When he first ran the Paul and Virginia Cabot Charitable Trust, established
by his parents, Paul C. Cabot of Needham, Mass., drew a modest five-figure
salary. But when his employer, a Northeast energy company, hit hard times in the
1990s, he dug deeper. Over the course of that decade, his foundation salary
crept into the high six-figures. Three years ago, when he faced a $200,000 bill
for his daughter’s wedding, Cabot paid himself $1.3 million. Cabot’s story
offers a lesson not just in how foundations can be exploited by foundering
scions, but also how this abuse can occur in plain sight. For whatever else
Cabot may have done wrong, at least he was honest. He disclosed his largesse to
the IRS and the Massachusetts attorney general, and when the Boston Globe
called, he told the whole story.
A combination of ills have battered the
foundation world in the past year. There have been dispiriting revelations of
officer excess and malfeasance. Congress has attempted to raise the minimum
amount that foundations are required to distribute each year under the
Charitable Giving Act from its current 5 percent of assets. (The House and
Senate continue to bicker over a watered-down version of the act, which would
prohibit private foundations from including operating expenses and salaries
above $100,000 within that 5 percent.) And then came a series of articles in the
San Jose Mercury News and Boston Globe that exposed how easily philanthropic
money can be misspent, whether it be on trustees’ pay, furnishings for the
institution’s headquarters, or retainers steered toward lawyers and accountants
related to directors.
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