Bad Donors, Good Results

Human kindness and charitable success aren’t necessarily linked. That’s one of the paradoxes of philanthropy.

Kindly donors with sterling characters and good intentions don’t always yield good charitable results. That’s one of the fundamental realities of philanthropy.

What’s rarely pointed out is the reverse. Uninspiring—even deeply unlikeable—donors sometimes produce amazingly powerful results. Some of our country’s most consequential giving was advanced by an all-star assortment of human train wrecks.

The introduction to The Almanac of American Philanthropy cites J. Paul Getty, Russell Sage, and Leland Stanford as examples of givers who pulled off huge good works for not-so-good reasons, and notes that part of the magic of the American charitable mechanism is that you don’t need to be an angel to succeed. The genius of our philanthropic tradition is that it takes people just as they are—kind impulses, selfish impulses, confusions and wishes and vanities of all sorts swirling together in the usual human jumble—and it helps us do wondrous things, despite our flaws. Even donors of dubious moral quality can make our society better, as the following eight examples show.

Charles Yerkes

A business prodigy who opened his own brokerage firm at age 22, Charles Yerkes made his first fortune trading public bonds. At the end of the Civil War he became a financial agent to Philadelphia’s City Treasurer, speculating with public monies in the dizzying post-war markets. As was the custom of the time, a considerable portion of the massive returns he racked up with taxpayer money went straight into the pockets of local political leaders—and Yerkes’s too. But the Great Chicago Fire caused a financial panic and wiped him out. Unable to make payments he owed the city, Yerkes was convicted of larceny and embezzlement and sentenced to 33 months of hard labor in the dreaded Eastern State Penitentiary.

Yerkes tried to secure a pardon by blackmailing several prominent politicians. The effort failed, but his allegations were serious. Fearing their potential repercussions on the 1872 elections, President Grant intervened. Yerkes received his pardon on the condition that he retract his accusations. Seven months into his sentence, he walked out of the prison gate.

After obtaining a quickie divorce in the Dakota territories, Yerkes acquired a 24-year-old trophy wife and moved to Chicago, where he made his next fortune in municipal public transportation. By means fair (massive borrowing) and foul (blackmail, bribery), he methodically acquired one street railway after another. Eventually exhausted by his adventures in Chicago’s bare-knuckle politics, Yerkes later moved to England and led a massive expansion of the London Underground. He died five years later, mistress at his side.

In his will, Yerkes made provision for two magnificent institutions. He donated his extensive art collection (he was the first American to acquire a Rodin) and his elegant home on Fifth Avenue for a public gallery. He also allocated funds to create a charitable hospital in the Bronx, “opened to the public without regard to race, creed, or color.” Unfortunately, debt finally caught up with Yerkes, and creditors claimed the majority of his estate, so the home and art had to be sold, and plans for the hospital were scrapped.

Yet the string puller did leave behind one massive philanthropic accomplishment. In what he admitted was an attempt to burnish his image, he pledged $300,000 in 1892 so the newly founded University of Chicago could build what was then the world’s largest telescope. The Yerkes observatory integrated observation equipment with on-site laboratories, marrying astronomy with earth sciences. It became a nonpareil research facility, and the birthplace of modern astrophysics, making Yerkes one of history’s most consequential supporters of science.

Leona Helmsley

Leona Helmsley may have been the face of a luxury hotel empire, but her hauteur was the stuff of late-night comedy. When she was convicted of 33 tax-related felonies for billing the costs of a home renovation to her company, and sentenced to four years in prison, spectators in the courtroom broke out in cheers. When she died in 2007 and left $12 million to her beloved Maltese terrier, the dog received death threats.

It was an unexpected ending to a life that began with much promise. Leona Mindy Rosenthal grew up in Brooklyn, the third child of an immigrant Polish milliner. She dropped out of college, married (and divorced) three times, and eventually entered real estate. She was tough and plain-spoken. Through force of will, she became one of the most successful agents in Manhattan, with a specialty in brokering conversions of rental apartments into co-ops and condos.

Accounts differ as to how Leona met Harry Helmsley, but it’s clear she made an immediate impression. Harry was among the most successful real-estate investors in New York City, and shortly after meeting Leona he offered her a position as senior vice president. Shortly after they began a torrid affair. In 1971, Harry left his wife of three decades to marry Leona. Together they built a massive real estate and hospitality empire worth $5 billion at its peak. Their holdings included the Empire State Building, the Flatiron Building, and a nationwide chain of 30 hotels, including the St. Moritz, the Park Lane, and the Helmsley Palace.

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When real-estate mogul Leona Helmsley was convicted of 33 tax-related felonies, spectators in the courtroom cheered for joy. But today, the medical patients and others served by her billions in giving are the ones cheering. (gettyimages / Donaldson Collection / Contributor)

Leona’s exacting standards and mercurial temperament earned her a nasty reputation. Her lavish lifestyle became fodder for Manhattan gossip columnists. Her reluctance to pay contractors for their work ultimately led to release of the false invoices that sparked the tax-evasion charges. Harry was too ill to stand trial, but Leona ended up serving 18 months in prison.

In her final years, Helmsley became increasingly committed to philanthropy, making gifts of $25 million to New York Presbyterian Hospital, $5 million to the victims of Hurricane Katrina, and $5 million to the families of firemen killed on September 11. When she died in 2007, most of her estate went to the Helmsley Charitable Trust. Today the trust has a corpus of $5.5 billion, and has already awarded more than $1.1 billion in grants for medical research, education, and local nonprofits serving Israel and New York City. Its reputation among biomedical researchers is second to none, matching the unapologetic perfectionism of its benefactor.

Hetty Green

One of the greatest business minds of the Gilded Age was a woman named Hetty Green. Born into a wealthy Quaker family, she invested her inheritance brilliantly. Avoiding speculation, she sought and found value in stocks, bonds, mines, railroads, and especially real estate. When markets panicked, she kept her head, thus building riches that, by one calculation, would place her somewhere between Warren Buffett and Bill Gates today.

Not that she ever enjoyed any of this. Tales of Green’s miserliness are legion. She wore the same outfits, day in and out, until they were little more than rags. Her daily lunch consisted of oatmeal, which she unceremoniously heated on an office radiator. She raised her two children in a series of shabby apartments in Hoboken and Brooklyn, never staying anywhere long enough for the tax authorities to find her.

As a person, she ranked somewhere between disagreeable and disreputable. At 21 years of age her Aunt Sylvia died and left millions to charity. Though Green was already at that point a millionaire herself, she claimed to have found an alternate will that left everything to her instead. At trial, the estate offered evidence that Green’s will was almost certainly a forgery. The disgraced skinflint spent the next six years hiding in London. At her death, the newspapers trumpeted that she left nothing to charity.

But that conclusion may be inaccurate. “I am of the Quaker belief,” she once explained. And “one way is to give money and make a big show…. That is not my way…. An ordinary gift to be bragged about is not a gift in the eyes of the Lord.”

Biographers have reconstructed Green’s anonymous philanthropy, and it appears she was among the largest funders of Mary Garrett’s campaign to build a medical school at Johns Hopkins, contributed to many women’s colleges, and donated land and monies for schools, nursing homes, and settlement homes. Moreover, the two children she raised eventually directed the remainder of her wealth almost entirely into philanthropy. When Green’s daughter died in 1951, about $200 million went to dozens of colleges, hospitals, and churches. Whether obscured by Quaker modesty or extreme thrift, Green’s ultimate generosity was real.

John MacArthur

John MacArthur was medically discharged from the Navy in 1917 for “dementia praecox,” a diagnosis that today might be called schizophrenia. On a good day, he was one of the world’s greatest salesmen.

It’s somewhat ironic that such an absurd risk-taker made his fortune in the insurance business. At a time when the life-insurance industry’s cheapest plans started at $10 a month, MacArthur sold policies for $1. In his early years, he was slow in paying benefits, and barely stayed ahead of state and federal regulators. He steadily bought out rivals, ultimately turning Bankers Life into one of the nation’s largest insurance companies. In the 1960s, he began snatching up Florida real estate, becoming the state’s largest private landowner.

MacArthur ultimately became the second-wealthiest man in the United States. Not that you would guess as much. He and his wife lived in a modest apartment, with a view of a parking lot. He worked out of a hotel coffee shop, making deals over the phone, drinking endless cups of black coffee, and filling ashtray after ashtray.

Through it all, he was fiercely combative. A good fight was something MacArthur relished, and he waged spectacular legal battles with any competitor, authority, or tax collector who got in his way, often descending to nastiness and vulgarity.

He was as unpleasant in his personal life. His reputation as a “bottom pincher” was a euphemism for what by many accounts was a long history of outright sexual harassment. He married his second wife, Catherine, by mail order in Mexico under bigamous circumstances.

He established the John D. and Catherine T. MacArthur Foundation in 1970. Today, it is the nation’s twelfth-largest foundation by asset size. His motivations were not uplifting: he wanted to avoid an estate tax that would require selling Banker’s Life. He showed no interest in the foundation’s mission, declaring to his trustees that “I’m going to do what I do best. I’m going to make [money]. You guys will have to figure out after I’m dead what to do with it.” These instructions are frequently cited as an example of what philanthropists should not do if they want to protect their donor intent.

Fittingly, given its benefactor’s bellicose temperament, what happened after MacArthur died in 1978 was war. A struggle for control of the foundation board, and direction of its lucre, developed. Eventually, estranged son Rod MacArthur wrested the foundation away from conservative board members, turning it into a prominent funder of progressive causes.

Despite the turbulence, the MacArthur Foundation has promoted a number of consequential initiatives, including the fellowships known as “genius” grants and a major gift to help localities reduce jail populations. Recently, the foundation announced it will award an eye-popping $100 million grant to fund “a single proposal that will make measurable progress toward solving a significant problem.”

Albert Barnes

Philadelphia, in the words of historian John Lukacs, is a city of patricians and philistines. Albert Barnes somehow managed to be both.

He grew up in a tough, working-poor neighborhood, then won a scholarship to attend the University of Pennsylvania, where he earned a medical degree in 1892. He launched a pharmaceutical company, then sold it just months before the 1929 stock-market crash for $6 million. Just as the world sank into depression, Barnes became a Croesus.

Barnes was drawn to early modern art, and the global downturn offered him a perfect opportunity to gather pieces orphaned in the insecure arms of what he called “suckers who had invested all their money in flimsy securities.” He stacked up scores of Cézannes and Matisses, Picassos and Renoirs, Soutines and Seurats.

Barnes also developed a highly idiosyncratic view of how art should be appreciated. Informed by the pedagogical theories of John Dewey, he believed that art spoke through color and shape more than through representational theme, and that even uneducated viewers could grasp the elemental meaning of any work. At the same time, he detested casual viewers of art. He set up his Barnes Foundation to shepherd small numbers of guests through his collection while teaching his very didactic theory of art interpretation.

Barnes made enemies effortlessly, and often. When critics panned one of his few public showings, he wrote profanity-laden replies, then hounded them for years afterward. He had contempt for many of Philadelphia’s educational, artistic, and civic leaders.

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Albert Barnes was a natural at enemy-making, sending profanity-laden replies to critics and hounding them for years afterward. Yet the art he left to be enjoyed has uplifted more than a million souls.

When he died in 1951, several of Barnes’s enemies challenged the strictures he had placed on public access to his art, and tried to liberate the collection from Barnes’s eccentric rules. Leading the charge was Walter Annenberg, owner of the Philadelphia Inquirer. Though Annenberg did not live to see it, the effort his foundation spearheaded ultimately broke the donor-intent restraints that kept most of the public from ever experiencing the magnificent paintings and sculptures gathered by Barnes. Since 2012, the Barnes Collection has been located in downtown Philadelphia, where more than 1 million visitors have toured it—including many untrained, casual viewers.

Larry Hillblom

The “H” in DHL, the package express firm, stands for Hillblom. It’s an understated testament to an unlikely entrepreneur. Raised in a middle-class home in California farm country, Larry Hillblom worked his way from peach canneries to Berkeley’s law school. While there, he took a night job as a courier, hopping on commercial airlines and flying bags stuffed with commercial documents up and down the West Coast. It gave the perpetually disheveled 25-year-old an idea: express delivery from the mainland United States to Hawaii, and from Hawaii to East Asia.

He met Adrian Dalsey (the “D” of DHL) in a grocery-store parking lot, and the two men decided to launch a trans-Pacific delivery service. Its couriers flew commercial airlines, their luggage stuffed with time-sensitive documents: bills of lading, original canceled checks, and signed legal papers. At a time when the Post Office took two weeks to get a letter from Los Angeles to Honolulu, DHL guaranteed overnight delivery.

Plagued by suffocating regulators and relentless lawsuits, the company nevertheless thrived. When Hillblom died 26 years later, the company flew to almost every nation, employed 33,400 people, and had annual sales of approximately $3 billion.

In the mid-1980s, Hillblom had stepped away from the day-to-day management of the company. He moved to Saipan and became a citizen of the Northern Mariana Islands, taking side jobs as a bartender, backhoe operator, pawnshop owner, and auxiliary justice of the commonwealth’s Supreme Court. Much of his free time was spent prowling the brothels of Southeast Asia.

On May 21, 1995, Hillblom’s twin-engined SeaBee crashed into the Philippine Sea. The bodies of the pilot and a fellow passenger were recovered, but not Hillblom’s. To this day, some people believe he survived and lives under an assumed identity in Thailand.

Hillblom’s will left his entire estate of about $600 million to the University of California for medical research. But the will was immediately contested by lawyers representing women in Vietnam, Micronesia, and the Philippines who claimed to have borne children by Hillblom. For two years, a brutal and often bizarre legal battle raged. In exchange for $1 million cash and a share of a French chalet, Hillblom’s mother eventually offered a blood sample so her DNA could be used to verify paternity claims. With that evidence, four women eventually received about $50 million each on behalf of the children they produced with Hillblom.

After these paternity payments, legal fees, and taxes, approximately $240 million was left to fund the Larry Hillblom Foundation. It went to work on health problems. Today it is a leading funder of cutting-edge efforts to cure, treat, and manage both diabetes and diseases associated with aging.

Henry Frick

Henry Frick was one of the Gilded Age’s most controversial figures. His eulogy in the New York Tribune was a little rough. “The name of Frick,” it stated, is “abhorrent to great numbers of his fellow citizens.” Whether or not that was true at the time, it wasn’t true later—thanks to the charities he endowed in his will.

Frick made his fortune in coke, the fuel essential to the steelmaking process. By his 30th birthday he was the world’s largest coke producer, running some 12,000 ovens. At age 32 he partnered with Andrew Carnegie, and when Carnegie retired in 1889 Frick was named chairman of Carnegie Steel.

The Johnstown Flood was the first blot on Frick’s name. He had helped found a hunting club that created magnificent grounds, charming cottages, and a stately clubhouse near a mountain lake in Pennsylvania. Largely neglected, however, was the South Fork Dam that created the club’s private water body. When heavy spring rains descended, the earthen dam broke, flooding nearby towns with apocalyptic force. More than 2,200 people died. Frick and his partners in the club contributed to the relief effort, but were never held liable for the death and destruction.

Three years later, Frick put down a strike in one of the bloodiest episodes in the history of American labor. Workers at the Homestead steel mill demanded higher wages in 1892. When the union and Carnegie Steel could not reach terms, workers surrounded the mill and dared strikebreakers to approach. Frick hired 300 Pinkerton agents, armed them with Winchester rifles, and ordered them to maintain access to the plant. In the ensuing battle, 10 men were killed, and dozens more wounded. Order was restored by 8,000 state militiamen. Frick was again denounced, and soon an anarchist walked into his office, shot him twice, and stabbed him three times.

After that, Frick avoided public notice. In his remaining three decades, he devoted himself to business and his art collection. He supported local charitable causes in western Pennsylvania, but quietly. Only after $117 million of his $145 million estate was dedicated to charity did he gain a reputation for philanthropy. His beneficiaries included universities, schools, parks, and hospitals. His signature gift was bequeathing his Manhattan home and remarkable art collection to New York City with a $15 million endowment. Thus did a man excoriated in life for ugliness become remembered after death for beauty.

Howard Hughes

Howard Hughes would have kept Shakespeare busy for years. He was a tinkerer of staggering genius whose business interests extended to industrial tooling, aircraft manufacturing, and Hollywood filmmaking. He bought TWA and turned the struggling letter-carrier into a major global airline. Hughes’s companies created precise weapons systems crucial to the Navy and Air Force.

When a Las Vegas hotel manager tried to kick Hughes out of a penthouse, Hughes bought the property. Then he spent the next few years methodically buying more real estate, casinos, and television stations throughout the city. Amid all this, he set world records as a pilot, and as a pursuer of Hollywood starlets.

But when Hughes’s star collapsed, it burned itself out with as much intensity as it had emitted while red hot. His last years were spent in self-imposed isolation and madness: a miserable existence in blacked-out hotel rooms, malnourished, unwashed, naked, strung out on codeine. His mental decline was linked to head trauma he had sustained in more than a dozen serious car and airplane crashes. His tertiary syphilis didn’t help. Even the circumstances surrounding his death were bizarre: it’s not exactly clear where he died. Hundreds of claims were made against Hughes’s $2.5 billion estate, some of them laughably fraudulent.

Hughes had a crippling hypochondria and all-consuming fear of germs. His interest in medical issues dated back to the premature deaths of his mother when he was 16 and his father about two years later. His first will, signed at age 19, dedicated his resources to a Howard Hughes Medical Research Lab to be launched “as soon after my death as practicable.”

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Howard Hughes lived and died under strange circumstances, progressively defined by addiction, hypochondria, and mental trauma. His will, though, established one of the world's leading biomedical research centers. (gettyimages / Bettmann / Contributor)

Hughes refined and deepened this idea as he aged and grew wealthier. In 1953, he created the Howard Hughes Medical Institute and endowed it with all the shares of Hughes Aircraft, a huge gift for which he was hailed. The IRS for years contested the idea that the medical organization owning Hughes Aircraft could be a tax-exempt charity, but ultimately conceded and granted it nonprofit status.

Today, the Howard Hughes Medical Institute is among the world’s largest—and most brilliantly innovative—funders of biomedical research. It invests approximately $660 million annually in basic research, and devotes an additional $85 million annually in support of science education. It is best known for giving top minds great freedom to experiment—quite appropriate for an organization fathered by a prominent polymath and free spirit.

Grant Smith is the pseudonym of an executive at a large foundation.

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