The Billionaire Who Gave It All Away. Really!

A number of billionaires have pledged to give their fortunes away, but you know they'll go on living the lush life. 

Not Chuck Feeney, who now lives in a rented San Francisco apartment and is said to own one pair of shoes. Remarkably, reports The Guardian, this billionaire has actually given almost all of it away.

Chuck Feeney has achieved his lifetime ambition: giving away his $8bn fortune while he is still around to see the impact it has made.

For the past 38 years, Feeney, an Irish American who made billions from a duty-free shopping empire, has been making endowments to charities and universities across the world with the goal of “striving for zero … to give it all away”.

This week Feeney, 89, achieved his goal. The Atlantic Philanthropies, the foundation he set up in secret in 1982 and transferred almost all of his wealth to, has finally run out of money.

The head of Feeney's foundation said his boss had once tried to live a life of luxury but it didn’t suit him. “He had nice places [homes] and nice things. He tried it on and it wasn’t for him."  

Women Are Changing the World of Wealth

On Wall Street and elsewhere, the management and deployment of Big Money has traditionally been men's work.  That's changing, as two names in the news remind us:

Catherine Keating has left Commonfund to become CEO of BNY Mellon Wealth Management. In an interview last year she explained why the investment management industry needs diversity.

Laurene Powell Jobs holds an MBA from Stanford and controls billions left by her late husband, Steve Jobs. As described in this feature in The Washington Post, her approach to impact investing and philanthropy is impressive.

P.S. You've got to chuckle  at Silicon Valley's reaction to the name of Powell Jobs' project, Emerson Collective. "Emerson? Emerson? Never heard of him. What was his startup?"

The Generosity of a Reformed Stockpicker

“After trying and failing to pick stock winners himself,” a retired ophthalmologist in Washington, D. C., “made his fortune by investing in the funds in the Standard & Poor's 500-stock index.”

Unmarried and living modestly, the retiree has used the fruits of his investing for philanthropy, dispensing millions to area charities. He agreed to tell his story to The Washington Post “to encourage others to invest wisely, research thoroughly and support those doing good work that will make a difference in peoples’ lives.”

Will the publicity cause the wise indexer to be inundated with requests for handouts? Not likely. He says he “would never donate to an institution that approached him first.”

Philanthropy's Name Game Takes a Hit

"Can you tell me the way to the lecture in Higglestone Center?"

"Yes, sir. Continue down Bubba Burns Hall to Axel Turner Door. Turn the Emma Branson Doorknob and walk through to the Prince Abbadabba Arcade. Follow the Arcade to  the Jim and Patsy Gotrocks Archway. You'll see Higglestone on your right, just beyond the Hugh Networthy Terrace."

The Name Game has gotten out of hand. Donors expect their names on buildings and wings of buildings and floors and rooms and equipment and playing fields and (excuse the expression) you name it.

Worse, old donor names are being replaced by new ones. At New York's Lincoln Center (not yet renamed Trump Center) Avery Fisher Hall just turned into David Geffen Hall.

Now comes a possible road block. A New York Court just ruled that Paul Smith's College may not change its name in order to qualify for a $20 million gift from Joan Weill, wife of Sandy Weill, the retired Citi tycoon.

The college, situated within Adirondack Park, was created more than 75 years ago with a bequest from Phelps Smith. His will required the school to “be forever known” as Paul Smith’s College of Arts and Sciences, in honor of his father.

The Weills, philanthropists par excellence, deserve lasting recognition. However, they already have their names on numerous benefactions. Does the court decision suggest that the Name Game may be reaching its limits? Or will "lasting recognition" become merely temporary?

Paul Smith's College

“An Aberration in the History of Wealth Creation”

"The geeks were not supposed to inherit the Earth," writes Sean Parker,  but they have acquired a good chunk of it, One result: the rise of the hacker philanthropist. 

Estate Planning Seminar in Mock Mourning

Upstairs at Chicago's Goodman Theater: Women in mourning clothes. Funereal organ music. Ushers in tasteful black, some sporting veils.

The organ music faded…."Good morning friends," [estate attorney Robert] Hamilton said in a warm, tender baritone. "I am brother Hamilton, your minister for today's service, 'In Memoriam of the Estate Tax.'"

***

This was an estate-planning seminar in mourning clothes. (Indeed the federal estate tax itself is not even actually dead, just largely irrelevant to the vast majority of tax payers.) The title was "Outfoxing Uncle Sam: How to Plan Your Estate," and the goal was donations — the kind of large, end-of-life charitable donations that a theater patron might bequest in a will.

Thus does the Chicago Tribune describe estate planning enlivened by a touch of theater. Three-fifths of FUNDS, as my bride learned in her fundraising days, is FUN. Funereal fun, in this case. 

Anyone know of other examples of estate planning seminars imaginatively staged?

Tips For Donors and Charities

Paul Sullivan's Wealth Matters column reveals an unusual corner of philanthropy: helping companies with ill-gotten gains give away their tainted funds.

Lesson for donors: Giving money away usefully can be hard work. Wealthy individuals who fund a new dorm for their alma mater or a new wing for the local hospital have it easy. Donors who have to come up with their own ideas do not. Giving away money effectively, Steve Jobs believed, was more difficult than making it.

Lesson for charitable recipients: Donors expect feedback. Most charities who received portions of the ill-gotten gains failed to report on how they used the money. The minority who did won additional grants.

Down With Donor-Advised Funds?

They're like charitable foundations for the millionaires next door. Fidelity launched the first donor-advised fund in 1991. The idea proved remarkably popular, prompting other companies to offer DAFs. Today the funds of Fidelity, Schwab and Vanguard rank among the top-ten recipients of tax-deductible dollars.

And there's the rub. With more philanthropic dollars flowing into DAFs, fundraiser Alan Cantor charges, actual charities are losing out:

"Giving USA" reports that charitable giving from individuals in recent decades has consistently hovered at around 2 percent of disposable personal income. While overall giving to charity as a percentage of income has remained flat, dollars flowing to DAFs doubled from 2009 to 2012 (reaching $13.7- billion), according to the National Philanthropic Trust’s 2013 Donor-Advised Fund Report, and the percentage of charitable giving going to donor-advised funds also doubled (to 5.7 percent of the $240.6- billion of all giving from individuals, as reported by "Giving USA"). It’s largely a zero-sum game: Money going into DAFs is essentially subtracted from other charitable giving.

Jesse Eisinger at DealBook echoes that criticism, noting proposals that would require donor-advised funds to distribute their assets quickly, within five or seven years.

Such a rule would doom DAFs to oblivion. Clearly, many donors like the idea of building mini charitable foundations, funds that can serve as philanthropic training wheels for the next generation. Vanguard pitches the possibilities here.

Whether DAFs, like dynasty trusts in a number of states, should be allowed to last forever is another matter. If family trusts become limited to a term of ninety years, shouldn't DAFs be limited, too?

Charitable foundations have to distribute a portion of their assets each year. DAFs at present do not. Is that difference likely to last?

Philanthropy First, Family Estate Planning Later

H/T to Gerry Beyer for sending me to Estate Planning for the Young, Rich and Childless.

Rich young techies aren't so concerned with conserving their millions as family legacies, Reuters suggests. Future kids and grandkids will be well provided for, no doubt. Meantime the young rich are willing and eager to set something aside for philanthropy. Through donor-advised funds, for example.

Fewer millions for younger branches of the family tree isn't necessarily a bad thing. The continuing Disney family feud, summarized here a few years ago and now here, suggests that leaving grandkids $1 million a year can be counterproductive. They or their relatives get hungrier and hungrier to devour the goose that lays those golden eggs.

Mark Zuckerberg: a Billion Here, a Billion There…

Last year, CNBC's Robert Frank reports, Mark Zuckerberg paid an estimated $1 billion in taxes.

Photo: Wikimedia Commons

Facebook's CEO also made last year's biggest charitable donation, giving the Silicon Valley Community Foundation shares worth about $1 billion.

If $1 billion is starting to sound like a routine sum, remember the John Allen Paulos comparison:

A million seconds is less than twelve days.

A billion seconds is almost thirty-two years.

Is Harvard Too Rich For Charity?

Kenneth C. Griffin, billionaire hedger, has pledged $150 million to Harvard, mostly for scholarships. Griffin's gift is the largest the university has ever received.

Does it make sense to give that kind of money to Harvard, an institution already half as rich as Warren Buffett?

No, opines this Bloomberg Businessweek columnist. He points out that Harvard's existing endowment could pay every student's tuition, room and board – about $60,000 – for many, many years.

Tuition, however, does not begin to measure what Harvard and other Ivy League schools spend on their students. According to these estimates, Harvard's annual expenditure per student exceeds what the average student pays by over $50,000. At Yale, over $95,000.

In a world where hardship and poverty remain widespread, donations to wealthy organizations inevitably draw criticism. (When I read that Harvard was naming its admissions office after Griffin, I thought they were kidding. Apparently not.)

Griffin Court, Chicago Art Institute

Previously, Griffin's most noted philanthropy was $19 million toward the magnificent new wing of The Chicago Art Institute. Some believe the money would have been better spent on efforts to reduce Chicago's murders and rampant drug addiction. Others assert that a splendid building, housing great art, enlightens and elevates the residents of the Second City more than another dozen anti-poverty programs. By most accounts, Chicago folks do like the new wing.

The Philanthropreneurs

Could  profit-making entities do better than charities to serve some areas of the public good? Bruce Bartlett touches upon the question in his second discussion of the charitable deduction. (Jim Gust linked to the first installment here.)

Philanthropreneurs have made news lately. Jeff Bezos has bought The Washington Post, Red Sox owner Paul Henry has agreed to nurture The Boston Globe, and hedge-fund tycoon John A. Paulson has rescued the venerable Steinway piano company. Their common goal: preservation and enhancement of organizations that contribute more to society than they are likely to earn in profits.

A pioneer philanthropreneur was Paul Newmen. A generation ago he began to market a commercial version of his home-made salad dressing, pledging to give away all profits. Now vastly expanded, Newman's Own has generated hundreds of millions of dollars for charity.

Say, there's an idea . . . . What if Jeff Bezos sold digital WP subscriptions to Amazon customers with the promise that once the subscriber base reached a certain level, all profits earned would be plowed into additional good works?

Art As a Billion-Dollar Asset Class

More than a score of philanthropists have made, or promised to make, gifts of $1 billion or more. Normally the gifts take the form of securities or cash. Leonard Lauder's $1.1-billion gift to The Metropolitan Museum of Art consists of art, including 33 Picassos and 17 Braques.

Will we be hearing a lot more about art as an asset class from Sotheby's and Christie's?

Picasso's "The Scallop Shell," 1912

The New York Times features a few highlights from Leonard Lauder's collection of cubist art here.

Higher Incomes = Greater Giving

Almost one out of every four charitable dollars comes from donors with incomes over $500,000. This elite subset of The One Percent accounts for an even larger share of giving to charities other than religious organizations. Economix illustrates with charts.

Should Philanthropy Be Purposeful or Public?

Dealbook's Andrew Ross Sorkin takes Steve Jobs to task for his lack of public philanthropy. There is no "hospital wing or an academic building with his name on it." See The Mystery of Steve Jobs Public Giving and the comments thereon.

One comment, from AB, cites a 1985 interview: Jobs indicated that the practice of philanthropy was more demanding than most billionaires would tolerate. There's more to it than giving a sum sufficient to get your name on a building.

Interviewer: You could spend all of your time disbursing your money.

Jobs: Oh, you have to. I'm convinced that to give away a dollar effectively is harder than to make a dollar. 

•

Want a Steve Jobs building? Here's the amazing spaceship come to earth that will become Apple's new campus. I'm guessing that Cupertino will consider it a contribution to the civic good.

Yale's “Tainted Donations”

When the going gets tough – as in the Great Recession – the reverberations spread far and wide. Here and here, Nonprofit Quarterly reports on questions raised for Yale University by two business bankruptcies. Were seemingly generous donations to Yale "tainted?" Were they made with other people's money?

John Ringling’s Plan B

If your estate plan includes founding an art museum, don't forget your Plan B.

Like Dr. Barnes, showman John Ringling left us an awesome art collection. Though I've never visited the Barnes collection, I have fond memories of visiting the Ringling Museum of Art in Sarasota, Florida.

Ringling willed his home, Ca d'Zan, and his collection of art and antiquities to the state of Florida, along with a $1.2 million endowment, in 1936. Now the responsibility of Florida State University, the museum faces tight financial times. (Does anything in Florida, post real-estate bubble, not face tight financial times?)

Nevertheless, Florida has a strong incentive to keep the museum alive and well in its beautiful setting. John Mackey, who is expected to serve as the museum's next chairman, describes Ringling's Plan B:

"He … stipulated that the art could not be sold, nor could any portion of the facility. Otherwise, everything would revert to his heirs."

Dead More Generous Than The Living

Seven out of the ten largest gifts to charity last year came from estates, Robert Frank notes in The Wealth Report. The largest came from the estate of "Trouble's" best friend, Leona Helmsley.

From Brooke Astor, a Thought for the Day

Born in Portsmouth, New Hampshire in 1902 and remembered over a century later in The New York Times as that city's "Aristocrat of the People," Brooke Astor died yesterday.

Vincent Astor, her third husband, left her $60 million and about an equal amount for a charitable foundation. Mrs. Astor took the job of giving money away seriously. She also found it fun:

With a wink and a sly smile, she liked to quote the leading character in Thornton Wilder’s play “The Matchmaker,” saying, “Money is like manure; it’s not worth a thing unless it’s spread around.”

The New York Times was clearly determined not to have Brooke Astor remembered primarily as "a victimized dowager at the center of a very public family battle over her care and fortune." Marilyn Berger's excellent obituary features Astor's philanthropy. If Bill and Melinda Gates can dispense their billions (and Warren Buffet's) with half as much care and enthusiasm as she demonstrated, they'll do well.

Brooke Astor was a hands-on philanthropist. (Well, almost. Ladies of her generation never stepped onto a New York City street without putting on gloves.)

She made it her duty to evaluate for herself every organization or group that sought help from the Vincent Astor Foundation. In her chauffeur-driven Mercedes-Benz, she traveled all over New York to visit the tenements and churches and neighborhood programs she was considering for foundation grants. Many times a welcoming lunch awaited her on paper plates and plastic folding tables set up for the occasion. She would exclaim over what she called the “delicious sauces”: deli mustard and pickle relish.

Because of her philanthropic zeal, major cultural institutions have the Astor name chiseled on their walls. Other gifts went unmarked but not unremembered: "new windows for a nursing home on Riverside Drive, fire escapes for a homeless residence in the Bronx, a boiler for a youth center in the Williamsburg section of Brooklyn."

The Times has created an extensive online tribute to Brooke Astor. You'll find it here.