Thursday, November 21, 2019

The Big Bad Donor and Anonymity

Imagine you’re a university fundraiser charged with raising millions of dollars annually to fund the work of your institution.  How much do you want to know about the source of a donor’s wealth, the use of that wealth, or for that matter the personal life and mores of the donor? If you find disturbing information, will such knowledge cause you to break the relationship with the donor or will you turn a blind and perhaps rationalizing eye in favor of the support such money will provide for your institution?

A recent case involving the Massachusetts Institute of Technology (MIT) brings this question into sharp and discomfiting focus.  It has the elements of a drama with a colorful cast of characters, and a plot centered on questions of cover-up, poor judgment and the plain old fashioned chase for money.
The setting: The prestigious MIT and its illustrious Media Lab program. The cast: The Lab’s star Director Joichi (“Jo”) Ito, MIT’s top administration, its development department and the late financier and convicted sex offender Jeffrey Epstein. Prominent Harvard Law School Professor Lawrence Lessig plays a small, but significant,  role.  In the wings, with possible walk- ons, are Microsoft’s Bill Gates and finance wizard Leon Black. The plot and Mise en Scene is created by The New Yorker magazine’s investigative journalist Ronan Farrow.

On September 6, 2019, the magazine published a piece by Farrow entitled “How an Elite University Research Center Concealed its Relationship with Jeffrey Epstein.”  The Pulitzer Prize winner Farrow, the son of Mia Farrow and Woody Allen, has developed a reputation of uncovering sexual abuse allegations of notable figures, most prominently the movie producer Harvey Weinstein .

 In the article Farrow details how the MIT administration and its Media Lab star Jo Ito hid the identity of Jeffrey Epstein as  a major donor to the Lab of $1.7 million, while knowing full well of his 2008 Florida conviction for procuring an underage girl for prostitution. The article was so damning that Ito resigned from MIT less than a day after its publication. He also left positions on the boards of the MacArthur Foundation and The New York Times Company and as a visiting professor at the Harvard Law School.  During his tenure at Media Lab, described by The New York Times as “a sort of academic skunkworks,” Ito had helped raise $50 million. 

The brilliant Ito, described by The New York Times as a “tech evangelist and master networker,” allegedly also brokered, through Epstein, a major donation to MIT from Bill Gates and Leon Black. Throughout, MIT ‘s administration concealed the deep relationship it had with Epstein.

Then, if the Ito resignation was intended to end the matter, the waters were roiled again by a friend of Ito and Harvard Law School colleague Professor Lawrence Lessig. Within days he published a 3500 word essay on the blogging platform “Medium” in support of Mr. Ito.  Lessig, noted as an expert on intellectual property and industrial corruption, argued that MIT’s keeping Epstein’s donations anonymous was good as it avoided “whitewashing” his reputation. Another storm of protest ensued.

Lessig defended his position in a September 17 interview with The New York Times: “ ..the suggestion of the Ronan Farrows of this world that somehow there’s something terrible about the anonymity – no! If you’re going to take the money, you damn well better make it anonymous. “

That begs the question:  Should you take the money in the first place?  On this matter Lessig provided in his essay a provocative template as a guide. He outlines four donor types institutions might encounter :

“Type 1: People like Tom Hanks or Taylor Swift, whose wealth comes from nothing but doing good.
Type 2: Entities like Google or Facebook or people whose wealth comes from those companies of ambiguous good.
Type 3: Criminals, whose wealth does not derive from their crime, such as Epstein , who no one suggested that his enormous wealth was the product of blackmail or sex slavery.
Type 4: People or entities whose wealth comes from clearly wrongful or harmful or immoral behavior, such as the RJ Reynolds Foundation, the Sacklers and the Kochs.”

Lessig believes universities have taken donations from all of the aforementioned categories. The MIT case, however, presents an opportunity for soul searching by university administrations, which should begin with an analysis of the motivation for a gift. Is it to advance the work of the institution or is there any evidence the donor is looking to cleanse a reputation?  Donor types in categories 3 and 4 above would be suspect if it is the latter.  Lessig argues that such gifts must be declared anonymous so that any whitewashing can be blocked. That was MIT’s and Ito’s intent in accepting the Epstein money on that condition.

As he admits, that strategy “was a ticking time bomb.”  And when it went off, the damage was compounded. The Lab staff was reportedly traumatized by learning of Epstein’s involvement with MIT, hidden by the MIT hierarchy and especially by their boss, Jo Ito.

Lessig’s essay is remarkable in its emotional honesty. He is a close friend of Ito, had prior knowledge of the MIT-Epstein connection and what’s more, was a victim of sexual assault himself. He had to post several clarifications to deal with the backlash to the essay specifically the implication that he condoned universities accepting contributions from Type 3 (criminal) donors.  He asserted he does not, but if a university decides to accept such gifts they should be listed as anonymous.  Further uproar ensued, and, in the language of today, Lessig  soon “walked that back” to declare  such donations  should never be accepted.

The tortured Lawrence Lessig saga should not been seen as a sidebar to the MIT drama.  At its core, it lays bare a moral and ethical dilemma facing those responsible for raising funds for nonprofits when confronted by offers of money from donors with dubious backgrounds. Equivocation and rationalization are temptations when faced by the bald-faced need for money . MIT hid behind donor anonymity as the solution, with the rationalization that at least Epstein’s reputation would not be enhanced by revelation of the gifts. But these days there are few secrets that can be hidden.

The simplest solution: Don’t accept blood money regardless of the need.  But as Lessig points out in his last rejoinder postscript: tell that to the development department, . And then be prepared to expect resistance from that quarter.

If the university sets such a “Just Say No” policy regarding big bad donors, think of how much grief it will avoid in having to explain away tainted donations if, and when, they are revealed. Along the way it would also have to deal with the public relations damage that could affect the attitude of lower profile donors, such as devoted alumni- the bedrock of any university’s support. So “No" is the way to go. Fund raisers - are you listening?

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