Reprinted from the Spring 2017 issue of Philanthropy magazine (PhilMag.org) istockphoto.com / OSTILL istockphoto.com

40 PHILANTHROPY Human kindness and charitable success aren’t necessarily linked. That’s one of the paradoxes of philanthropy.

By Grant Smith

Kindly donors with sterling characters and good intentions don’t always yield good charitable results. That’s one of the fundamental realities of philanthropy. quality can make our society better, as the following What’s rarely pointed out is the reverse. eight examples show. Uninspiring—even deeply unlikeable—donors sometimes produce amazingly powerful results. Charles Yerkes Some of our country’s most consequential giving A business prodigy who opened his own brokerage was advanced by an all-star assortment of human firm at age 22, Charles Yerkes made his first fortune train wrecks. trading public bonds. At the end of the Civil War The introduction to The Almanac of American he became a financial agent to ’s City Philanthropy cites J. Paul Getty, Russell Sage, and Treasurer, speculating with public monies in the Leland Stanford as examples of givers who pulled dizzying post-war markets. As was the custom of the off huge good works for not-so-good reasons, time, a considerable portion of the massive returns and notes that part of the magic of the American he racked up with taxpayer money went straight into charitable mechanism is that you don’t need to be the pockets of local political leaders—and Yerkes’s an angel to succeed. The genius of our philanthropic too. But the Great Fire caused a financial tradition is that it takes people just as we are—kind panic and wiped him out. Unable to make payments impulses, selfish impulses, confusions and wishes he owed the city, Yerkes was convicted of larceny and vanities of all sorts swirling together in the usual human jumble—and it helps us do wondrous things, Grant Smith is the pseudonym of an executive at a despite our flaws. Even donors of dubious moral large foundation.

SPRING 2017 41 and embezzlement and sentenced to 33 months of hard labor in the dreaded Eastern State Penitentiary. Yerkes tried to secure a pardon by blackmailing several prominent politicians. The effort failed, but his allegations were serious. Fearing their potential repercussions on the 1872 elections, President Grant intervened. Yerkes received his pardon on the condition that he retract his accusations. Seven months into his sentence, he walked out of the prison gate. After obtaining a quickie divorce in the Dakota territories, Yerkes acquired a 24-year-old trophy wife and moved to Chicago, where he made his next fortune in municipal public transportation. By When real-estate mogul was convicted of 33 tax-related felonies, spectators in the means fair (massive borrowing) and foul courtroom cheered for joy. But today, the medical patients and others served by her billions in giving are (blackmail, bribery), he methodically the ones cheering. acquired one street railway after another. Eventually exhausted by his adventures of history’s most consequential supporters investors in , and shortly in Chicago’s bare-knuckle politics, of science. after meeting Leona he offered her a Yerkes later moved to England and led position as senior vice president. Shortly a massive expansion of the Leona Helmsley after they began a torrid affair. In 1971, Underground. He died five years later, Leona Helmsley may have been the face Harry left his wife of three decades mistress at his side. of a luxury hotel empire, but her hauteur to marry Leona. Together they built In his will, Yerkes made provision for was the stuff of late-night comedy. When a massive and hospitality two magnificent institutions. He donated she was convicted of 33 tax-related empire worth $5 billion at its peak. Their his extensive art collection (he was the felonies for billing the costs of a home holdings included the Empire State first American to acquire a Rodin) and renovation to her company, and sentenced Building, the , and a his elegant home on Fifth Avenue for a to four years in prison, spectators in the nationwide chain of 30 hotels, including public gallery. He also allocated funds to courtroom broke out in cheers. When she the St. Moritz, the Park Lane, and the create a charitable hospital in , died in 2007 and left $12 million to her Helmsley Palace. “opened to the public without regard beloved Maltese terrier, the dog received Leona’s exacting standards and to race, creed, or color.” Unfortunately, death threats. mercurial temperament earned her a debt finally caught up with Yerkes, and It was an unexpected ending to nasty reputation. Her lavish lifestyle creditors claimed the majority of his a life that began with much promise. became fodder for gossip estate, so the home and art had to be sold, Leona Mindy Rosenthal grew up columnists. Her reluctance to pay and plans for the hospital were scrapped. in , the third child of an contractors for their work ultimately Yet the string puller did leave immigrant Polish milliner. She led to release of the false invoices that behind one massive philanthropic dropped out of college, married (and sparked the tax-evasion charges. Harry accomplishment. In what he admitted divorced) three times, and eventually was too ill to stand trial, but Leona was an attempt to burnish his image, entered real estate. She was tough and ended up serving 18 months in prison. he pledged $300,000 in 1892 so the plain-spoken. Through force of will, In her final years, Helmsley became newly founded she became one of the most successful increasingly committed to philanthropy, could build what was then the world’s agents in Manhattan, with a specialty making gifts of $25 million to New York largest telescope. The in brokering conversions of rental Presbyterian Hospital, $5 million to integrated observation equipment with apartments into co-ops and condos. the victims of Hurricane Katrina, and on-site laboratories, marrying astronomy Accounts differ as to how Leona met $5 million to the families of firemen with earth sciences. It became a nonpareil , but it’s clear she made killed on September 11. When she died research facility, and the birthplace of an immediate impression. Harry was in 2007, most of her estate went to the modern astrophysics, making Yerkes one among the most successful real-estate Helmsley Charitable Trust. Today the / Contributor gettyimages / Donaldson Collection

42 PHILANTHROPY trust has a corpus of $5.5 billion, and has already awarded more than $1.1 billion in grants for medical research, education, and local nonprofits serving Israel and New York City. Its reputation among biomedical researchers is second to none, matching the unapologetic perfectionism of its benefactor. John MacArthur Hetty Green John MacArthur was medically discharged from the One of the greatest business minds of the Gilded Navy in 1917 for “dementia praecox,” a diagnosis Age was a woman named Hetty Green. Born into a that today might be called schizophrenia. On a good wealthy Quaker family, she invested her inheritance day, he was one of the world’s greatest salesmen. brilliantly. Avoiding speculation, she sought and It’s somewhat ironic that such an absurd found value in stocks, bonds, mines, railroads, and risk-taker made his fortune in the insurance especially real estate. When markets panicked, she business. At a time when the life-insurance kept her head, thus building riches that, by one industry’s cheapest plans started at $10 a month, calculation, would place her somewhere between MacArthur sold policies for $1. In his early years, he Warren Buffett and Bill Gates today. was slow in paying benefits, and barely stayed ahead Not that she ever enjoyed any of this. Tales of of state and federal regulators. He steadily bought Green’s miserliness are legion. She wore the same outfits, day in and out, until they were little more than rags. Her daily lunch consisted of The genius of our philanthropic oatmeal, which she unceremoniously heated on an office radiator. She raised her two children in tradition is that it takes people just as a series of shabby apartments in Hoboken and we are and it helps us do wondrous Brooklyn, never staying anywhere long enough for the tax authorities to find her. things, despite our flaws. As a person, she ranked somewhere between disagreeable and disreputable. At 21 years of out rivals, ultimately turning Bankers Life into one age her Aunt Sylvia died and left millions to charity. of the nation’s largest insurance companies. In the Though Green was already at that point a millionaire 1960s, he began snatching up Florida real estate, herself, she claimed to have found an alternate will becoming the state’s largest private landowner. that left everything to her instead. At trial, the estate MacArthur ultimately became the offered evidence that Green’s will was almost certainly second-wealthiest man in the United States. Not a forgery. The disgraced skinflint spent the next six that you would guess as much. He and his wife lived years hiding in London. At her death, the newspapers in a modest apartment, with a view of a parking trumpeted that she left nothing to charity. lot. He worked out of a hotel coffee shop, making But that conclusion may be inaccurate. “I am of deals over the phone, drinking endless cups of black the Quaker belief,” she once explained. And “one way is coffee, and filling ashtray after ashtray. to give money and make a big show…. That is not my Through it all, he was fiercely combative. A way…. An ordinary gift to be bragged about is not a good fight was something MacArthur relished, gift in the eyes of the Lord.” and he waged spectacular legal battles with any Biographers have reconstructed Green’s anonymous competitor, authority, or tax collector who got in his philanthropy, and it appears she was among the way, often descending to nastiness and vulgarity. largest funders of Mary Garrett’s campaign to build He was as unpleasant in his personal life. His a medical school at Johns Hopkins, contributed to reputation as a “bottom pincher” was a euphemism many women’s colleges, and donated land and monies for what by many accounts was a long history of for schools, nursing homes, and settlement homes. outright sexual harassment. He married his second Moreover, the two children she raised eventually wife, Catherine, by mail order in Mexico under directed the remainder of her wealth almost entirely bigamous circumstances. into philanthropy. When Green’s daughter died in 1951, He established the John D. and Catherine T. about $200 million went to dozens of colleges, hospitals, MacArthur Foundation in 1970. Today, it is the and churches. Whether obscured by Quaker modesty or nation’s twelfth-largest foundation by asset size. His extreme thrift, Green’s ultimate generosity was real. motivations were not uplifting: he wanted to avoid

SPRING 2017 43 pieces orphaned in the insecure arms of what he called “suckers who had invested all their money in flimsy securities.” He stacked up scores of Cézannes and Matisses, Picassos and Renoirs, Soutines and Seurats. Barnes also developed a highly idiosyncratic view of how art should be appreciated. Informed by the pedagogical theories of John Dewey, he believed that art spoke through color and shape more than through representational theme, and that even uneducated viewers could grasp the elemental meaning of any work. At the same time, he detested casual viewers of art. He set up his Barnes Foundation to shepherd small numbers of guests through his collection while teaching his very didactic theory of art interpretation. Barnes made enemies effortlessly, and often. When critics panned one of his few public showings, he wrote profanity-laden replies, then hounded them for years afterward. He had Albert Barnes was a natural at enemy-making, sending profanity-laden replies to critics and hounding them contempt for many of Philadelphia’s for years afterward. Yet the art he left to be enjoyed has uplifted more than a million souls. educational, artistic, and civic leaders. When he died in 1951, several of an estate tax that would require selling “genius” grants and a major gift to Barnes’s enemies challenged the strictures Bankers Life. He showed no interest in help localities reduce jail populations. he had placed on public access to his the foundation’s mission, declaring to Recently, the foundation announced it art, and tried to liberate the collection his trustees that “I’m going to do what will award an eye-popping $100 million from Barnes’s eccentric rules. Leading I do best. I’m going to make [money]. grant to fund “a single proposal that the charge was Walter Annenberg, You guys will have to figure out after will make measurable progress toward owner of the Philadelphia Inquirer. I’m dead what to do with it.” These solving a significant problem.” Though Annenberg did not live to see instructions are frequently cited as an it, the effort his foundation spearheaded example of what philanthropists should Albert Barnes ultimately broke the donor-intent not do if they want to protect their Philadelphia, in the words of historian restraints that kept most of the public donor intent. John Lukacs, is a city of patricians and from ever experiencing the magnificent Fittingly, given its benefactor’s philistines. Albert Barnes somehow paintings and sculptures gathered bellicose temperament, what happened managed to be both. by Barnes. Since 2012, the Barnes after MacArthur died in 1978 was He grew up in a tough, working-poor Collection has been located in downtown war. A struggle for control of the neighborhood, then won a scholarship Philadelphia, where more than a million foundation board, and direction of its to attend the University of , visitors have toured it—including many lucre, developed. Eventually, estranged where he earned a medical degree in untrained, casual viewers. son Rod MacArthur wrested the 1892. He launched a pharmaceutical foundation away from conservative company, then sold it just months Larry Hillblom board members, turning it into a before the 1929 stock-market crash for The “H” in DHL, the package express prominent funder of progressive causes. $6 million. Just as the world sank into firm, stands for Hillblom. It’s an Despite the turbulence, the depression, Barnes became a Croesus. understated testament to an unlikely MacArthur Foundation has promoted Barnes was drawn to early modern entrepreneur. Raised in a middle-class a number of consequential initiatives, art, and the global downturn offered home in California farm country, including the fellowships known as him a perfect opportunity to gather Larry Hillblom worked his way from

44 PHILANTHROPY After these paternity payments, legal fees, and taxes, approximately $240 million was left to fund the Larry Hillblom Foundation. It went to work on health problems. Today it is a leading funder of cutting-edge efforts to cure, treat, and manage both peach canneries to Berkeley’s law school. While diabetes and diseases associated with aging. there, he took a night job as a courier, hopping on commercial airlines and flying bags stuffed with Henry Frick commercial documents up and down the West Coast. Henry Frick was one of the Gilded Age’s most It gave the perpetually disheveled 25-year-old an idea: controversial figures. His eulogy in the New York express delivery from the mainland United States to Tribune was a little rough. “The name of Frick,” it Hawaii, and from Hawaii to East Asia. stated, is “abhorrent to great numbers of his fellow He met Adrian Dalsey (the “D” of DHL) in a citizens.” Whether or not that was true at the time, grocery-store parking lot, and the two men decided it wasn’t true later—thanks to the charities he to launch a trans-Pacific delivery service. Its couriers endowed in his will. flew commercial airlines, their luggage stuffed with Frick made his fortune in coke, the fuel essential time-sensitive documents: bills of lading, original to the steelmaking process. By his 30th birthday he canceled checks, and signed legal papers. At a time was the world’s largest coke producer, running some when the Post Office took two weeks to get a letter 12,000 ovens. At age 32 he partnered with Andrew from Los Angeles to Honolulu, DHL guaranteed Carnegie, and when Carnegie retired in 1889 Frick overnight delivery. was named chairman of Carnegie Steel. Plagued by suffocating regulators and relentless The Johnstown Flood was the first blot on lawsuits, the company nevertheless thrived. When Frick’s name. He had helped found a hunting Hillblom died 26 years later, the company flew to club that created magnificent grounds, charming almost every nation, employed 33,400 people, and cottages, and a stately clubhouse near a mountain had annual sales of approximately $3 billion. lake in Pennsylvania. Largely neglected, however, In the mid-1980s, Hillblom had stepped away was the South Fork Dam that created the club’s from the day-to-day management of the company. private water body. When heavy spring rains He moved to Saipan and became a citizen of the descended, the earthen dam broke, flooding nearby Northern Mariana Islands, taking side jobs as a towns with apocalyptic force. More than 2,200 bartender, backhoe operator, pawnshop owner, and people died. Frick and his partners in the club auxiliary justice of the commonwealth’s Supreme contributed to the relief effort, but were never held Court. Much of his free time was spent prowling liable for the death and destruction. the brothels of Southeast Asia. Three years later, Frick put down a strike in one On May 21, 1995, Hillblom’s twin-engined SeaBee of the bloodiest episodes in the history of American crashed into the Philippine Sea. The bodies of the labor. Workers at the Homestead steel mill pilot and a fellow passenger were recovered, but not demanded higher wages in 1892. When the union Hillblom’s. To this day, some people believe he survived and Carnegie Steel could not reach terms, workers and lives under an assumed identity in Thailand. surrounded the mill and dared strikebreakers to Hillblom’s will left his entire estate of about approach. Frick hired 300 Pinkerton agents, armed $600 million to the University of California for them with Winchester rifles, and ordered them to medical research. But the will was immediately maintain access to the plant. In the ensuing battle, contested by lawyers representing women in 10 men were killed, and dozens more wounded. Vietnam, Micronesia, and the Philippines who claimed to have borne children by Hillblom. For two years, a brutal and often bizarre legal battle raged. In exchange for $1 million cash and a share of a Some of our country’s most French chalet, Hillblom’s mother eventually offered a blood sample so her DNA could be used to verify consequential giving was advanced paternity claims. With that evidence, four women by an all-star assortment eventually received about $50 million each on behalf of the children they produced with Hillblom. of human train wrecks.

SPRING 2017 45 filmmaking. He bought TWA and turned the struggling letter-carrier into a major global airline. Hughes’s companies created precise weapons systems crucial to the Navy and Air Force. When a Las Vegas hotel manager tried to kick Hughes out of a penthouse, Hughes bought the property. Then he spent the next few years methodically buying more real estate, casinos, and television stations throughout the city. Amid all this, he set world records as a pilot, and as a pursuer of Hollywood starlets. But when Hughes’s star collapsed, it burned itself out with as much intensity as it had emitted while red hot. His last years were spent in self-imposed isolation and madness: a miserable existence in blacked-out hotel rooms, malnourished, unwashed, naked, strung out on codeine. His mental decline was linked to head trauma he had sustained in more than a dozen serious car and airplane crashes. His tertiary syphilis didn’t help. Even the Howard Hughes lived and died under strange circumstances, progressively defined circumstances surrounding his death were bizarre: by addiction, hypochondria, and mental trauma. His will, though, established one of it’s not exactly clear where he died. Hundreds of the world’s leading biomedical research centers. claims were made against Hughes’s $2.5 billion estate, some of them laughably fraudulent. Hughes had a crippling hypochondria and Order was restored by 8,000 state militiamen. Frick all-consuming fear of germs. His interest in medical was again denounced, and soon an anarchist walked issues dated back to the premature deaths of his into his office, shot him twice, and stabbed him mother when he was 16 and his father about two years three times. later. His first will, signed at age 19, dedicated his After that, Frick avoided public notice. In resources to a Howard Hughes Medical Research Lab his remaining three decades, he devoted himself to be launched “as soon after my death as practicable.” to business and his art collection. He supported Hughes refined and deepened this idea as he local charitable causes in western Pennsylvania, aged and grew wealthier. In 1953, he created the but quietly. Only after $117 million of his $145 Howard Hughes Medical Institute and endowed it million estate was dedicated to charity did he gain with all the shares of Hughes Aircraft, a huge gift a reputation for philanthropy. His beneficiaries for which he was hailed. The IRS for years contested included universities, schools, parks, and hospitals. the idea that the medical organization owning His signature gift was bequeathing his Manhattan Hughes Aircraft could be a tax-exempt charity, but home and remarkable art collection to New York ultimately conceded and granted it nonprofit status. City with a $15 million endowment. Thus did a man Today, the Howard Hughes Medical Institute excoriated in life for ugliness become remembered is among the world’s largest—and most brilliantly after death for beauty. innovative—funders of biomedical research. It invests approximately $660 million annually in basic research, Howard Hughes and devotes an additional $85 million annually in Howard Hughes would have kept Shakespeare busy support of science education. It is best known for for years. He was a tinkerer of staggering genius giving top minds great freedom to experiment— whose business interests extended to industrial quite appropriate for an organization fathered by a tooling, aircraft manufacturing, and Hollywood prominent polymath and free spirit. P gettyimages / Bettmann Contributor

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