Philanthropic donation of the day, John Paulson edition
John Paulson lives in a 28,500 square foot townhouse at 9 E 86th Street on the Upper East Side, opposite the Neue Galerie and just steps away from Central Park. He’s invested a lot into his townhouse, which hosted a big fundraiser for Mitt Romney in April. And now he’s given even more to Central Park: $100 million, to be precise. “The park is very large,” he explained to the New York Times, “and its endowment is relatively small.”
Actually, at $144 million (pre-Paulson), Central Park’s endowment, I’m pretty confident in saying, makes it the most lavishly-endowed park in the world. Half of Paulson’s gift is going to make that endowment even bigger; the other half will be spent on various capital improvements. Apparently the entrance to the southwest corner is going to get spiffed up.
The Central Park Conservancy has a CEO, of course, named Doug Blonsky; he made $493,462 in 2010. Paulson probably considers that to be a “relatively small” amount as well. Most numbers have a habit of looking small, when you’re a multibillionaire. Blonsky did his job today, hailing Paulson’s money as “transformational”.
But the fact is that if you wanted to give $100 million to charity while making the barest minimum impact on the world, you’d be hard pushed to improve on Paulson’s performance today. Maybe he was inspired by Ronald Lauder, across the street, who is just waiting for the perfect time to donate the Klimt painting he owns to the museum he founded, where it has been hung since he bought it.
On the other hand, if you wanted to make a charitable donation expertly calibrated for its helpfulness with respect to your social-climbing ambitions on the Upper East Side, then a splashy gift to the Central Park Conservancy could hardly be improved upon. The gift was announced with great fanfare: a massive press conference and photo opportunity, dozens of park employees, the Mayor, the whole bit.
Of course, since this is a charitable deduction, it’s a tax expenditure, too. I don’t know what Paulson’s marginal tax rate is, but in any case, if you multiply that by $100 million, you get the amount of money that taxpayers are being forced to contribute to John Paulson’s 843-acre back yard, in the form of foregone tax revenues. Is that the best use of public funds? Almost certainly not, but we don’t have any choice.
I spent last night learning a lot about the Drugs for Neglected Diseases initiative — an incredibly exciting model of drug development and clinical testing which refuses to deal in any kind of patents and which has already, in its short life, come up with six transformational treatments for diseases which are too rare, or suffered by people too poor, for the market to ever really help on its own. It’s not a particularly sexy charity, and doesn’t have a Halloween ball full of boldface names, but it saves lives, and as a byproduct it’s also helping to open up drug libraries which have been neglected for decades. What’s more, it acts on a tiny budget, mainly acting as a liaison between many other actors, helping them to work in concert with each other.
After seeing the amazing things that are being done by DNDi, it was a little depressing to wake up to Paulson’s preening performance. He is of course free to spend his money any way he sees fit. He has more money than he could ever spend, so the next thing on his list is acquiring the respect and admiration of his social circle. And he’s going about that in a very effective way. I just don’t see why the coverage should be so glowing, and I certainly don’t see why U.S. taxpayers should be chipping in.
This gift, in other words, is Exhibit A in any attempt to cap the amount that American taxpayers can deduct in any given year. Foster Friess likes to say that the rich shouldn’t pay any taxes at all, and that instead they should “self-tax” by giving their money to carefully chosen charities. What today’s news underlines is that while such donations are ostensibly in the service of helping others, in practice they tend to be extremely self-serving. The rich can give away more money than the rest of us. But that doesn’t make them any better at it. Quite the contrary.