giving, and now he wonders how to cultivate that quality in his seven grandchildren.

"Do they know they've been fortunate enough to give back?" he asks.

To teach them, the foundation has given the oldest, ages 14 and 17, a small sum to donate to charity. The two grandchildren will have to explain to Mr. Iacocca what cause they supported and why. Mr. Iacocca also foresees an occasional philanthropy field trip for his grandchildren.

"They have to go to the hospital and see some kid diabetics," he says. "That's what we're going to force our kids to do. Go out and see how the other half lives."

It is philanthropic efforts like these that Mr. Iacocca hopes he will be remembered for. While he became famous for his success in the auto industry, he says finding the cure to Type I diabetes would overshadow all his business accomplishments.

"What are you going to be remembered for?" he says he asks himself regularly. "If I helped save some lives from this scourge called diabetes during my time on this earth, then I've done something."


IACOCCA FAMILY FOUNDATION

History: The foundation was established in 1984 with the proceeds from Lee A. Iacocca's best-selling Iacocca: An Autobiography. In 2002 the organization created a fund-raising arm to seek money for clinical trials on humans aimed at finding a potential cure for Type I diabetes, the autoimmune disease that took the life of Mr. Iacocca's wife, Mary. That form of diabetes is less common than Type II, which often can be treated through changes in diet and exercise.

Purpose and areas of support: The foundation supports academic fellowships and science programs to conduct research on Type I and II diabetes.

Assets: $43-million

Key officials: Lee A. Iacocca, founder; his daughter Kathryn Iacocca Hentz, president; Dana Ball, executive director.

Application procedures: Grant seekers are asked to mail an application to the foundation after reviewing its guidelines to be sure their research would qualify. The application is available on the fund's Web site. Proposals are due by March 1.

Address: 17 Arlington Street, Boston, Mass. 02116; (617) 267-7747

Web site: http://www.iacoccafoundation.org



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