June 11, 2021
But rich people giving away loads of money – from Bill Gates to Michael Bloomberg to Len Blavatnik – is often about a lot more than just wanting to, you know, show their love of humanity.
To illustrate this, a quick quiz: Which of the below are actual, real-life philanthropic efforts?
- A donation of $7 million to establish and support the Sackler Center for Arts Education at the Guggenheim Museum in New York – named for and funded by the family behind Purdue Pharma, which fueled the opioid epidemic that’s killed upward of 500,000 Americans via its painkiller OxyContin.
- A bequeathment in 1902 to Oxford University’s Oriel College by toxic racist and white supremacist (and founder of diamond purveyor De Beers) Cecil Rhodes – after whom one of the most prestigious post-graduate scholarships in the U.S. is still named.
- The $50 billion Bill & Melinda Gates Foundation – founded by a determined former monopolist. If the U.S. Department of Justice had not taken Microsoft to court in a landmark antitrust case, the development of the Internet and the trajectory of technological innovation of the past two decades would likely have been very different.
- A $5 million donation (subsequently rejected) to the film school of the University of Southern California toward a scholarship fund for female filmmakers – by Oscar-winning filmmaker Harvey Weinstein… who is now serving a 23-year sentence for rape and sexual assault.
- A $12 million-multidisciplinary Contemplative Sciences Center at the University of Virginia, funded by hedge-fund billionaire Paul Tudor Jones (and vetted by Jones’ yoga consultant).
Give up? All of the above are real… for better or for worse.
The Good of Philanthropy
All of these efforts improved the world in both minor and extraordinary ways: college kids in Virginia learning about the “application of human flourishing,” people enjoying art in Manhattan, helping to eradicate polio in the developing world, sending Bill Clinton to a cozy town outside of London to study politics.
And humanity would (probably) be worse off if cartoonishly rich people decided to buy more jacked-up yachts or Caribbean islands instead of giving away $428 billion to good causes. According to Aspire Research, that’s how much institutions, public foundations, and ultra-high net worth ($30-plus million) gave to philanthropy globally in 2019. (Normal people pitched in another $304 billion.)
Why do they do it?
There’s the obvious, if naïve, initial take: Doing good – however flexibly that’s defined, as I’ll get to in a moment – makes you feel good. “Human beings around the world derive emotional benefits from using their financial resources to help others,” concludes a 2013 study published in the Journal of Personality and Social Psychology.
And this crosses cultures and civilizations… “The reward experienced from helping others may be deeply ingrained in human nature, emerging in diverse cultural and economic contexts,” the study explained.
But if giving wealth away made us so deliriously happy, Elon Musk would be snuggling up with Harry Homeless – who’d have his own trust fund. The motivations of the rich to give money away are a lot more than feeling OK about their untold wealth.
The perversion of philanthropy – the twisted ways it’s applied to achieve distinctly non-“love of humanity” ends – sometimes suggests another Greek word: Narcissus.
As you may (or not) remember from that sophomore-year Greek mythology class, Narcissus was a dreamboat – such a tall drink of water that he fell in love with his golden reflection beaming back from a lake.
One version of the story says Narcissus drowned when he jumped into the water to go after the object of his obsession. Alternatively, the Roman poet Ovid wrote – well before selfies were a thing – that Narcissus withered away from deprivation because he couldn’t tear himself away from gazing at his undeniably beautiful self. (Maybe he’d have lived longer if he’d had the opportunity to endow a professorship in a Psych department somewhere.)
Insanely rich people can instead gaze at their names – and, if they wish, their images – on the walls of universities, hospitals, and orchestras that they support. Personal branding, publicity, and “social signaling” – the do-good version of flashing a Patek Philippe or driving a Lamborghini Veneno – are all-too-common, deeply shallow reasons for giving money away.
There’s probably no more self-stroking social signal – like an “I gave blood today” sticker for the billionaire set – than the “Giving Pledge.” Launched by Bill and Melinda Gates and Warren Buffett, it’s “an open invitation for billionaires… to publicly commit to giving the majority of their wealth to philanthropy.”
On their site, 221 self-congratulating plutocrats showcase themselves in (maybe) the highest-priced Internet real estate: Airbnb co-founder Brian Chesky, Australian gambling machine magnate Len Ainsworth, even 5-Hour Energy drink founder Manoj Bhargava. The moody black-and-white portraits are a happy reminder that money can do almost anything – except hide made-for-radio looks or old age.
And if ego weren’t involved in philanthropy, the most charitable contributor by far would be that fellow who goes by the name of Anonymous. But he generally accounts for the pocket change of total philanthropy.
Instead, sometimes egos clash when donors get into tacky public disputes about who gets the brightest lights to recognize their generosity – as happened with New York’s Franklin D. Roosevelt Four Freedoms Park in 2012. As the New York Times explained then,
At issue is how prominently the foundations that gave money [for the FDR memorial] will be acknowledged at the site, and where… [the two competing foundations] filed suit in State Supreme Court saying that the park’s sponsors promised to engrave their names close to the memorial bust that is the centerpiece of the four-acre park.
Welcome to the Whitewash: Milken, Blavatnik, Cosby?…
Business ethics expert Marianne Jennings flags large – and excessive – philanthropic contributions as a sign of “ethical collapse.” Outright fraudsters like Enron founder and CEO Ken Lay (a sizable contributor to a cancer center at the University of Texas) or Ponzi scheme mastermind Bernard Madoff, who gave away (stolen) money through a family foundation, used philanthropy as a cover or distraction.
Sometimes philanthropy is a way to spread Vaseline over the lens to a messy past. Cue Bill Gates… He morphed from the money-grubbing monopolist co-founder of Microsoft… to “travel the globe as near-royalty, knighted by Queen Elizabeth and draped in medals by President Barack Obama,” Vox explained.
But the stains on Gates’s reputation that his philanthropy aims to OxiClean out are minor compared to the full-blown philanthropy whitewash efforts of other billionaires. (“Whitewash” in this case refers to covering up or glossing over a reputation that might be shady at best… not, as the more woke connotation suggests, when people of color are written out of their own narratives.)
Michael Milken undertook one impressive example of whitewash-by-philanthropy: a pioneer of the junk bond (below investment grade) market who was supposedly an inspiration for the Gordon Gekko character played by Michael Douglas in the 1987 movie Wall Street.
Courts indicted Milken in 1989 on charges of insider trading and securities fraud. He spent nearly two years in prison (sentenced to 10), paid around $600 million in penalties, and was barred for life from working in the securities industry. Milken was subsequently diagnosed with prostate cancer, and told he had 18 months to live.
But, hey, greed is good.
But Milken lived… and then set about using his remaining $3.7 billion fortune to rehabilitate his controversial reputation. Milken donated $1 billion to cancer research, and in 1993 (in a self-serving move) founded the Prostate Cancer Foundation, which bills itself as “the world’s leading philanthropic organization dedicated to funding life-saving prostate cancer research.”
He also founded the Milken Institute, an economic think tank that holds a ritzy annual conference in Beverly Hills that CNBC described as “Davos with palm trees.” Luminaries in attendance rang from Cabinet officials to private equity billionaires to banking CEOs to football quarterback Tom Brady.
And in February 2020, Milken came full circle to achieve the ultimate character resurrection that not even philanthropy could buy: A pardon from former President Donald Trump. The president cited Milken’s support for cancer research and explained that he’d “paid a big price, paid a very tough price” for his crimes.
Perhaps even more successful at OxiCleaning his past has been Ukraine-born multibillionaire Len Blavatnik, who – in the words of the Financial Times in 2019 – is…
… an entrepreneur who reaped phenomenal riches from the chaotic world of 1990s Russian cowboy capitalism, and who cashed in that wealth in favour of western investments and a place in British and American high society.
… Few in the west, outside elite business circles, know of the Siberian aluminium deals or courtroom battles for control of oil assets that built his first fortune. And that is how [Blavatnik] likes it.
Sir Leonard – knighted by the Queen for his philanthropy – diverted attention from a sordid past with the Blavatnik School of Government at Oxford University (thanks to a donation in 2010 of £75 million, or around $110 million at the time)… the Blavatnik Building at the iconic London art museum Tate Modern ($65 million)… and the biggest-ever donation to Harvard Medical School ($200 million). He’s “earned… admiration as one of the world’s most generous philanthropists,” the FT says.
Blavatnik’s former partners in Russia, with whom Blavatnik started on the way to his $33 billion fortune, haven’t enjoyed a similar kind of adoration. Blavatnik’s buddy Viktor Vekselberg, with whom he launched his first business in Russia, was placed under U.S. sanctions in 2018, resulting in $1.5 billion of frozen assets.
Another former partner and Russian oligarch Oleg Deripaska suffered a similar threat. Other Russian billionaire contemporaries of Blavatnik’s were even less fortunate… They were imprisoned, forced into exile, or “committed suicide” under suspicious circumstances.
Some rich people may use philanthropy to quiet their own guilty conscience – or do a kind of pre-whitewash. Disgraced comic Bill Cosby in 1988 gave $20 million to Spelman College, an all-female historically Black school. Thirty years later, he was found guilty of aggravated indecent assault, after more than 60 women accused him of sexual crimes – going all the way back to the mid-1960s. (In 2015, Spelman terminated a professorship endowed in his name and returned the funds. An academic center there still bears the name of Cosby’s wife.)
How Philanthropy Hurts
No matter how it’s dressed up, billionaire philanthropy aims for Mr. (almost always a Mr., unfortunately) Billionaire to scratch an itch.
Maybe didn’t get enough hugs as a kid… his ego’s as big as his Scrooge McDuck-style vault… he has something sordid in his past that he’d like you to forget (and that he’d like to forget as well)… or maybe (see below) he wants a tax break.
Whatever the reason, Mr. Billionaire wants to give away his cash. But what happens if what he thinks is vital – the effort, building, or museum wing he wants to launch, endow, or support – isn’t necessarily what’s needed?
The way I would like to celebrate my 15-year old’s birthday – oatmeal for breakfast, a walk in the woods, late lunch at the new Thai place, and to bed early with the latest Tana French novel – differs from his plan to play Fortnite in a dark room, fueled by Domino’s.
But I hold the cash… so on junior’s big day, do we go for pad Thai or eat a cold, plain cheese pizza? It’s a conundrum that the recipients of philanthropy have to struggle with – it’s a first-world problem underscoring a bigger problem.
Stanford political scientist Rob Reich describes big philanthropy as “an exercise in power,” whereby rich people use their money to exert a public influence. Philanthropy generally exists to fill a need that’s not met by government or society already – whether it’s clothing the homeless, giving mosquito nets to people in malarial areas, or giving iPads to underfunded schools.
And – by definition – private philanthropy prioritizes the issues that donors view as important. The wealthy foreigner will chopper in and set the agenda of what they want. Research published in the medical journal The Lancet has described how the Gates Foundation focused on polio eradication – rather than health challenges (like diseases caused by dirty water) that were, in the view of the people being helped, a higher short-term priority. As a result, local resources needed to be diverted from an immediate priority to facilitate philanthropy.
It’s similar to cash gifts closer to home. In 2012, University of Virginia alum and major donor Paul Tudor Jones wanted to build a $12 million yoga center for his alma mater. The New York Times revealingly explained in September 2012 how the institution handled the donation…
I thought, ‘Oh, man, people are going to be very cynical about this,’ recalls Bob Sweeney, UVA’s fund-raising chief. So [university president] Sullivan convened a dinner at her home with professors of religion, medicine and other disciplines. “I said, ‘O.K., let us think about it a little bit,’ she said. ‘We began talking about, wait a minute, it’s not just yoga.’ The group swiftly produced a proposal for a multidisciplinary Contemplative Sciences Center, which was vetted by Jones’s paid yoga consultant.
Earlier that year, 20 UVA students went on a hunger strike to protest the low wages of hourly workers in the university system. Jones, though, got his yoga center – and UVA kept their deep-pocketed alum close. In December 2019, the university announced plans for a building to be called Contemplative Commons – a $40 million effort funded in part by a gift from Jones.
The wealth gap in America has never been wider — we’ve still never fully recovered from the Great Recession of 2008, and it’s only going to get worse from here. But the effects of the Big Con are going to devastate those who don’t take action. So do something now while you still can.
Who Needs It? The Wealthy…
Does UVA – or anyone – need a Contemplative Commons? For all of its problems, the Gates Foundation, as its tag line states, fights poverty, disease, and inequity worldwide.
In a world of problems like that, another posh building at one of the world’s premier universities – where mostly children of privilege learn how to maintain their privilege – feels excessive.
So does entrepreneur and New York mayor Michael Bloomberg’s $1.8 billion donation to Johns Hopkins University to facilitate need-blind admissions… Blavatnik’s gifts to Oxford… the Sacklers’ numerous donations to art institutions… Milken’s cancer research funding… and anyone who gives money to (say) Harvard University, which already has an endowment of $40 billion.
The marginal utility – that is, the incremental good – of much of the philanthropy of rich people is minimal. It’s like a fourth scoop of Ben & Jerry’s full-test chocolate brownie ice cream… the size 2 Air Jordans that your toddler will wear twice before he outgrows them… or the rainbow LED spoiler that would make even the guys on Pimp My Ride blush.
Most of philanthropy is icing on icing, as the Guardian explained last year…
In the US… barely a fifth of the money donated by big givers goes to the poor. A lot goes to the arts, sports teams and other cultural pursuits, and half goes to education and healthcare…
The common assumption that philanthropy automatically results in a redistribution of money is wrong. A lot of elite philanthropy is about elite causes. Rather than making the world a better place, it largely reinforces the world as it is. Philanthropy very often favours the rich – and no one holds philanthropists to account for it.
Helloooo, Tax Break
Another way philanthropy favors the rich: The tax break. Rarely does anyone just give away their funds… instead, it’s placed in tax-efficient structures that allow the donor control – while financially optimizing the transaction. And that imposes a real – and tilted – cost as well, as political scientist Reich explained in 2018…
When a wealthy person taxed at 40 percent of their annual income makes a gift $1,000 gift to a soup kitchen, the government forgives 40 percent, or $400, of their gift. So, the cost of their $1,000 donation to them is $600. But when a middle-class person taxed at 20 percent of their annual income makes that identical $1,000 donation to the same soup kitchen, they are forgiven $200. The cost they pay is $800. In these two cases, the identical social good has been produced but the wealthier you are, the higher the subsidy rate is of your giving.
He estimated that these tax breaks that disproportionately favor the rich cost the U.S. Treasury more than $50 billion in 2017 – which naturally means less funding for things like school lunches, college loan programs, and repairing bridges.
Coming Soon: The Zuckerberg Center for Preserving Democracy?
Rich people – many of them, at least – probably mean well. For whatever the reason, they want to “give back.” The difference is that their flaky good intentions run the risk of actually coming to fruition… unlike (say) the random delusions of us normal people over a whiskey about how we’d change the world, if only…
We usually view philanthropy through a relentlessly and exclusively positive prism: Rich person gives away money? Yay! It’s only in the most extreme cases – say, the reason that a Jeffrey Epstein Center for the Study of Adolescent Sexuality might have inspired – that there’s a whisper of doubt.
But really… Does the world need another art museum wing? Or another comfy space for the kids of rich parents to collaborate and share, at a university with more money than the gross domestic product of a mid-sized African country? Or… whatever Bill Gates comes up with, to try to blot out the new divorce-shade – with the split of Bill and Melinda Gates – stains on his strenuously refurbished image?
Perhaps. But it’s worth asking the question. Because just because rich people have money doesn’t mean they have the answers – or know what’s better for you.
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June 4, 2021