Opinion

Felix Salmon

Goldman Sachs’s not very charitable foundation

By Felix Salmon
November 12, 2009

Geraldine Fabrikant gets her hands on the 2008 tax filing for the Goldman Sachs Foundation today, and it’s pretty astonishing stuff:

The latest tax filing for Goldman Sachs’s foundation is as thick as a phone book. The list of trades is more than 200 pages, single spaced. Goldman, it seems, invests like no other, even for its own charity.

“I have never seen anything like it,” said Verne O. Sedlacek, president of Commonfund, when shown the 2007 filing, which was nearly three inches thick. He has a good overview from the Commonfund, which manages more than $25 billion for universities, foundations and other not-for-profit groups.

What good does all this extreme trading do? Not very much, it would seem, according to Fabrikant’s numbers:

  • Goldman has given $501 million to the Goldman Sachs Foundation since 1999
  • The present size of the foundation is $404 million
  • The foundation gave away $12.6 million in 2007 and $22 million in 2008.

Goldman doesn’t reveal the foundation’s investment returns, but clearly they’re negative: the amount of money in the foundation is lower than the amount donated to it, even after accounting for the sums it’s given away.

What’s more, Goldman seems to be giving away only the bare minimum of the foundation’s assets each year: just 5%, the level below which the foundation would lose its charitable status.

I’m going to take a wild guess here and say that the foundation’s counterparty, on its phone-book-sized list of trades for just one year, was always or nearly always Goldman Sachs*. And when Goldman Sachs trades with anybody, be it a client or the Goldman Sachs Foundation or anybody else, Goldman Sachs makes money.

Meanwhile, the foundation itself, as we’ve seen, has been losing money.

And who are the charitable recipients of the foundation’s funds? Entities like the Asia Society, on Park Avenue, which is a talking shop where Goldman bankers can schmooze important international clients. Or big universities like Johns Hopkins and Duke, which take charitable gifts and keep them in the market by adding them to their endowments and investing them rather than spending them.

All in all, the single biggest beneficiary of the Goldman Sachs Foundation would seem to be Goldman Sachs itself, while the amount of money which trickles down from it to genuinely needy charitable cases is minuscule. Goldman should turn its foundation into an arm’s-length institution, charged with giving money where it can do the most good, and allowed to give much more than 5% of its total assets if it sees the need to do so. Because right now the foundation looks mostly like an exercise in self-dealing.

Update: One other thing: why on earth couldn’t the NYT have either linked to the tax filing, or put it online? Most annoying.

*Update 2: Goldman phones to say that the vast majority of trades at the Goldman Sachs Foundation are not with Goldman Sachs.

Comments
8 comments so far | RSS Comments RSS

Great update question Felix. Any time I see the NY Times not linking to a document,that they have sourced as the center of their story theme, I have to wonder what part of the story they’re not telling you.
It’s refreshing to see you offer readers an actual insightful view on what’s really going on. I didn’t get that from the NY Times story.

 

A Charitable foundation. A creature of the law, and a thing with a set of rules and a theoretically beneficial purpose.

But in the hands of these nihilists it’s just another tool for maximizing revenue, minimizing tax expense, building profitable relationships and profitable influence.

A bit like the Constitution in the hands of Dick Cheney.

Posted by Dollared | Report as abusive
 

Am I missing something here?

$501M – $404M – $22M – $12.6M = $62.4M

$62.4M / 8 Years = $7.8M

Is it really reasonable, in the light of the 2007 and 2008 amounts, and the 5% minimum, to assume that the foundation gave away less than $7.8M/Year in the period 1999-2006?

Posted by Benquo | Report as abusive
 

Fabrikant’s article was good, but as you point out, there is a bigger issue she may have missed: if the directors or trustees of the foundation are trading with Goldman, intending to benefit Goldman and not the foundation, or are carelessly allowing the foundation to trade with Goldman to its detriment, their actions violate their fiduciary duties (and may violate the corporations law, to boot). I would guess that the foundation is about to get a call from Andrew Cuomo.

Posted by monboddo | Report as abusive
 

Well, that is indubitably God’s work…

Posted by wendell | Report as abusive
 

This article is misleading. As a previous commenter points out, it does look like the $100m difference could easily be accounted for by contributions. Besides that, maybe we should allow them a little bit of overhead? Just to keep a foundation running, even on a barebones budget, is pretty expensive. The Goldman Foundation’s 2007 tax filing (http://dynamodata.fdncenter.org/990s/99 0search/ffindershow.cgi?id=GOLD029) shows almost $5 million in administrative expenses.

More importantly, the average giving rate for foundations is just barely above the legally mandated 5%. Foundations as a whole gave away only 6.5% of their assets in 2007. (See http://foundationcenter.org/findfunders/ statistics/grantmakerinfo.html.) One can argue that foundations ought to donate more across the board, but it’s very misleading to imply that Goldman’s foundation is especially stingy.

And finally, this is just sloppy. All of the foundation’s tax filings since 2007 are available online at the Foundation Center. Investment gains and losses are publicly reported information. If you want to know whether Goldman’s Foundation made money or lost it over the last decade, just go look.

Posted by Allison | Report as abusive
 

Commodianus (written in 240 A.D.) says
“You have lent on interest, taking 24 percent! Yet, now you wish to bestow charity that you may purge yourself … with what is evil. The Almighty absolutely rejects such works as these”

Posted by God | Report as abusive
 

I am going to thank you Fabrikant for the tip.I am going to be getting a 501c3 soon and really want to send a proposal to them in a bad way.I hope their ethics is in order and they see the needs of these BABY BOOMERS who are disabled.I am on a mission from GOD and Goldman Sachs have sinned.GOD BLESS ALL

Posted by JohnJoebee | Report as abusive
 

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