The Billionaire Who Wasn't (21 page)

To make his point, Hannon compiled a mock version of a story the
Wall Street Journal
might run if a dogged reporter got on their tracks, with some of the damaging assumptions that a reporter might make.

 

Feeney was horrified that such a worst-case newspaper story might actually appear, and Harvey Dale was so alarmed that he wanted to destroy all copies, recalled Hannon. If anything, it reinforced Feeney's determination that everything be kept secret and security tightened.

CHAPTER 14

Don't Ask, Don't Tell

At the time he set up the Atlantic Foundation in Bermuda in 1982, Chuck Feeney created a structure for giving in the United States that would protect his anonymity. He established an office in Ithaca, New York, the hometown of Cornell University, and gave it the innocuous name of the Atlantic Foundation Service Company (later known as the Atlantic Philanthropic Service Company). It was registered as a “for-profit” company to avoid disclosure rules. Ray Handlan was put in charge to help identify beneficiaries and arrange payments.

Feeney also created an advisory body made up of several trusted friends, including Chuck Rolles, to vet grant recommendations. He transferred $25,000 of the foundation's money to each member per year to donate to a charity of their choosing. This enabled the service company to claim, as it did in a brochure, to be a consulting company that dealt with “
a number of individuals”
who wished to make grants anonymously. They said they had eight or ten donors on their books. “This was not an outright lie,” said Handlan. “It was all Chuck's money, but other people were giving it away.” Handlan maintained the fiction even in his confidential internal reports to the directors in Bermuda on the work of the service company, once noting, “It is a pleasure and joy to work for and with our clients, who are such caring people.”

The same discretion was employed by Sterling Management, a private company in Hamilton, Bermuda, commissioned to manage Feeney's and
GAGL's bank accounts and other affairs. Sterling Management's account manager, Margaret Hern, established a full-time office for what the company described, accurately if somewhat misleadingly, as a “group of substantial private charitable foundations.”

As a further measure to ensure that beneficiaries could not know who the “donors” were, grants were transferred from the foundation's bank in Bermuda to the Bessemer Trust Company in New York, a private bank that serviced high-net-worth clients, family endowments, and foundations. Bessemer made the checks out to the donees, without any indication of the source of the money.

The check arrived in the mail, accompanied by a letter that laid out the conditions to be observed by the donee.

The basic message of the letter was, “Don't ask, don't tell.” It stated: “The donors do not want to receive any recognition for this gift. And our ability to seek out, assess, and assist worthwhile projects on their behalf is greatly dependent on being able to do so confidentially. Thus the issue of confidentiality is a matter of the utmost importance to the donors. We specifically request that this gift is referred to—both externally and internally—as a private donation and that it is not stated, orally or in writing, that it has been received from our principals. Please list it in this way in your annual report and in internal reports. In addition, it is recommended that the papers relating to this gift be retained in a confidential file. . . . I would ask you to confirm your acceptance by countersigning a copy of this letter and returning it to us.”

“It was all very strict and there was a convoluted way of getting the donees the money so it couldn't be traced,” said Cummings Zuill, who recalled that the anonymity rules created a problem for foundation staff as they couldn't tell their families what they were doing or get a job reference. “People would tell their wives they were in a pub to keep secret that they were at an Atlantic Foundation meeting,” he said.

Harvey Dale, as president of the Atlantic Foundation, would often lecture the advisory board members on the need for absolute confidentiality. “My favorite definition of a secret is something that you tell other people one at a time, and I did not want that scenario, so I was busy pushing the pendulum as far as I could on this,” said Dale. “Almost every time we got together I would remind them that this was confidential so they had no excuse for not knowing it and how they couldn't say it.” It got to the point where even Chuck felt that Dale was laying it on too thick. On one occasion when
he and Dale were conducting a meeting with board members Ray Handlan, Chuck Rolles, Fred Eydt, Jack Nordeman, and Bob Beck in the office in Ithaca, the secretary, by arrangement, called Dale out to take an urgent phone call. When he came back, he was momentarily nonplussed to see everyone had their backs to the door. On a signal, they turned toward him. Everyone was wearing a Groucho Marx disguise—false nose, mustache, and big glasses—that Handlan had handed out. Dale roared with laughter, and they all posed for a photograph.

The members of this covert group also derived some amusement from the fact that the program manager appointed by the foundation was named Angela Covert.

Dale had his own reasons for enforcing secrecy. He worried about how people would relate to him if it were known he controlled a huge foundation. It was a truism in philanthropy that once a person became a philanthropist or a foundation executive, he had eaten his last bad meal and told his last bad joke, he said. He cited the warning of an adviser to the Rockefeller family that “if you are perceived to have the ability to give away money, everybody lies to you, always.”

“I was always terrified by this,” he recalled. “I worried that I would become ‘very handsome and a good dancer.' I think Lord Acton understood human nature better than anybody when he said that ‘power tends to corrupt and absolute power corrupts absolutely.' You get seduced by being in the position of giving money away, and the arrogance and certitude that comes with that is awful. I hate it, it's really evil, but the tendency for that to happen is very big. I was much more comfortable not having my friends and colleagues thinking that I was president of a major foundation.”

Looking back long after leaving Atlantic, legal counsel Paul Hannon thought the secrecy made it more difficult for the foundation to operate properly. “Harvey Dale liked to play Santa Claus, in my view,” he said. “Chuck would say, ‘I'm interested in aging,' for example, and so Harvey would go out and find somebody who was big in the field, and they went out and supported a guy called Bob Butler, and we gave quite a bit of money to him.” Dr. Robert Butler, president and CEO of the International Longevity Center, later met Feeney when pitching for finance to an advisory board that reviewed grant proposals but had no idea he was his anonymous benefactor.

The main beneficiary of the foundation in the early days was Cornell. Ernie Stern, who secured the first big gift from Feeney in 1981, believes that
Feeney's giving to Cornell, like his own, derived from a sense of
owing.
Neither could have expected early in life to have ended up graduating from such a prestigious university. Stern was born in Nazi Germany and escaped with his parents to America in November 1938, four days before Kristallnacht, and had risen in the corporate world to become chairman and CEO of Thales Components Corporation, a global supplier of professional and defense electronics. He reckoned they both felt enormously indebted to Cornell for their success and their friends.

After that first gift, Feeney and Stern cooperated to get their class to set new levels of giving when it was required, by tradition, to make a special effort once every five years. They would meet to figure out a way to encourage the class to give more. Stern would send the word out to alumni: If anyone gives $5,000, a group of anonymous donors—that is, Feeney—would match it two to one, or even three to one. “His motivation was to prime the pump,” said Stern.

Feeney primed the pump for construction of a new 150-room Statler Hotel on the Hotel School campus. There was a down-at-heel fifty-two-room hotel on the site that was losing $150,000 a year. Jack Clark, who succeeded Bob Beck as Hotel School dean in 1981, and who was let in on the secret of Feeney's giving to the university, got the idea of replacing it in 1983. Feeney came to look at the architect's drawings in Clark's office. “I like the plans,” he said. “But if you are looking into the future, how big should the hotel be?” Clark replied, “To be honest, if I could I would make 150 rooms instead of 100.” Feeney said, “Let's do it!” Feeney's initial funding of the $50-million project helped pull in gifts from industry leaders like Bill Marriott of Marriott Hotels, Dick Ferris of United Airlines, and John F. Mariani Jr. of Banfi Vintners. On completion, it became a “cash cow,” said Clark, and today is always full and makes over $1 million a year.

Clark recalled that Feeney would turn up on campus always wearing the same light khaki raincoat until it was falling apart. Feeney joked about being the “shabby philanthropist.”

One of his most innovative gifts was $7 million to set up a scheme that became known as the Cornell Tradition. It allowed bright students from modest backgrounds to earn scholarships to Cornell by combining study with work on the campus. Feeney liked it because “it was a hand up rather than hand out,” said Handlan. The Cornell Tradition became self-sufficient and went on to award 600 fellowships each year. “The kids who staff the
desk and do other stuff at the tennis courts here are all Cornell Tradition,” said Clark on a stroll across the campus. “They sweep the floor, they keep the place going, they check you at the desk.” The idea had the enthusiastic support of the president of Cornell, Frank Rhodes, who was also brought into Feeney's confidence from the beginning and would later become a close associate. It caught the attention of the
New York Times,
which hailed it as a landmark in the financing of higher education.

Ray Handlan recalled that when Feeney came to Cornell, “he did not want to sit necessarily with the president; you see him maybe downstairs at the faculty club or sitting in the lounge at the Hotel School, or whatever, talking with kids. He is a very caring person, he is a very human person, so he can sit down with young boys and talk about their future, their career, and they seem to know that he is there to help them in whatever way they might need help through financial support or guidance.”

Handlan's main responsibility was to find other worthy causes across the United States. He came across a privately funded program in Boston called City Year that began in 1988 as a summer community service program for about seventy volunteer students who would paint schools, renovate homeless shelters, and clean up parks. After giving a speech, cofounder Michael Brown was approached by Handlan, who put him through a rigorous interview about what he hoped to achieve. A grant of several million dollars followed in 1991. City Year was able to expand and within a decade was operating in fourteen cities. It became the model for President Bill Clinton's AmeriCorps program for national youth service. The Atlantic Foundation also funded the Citizens' Scholarship Foundation of America in St. Peter, Minnesota, enabling it to expand its Dollars for Scholars program nationwide and conduct follow-up research to ensure it was effective.