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.
These excerpts have been reprinted with permission of Planned Giving Today.
Below are excerpts from the report entitled “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.
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.
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.
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?”
To read the complete report, please visit Planned Giving Today (subscription required).