The 10 Most Toxic Philanthropists
The Massachusetts Institute of Technology is one of the most respected higher education institutions in the United States, and until just a few weeks ago, its edgy Media Lab was considered one of the most innovative research programs creating what it calls “disruptive technologies.”
But the $7.5 million in donations it received with the help of financier and convicted sex offender Jeffrey Epstein, who last month committed suicide while awaiting trial on sex trafficking charges in a Manhattan prison cell, is the real disruptor.
MIT Media Lab founder and professor Joi Ito has resigned after accepting the donations, as have several other professors connected with the scandal. Some students and faculty are even demanding the ouster of MIT president Rafael Reif. After first denying any involvement with the Epstein money, Reif finally admitted approving the donation—and demanding it be anonymous—then signing a thank you letter to the pedophile.
It’s now debatable whether the Media Lab will survive the scandal, and the cover-up is being widely condemned. “The notion that the way to handle a gift from Epstein was to anonymize it is appalling,” says Phil Buchanan, president of The Center for Effective Philanthropy. “If the instinct is to want to hide something, that’s almost always a sign it’s the wrong thing to do.”
The Epstein MIT scandal is just the most recent—and flagrant—example of the type of toxic philanthropy that increasingly pervades the nonprofit world and threatens to turn it upside down.
In the past, taking tainted money wasn’t particularly controversial, even though those in the nonprofit world knew it could be a way for the wealthy to launder somewhat sordid, even criminal, reputations.
Defenders point to some of the most renowned philanthropists in history—Andrew Carnegie, John Rockefeller, Cecil John Rhodes and Alfred Nobel—as men who, during their lifetimes, were often viewed as noxious individuals. Carnegie employed thugs to break strikes by workers in his steel mills, Rockefeller ran a monopoly that the U.S. government dismantled, Rhodes was a British white supremacist and Nobel was a munitions manufacturer.
But a sea change is afoot, with writers such as Anand Giridharadas arguing that all philanthropy is “fake change” and #MeToo victims demanding justice for behavior that was previously swept under the rug. Meanwhile politicians like Democratic presidential candidate Elizabeth Warren hope to heavily tax the nation’s wealthiest, arguing that it’s better for much of their fortunes to go to the government to fund social and environmental programs than to put their names on a museum wing, launder their reputations or ease guilty consciences.
If giving money away makes the donor look bad, what donor is going to give money away?
The new mood is creating a moment of anxiety for the donor class and has the potential to disrupt the flow of giving. “Is all philanthropy going to be seen as toxic?” asks one billionaire donor who requested anonymity because of the sensitivity of the topic. “If giving money away makes the donor look bad, what donor is going to give money away?”
The definition of a toxic philanthropist is murky, but it typically includes not just those convicted of heinous crimes, whether financial or personal, but also the super wealthy whose business or personal behavior is seen as detrimental to society.
Some even bring up Bill Gates, whose Microsoft Corp. reached a historic settlement with the U.S. Justice Department over antitrust allegations, as someone who has used charity to change his image. If Gates’ behavior was once controversial, “now when we think of Gates, we think of how he brought mosquito nets to Africa,” says Marianne Jennings, a business ethics professor at the University of Arizona.
Jennings lists outsize philanthropic contributions as one of her “seven signs of ethical collapse” among corporate CEOs in a book of the same title. “Corporate fraudsters almost all use philanthropy as a cover. Because of all their goodness, people never look any further,” she says.
That is getting harder to do. Over the past 18 months photographer Nan Goldin, a recovering Oxycontin addict, led protests at the Metropolitan Museum of Art, the Guggenheim and even the Louvre, over the millions the museums have taken from the Sackler family, widely reviled as a key instigator of the opioid crisis through their company, Purdue Pharma, the makers of Oxycontin. The company, which just filed for bankruptcy protection, is on the verge of settling a number of government lawsuits against it for $10 billion, and there could be more to come.
Sackler’s donations to the art world have given rise to another term: art washing. Protestors have asked that the museums take the Sackler name off the wings named for them and give the donations to recovery groups. Goldin has identified 23 museums that took the money.
The problem is that all nonprofits, from universities and museums to those working on criminal justice reform and cancer research, are dependent on the rich, and nonprofits spend an inordinate amount of time courting them. Even universities as prestigious as MIT and Harvard are “worried about their rankings, which are related to how much money they raise,” says Buchanan. He argues that nonprofits need to remember that “they’ve got a higher purpose than maximization of revenue.”
Adds Jennings: “You can talk yourself blue in the face how you knew nothing about it. But it almost always hurts the nonprofit.”
Intense media focus on the donations of people such as Epstein and the Sacklers may, at the least, force nonprofits to look more closely before taking money. “As a nonprofit, you have to ask yourself, ‘Would I be embarrassed to have this support?’” says Buchanan. “Are we being used for an objective that is counter to our values? And does the donor expect us to provide them some benefit we’re uncomfortable providing?”
It’s also affecting the larger group of donors who simply want to do good. “If you’re a donor and making a significant gift to an organization, I do think you’d want to know that the leadership lives its values,” says Buchanan. “A reasonable question of any nonprofit director would be, ‘What money won’t you take?’”
Following, in no particular order, are 10 of the most toxic philanthropists of the 21st century.
The extent of Jeffrey Epstein’s efforts to burnish his image as a do-gooder at the same time he was allegedly sexually abusing dozens of underage girls began to come into public view after his arrest in July for sex trafficking. Epstein was first convicted of sexual offenses in 2008, and before that his most significant philanthropic contribution was $9 million to Harvard University, which recently said it would donate the $186,000 it had not spent to organizations assisting survivors of human trafficking and sexual assault.
After Epstein was released from prison, the sexual predator helped shepherd $7.5 million to MIT, which led to resignations of some people associated with the funding once it was disclosed. Epstein made another anonymous donation to the breast cancer charity that his former girlfriend Eva Dubin—the wife of financier Glenn Dubin—had set up. He gave to other scientific and medical foundations and funded individual scientists’ work. He also served on the board of the family foundation of private equity mogul Leon Black, whose money was part of the $7.5 million he shepherded to MIT.
David Koch and his brother Charles created and funded a political movement to attack the legitimacy of climate science and roll back environmental laws that would hurt the profits of Koch Industries, their privately held energy and chemicals conglomerate. While engaged in what is literally a toxic political effort, David Koch, who died in August, also had a philanthropic organization that funded climate change denial research.
Worth an estimated $48 billion, David Koch gave $1.2 billion to various other philanthropies, including museums and hospitals. Today his name is plastered on several New York institutions—including the David H. Koch Dinosaur Wing at the Museum of Natural History and the David H. Koch Theater at Lincoln Center, which houses the New York City Ballet. Other recipients were the Metropolitan Museum of Art and the Memorial Sloan Kettering Cancer Center (Koch died of prostate cancer).
Koch once admitted that having his name on elite art institutions “sent a message” to people who don’t like conservative businessmen. Others call that message “art washing.”
The Sackler family, whose members are currently battling multibillion-dollar lawsuits by states and others over their role in the opioid epidemic, have brought art washing to a new high. In 2007, their privately held company Purdue Pharma, the maker of Oxycontin, pled guilty to a felony charge of deceiving doctors. But long before that occurred, the Sacklers were giving millions of dollars to museums. At latest count, they’ve donated to 23 cultural museums in the United States, the UK and France.
After a movement led by photographer Nan Goldin, a recovering addict, to expose the contributions, London’s Tate Museum, the Guggenheim in New York and others said they’ll take no more Sackler money. The Louvre has taken the Sackler name off a wing of the museum, though it will remain at the Metropolitan Museum of Art, the Smithsonian in Washington and elsewhere. Meanwhile, eight family members involved in ongoing lawsuits against Purdue Pharma and its family owners reached a tentative $10 billion settlement with thousands of municipal governments nationwide and nearly two dozen states just before the company filed for bankruptcy in September. The Sacklers are believed to be worth $13 billion.
In 2017, at least 80 women accused the renowned filmmaker of sexually abusing them, sparking the #MeToo movement. The next year, Harvey Weinstein was indicted on charges of rape and other sexual offenses, but he has not yet gone to trial. The furor surrounding Weinstein led the film company he and his brother cofounded, the Weinstein Company, to file for bankruptcy.
While Weinstein was allegedly preying on women in the film industry, he was also donating millions to various causes, including progressive female politicians. An apparent effort to whitewash his name came when he pledged $5 million to the University of Southern California film school toward a scholarship fund for female filmmakers. The school returned the money after a student protest called it “blood money.” Weinstein also sat on the board of the Robin Hood Foundation, a New York charity set up by hedge fund billionaires, but he quit when the allegations of his sexual attacks surfaced.
Rupert Murdoch’s Fox News fired its longtime CEO Roger Ailes in 2016 following an internal investigation of a number of sexual harassment accusations against Ailes from anchors such as Gretchen Carlson and Megyn Kelly. Fox settled lawsuits from several women for undisclosed amounts.
As the controversy was unfurling, Ailes’ nonprofit organization, ACI Senior Development, was planning to donate $500,000 toward an elder-care facility in Putnam County, N.Y., where the Ailes lived at the time. Following a newspaper exposé of the project, the county legislature postponed acceptance of the donation, and Ailes canceled it. The controversial project was to bear Roger Ailes’ name, and the contract would have allowed noncompetitive bidding and no legal recourse for employees or contractors. Ailes also made what was termed a “generous” donation to Ohio University’s college of communications, his alma mater. Ailes died in 2017.
Once a beloved comedian and TV star known as “America’s dad,” Bill Cosby was highly regarded for his generosity to African American causes, including $20 million to Spelman College in Atlanta, in 1988. At the time, it was the largest single donation ever given to a historically black college. Spelman, an all-female school, even endowed a professorship in his name.
More than 60 women accused Cosby of sexual crimes including rape and attempted assault and sexual battery, often with the help of drugs. When those allegations were disclosed in 2015, Spelman killed the fellowship and returned Cosby’s funds. In 2018 Cosby was found guilty of three counts of aggravated indecent assault and sentenced to three to 10 years in prison.
The former CEO of Valeant Pharmaceuticals is known for leading the company into a series of acquisitions that turned it into a major drug company—one that jacked up the prices on some life-saving drugs to exorbitant levels. While neither Valeant nor Michael Pearson were ever accused of illegal action, the controversy led the company’s high-flying stock to collapse, and Pearson was ousted in 2016 after six years at the helm. The Valeant story was part of the 2018 Netflix documentary series Dirty Money.
Pearson became a billionaire through his Valeant stock gains, and began to share the largesse, becoming one of Duke University’s most generous donors. He donated $15 million to the Duke University School of Nursing on behalf of his wife, a graduate of that school. He also donated $30 million to Duke’s Edmund T. Pratt Jr. School of Engineering, from which he had graduated. In addition, he donated $7.5 million to Duke’s Fuqua School of Business.
Raj Rajaratnam, founder of the now-defunct hedge fund Galleon Group, became the biggest hedge fund manager convicted during Preet Bharara’s far-reaching insider trading investigation when he was the U.S. attorney for the Southern District of New York. At its peak, Galleon ran $7 billion and was considered one of the hottest hedge funds in the world, with an annualized return of more than 20 percent. Rajaratnam was found guilty of securities fraud in 2011, sentenced to 11 years in prison and released in September.
The recipients of his charity were also controversial. Rajaratnam was an expatriate member of a minority Sri Lankan ethnic and religious group known as Tamils. In November 2009, a month after he was arrested, Rajaratnam pledged $1 million to help rehabilitate Tamil rebels hurt by land mines in Sri Lanka during a civil war in which the Tamils were fighting for their own homeland. The Tamil Tigers, as the militant separatists were called, were defeated in May 2009. A separate charity Rajaratnam founded funneled $3.5 million to help rebuild Sri Lanka following the 2004 Tsunami.
The former hedge fund manager became the face of the financial crisis when he was arrested in December 2008 for running a massive Ponzi scheme that cost investors $18 billion in capital losses. In March 2009 he pled guilty and has been imprisoned ever since.
To pull off his fraud, Bernie Madoff preyed on members of the Jewish community, where he was considered a pillar due to his extensive philanthropic work, including $19 million in gifts made through his Madoff Family Foundation.
More than any other toxic philanthropist, he convinced the nonprofits on whose boards he sat to invest with him, and several were forced to close when Madoff imploded. Other victims of his affinity fraud were Hadassah, the Elie Wiesel Foundation and Steven Spielberg’s Wunderkinder Foundation, all of which suffered losses due to the investments they made in Madoff’s hedge fund. He was on the board of directors of the Sy Syms School of Business at Yeshiva University and served as the trustees’ treasurer.
Ken Lay was founder, CEO and chairman of Enron in 2000 when the biggest corporate scandal of the time engulfed the company, leading to its bankruptcy. Lay and Enron president Jeff Skilling were indicted and found guilty of securities fraud by a Houston federal jury. Enron was the largest in a series of accounting scandals that saw several other CEOs convicted of fraud, such as Tyco’s Dennis Kozlowski and Adelphia’s John Rigas. These CEOs also had contributed heavily to charities.
One of the biggest contributions of the Lay family foundation and the Enron corporate foundation was made to the M.D. Anderson Cancer Center at the University of Texas. The contribution drew criticism after Enron’s collapse because the center’s president, John Mendelson, was an Enron board member who served on its audit committee, and the president emeritus was Charles LeMaistre, another Enron board member who chaired its compensation committee.
Under Lay’s leadership, Enron allegedly used its corporate grantmaking to try to win support for its deregulation initiatives from groups like the Natural Resources Defense Council and the think tank Resources for the Future. Lay died in 2005.