Recently billionaire hedge fund manager Kenneth C. Griffin
set, as The New York Times (January
24 2018) put it: “ a new standard for conspicuous consumption by paying a
fortune for an unfinishedpiece of property in the sky.” The fortune: $238 million (later adjusted at
closing January 23rd to $239.958 million), the unfinished property: a
24,000 square foot penthouse at 220 Central Park South in New York City. The
transaction is the most expensive residential sale in U.S. history.
It’s not as if Mr.
Griffin lacks for housing.
He
already has a penthouse in Miami ($60 million) and a mansion in London ($122
million). He is based in Chicago where last summer he paid $58.5 million for a the
top four floors of a building in the affluent “Gold Coast” neighborhood, in
addition to the four other houses he owns in the city. He collects real estate as
ordinary mortals collect stamps or bottle caps.
Mr. Griffin who has net worth of $10 billion has been philanthropic,
reportedly donating to date $700 million.
Beneficiaries of his generosity include universities – his alma mater
Harvard got $150 million in 2014 – and museums – The Museum of Modern Art
received $40 million. However he has declined to sign the “Giving Pledge”
organized by Bill and Melinda Gates and Warren Buffett where 150 billionaire signees
so far have pledged to give away a majority of their wealth to charity.
Speaking of Mr. Buffett, the contrasts between this
legendary investor and Griffin are striking, especially in the life style
category. Buffett, whose net worth is estimated at $85.6 billion, continues to
live in the same house in his hometown of Omaha, Nebraska that he bought in 1958 for $31,500. He does
have a house in California valued at $4 million (doghouse scale for Griffin)
and reluctantly purchased a private jet he nicknamed “The Indefensible” for his
corporation. He is 88 years old after all. So far he has donated $35 billion,
much of it to the Gates Foundation.
A follow-up article in The
New York Times of January 26 offers another contrast, generational and
sociological. Brooke Astor (1902-2007), the New York socialite and
philanthropist, was content to live in a 5000 square foot Park Avenue
apartment. Her wealth, peanuts compared to Griffin’s, was inherited. David Rockefeller
( 1915-2017) and his wife Peggy’s 65th
Street town house was 10,000 square feet , but it was their primary residence
where they raised their six children. I would venture to say that the real
estate activities of Mr. Griffin would be viewed as distasteful to these old
money philanthropists. Their personal acquisitions tended more to art and
country estates.
This current period of vast wealth, with its yawning societal
income gap, has been termed “The New Gilded Age.” Certainly the Vanderbilts and
Carnegies liked their real estate too. The 54 room Vanderbilt Mansion in Hyde
Park NY, now a National Historic Site, was only lived in a few weeks a year by
its owners Frederick Vanderbilt, and his wife Louise. It was built in the late 1890s when, it must
be emphasized, there was no income tax, which was not made law until 1913. Today
the top marginal income tax rate is 37 percent, whereas between 1945 and 1980,
during prime Astor and Rockefeller time, it was between 70 and 80 percent.
With the additional tax cuts promoted by President Trump,
along with the assault on the Estate Tax (renamed the “Death Tax” by repeal
adherents), rates on the very rich may
well drop even further. So there will be
even more cash for the billionaire to spend, some perhaps on philanthropy but
also on “toys,” such as the $100 million + yacht complete with a certified Imax
Theater recently purchased by Washington Redskins owner Daniel Snyder. Perhaps
on board he will enjoy big screen replays of his football team’s dismal 7-9 season
record in 2018.
Let me end this post with uplift, for as you have read I am
not a fan of conspicuous consumption. If you are with me on this, this story from
The Chronicle of Philanthropy may provide an antidote.
George Ellis, a small town doctor in the Midwest never
forgot his time during the period of WW2 earning his M.D. at the University of
Buffalo (UB ) School of Medicine. After
the war he moved to rural Indiana where with his wife as nurse set up a
practice in his aunt’s house. He practiced medicine there for years, keeping in
touch with the UB Medical School, attending reunions and striking up a
friendship with the school’s vice president for advancement David Draper. Over
the years, Draper visited Ellis in Indiana 50 times where they discussed how
“Doc” Ellis might achieve his wish to help his beloved alma mater.
The Ellis couple was childless and lived simply in a two
bedroom ranch house. They drove Buicks and Oldsmobiles. He drank bourbon
(Buffalo Trace, of course) from a coffee mug.
When he wasn’t tending to patients the doctor spent time at the public
library teaching himself about the stock market, researching and investing,
with a small inheritance from his father as a starting point. Along the way he set up charitable trusts.
All the time his aim was UB Medical School and UB knew that. But no one in his small city had a clue of
his wealth. He died age 87 in 2010.
In 2011 UB announced the receipt of an endowment of $40
million, established by a donor (Dr. Ellis) who wished to remain anonymous .His
instructions were that his identity as
the donor could only be made known after his wife’s death. By the time his estate was settled in 2013
the donation had grown to $45 million. His wife died in 2018 whereupon the
three trusts Ellis had established years before yielded another $11.8 million.
The gift from Dr. Ellis to UB Medical ended up totaling $56.8 million.
I have told similar stories over the years I have been
writing these blogs. They were about
quiet philanthropists unknown during their lifetimes, living simple lives, but
driven by the need to help places or institutions they loved.
There ought to be a Hall of Fame built dedicated to them.
Perhaps it could even have an IMAX theatre to tell their stories. The only thing conspicuous about them was the
purity of their generosity and they should be honored.
The definition of the word philanthropy bears repeating. The
Greek root, philanthropia, means love of man. Philanthropy is the act of desiring to help
humanity and is most often associated with providing financial support. I wish
I could coin a word for the love of collecting real estate (suggestions
anyone?). I further wish those who have that unnamed condition cure the urges
by redirecting more of their vast resources to helping others. Think of what the $238 million spent on the
penthouse in the sky could do for those in need who live on the streets below?
Comments on this and previous posts (see archive to the left) are always welcome at gplatt63@gmail.com
