Etymologically, philanthropy speaks to a love for humanity and involves a benefactor and beneficiary. By definition, philanthropy is distinguished from business enterprise (private initiatives for private good) and government enterprise (public initiatives for public good), but the reality is that a distinction cannot always be made. I should probably disclose that I come from a family of self-proclaimed philanthropists, but I am not and have never engaged with them in their philanthropic endeavors. A problem with philanthropy, which I have witnessed firsthand, is that it is constantly used to blanket ulterior motives and then publicized as altruism. Of course, the disguised motives and intentions of philanthropists should not fundamentally matter as long as their money is actually being used to better lives, but it seems there are often too many deceitful and consequential strings attached. It should be remembered that a marked difference between philanthropy and altruism in giving is anonymity. Maimonides, the 12th century philosopher, constructed a hierarchy of the best way to do charitable acts. At the top was when the charitable person gives anonymously to an anonymous recipient. That philanthropists often fail to distinguish philanthropy from business and government related enterprise is a failure of humanity and our love for it, which in turn, speaks loudly to a larger global phenomenon of dishonesty: that nothing is what it seems anymore. There are some examples we can use to explore this failure, and Bernie Madoff, Mr. Gates, and the Brothers Koch create a telling trifecta.
In the year 1960, Bernie Madoff founded Bernard L. Madoff Investment Securities LLC and pulled off the largest Ponzi scheme in history (quite impressively until he was caught). It was worth about a cool $65 billion. Thankfully, none of the big banks bought into his less than transparent scheme, but for those other 4,800 clients who did, they probably fell off their chairs when news about Bernie broke. According to an article from the New York Times, Madoff was thought of as “a great philanthropist, a pillar of the community… there was a joke around that Bernie was actually the Jewish T-bill… he was that safe”. He often turned investors away and this made his firm all the more enticing. Madoff became famous on Wall Street. He served on the boards of nonprofit institutions and was entrusted with many of their endowments. As his philanthropic endeavors increased with his firm’s returns, his reputation as a model and trusted contributor to society remained intact. He even became the chairman of Nasdaq, the chairman of Yeshiva University’s school of business, and served on various other boards and commissions in the financial sector through which his opinions influenced securities regulations. Madoff donated to hospitals, educational institutions, cultural causes, and political campaigns.
In 1999, his scheme began to unravel when an analyst proved that it was impossible to have achieved such returns over the respective investment periods. In fact, in November 2008, quite hilariously, Madoff’s firm reported year to date returns of 5.6%, while the S&P 500 dropped 39% over the same period. The ironic part is that when evidence was presented to the SEC in Boston and New York, it was ignored, so it was not until December 2008 that Madoff was arrested. The sad part is that he took other relatively well-meaning organizations and foundations down with him, all because they trusted him blindly.
Though a constant reminder to all those on Wall Street not to get caught playing dirty, Madoff hasn’t exactly become a household name, so the next discussion is about the world’s richest man, Bill Gates. Jeff Bezos briefly claimed this title the other day before Amazon’s earnings release let him down, so perhaps he shall be looked into next time. The Bill and Melinda Gates Foundation (BMGF) has the largest foundation endowment in the world and it is important to credit the BMGF for having done a lot to cut poverty and disease in some of the poorest regions of the world. That being said, it does not excuse Gates from Microsoft’s sins. An article from the Guardian highlights a standard rhetoric of philanthropists: “they pretend there is no option between outright communism and the present rising tide of inequality- taxation is theft, avoidance is natural and philanthropy is the best redistribution”. According to a Global Justice report published in 2016, Microsoft was able to “offshore nearly $21 billion (in a 3-year period) which is equivalent to almost half of its US retail sales net revenue. This amounts to savings of up to $4.5 billion in taxes on goods sold in the US, just over $4 million in US taxes each day”. Interestingly, this resulting annual loss to Treasury income is greater than the annual global spending of the BMGF. Today, American income inequality has reached levels that America has not experienced since the 1920s and rather than fulfilling tax obligations to support American education, infrastructure, job creation, and healthcare, Bill and Melinda have ‘redistributed’ their tax income elsewhere to become the world’s most famous and trusted humanitarians. The reality is that they have more than enough money to be humanitarians who fulfil their tax obligations.
The Global Justice report also extensively details how the BMGF has influenced global policies, promoted corporate interests, supported industrial agriculture at the expense of small scale farmers, and pushed privatization of public enterprise, altogether demonstrating how philanthropy can be a vehicle to drive ideological agendas. The report illustrates how the BMGF is granted too great a voice and that too many international players are falling in line with the BMGF’s priorities. As it becomes unquestionably lauded and recognized, its influence becomes dangerous as it is blindly left to operate without any legitimate checks and balances. This year a private bank approached me to invest in a philanthropic endeavor spearheaded by the BMGF, emphasizing that I would be able to ‘meet and work with Belinda Gates and the Gates Foundation’. I asked if investors are granted decision making power and they said that a private board of the BMGF would manage all decision making. I am still not sure what their definition of ‘work with’ constitutes exactly, but I am yet to become a philanthropist.
Of course, we also cannot overlook the hypocrisy of the BMGF Trust investments. Last year it was announced that Gates is heading a $1 billion clean energy venture fund. He said “Our goal is to build companies that will help deliver the next generation of reliable, affordable, and emissions-free energy to the world”. On the BMGF website, it states that they have defined areas in which the endowment will not invest, such as companies whose profit model is centrally tied to corporate activity that they find egregious. This is why the endowment does not invest in tobacco or Sudan-related stocks. Gates has also spoken directly on how to avoid corruption. The Bill and Melinda Gates Foundation Trust 2015 tax returns discloses the following investments in:
China (where birds go to die) and other renown polluters
- Jizhong Energy Resources (China’s worst polluter in China’s most polluted city)
- Hainan Mining
- China Coal Energy
- Royal Dutch Shell
Defense Contractors (interesting protest against violence)
- Lockheed Martin Corp
- BAE Systems
- United Technologies Corp
- Airbus Group
- HSBC (laundered money for Mexican drug cartels, rogue states and terrorists)
- BNP Paribas (violated sanctions against Sudan, Cuba and Iran)
- Lehman Brothers (largest victim of 2008 subprime mortgage induced financial crisis)
- IndyMac (another large victim of the subprime mortgage crisis)
- JPMorgan Chase & Co. (in addition to many other corruption scandals, faced civil and criminal charges for helping Bernie!)
All the same, like Bernie was, Bill is largely considered an exemplary pillar of the community. So while basically everyone loves Bill, it is interesting that a lot of people hate the Kochs. Koch industries is listed by Forbes as the second largest privately held company in the United States with revenue of $100 billion and they are involved in basically every industrial product there is. The National Committee for Responsive Philanthropy is a liberal advocacy group that promotes and monitors philanthropy. In 1997, they identified twelve American foundations which have had a key influence on US public policy since the 1960s. Three of the foundations belong to the Koch family. Almost six decades later and the Kochs are still driving their political and ideological agendas via their philanthropic adventures.
An article from Time magazine published in 2015 details how the Kochs have influenced US colleges and their curriculums. The article highlights that a Center for Public Integrity analysis of tax returns revealed that foundations led by the brothers invested more than $23 million into US colleges in 2014, and that “In some cases, the Koch foundations have attempted, or succeeded, in attaching certain strings to their contributions, such as control over curriculum”. A US News article elaborates on the hallmark dichotomy set up by philanthropists as exemplified by the Kochs: “You can be outraged by what the Koch brothers do with their money in politics. And you can appreciate what they contribute to hospital and medical research”. The article states poignantly that “Their influence on culture and politics are signs America has entered what could be called The Gilded Age 2.0: an era in which wealth inequality, and an electoral system awash in money, have given the super-rich a disturbing amount of influence in American society”. It seems that fighting political battles with money does not bode well in the public eye. So I wonder, how many hospitals do the Kochs have to build to be loved like Bill?
Though the above examples come from America, the hypocrisy of philanthropy is a global phenomenon. As Asia’s growth skyrockets, the number of philanthropists have increased in proportion, from China and Hong Kong all the way down to the south in Singapore, where incidentally, hospitals have been built on the backs of philanthropists! Of course, the government has ensured that no information has remained public, but once upon a time, a SGD100++ million donation was made to a government run hospital by a Malaysian family in order to save a family member from the ordeal of jail after having been caught up in a corruption scandal involving an ownership stake in a bank headquartered in the UK. The hospital was then named after the late patriarch of the family and remains his namesake today.
The world has reached a point where almost all sectors of our political, economic and social lives are contaminated with greed, including our love for humanity. In this sense, there is very little left that is honest in this world. It has become increasingly convoluted as transparency is substituted for a more convenient alternative. These days blind trust can ensure that we pay the ultimate price, so what can we do? Legal bodies like the SEC need to start taking their job more seriously, and need to implement greater checks and balances on the institutions and individuals with the greatest wealth and influence. This same accountability should then be imposed on both benefactors and beneficiaries of philanthropy, to uphold the distinction between business, government and philanthropic endeavors. In the meantime, be careful of your friendly neighborhood philanthropist and you won’t find yourself surprised that Bernie Madoff with your money.