Frequently in 2019 we raised the question about what to do with grants from questionable individuals and organizations. Jeffrey Epstein was by far the worst example—but should we have a system to assess donors?
How should grantees deal with grants from questionable people? In 2019, this question was frequently raised—but most significantly in the case of Jeffrey Epstein.
Most stories have two sides. But the Epstein case only has one side: he was an evil man who harmed dozens of underage women, and one consequence of his death is that these women will not get the justice they deserve.
But Epstein was also a philanthropist, one who played at being a Medici supporting greatness. After his death, those who accepted his grants—particularly after he was convicted of sex crimes in 2008—scrambled frantically to say they had no idea who Epstein was.
Epstein made substantial contributions to MIT in the years following his 2008 conviction. This caused the university significant embarrassment and led to the resignation of MIT Media Lab director Joi Ito when knowledge of these gifts—and of Epstein’s close relationship to the Media Lab—was revealed in 2019. In at least one case, MIT president L. Rafael Reif signed a letter thanking Epstein for his donation. In a letter sent to faculty and students on September 12, Reif said “I apparently signed this letter on August 16, 2012, about six weeks into my presidency. Although I do not recall it, it does bear my signature.” However, earlier this month, Goodwin Procter LLP issued a report (commissioned by the university) stating that Epstein had donated $850,000 to the school and visited the campus at least nine times. The report said that Reif was not aware of the donations.
Reif’s letter was issued as a response to this article by Ronan Farrow, which the New Yorker posted on its website on September 6, 2019. In the article, Farrow reports that all of Epstein’s donations to the Media Lab were to be reported as anonymous: “Jeffrey money, needs to be anonymous,” Media Lab development director Peter Cohen wrote in an email. While the full names of all other donors were written in Joi Ito’s calendar, Epstein was only listed as “J.E.” on official entries.
DEALING WITH DIRTY DONORS
Regarding what to do with grants from questionable people, Harvard Law School professor Lawrence Lessig, a friend of MIT’s Joi Ito, wrote an interesting argument following Ito’s resignation. Lessig divides donors into four types. Type 1 donors are people “who are wealthy and whose wealth comes from nothing but doing good” such as Tom Hanks or Taylor Swift. Type 2 are corporations who may do good or harm, such as Google or Facebook.
Type 3 are people like Epstein “who are criminals, but whose wealth does not derive from their crime.” Lessig explains that at one point, he believed institutions could accept donations from these people on the condition of anonymity, which would prevent the donors’ purchasing tacit absolution through association with prestigious institutions. Now, however, after witnessing the fallout from Epstein’s relationship with MIT, Lessig has concluded that universities should refuse all contributions from these donors.
Finally, there are the Type 4 donors whose money should always be refused, “people or entities whose wealth comes from clearly wrongful or harmful or immoral behavior. The RJ Reynolds Foundation, the Sacklers, the Kochs.”
The Reynolds American Foundation primarily funds schools, United Way campaigns, and matching grants by Reynolds American employees. Nearly all of their grants are to organizations in North Carolina, and they don’t donate to universities. One wonders why this sort of charity should be refused and what the beneficiaries of those funds might think of this recommendation.
As for the Kochs, Lessig says their “crime” is what he considers their responsibility for the fact “that we have no comprehensive legislation addressing climate change.” In other words, Lessig would like to ban the ideas which the Koch Foundation supports. One wonders how he reconciles this censorship with his support of academic freedom.
Unlike Lessig, I don’t have a comprehensive list of who should and shouldn’t be able to donate to colleges. But if a level 3 sex offender offers to give money to your school, just say no. And in order to preempt this crisis at your organization, consider drafting a formal “gift acceptance policy.” The Goodwin Procter report found that an MIT committee considered draft policies starting in 2012 and as recently as February 2019—but no policy was officially adopted, clearly to the detriment of the university’s reputation. Hopefully this case will encourage more organizations to take the time to draft and adopt formal gift acceptance policies suitable for their needs.
2 thoughts on “Dirty donors: what to do with questionable money?”
Upon reflection, I realize that Professor Lessig is talking about the Reynolds company that produces cigarettes, not aluminum. I presume Professor Lessig does not smoke and has no sympathy for those who do. If he is in charge of accepting or rejecting donations, he can make decisions based on his preferences, but to presume to make those decisions for others reflects arrogance.
Harvard Law School professor Lessig’s arrogant confidence that he knows which donations to reject from law-abiding companies undermines whatever he says about accepting donations from sex offenders. His four categories are absurd. I presume Mr. Lessig uses aluminum and oil and gas and I wonder what he would do if they weren’t available.