Joanne Florino in Planned Giving Today: Toxic Donors, Tainted Dollars: A Perspective

In the October 2023 issue of Planned Giving Today, Philanthropy Roundtable’s Adam Meyerson Distinguished Fellow in Philanthropic Excellence Joanne Florino discusses what happens when the reputations of philanthropists – both living and deceased – become tainted, and the institutions that bear their names subsequently become the subjects of protests and media scrutiny. 

 She cites the stories of “toxic” donors, including the Sackler family, Jeffrey Epstein, Bill Cosby, and more. Florino says although institutions who receive private funding cannot predict the future, they should consider having a morals clause in place to help navigate challenges in the event a donor’s reputation is damaged.  

Editor’s Note: The following has been reprinted in full with permission of Planned Giving Today. 

Toxic Donors, Tainted Dollars: A Perspective 

As civil society is increasingly buffeted by the harsh winds of political polarization, charitable donors may find themselves the objects of suspicion, investigation, scorn, and what we commonly call “cancellation.” Distrust of wealthy philanthropists is certainly not a new phenomenon. Neither Andrew Carnegie nor John Rockefeller escaped criticism for their business practices and their treatment of unions, with former President Theodore Roosevelt noting of Rockefeller, “Of course no amount of charities in spending such fortunes can compensate in any way for the misconduct in acquiring them.” Nonetheless, both Carnegie and Rockefeller forged philanthropic legacies that continue to this day.  

The skepticism around how donors make their money continued well into the 20th century, manifesting in 1989 with the indictment of Wall Street’s “junk bond king,” Michael Milken, who pleaded guilty to six felony counts of crimes including insider trading, securities fraud and mail fraud and spent two years in prison. At Drexel Burnham Lambert, Milken’s salary had totaled a billion dollars over four years, an astonishing amount at that time. A New York Times piece reported that David Rockefeller, then worth ap – proximately $1.1 billion, commented, ‘’Such an extraordinary income inevitably raises questions as to whether there isn’t something unbalanced in the way our financial system is working.” 

Yet Milken, though tarnished, was never truly canceled, and his philanthropy was cited frequently as the genuine representation of his character. The Jewish Telegraphic Agency reported in 1990 that “by the end of 1987 [the charitable gifts from his foundations] had totaled close to $100 million to some 200 different programs, with $183 million remaining in assets.” The Milken Family Foundation, launched in 1982, remains a leading funder in the areas of education, public health, medical research, and Jewish causes. The Milken Institute, established in 1991 and currently chaired by Michael Milken, is a well-regarded, globally fo – cused think tank, conducting research, advocating policy reforms and hosting conferences across a broad range of eco – nomic and social issues.  

By 2018, however, philanthropy itself was under attack as three books pub – lished that year questioned whether private philanthropy was a legitimate undertaking. Just Giving, authored by Stanford University professor Rob Reich, suggested that it was simply tax advantaged power that lacked public ac – countability. In Winners Take All, Anand Giridharadas alleged that for many philanthropists, giving was no more than a smokescreen to draw attention away from how they came by their power and wealth. And Edgar Villanueva’s Decolonizing Wealth linked racism and an ex – tractive economy with wealth creation, asserting that philanthropy was itself an institution of “colonial dynamics.”  

More importantly, between 2015 and 2022, the offenses that would render a donor “toxic” had far surpassed securities fraud in both their actual harm to individuals and in the perception of a public that increasingly turned to social media for current news. The opioid epidemic, which has taken well over 500,000 lives since the mid-1990s, was driven by three waves according to the Centers for Disease Control and Prevention: an increase in deaths from prescription opioid overdoses since the 1990s, an increase in heroin deaths starting in 2010, and a more recent surge in deaths from synthetic opioids, including fentanyl. Blame for the first wave led directly to Purdue Pharma’s 1996 release of FDA-approved OxyContin and to the Sackler family, the company’s owners. By 1996, the Sacklers were also well-established major donors to cultural institutions and universities in the United States, the United Kingdom, and France, and the family’s name was displayed on many cultural and educational institutions in those countries. 

 In 2007, Purdue Pharma executives pleaded guilty to federal criminal charges that the company had minimized OxyContin’s risk of addiction to regulators and to the doctors and patients to whom the drug had been aggressively marketed. It took another decade, however, before public outrage reached its peak. At that point, the prominent use of the Sackler name added to the increased difficulties in the relationships between the donor family and their prestigious grantees. This resulted in a confused jumble of decisions by recipient institutions over the next five years.  

In 2019, Tufts University pulled the Sackler name from five facilities on its Boston health sciences campus. Tufts acted without consulting the Sackler family, although the university did inform them before the public announcement was made. That same year, Yale University announced that it would no longer accept Sackler donations but retained the Sackler name on various units and professorships until March 2022. Cornell University also renounced future donations in 2019, as did Harvard University. Both of those institutions still have units bearing the Sackler name, Cornell at its medical college and Harvard at its art museums.  

At the Smithsonian Institution, the Sackler name is still displayed on one of the institution’s two galleries of Asian art, although collectively they have now been rebranded the National Museum of Asian Art. Lonnie Bunch, secretary of the Smithsonian, has explained the retention of the name by noting, “The legal agreement signed between the Smithsonian and Arthur M. Sackler was in keeping with the Smithsonian’s recognition practices at the time and obligated the Smithsonian to designate the facility as the Arthur M. Sackler Gallery in perpetuity.” It also appears that, unlike many other Sackler grantees with similar restrictions, the Smithsonian has distinguished between gifts made by the family members involved with OxyContin and those who had no such connection. Arthur Sackler made his gift of $50 million worth of Asian art and artifacts plus $4 million to help fund the gallery itself in 1982. He died in 1987, nearly a decade before OxyContin came to market. 

Another group of donors were entangled in the globalization of the “Me Too” movement that followed sexual harassment and assault accusations about comedian Bill Cosby, film producer Harvey Weinstein, and eventually, Jeffrey Epstein. The earliest Cosby allegations went back to 1967, Weinstein’s to 1990. Over their long careers, both men had made charitable gifts and also had been recognized publicly for their contributions to the entertainment industry. The repercussions of the accusations were swift and dramatic.  

In 1988, Cosby and his wife had donated $20 million to Spelman College, a historically black women’s college. In July 2015, Spelman announced that it had suspended a professorship endowed by that gift which carried the Cosby name and had also returned “related funds” to the family’s foundation. Well more than half of the honorary degrees that had been awarded to Cosby by higher education institutions across the country had been rescinded by the end of 2018, the year he was convicted of a criminal sex assault charge in Pennsylvania. Cosby had served almost three years of his 10-year sentence when his conviction was overturned by that state’s Supreme Court on a technical matter, and he was released. In early 2023, five women filed a new sexual assault lawsuit in New York against NBC and Cosby.  

The Weinstein story broke in the New York Times on Oct. 5, 2017. Two months earlier, Weinstein had contributed $100,000 to the Gloria Steinem Chair in Media, Culture and Feminist Studies at Rutgers University. On the same day the accusations against him became public, Weinstein announced a $5 million gift to the University of Southern California School of Cinematic Arts to fund an endowment for women filmmakers, adding that he had made his pledge much earlier. Several days later, a spokeswoman for the university publicly declined the gift, announcing, “In light of the admitted behavior by Mr. Weinstein and the subsequent reports there is no way the school would move forward.” Both Rutgers and the Clinton Foundation, another recipient of Weinstein’s philanthropy, chose to keep the funds he had contributed.  

The revelations about Epstein took center stage when he was arrested in July 2019. The arrest resulted from the Miami Herald’s well-documented series about his history of sex trafficking. Epstein had been under investigation for over a decade and had already served time in prison, but it was in 2019 and 2020 that his links to philanthropy came to light. The foundation he founded in 2000 lost its tax-exempt status in 2008, but continued to make grants despite that ruling. Among the early and later grants were several large donations to Harvard University and the Massachusetts Institute of Technology. 

 In May 2020, Harvard President Lawrence Bacow issued a public report on Epstein’s relationship to the university, noting that Harvard “received a total of $9.1 million in gifts from Epstein between 1998 and 2008 to support a variety of research and faculty activities, and that no gifts were received from Epstein following his conviction in 2008.” Bacow also revealed that the $201,000 remaining from those gifts had been donated to organizations in Boston and New York City that “support victims of human trafficking and sexual assault.”  

The situation at MIT, where Epstein had donated a total of $850,000 was more complex. That university issued its own report on its relationship with Epstein, but at MIT, a number of officials and professors, not including President L. Rafael Reif, had known about the donor’s criminal record and had nonetheless accepted $750,000 in gifts after 2008. Reif apologized for MIT’s actions and announced that the university would donate “an amount equal to the funds MIT received from any Epstein foundation to an appropriate charity that benefits his victims or other victims of sexual abuse.”  

The unrelenting press reports about Epstein also dragged many prominent individuals into his spotlight, among them two U.S. presidents and other government officials, members of two royal families, entertainers, corporate CEOs, and some prominent philanthropists. The relationships between Epstein and most members of that last group were generally brief and inconsequential. In the case of Bill Gates, however, the spotlight grew brighter with time. Although MIT refuted the rumor that Gates’ $2 million donation to its Media Lab had any connection to Epstein, it is clear that Gates had met with him on many occasions between 2011 and the end of 2014, meetings which have had serious repercussions for Gates’ reputation and private life.  

Philanthropic donors who support the fossil fuel industry are also targets for protests, removal from nonprofit boards, and “denaming.” Charles and David Koch came early to this group as both the owners of a company named “one of the top ten air polluters in the United States” and funders of organizations opposed to environmental regulation. In their individual lives, Charles Koch’s foundation awards grants to colleges and universities to create centers and sponsor programs focused on promoting individual liberty and a free market economy. Some of the earlier grants included inappropriate faculty hiring stipulations. When this became public, faculty and student protests typically followed. They continued, however, even after that practice ceased and clear statements affirming academic freedom were added to grant agreements. This was exemplified by a 2018 protest at Middle Tennessee State University. UnKoch My Campus continues to track, and encourage opposition to, Koch philanthropy in higher education to minimize “their impact on our democracy, climate, and economy.” Colleges and universities can refuse Koch funding altogether, as some have decided. Otherwise, they may be assured that they will certainly have some ‘splaining to do, as Wellesley College President Paula Johnson discovered when the school accepted Koch funding for the Freedom Project in 2018. That project, founded in 2012 by a sociology professor at Wellesley to promote free speech and viewpoint diversity, was discontinued after the 2021-22 school year in response to concerns that it had become an outlet for right-wing speakers.  

The late David Koch, who joined his brother Charles in espousing libertarian ideals, was also no stranger to controversy. Like his brother, he provided funding to organizations such as Americans for Prosperity. But unlike his brother, who still lives a very private life in Wichita, David led a far more public life in New York City. He sat on many large nonprofit boards, directed his philanthropy toward medical research, museums, and other cultural institutions, and did not hesitate to accept naming opportunities from the institutions he supported. His name appears prominently at the Metropolitan Museum of Art, at two New York City hospitals, at Lincoln Center, and at both the American Museum of Natural History and the Smithsonian’s National Museum of Natural History. The natural history museums, in particular, took heavy criticism in 2015 for accepting his gifts and honoring his name in a letter from scientists that warned, “When some of the biggest contributors to climate change and funders of misinformation on climate science sponsor exhibitions in museums of science and natural history, they undermine public confidence in the validity of the institutions responsible for transmitting scientific knowledge.”  

At both art and natural history museums disagreements around climate change also have generated increased scrutiny of their board members, and protesters celebrated David Koch’s 2016 retirement from the board of the American Museum of Natural History after 23 years of board service. But board member protests have gone well beyond the issue of climate change denial to include occupations, political affiliations, and unacceptable associations. In late November 2018, news photographs of tear gas in use at the country’s border with Mexico displayed canisters bearing the logos of corporations owned by Warren Kanders, vice chairman at the Whitney Museum of American Art and a board member since 2006. When the affiliation became public, a group of museum staffers wrote a letter to the Whitney’s leadership suggesting that Kanders should resign. The situation escalated when Decolonize This Place organized what became a months-long protest at the Whitney, and even at Kanders’ home. Within days following the July 2019 news of the withdrawal of eight artists from the Whitney Biennial, Kanders submitted his resignation from the museum board, writing, “I joined this board to help the museum prosper. I do not wish to play a role, however inadvertent, in its demise.”  

Rebekah Mercer, a conservative donor who joined the board of the American Museum of Natural History in 2013, seemingly drew little attention during the protests to oust David Koch, who had resigned in 2016. Two years later, however, the museum was once again under siege. The circumstances that led to calls for Mercer’s removal involved a Tweet that suggested undue donor influence over the museum’s interpretation of climate change in the David H. Koch Dinosaur Wing. Mercer checked several boxes for those offended by her presence. Like Koch, her philanthropy included donations to the American Museum of Natural History but also to organizations that disagreed with calls to eliminate fossil fuels. But by 2018 those who protested her presence could also cite her financial support of Donald Trump’s 2016 presidential campaign and her service on his transition team. Museum leadership attempted to calm the protest by asserting (as it also had done in Koch’s case), “The museum has long maintained that its funders do not shape its curatorial decisions.” Nonetheless, when the 2020 list of trustees was published, Mercer’s name was gone. Neither Mercer nor the museum would explain why she had stepped down before what would have been her third and final term.  

The Museum of Modern Art (MoMA) may provide one of the more unusual stories of board member “toxicity.” In late 2019, a group using the name Guerrilla Girls demanded that the museum remove its board chair and major donor, Leon Black, because of his financial dealings with Jeffrey Epstein. Black was never accused of participation in any of Epstein’s crimes, but he had paid Epstein over $150 million for tax and advisory services after Epstein’s 2008 conviction. When Black’s term as chair ended in June 2021, he chose not to run for re-election as chair but continues as a board member to this day. He was replaced as chair by MarieJosée Kravis, a MoMA board member since 2004 and board president from 2005 until Black’s term began in 2018. In early June 2023, a small group of climate activists protested MoMA’s acceptance of grants from donor Henry Kravis, whose private equity firm invests heavily in the fossil fuel industry. Not a MoMA board member himself, Henry Kravis is indeed the husband of the museum’s board chair.  

The complexity of responding to situations involving living donors with tainted reputations takes on new dimensions when dealing with donors who have taken their transgressions to their graves. The death of George Floyd in May 2020 amplified a racial upheaval that led to a wave of renaming and condemnation. Princeton University’s removal of Woodrow Wilson’s name from its School of Public and International Affairs was one example. Planned Parenthood’s “reckoning” with Margaret Sanger was another. Several of the decisions to remove names suddenly considered toxic have caused considerable consternation, however, and have resulted in lawsuits, notably at Middlebury College and Hastings College of the Law. 

Beyond the renaming issues, however, philanthropists are increasingly encouraged to ask questions about the ways in which their philanthropic wealth was accumulated by donors long gone. Inherent in the suggestion is the suspicion that it may have derived from the exploitation of others. This is certainly not a new critique, as this same charge was levelled more than a century ago at Andrew Carnegie and John D. Rockefeller. Today, however, the social pressure to uncover the source of wealth comes with a strongly implied, if not overt, expectation that action must follow knowledge. Families may certainly choose to focus on reparative grantmaking, and the Chronicle of Philanthropy recently provided examples of the changes some foundations have made as they uncovered the sources of their assets.  

For other philanthropic families, their investigations reinforce their current missions and their desire to focus their giving on the here and now. Sylvia Brown was moved to study her Rhode Island family’s nearly 400 years in this country by a comment she heard in 2004 at a symposium hosted by Brown University’s Steering Committee on Slavery and Justice: “There were no good Browns.” Her 2017 book, Grappling with Legacy, chronicles her findings. The Brown family did indeed participate in the triangle trade routes that included transporting slaves from Africa to the Caribbean until 1765. They were also ministers, privateers, and early founders of the textile industry. They brought the College of New England to Providence in 1770, and in 1804 changed its name with a $5,000 gift made by a family member who was an abolitionist. Is there any one point in the family’s history that defines the family legacy? For Sylvia Brown, the answer lies between ignoring the past and being imprisoned by it. “Part of our legacy is what we have in our DNA,” she commented in 2018, “but the other, vital part is what we choose to do with the values and examples that our families have instilled in us….my legacy will be my actions and what I do to leave a positive mark on the world.”  

No matter how much due diligence organizations apply to prospective donors, they are not likely to uncover questionable activities from generations past, nor can they predict the occurrence of such activities in the future. As a result, the questions and concerns that have arisen around toxic donors and tainted money have grown more complex in recent years and remain unsettled. Should grantees remove names that were promised to donors in perpetuity? What sort of offenses or behavior would warrant such action? Should grantees refuse or return money deemed tainted, or should they use it in pursuit of their missions? Should nonprofit or foundation board members be chosen based on their political affiliations or their positions on public issues that are external to the mission of the organization they serve? Who will decide whether the source of funding is ethical and on what measures would such a decision be made?  

Morals clauses, used initially in entertainment and sports contracts, are one way for nonprofits to handle some of these questions. Prior to recent years, they were more likely to appear in the gift acceptance policies of larger institutions, including colleges and universities, hospitals, museums, and national organizations. Now, even small, community-based charities may see the value in having such policies in place, particularly in situations in which naming rights are at stake. Developing the language for morals clauses, however, presents its own dilemmas.  

Most morals clauses include language which allows for a considerable amount of discretion in determining whether a gift will be accepted, or a name will be removed. Dartmouth College, for example, “will not accept a gift that may damage or compromise its reputation, is not in the best interests of the Dartmouth community, or is not consistent with Dartmouth’s core values.” Catholic University alerts donors that it may remove a name if it “determines that its association with the donor will materially damage the reputation of the University.” It is no wonder, then, that donors or their descendants may react to such determinations with frustrations, anger, and lawsuits.  

And what of the funds that, tarnished or not, might be used to fulfill a nonprofit’s mission and improve the lives of the individuals and communities it serves? In late June 2023, the New York Times reported that British museums, long used to considerable government support, are now facing a future demanding much more reliance on private funds. The article quotes Leslie Ramos, a philanthropy advisor to the arts, who noted that Britain “just doesn’t have the culture of philanthropy like the U.S., especially for the arts.” Younger donors, she added, are more likely to give to organizations focused on social justice and climate change. She also remarked that the Sackler family’s experience may have given other donors pause. If any of the UK’s arts and culture institutions are now having second thoughts, they are not likely to admit it and certainly not in public.  

In contrast, Leon Botstein, president of New York’s Bard College, spoke at length about his experiences with Jeffrey Epstein and the dilemmas he faced. Like many small colleges, Bard faced financial difficulties stemming from the 2008 recession. When Epstein made an unsolicited gift of $75,000 and 66 laptop computers to Bard in 2011, Botstein anticipated that there might be additional gifts in the future and energetically pursued his unexpected donor. He knew he was not alone in this pursuit and reminded his critics, “People don’t understand what this job is. You cannot pick and choose, because among the very rich is a higher percentage of unpleasant and not very attractive people. Capitalism is a rough system.” Stephen Trachtenberg, former president of George Washington University, shared that perspective in recalling several donors he had turned away. “You’re trying to figure out how to balance the source of the money with the purpose that you’re applying the money to.” 

 In the end, nothing came of Botstein’s repeated efforts to obtain additional funds from Epstein. “He was sadistic. He absolutely strung me along.” 

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