Harvard University recently made an historic announcement: billionaire hedge fund manager John Paulson gave $400 million to his alma mater’s School of Engineering and Applied Sciences. It marks the biggest gift to the world’s richest university, and some critics are pouncing on Paulson’s choice of a worthy cause.
“Giving to Harvard is not philanthropy,” Dylan Matthews writes on VOX.com. “It’s not helping people who need help, and it’s obscene that Paulson is getting a massive tax write-off for it. Giving to Harvard is not an act of altruism. It’s a gigantic, immoral waste of money, and it’s long past time we started treating it as such.”
But Paulson’s hedge fund colleagues defend him. Daniel Loeb from Third Point LLC tells Business Insider, “Would they criticize him if he just sat on his wealth and ‘compounded it’ like certain others? It’s a fabulous and impactful gift to a great institution. It will lead to discovery, life-saving innovation in biomedical engineering, opportunity, job growth and increased competitiveness in the United States.”
This debate over Paulson’s gift touches on vital issues in philanthropy today: How do you do the most good with your dollars? Who decides? Should the potential impact of large donations be scrutinized and debated? Or should we all just be thankful Paulson is parting with $400 million at all?
For our latest podcast, we asked a few thoughtful people around the world to weigh in:
“I think there’s no question that that money could have done a lot more good elsewhere,” Jon Behar tells Tiny Spark from Seattle. He’s Chief Operating Officer and Director of Philanthropy Education at the nonprofit The Life You Can Save. Behar explains his objection to the gift: “Partially it has to do with how much money Harvard already has; how much money they would have been able to raise even if Paulson hadn’t given that gift; and the (philanthropic) opportunities Paulson passed up in order to give this gift.”
Behar also used to work in the hedge fund industry. He concedes that wealthy individuals walk a public relations tightrope after giving away large sums of their personal wealth. “The impression that a lot of the hedge fund community probably has is, ‘Well you just can’t win. If you keep the money, you get blamed. If you give it away, you get blamed.'”
Behar says he would have advised Paulson to look at the vast body of existing research about what makes your donation most useful to the most people. It’s an idea known as effective altruism and is at the heart of Behar’s nonprofit.
We also spoke to Caroline Fiennes, who directs the nonprofit Giving Evidence and previously appeared on this program to discuss the need for nonprofits to collect better data. Speaking from London, she says she’s happy that there’s any debate at all about Paulson’s donation. “I’ve been in this game for 15 years in philanthropy, and this is the first discussion I ever remember about the effectiveness of a mega gift.”
Fiennes says public reactions to Paulson’s gift have mostly been from “rich white men” and not from poor people worldwide. “I dare say if you go out into the villages of northern Ghana and say, ‘Hey, we’ve got $400 million. Where do you think is the best place to put it?’ I kind of doubt many people would have voted for Harvard.”
But what about Harvard’s alums, who are doing good around the world and have benefited from the university’s generous scholarship programs?
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We reached Kathy Ku in Seguku, Uganda. She received a full scholarship to study engineering and molecular/cellular biology at Harvard. The university also gave her a grant to teach in Uganda, plus seed money to start SPOUTS of Water, which locally manufactures water filters at an affordable price.
“I’ve had classmates go into similar paths, and without donors like Paulson that made it possible to travel to Uganda the summer after my freshman year, I wouldn’t have known that these opportunities existed, or that I could choose a career path like this one,” Ku tells us.
She also believes that Paulson’s money will go beyond its direct impact on Harvard’s School of Engineering and Applied Sciences. “That idea is to impact students, and to allow students to travel around the world, and see the world beyond their borders and try to put their engineering skills to use.”
What do you think of Paulson’s gift? Is it a good use of $400 million? A bad one? Or nobody’s business but the donor’s?
Caroline Fiennes’ op-ed in Alliance Magazine: A welcome public row about donor effectiveness
Chronicle of Philanthropy: Harvard Gets Its Largest Donation Ever: $400 Million for Engineering
Inside Higher Ed: Does Harvard Need Your Money?
VOX: For the love of God, rich people, stop giving Harvard money
Business Insider: Hedge fund managers unload on Malcolm Gladwell after he trashes John Paulson
Featured Image: John Paulson (right) and Harvard President Drew Faust greet Harvard Business School Dean Nitin Nohria. (Credit: Rose Lincoln/Harvard Staff Photographer)