America has long been a leader in charitable giving, and still ranks near the top of the World Giving Index rankings. This is clearly a positive thing. Private gifts are critically important for supplementing public programs that support arts and sciences, education, food accessibility, and civil rights. However, as fallout continues from the school admissions scandal and Jeffrey Epstein’s generous “gifts”, it is important to more closely analyze the American philanthropic tradition.
The good that can be done with large no-strings-attached gifts cannot be understated. Research efforts ongoing at the Koch Institute (anti-environmental industrialists) will lead to new cancer treatments. The Guggenheim can now afford to curate and display priceless works of art in the security of the Sackler Wing (opioid pushers). But when does a private nonprofit institution have the responsibility to reject these large donations?
Intent matters. As wealth disparities continue to grow, philanthropy can increasingly be used as a tool for the wealthy and powerful to advance their own interests. These can range from minor issues, like increasing the odds of a child being accepted into a selective school, to major causes like trying to get the Bible into (and evolution removed from) ALL schools. Well run institutions have formal committees to review private gifts, rejecting those made by donors with unsavory reputations, but the status quo is not working.
Association with the right credible institution goes a long way towards hiding personal shortcomings. Remember that insufferable 40-year-old colleague who wont shut up about his Ivy League undergraduate degree? Legendary conman Bernie Madoff donated millions to various high-profile causes and managed the endowments of a number of prestigious nonprofits. This helped to bolster his image as a mysterious financial genius right up until he turned himself in to the authorities as a total fraud. His philanthropic activity likely reduced the level of scrutiny placed on his fund.
Jeffrey Epstein had no clout on Wall Street; most major players in financial markets didn’t take him seriously. Before his 2006 arrest he cultivated ties with major research institutions and scientific luminaries to bolster his own image and credibility. After the arrest, these donations continued with MIT and Harvard accepting millions to specific research initiatives and departments. In the fallout surrounding Epstein’s second arrest and death, an internal investigation has shown that MIT President Rafael Reif personally approved the acceptance of these gifts from Epstein, carefully making sure that they were designated as anonymous donations… As recently as 2016, Epstein, a known abuser and monster, was among the largest donors to the Harvard Hasty Pudding Society, a fact that has been quietly removed from their website.
The Clinton Foundation has been a global force for good in the developing world. However, the decision to keep the Foundation running as Hillary continued her political climb and mounted a presidential campaign was highly questionable. If the Clintons had both fully retired from politics, the lines would have been less blurry. Instead, the Foundation continued operations through 2016 with a weak promise to reject or return foreign or corporate donations.
This structure created a clear opportunity for unscrupulous donors to buy access and favor under the guise of philanthropy. The Clinton political machine and the Clinton foundation were impossibly entangled. Many other major foundations have similar entanglements at the leadership level.
The most common flavor of American philanthropy is done late in life or even posthumously, enabling those with the means to control the narrative around their lives. Capitalism in America has historically allowed corporate tycoons to amass huge fortunes. While I regard this as a fundamentally good thing, some will use aggressive, unethical, or downright illegal tactics to build their wealth. Late in life or on their deathbeds, these titans of industry may begin to worry about how they will be remembered. Philanthropy can become a tool to shift public perception.
Andrew Canegie, Cornelius Vanderbilt, Howard Hughes, John D. Rockefeller…these are arguably the founders of American philanthropy. Each was dominant in their respective industry and absolutely ruthless towards competitors and organized labor. Of the group, only Rockefeller showed any real interest in philanthropy prior to his twilight years.
Vanderbilt showed nothing but contempt towards women while alive and married two of his first cousins. Hughes was an addict, philanderer, and all-around strange dude. Yet they are now remembered, not for the bad things they did in life, but for their significant deathbed philanthropy.
21st Century Philanthropy
A new breed of mega-philanthropist has recently appeared: self-made billionaires who typically made their fortunes with innovative products in software or hardware technology. This includes Bill Gates, Gordon Moore, Michael Bloomberg, and Warren Buffet. These individuals take a careful longterm active approach to philanthropy, focusing on impact rather than boosting their own images. Their philanthropy is not an end-of-life attempt to make amends for earlier transgressions or scandals, but instead an attempt to improve the human condition and to save lives.
Philanthropy is important and good. Even donations made by modern-day robber barons can be a powerful force for positive change. While I disagreed with the politics of the late David Koch and his systematic financing of climate change denial, the cancer center he endowed will result in new treatments that will undoubtedly save lives. But without external oversight and careful internal reviews, large philanthropic gifts are no different from the dark money pools that now plague politics. Donors who seek influence and access or to burnish a tarnished reputation can easily accomplish these goals under today’s rules.
Our institutions must do better. The ability to selectively determine which donations are to be categorized as “Anonymous” gives universities and foundations the ability to take gifts that have invisible strings attached. Internal review mechanisms need to focus on the intent and potential conflicts presented by any large gift, rather than instead reviewing the potential for embarrassment to the institution. We need to demand transparent public disclosure of all gifts taken by tax exempt foundations and universities in order to determine what exactly is going on behind the scenes.