The head of failed US investment bank Lehman Brothers has told Congress that he took home about $300m in pay and bonuses over the past eight years.
Yes, but he and his wife, Kathy, were also quite philanthropic:
A foundation set up by Richard S. Fuld Jr., Lehman’s chairman and chief executive — the Kathy and Richard S. Fuld Jr. Family Foundation — gave away about $5 million in 2006. The Fulds are still on the philanthropy scene, and are among the co-chairmen at the New York Public Library’s annual gala on Nov. 3. But it is too early to forecast their future role, given the changing economic environment.
He does have good taste and moves in good company.
"Carnegie Hall is delighted to present its second Medal of Excellence to Richard S. Fuld, Jr.," said Sanford I. Weill, chairman of Carnegie Hall's board of trustees and honorary chair of the gala. "For over a decade, Dick's firm leadership has contributed to the growth and prosperity of Lehman Brothers and maintained its standing as a top global finance firm...."
Kathy Fuld, a Trustee at the Museuam of Modern Art, is, apparently, selling some of pieces from her art collection for $15 - 20 million. She calls the end of Lehman "profoundly sad," and emphasizes that her art purchases were made carefully over time:
“I have a budget, and I buy very slowly,” she said. “A lot of looking, seeing and thinking goes into every decision. It’s a very old-fashioned way to collect.”
Who is the writer who might do justice to such virtue? Henry James? Edith Wharton? Petronius?
Case Study on Raising Affluent Children in the Internet Age. I presented a version of this to The Southeastern Conference of Council on Foundations at their meeting in Tupelo, MS. Parents and grown children were in attendance. The kids seemed to "get it," and the parents were appropriately uneasy. Download in 6 page pdf
Ray D. Madoff in an Op Ed in the NY Times:
THE latest news from the Palace, that Leona Helmsley left instructions that her charitable bequest of as much as $8 billion be used for the care and welfare of dogs, rubs our noses in the tax deduction for charitable gifts and its common vehicle, the perpetual private foundation. Together these provide a mechanism by which American taxpayers subsidize the whims of the rich and fulfill their fantasies of immortality.
Should there be a law against, say, establishing a perpectual foundation to care for dogs, or to maintain a useless monument to some long dead Pharonaic donor? Do we as tax payers get to second guess the donor's charitable purpose? Within what limits? And if we do start decreeing what is and is not suitable, where does that tend? Will the ACLU Foundation be ruled out? NAACP? Act Up? Code Pink? Heritage? Hudson? Harvard and Yale? (since they are so rich)?
I am inclined to prefer a society that gives donor's wide sway in just how idiosyncratic their philanthropic efforts might be. Better that wild diversity than a government bureau with political appointees ruling gifts in and ruling gifts out.
I can see the rationale for encouraging gifts for the benefit of the poor, but I wonder if that does not become yet another excuse for defunding government programs and shifting the burden to individual donors, who may in turn slough it off, and decide to keep their money in the family, further concentrating dynastic wealth.
How to discourage billions to dogs? Well, that is what satire is for, and other forms of public contumely and shaming. Shame on Leona for her poor judgment! But let her have her folly.
Melinda Norman (in this fictional case study) has been active in the community since the 1960s. Let's say she lives in large Southern city. She has been a steady funder of the Women's Foundation, Planned Parenthood, the Community Foundation, and a shelter for battered women. Melinda describes herself as sitting in the living room eating buttered scones while her father and brother work in the Counting House, making and managing the family fortune. Recently she has been divorced. Her income comes to her from alimony, and a trust fund run by her former husband's business partner. Her father owns an oil drilling company, along with a real estate development company. He has a family foundation named for his wife, now deceased. Melinda, and her brother, sit on the grants committee. Melinda's charitable funds consist of what she can spare from her trust income and from the payments she gets pursuant to her divorce, plus whatever she can influence through the foundation. Let's say her annual philanthropic budget is $50,000 a year.
When we talk to Melinda about her vision and values, about her sense of what she wants to preserve or change in the world, she is very clear. Given that clarity she makes good use of her philanthropic dollars. But what of the "Counting House," as she calls it? When we ask about her net worth, or about her potential inheritance, she may be uncomfortable. What does she own? Well, a house, furnishings, two cars, clothing. The rest, including a shared family vacation home, even her boat, is owned by a trust she does not control. As for the family business and the finances of her father, around all that is silence. She says she first found out how wealthy she was when she read an article about her family in a regional newspaper. To her shock she found that she, her brother, and her father are among the wealthiest people in the South. In her world, polite women don't talk about money; and they leave business affairs to the men. To make things a little more tense, Melinda is a pro-life activist. Her father is an Evangelical Christian, who gives mightily to the church. She and he are in constant conflict over foundation grants. Melinda's brother has positioned himself as his father's steward.
How, then, do we conceptualize comprehensive planning for Melinda? How do the advisors to her father conceptualize her future role as inheritor? What say will she have as to form and timing of her inheritance? Will her father leave money to the foundation, knowing that she will lobby for progressive grants? Will he put her brother in charge of the foundation? Will he spend down his resources, giving to the Church, to prevent Melinda from giving it later to progressive causes? If the family system matters, the interplay of these forces, who is the client? Melinda? Her father? Brother? Or, do we take the family system to be the client?
Philanthropy as Play Money
It sometimes feels that philanthropy for some wealthy families is play money given to an heir or spouse, to keep him or her happily engaged, while the real financial action is elsewhere. Getting a shared vision for family and society that encompasses the entire family and its entire financial system may call for a family meeting or family retreat. In any case, getting a vision to control all the family money, not just the giving budget would seem to be critical if we are to maximize family harmony, financial efficiency, and social good. Whose vision will prevail? "Mine," says Melinda. "Can you get an appointment with Father, please, and straighten him out?"
The Emergent Profession of Wealth Coaching
In the world of multi-generational wealth, a new profession is emerging, that of Wealth Coach. These Coaches, sometimes trained as pyschologists and often as Life Coaches, and sometimes heirs themselves, do not presume to have financial expertise, but they may work with people like Melinda to deal with what some call "the dark side of wealth." My hope is that the Wealth Coaches will encourage open communication, and not simply take heirs like Melinda aside to reconcile them to their plight. Only (so it seems to me) by closing the open loops with advisors and other family members, are these heirs likely to emerge as the leaders they very well should be.
"John, if you were King for a Day, and could have any Constitution, or form of government, you wanted, what would be it be? Plutocracy? Autocracy? Monarchy? Dictatorship? Keep the Constitution on ice to protect it, while we declare martial law?"
For my fellow Values-Based Consultants to Wealth and Power, please note the way I begin with a vision building open ended question to get the the client day dreaming in an expansive mood. I watch as John's eyes dilate with pleasure, and his body shifts and relaxes into an open stance. I get him talking, less and less guarded, to build confidence and trust. As a subordinate, he may not always get the benefit of the interlocutor's full attention. So, I lean forward to show him that every word he speaks is fascinating and profound. As his guard drops, I can begin to see the rising energy of his great dream, his fantasy, of which he himself may not even be fully conscious. Then, did you notice how I pivot right into to my list of closed ended questions? When I tick of each form of government, I watch what we call for "tells," the little signs than indicate we are getting closer to the heart of the matter. I see him lick his lips as I say, "Dictatorship," and see his flash of teeth as he smiles fleetingly, before reassuming his dignified legal persona. I see his eyes glint. Perhaps he rises from his chair, opens his collar, and begins to pace and mutter and gesticulate. When I get to "martial law" I know I have him as a client. I know what gets his motor running. I go on to clarify his preferred role under martial law. Head of the Secret Police? Chief Justice of the Kangaroo Court? The legal role seems best, judging from his modest demurral, "Well, I would certainly think my name would be on the short list, though I would be one of many qualified candidates, I am sure."
Now that I am clear on John Yoo's vision of a better life in a better world, it is my job to come back with a plan. Sometimes it will be a business solution; sometimes we will go with social capital markets; sometimes we will work through Fox News, talk radio, or some other media outlets; sometimes we will go with a Think Tank, like American Enterprise Institute, to lay down the talking points; sometimes we will work through a nonprofit organization of experts, like The Federalist Society; sometimes we will go out to autocratic donors and raise money for ordered liberty as we might call it; sometimes we will work with scholars to draft legislation, waiting for some crisis, some terrorists event, or natural disaster, to drive it through Congress in a heated rush. Sometimes, of course, we when the enabling legislation has been passed piecemeal, and the pieces are in place, and we have a good pretext, based on some unforeseen event, we just go with the military option, jail and torture or opponents, suspend the Constitution to protect it, and do whatever we damn well want with the legal sanction provided by John Yoo, or some other qualified person, from the highest court in the land. Who would stop us at this point?
In this way, with proper planning and hard work, even a kid from Korea, who starts out with nothing, can get the world he wants, right here in America. It is a great country. As a values-based planner, I am glad to play a small role in helping my clients' dreams come true.
In 1999, Lord Black donated $1-million to Toronto's University of St. Michael's College to establish a namesake chair in Christianity and Culture. Eight years later, the chair has not been filled, leading to speculation that his legal status is holding up the process.
I wonder if I could get our mutual friend, Joseph Fosco, to toss my hat in the ring.
Well, $5 million is not bad, but I am sure Paris Hilton would have preferred the full $100 million. Charity will benefit from the $2.3 billion going from her grandfather to charity. This story will become a moral fable, I am sure, told over and over by philanthropic counselors to wealthy parents. I asked Missy Proctor, Senior Advisor to Heirs in Wealth Bondage, for her advice to her peers. "Wait to make the porno of yourself until after you get the old fart's money," she said, "or wear a mask like I do." Sounds like a prudent plan to me.
Competing or Completing? Beyond Planned Gifts as Transactions
In 2002 Robert Sharpe wrote an interesting article for Trusts & Estates, "Competing or Completing? Balancing the roles of various professionals in planning charitable giving maximizes the benefits for all." I would like to second the spirit of his piece, while recommending that we as diverse professionals go beyond collaborating on specific "gift transactions" to collaborating on an overall legacy planning process of which the specific gift transaction is but one tactic or strategy. My sense is that such a collaborative process would transform our field for the better, move more money, and make our donor clients much happier and more fulfilled. In the process we advisors and gift planners will do ok too.
When we think of planned gifts as specific vehicles, like a donor advised fund, or a charitable remainder trust, offered by both nonprofits and for-profits we might ask, as Robert Sharpe does, whether the two distribution systems are competitors or complements. Considered in that way, a life insurance agent "selling" a Charitable Remainder Trust payable at death to charity Y is competing with charity X who might have written the CRT payable to them. Likewise, Fidelity might compete with a community foundation for donor advised fund assets. But let us say that the topic is not promoting a specific gift vehicle, or making a sale, but helping the donor client create an overall plan that is both prudent and inspired. (Prudent means a plan that takes care of the client and the client's family come what may. Inspired means having a positive impact on the community.) How then do the players arrange themselves around that program or process? A case study may help us get the issues in perspective.
Case Study: Beyond Transactions to Prudent and Inspired Collaboration
Mary and John are worth $10 million, most of it in their closely held business. They are both 55. Both are active in the business and own 100% of the stock. They have two children, Alan and Marcie. Alan is a painter in NYC, barely getting by. He is single. Marcie is married with two children. She is the Comptroller in the family firm. John and Mary are active in Holy Name Cathedral in Chicago where they live. They have thought about spending more time working with the Church and less time in the business. They dream of devoting their lives to working with disadvantaged children, instilling faith and character in children at risk. Not only would they like to do more volunteering, they wonder if they might fund or endow a program and a facility. A local competitor has been making overtures to the family to sell the business. Here are the questions on Mary and John's mind. (These questions have been elicited in part by their lead advisor and in part through their own reflections.)
Observations and Suggestions
Competition or Collaboration?
Practical Steps for Nonprofits, Donors, and Advisors
Posted at 07:46 PM in Advisor's Role, Best Practices, Case Studies in Giving, Charitable Tools, Donor Motivation, Effective fundraising, Giving as Field of Practice, Inspired Legacies, Legacy Partnerships , Partnering with Advisors, Philanthropic Leadership, Values and Planning | Permalink | Comments (0)
To Whom it May Concern
Gifthub is an immortal work of art in theMenippean Tradition,written in a Padded Cell (he calls it a Dumpster for obvious reasons) in a state of shock by Phil Cubeta, Morals Tutor to America's Wealthiest Families, under an alias, or alter ego, The Happy Tutor, Dungeon Master to the Stars in Wealth Bondage...... More....
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