Nonprofits that benefited from Michael Steinhardt’s dirty money must face up to their complicity
For once, Michael Steinhardt can’t just dust off his dirty work. Last week, the Manhattan District Attorney’s Office concluded that the billionaire and hedge fund philanthropist had engaged in the illegal acquisition of antiques. The telltale clue – dirt.
More precisely, the DA’s office found that 101 of the 180 illegally acquired objects âappeared dirty (or unrestored) in the photographs; and 100 appeared to be covered in dirt or encrustation before the Steinhardt purchase. According to investigators, the dirty items were a clear indication that they had been looted in 11 countries, in many cases during times of civil unrest.
Well-known for his donations to New York University, Jewish philanthropic causes, and New York-area cultural institutions, Steinhardt never seemed to worry that dirty work – illegal or not – could taint him. . Rather, he played in the dirt and won, time and time again. The spoils of his victories have lined his own pockets, while also allowing him to enrich investors and philanthropic organizations, which in turn have helped him clean up for the next round.
Whatever rewards organizations may have reaped from Steinhardt’s largesse, they cannot easily erase the stains left behind. The institutions that accepted Steinhardt’s donations have a responsibility to track his wealth and make amends to the nations and peoples he plundered. Steinhardt’s story is yet another example of why nonprofits should demand higher levels of accountability and transparency from their donors.
For years Steinhardt skillfully avoided such responsibility. An early and successful entry into the hedge fund industry, he credited his âaggressive and combativeâ management style for his fund’s outstanding performance, shamelessly writing in his autobiography No bull that employees characterized the experience of working under him with terms such as “battered children”, “mental abuse”, “random violence” and “rabies disorder”.
Steinhardt’s hard-hitting approach caught investors but also caught the attention of the Securities Exchange Commission. A Department of Justice and SEC investigation of the early 1990s revealed “fraud and manipulation in the US Treasury securities market” by Steinhardt Management Company and resulted in a settlement payment of several million dollars.
Unsurprisingly, as Steinhardt paid his share of the court settlement, he became a serious player in the world of philanthropy, creating a prominent private family foundation in 1994, seven years after starting a smaller one. Whatever else motivated him, philanthropy had the potential to boost his reputation. Yet he behaved with remarkable consistency, writing candidly in his autobiography: âIt seems clear that I should act in philanthropy like I did in business. This meant seeking high returns on his philanthropic investments and apparently continuing his abusive behavior towards his subordinates.
Steinhardt’s ambitions correspond to the turn of the millennium when philanthropy embraced the language and logic of finance. In an oft-cited article published in the harvard business review, Michael Porter, professor at Harvard Business School, and Mark Kramer, then president of the newly formed Jewish Funders Network, defined the philanthropic objective as “”valuable creation. “
Steinhardt imported its business practices into its support for the Birth program, which he helped launch in the late 1990s to give every young Jew a free 10-day trip to Israel. The philanthropic returns of the program would be calculated with precision. They would include the number of young people who made the trips; empirical data collected by Steinhardt Institute for Social Research at Brandeis University demonstrate participants’ ties to Israel and their likelihood of marrying Jews; and new dollars generated to support Jewish philanthropic causes.
Generosity as a cleaning agent
In addition to bringing his investment sensitivity to his philanthropic work, Steinhardt displayed his aggressive and domineering management style. As institutions carved his name off their walls and celebrated his donations, he translated his capital – already deployed to eliminate his indecency and legally questionable practices – into a powerful cleaning agent: his own generosity.
A case in point, revealed in a 2019 ProPublica survey, was that of Steinhardt proposal model to women with whom he has interacted professionally and make obscene and demeaning comments about their bodies and reproductive capacities. Staff from Birthright and Hillel, two organizations funded largely by Steinhardt, reported that painful and frightening details of the harassment they endured from him.
A internal investigation conducted by Hillel before the ProPublica reporting found that even when supervisors and senior officers learned or saw firsthand Steinhardt’s conduct, they did not confront him. Instead, they devised workarounds, such as making sure women never had one-on-one meetings with him and ultimately removing his name from the board listed on his site. Web.
It was only after the 2019 report that Steinhardt received public reprimands and faced retaliation from some Jewish community organizations. In response, Steinhardt admitted in the public declaration of its foundation that he could be “rude” and “disrespectful”, but went no further than apologizing for “the unintentional feelings his remarks caused”.
Steinhardt was right to bet on the continued support of most of the organizations he funded. His name has remained attached at Brandeis University and NYU and many Jewish programs. Last December, during Steinhardt’s presentation to a Focus on the event, enthused the rabbi of the Fifth Avenue synagogue in New York: “There are few people out there, in this world, for whom we can say that they have potentially touched their lives, enriched their lives. from much of the Jewish world. “
Examine the origins of wealth
If Steinhardt is to be credited with supporting broad philanthropic efforts, then the means of his support must also be scrutinized. The latest developments regarding his illegal acquisition of cultural artifacts raise serious questions as to whether his “rapacious appetite for looted artifacts”, as described by Manhattan DA Cy Vance Jr., has also funded its equally rapacious appetite for philanthropic largesse and recognition.
The investigation revealed that Steinhardt not only illegally purchased cultural objects, but also sold some. A question for any institution that has received philanthropic support from Steinhardt is whether the proceeds of those sales, which would have been capital gains, enriched the philanthropic giving.
When a donor donates a valued asset, especially antiques and art which undergo complicated valuation procedures, the tax benefits are even more beneficial than a simple deduction, which means that such gifts are often as attractive to donors as they are to nonprofits. A recent article in the Cornell International Law Review Note: “In the arts and antiques world, the US charitable deduction is often credited with helping loot archaeological sites and encouraging the sale and purchase of antiques without provenance.”
In 2019, when he was accused of sexual misconduct, the Steinhardt Foundation journalists castigated for “trying to dig up the dirt” on him. Strikingly, his professional managers wanted the world to believe that finding dirt on Steinhardt required digging. In truth, Steinhardt flaunted his filth as a badge of honor, reporting it entirely to readers of his autobiography, humiliating women in plain sight of his colleagues, and bragging on looted items he bought. Buying dirty antiques gave him little respite. After all, they were valuable items that he could own and, when he wanted, unload for high returns.
Steinhardt probably expected the world, especially the cultural, educational, and Jewish organizations that depend on his donations, to launder his dirty work for social good, while using his own generosity to cleanse themselves. Ultimately, however, dirty things – not just antiques, but the cultures and people he sought to own and operate – can help expose the unvarnished truth.