The Underachieving Train that Couldn’t

Joe Volz and Jennifer Gauck
March 1, 1998

It was a dramatic idea rivaling the Friendship Train which steamed across the nation just after World War II collecting food for the starving masses in Europe.

An embryonic nonprofit group called, “the New American Revolution,” would send a special train of the 1990s across the country on a three-week tour from Los Angeles to Washington, D.C. stirring up businessmen to support programs for at-risk and disadvantaged youth.

The kids, themselves, would flock to the railroad stations in the spring of 1995 to greet the train and dramatize just how many teens sought out help. Businesses would respond on both the local and national level by pouring money into youth programs.
In fact, at one point, it was even suggested that a glass car be attached to the train and kids could make a symbolic gesture by contributing pennies to the gigantic piggybank on rails.

Train Never Arrives

But the train never arrived.

Almost $2 million was spent, though, by the New American Revolution from 1994 to 1996, mainly on planning, consulting and public relations for the phantom train.
Was this any way to run a railroad?

The engineer of the New American Revolution was the energetic former publisher of Fortune Magazine, Jim Hayes. Hayes was well-connected to the business community. If anyone could get businessmen to contribute, he could.

But then what? After the money was raised, what mechanism would be developed to make sure needy kids got the money?

Some nonprofit officials now argue that a well-connected fundraiser who has come out of the for-profit sector may not necessarily be the best person to actually run a nonprofit venture.

If high-powered public relations and marketing, so admired in the for-profit sector, becomes the driving force in running a nonprofit youth agency, the intended beneficiaries, the kids, may be shortchanged.

Hayes had grand ideas for his revolution which he wasn’t hesitant to express. In a letter to colleagues, he said: “Seasoned business people refer to the New American Revolution as the last hope in the battle to save the American dream for future generations. “The New American Revolution will reach out to every business in America — from Fortune 500 companies to local community retailers,” he said. “The combined force of national and local business working together will lead to a more supportive, pro-active environment for what is truly our greatest natural resource.”

About $1.8 million was collected by Hayes from some of the nation’s most respected funders, such as the Annie E. Casey Foundation, the Chrysler Corp., TRW and the GE Fund.

Program Scrapped

The entire program was scrapped after two years. Hayes’ failure with the railroad has not sidetracked his nonprofit career, however. In fact, just as the train project was derailing, he was named president of Junior Achievement which describes itself as “the largest economic education organization in the world.” It’s an organization to teach youths how to succeed in business.

In making the announcement, 3M Chairman Livio DeSimone, who was chairman of the Junior Achievement board of directors, said Hayes, a board member himself, had a “wide range of business experience and his commitment to increased opportunities for our children make him an ideal leader for JA.”

A look at Hayes at the helm of the New American Revolution, though, reveals a lot of enthusiasm, some dynamic fundraising, but little program success.

According to the Revolution’s 990 income report for 1994-95, filed with the Internal Revenue Service, Transportation Operations, Inc. of Livonia, Mich., got $274,000 for “interpreting railroad sources documents and loading, running and reading the data from the train performance calculations.” No one at the firm was available to translate what that meant.

Events Only of Bay Harbor Island, Fla., received $143,000 for planning events although it was not clear what events, if any, actually took place. Company officials did not return a reporter’s call.

The revolution also hired an “event management consultant,” Studdert Companies of Salt Lake City, Utah, which received $131,000. Maura Carabello of the Studdert group said she worked over a year on planning for the train. She said there were some intriguing ideas, such as making an empty railroad car into a stage which could be lifted hydraulically when the train pulled into the station.

The Revolution’s marketing director, Carol Ahlers, got $54,500 and the chief financial officer, Arthur Loomis, received $83,342. Hayes, listed as a trustee, was not paid, according to the 990 forms.

What Went Wrong?

Hayes put it this way in a telephone interview with YOUTH TODAY: “I tried to make the New American Revolution happen for the better part of two years. I realized it was presumptuous to try and start a nationwide movement by myself. I had a few people who volunteered and who I paid, but I didn’t have an infrastructure. In the final analysis, what I tried to do was too much for one individual. The cost of the train tour got more and more expensive — the price got higher and higher. The financial feasibility got unrealistic.”

$20 Million Price tag

Hayes estimates it would have cost $20 million to send the train down the rails. But by then, critics would have contended that the money should have been spent for youth programs, not a PR campaign.

Just what kind of discount train Hayes hoped to get for only a million or two is not clear. Another group, not associated with Hayes, is planning to run an Operation Smile train in China to bring medical staff and supplies to 100,000 children and that is estimated to cost at least $10 million. Computer Associates Chairman Charles Wang is donating the $10 million.

One official of a national youth serving agency who attended early meetings with Hayes, but asked to remain anonymous, said, “A lot of us assumed him to be a wizard. The problem wasn’t that he didn’t have the right answers (seeking help from business), there weren’t enough resources.”

Another observer, Doug Nelson, president of the Annie E. Casey Foundation, which contributed $150,000 to the Revolution, also doesn’t question Hayes’ motives.

“There was something unmistakably genuine about his concern for kids.

“But did he know what he was getting into? I think his miscalculation was how much volunteer and resources help would be available.”

Nelson got to the heart of a grant giver’s dilemma. Many foundations do not want to limit their contributions just to sure things. They want to take risks on innovative projects that deserve attention. He says it is sometimes hard to figure out in advance if a project, no matter how worthwhile, is going to work out. And can a man who is a good fundraiser, actually run a program that will work?

“From a funder’s point of view, these things are extremely difficult to gauge,” Nelson says. “There is a certain amount of risk taking. I said this is a 20-80 investment (20 percent chance of succeeding) but it was probably worth the bet to make a significant difference for kids.”

But Nancy Van Gulick, former Red Cross director of youth at risk, insists it was “kind of a hokey idea” from the beginning. She sat in on an early planning meeting with Hayes. “Most of us didn’t understand why we were attending,” she said. “Because we respected him (Hayes), we showed up but by the end, we realized we wouldn’t get involved. He wanted a pep rally in each city. Public relations wasn’t anything I could see that would make a difference. I was not sure how much money would get back to us.
I think he underestimated how hard it is to raise money.”

‘Sensitive Subject’

“It’s a sensitive subject,” says Al Singer, vice president of TRW’s fund, which gave $50,000. As for what happened to that money, Singer says only, “When it doesn’t work, we don’t give any more money. We gave one check.”

Now, Hayes has gone on to be president of Junior Achievement in Colorado Springs.
As always, he is optimistic — this time showing a bit of caution, though.
“I’m not about to suggest that Junior Achievement can solve all the problems facing young Americans,” he says. “No one program can. But Junior Achievement is a powerful way to reconnect kids to the American dream.”

However, the last dream, which turned into a nightmare, won’t haunt him again. No train trips are on the JA timetable.

Sidebar:

Penny Ante Program Makes Cents


Volz, Joe and Jennifer Gauck. "The Underachieving Train that Couldn’t." Youth Today, March/April 1998, p. 8.

©2000 Youth Today. Reprinted with permission from Youth Today. All rights reserved.

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