Badass Mustachian leaves $188M Trust to Charity

[Pylortes]

Check this story out! True, it sounds like he inherited a chunk of $, but I am still inspired by a man who took public transportation, lived in a modest home and spent 30 years working in a job to help others while amassing a huge charity to donate on his death!  This guy sounds like a Mustachian.

http://m.nydailynews.com/1.1532305#bmb=1

[arebelspy]

Awesome. Thanks for sharing.

[Honest Abe]

Seriously badass

[Nords]

An elderly Seattle man who lived a frugal lifestyle with holes in his clothes and coupons in his pockets has left behind a record-shattering $188 million in his will to three Washington institutions.
As many are now learning, 98-year-old Jack MacDonald was never poor but was in fact a secret millionaire.
"Jack went out of his way to look poor, partly because he didn't want to be badgered by people who wanted money," his stepdaughter Regen Dennis told the Seattle Times of the secret life-long philanthropist.

Heck, I'm doing that now.  All I need to do next is add in the $188M part...

[Albert]

I'm not that impressed. What hindered him doing more interesting and useful things with the money while he was still alive?

[arebelspy]

I'm not that impressed. What hindered him doing more interesting and useful things with the money while he was still alive?

Why should he have to?  Building it up was the most interesting and useful thing to him, and then when he's done with that (passed away) it goes to causes he'd like to support.  I have nothing but admiration for that.

[Albert]

I'm not that impressed. What hindered him doing more interesting and useful things with the money while he was still alive?

Why should he have to?  Building it up was the most interesting and useful thing to him, and then when he's done with that (passed away) it goes to causes he'd like to support.  I have nothing but admiration for that.

He didn't have to, but I would be more impressed if he had. I would have for sure.

[arebelspy]

Interesting.  I see it as the other way around.

If he had donated a bunch while he was alive, he'd have less invested and less compounding.  He'd have made less of a net impact.  But by doing it the way he did, he ended up donating more (real) dollars and helping more people because he focused on earning it while alive (something he was obviously rather good at and enjoyed), rather than giving it away then (something he may not have been as good at).

Thanks for the perspective.

[Albert]

I guess you can look at it that way as well. It's just that if I had that kind of money (even half of it) I would be interested to see how it's used. I wouldn't donate it to rather anonymous charities anyway. I'd be more likely to set up my own fund and distribute money to projects I find most worthy. Similar to what Bill Gates is doing only on a more modest scale. He seems to favour treatment of rare diseases, I'd probably favour education but the idea is similar. For me that would be the most fun part of having really huge amounts of money! Otherwise if you are just sitting in your corner and watching your numbers grow already far beyond any likely personal consumption it seems like a waste. Just my opinion of course :)

[arebelspy]

I guess you can look at it that way as well. It's just that if I had that kind of money (even half of it) I would be interested to see how it's used. I wouldn't donate it to rather anonymous charities anyway. I'd be more likely to set up my own fund and distribute money to projects I find most worthy. Similar to what Bill Gates is doing only on a more modest scale. He seems to favour treatment of rare diseases, I'd probably favour education but the idea is similar. For me that would be the most fun part of having really huge amounts of money! Otherwise if you are just sitting in your corner and watching your numbers grow already far beyond any likely personal consumption it seems like a waste. Just my opinion of course :)

But how is it a waste if it all ends up donated, and even more is donated?

I guess I'm having a hard time wrapping my head around the fact that because you would enjoy giving it away and stop earning as much, that his choice to continue earning a bunch and wait to give it away is a "waste" or less impressive, or whatever.

Different strokes, IMO.

[Zamboni]

Great story!

One of the things that annoys me about some charities is that, once I donate, they continue to solicit me for donations at an alarming frequency.  Often I end up feeling like every dime I donated in the first place gets spent mailing me stuff to try to get me to give them more (although it has the opposite effect in my case.)  I don't want to be called, sent "informational emails," or to receive magazines, return address labels, and the like.  I also don't want people pandering to me and trying to butter me up to get more donations, and this is what happens as a follow up to particularly large donations.  Perhaps that factored into his decision to just keep it quiet and give a giant chunk at the end?

[sheepstache]

The article I read did mention some modest anonymous gifts during his lifetime but I had a similar thought. 

Had he done more, he would have had two options: a. give everything away.  downside: no more money to play with which was obviously a hobby he enjoyed.  b. Give, like, half of it away so he can still have his hobby.  downside: now everybody and their sister knows he's rich and is hitting him up for money.  So waiting til the end does avoid those downsides.

There's some question as to whether the skills needed to generate wealth relate to the skills needed to use it.  He may have believed the organizations he was giving to were highly skilled at using money and might not want to have been consulted or to have had any sway with what the orgs did with the money.  I work at an institution that relies on large private donations and there is definitely some deference paid to what people think the donors would like even if the donors never ask for anything.  Personally, while I would be wary of having undue political influence, I would want to oversee that the money was being used appropriately.  For example there was a case where an endowment had been given to a hospital with the intent that the principal was not to be touched yet the organization fought that with lawyers and gained access to the principal and then burned through it.  I have to assume he either didn't care or had researched each organization enough to be satisfied that they would be responsible. 

The time value of money question is interesting.  Sure, he has more time to grow the fund the longer he holds onto it.  But getting the money working on the cause sooner rather than later is valuable too.  If you're interested in disaster relief, for example, there is something odd about sitting through Katrina and Haiti and the Philippines without doing anything, in the interest of compounding.  If you're interested in a cure for a specific disease, getting the money working sooner potentially saves more lives.  However, if he's interested in rare diseases generally, that suggests to me he's interested in helping costly research projects that would have difficulty getting funding otherwise because they're so specialized, and we probably will not run out of those any time soon.

[arebelspy]

The time value of money question is interesting.  Sure, he has more time to grow the fund the longer he holds onto it.  But getting the money working on the cause sooner rather than later is valuable too.  If you're interested in disaster relief, for example, there is something odd about sitting through Katrina and Haiti and the Philippines without doing anything, in the interest of compounding.  If you're interested in a cure for a specific disease, getting the money working sooner potentially saves more lives.  However, if he's interested in rare diseases generally, that suggests to me he's interested in helping costly research projects that would have difficulty getting funding otherwise because they're so specialized, and we probably will not run out of those any time soon.

That's a good point, and why I specified real dollars, but there's no time value of prosperity equation, so it very well could go either way.

Interesting.

[Albert]

When I said kind of waste I didn't mean money or at least not just money. What I meant is that from my perspective he could have had more fun with his money while still alive. There are so many possibilities! It just feels a bit like Scrooge McDuck swimming in the pile of money…

Or maybe it's just my cultural bias. Where I come from there is no tradition of giving money to organised generic charities like in US. Mostly because you don't believe that it won't be just stolen…

[Honest Abe]

When I said kind of waste I didn't mean money or at least not just money. What I meant is that from my perspective he could have had more fun with his money while still alive. There are so many possibilities! It just feels a bit like Scrooge McDuck swimming in the pile of money…

Or maybe it's just my cultural bias. Where I come from there is no tradition of giving money to organised generic charities like in US. Mostly because you don't believe that it won't be just stolen…

There are several watchdog organizations that rate charities according to the percentage of their income spend on administrative costs and overhead. A little bit a research and one can easily see who the better charities are.

[impaire]

This story was really heartwarming, and while I may not have chosen to do things the same way that this man did, I still think he's attained a level of awesomeness which I can in good conscience do nothing but applaud.

One of the things that annoys me about some charities is that, once I donate, they continue to solicit me for donations at an alarming frequency.  Often I end up feeling like every dime I donated in the first place gets spent mailing me stuff to try to get me to give them more

Oh Zamboni, I don't know if that factored in his choice, but I feel you! It's to a point that I look for causes based on how little marketing they do--donating money actually ended up making me feel terrible, because then you get so many heart-wrenching requests that you cannot answer. The absolute worst was when I rounded up to the next dollar theater tickets, a donation of about $.80, and then ended up being mailed once and called twice by a theater I had zero intention of putting on the list of causes I support. If I had any kind of large fortune to administer, I would definitely find ways to donate with an explicit "no marketing" clause. As large as that man, I'd probably have my own foundation, so that's a different story altogether!

[Nords]

I can think of several reasons why MacDonald made his choice.

I guess you can look at it that way as well. It's just that if I had that kind of money (even half of it) I would be interested to see how it's used. I wouldn't donate it to rather anonymous charities anyway. I'd be more likely to set up my own fund and distribute money to projects I find most worthy. Similar to what Bill Gates is doing only on a more modest scale. He seems to favour treatment of rare diseases, I'd probably favour education but the idea is similar. For me that would be the most fun part of having really huge amounts of money! Otherwise if you are just sitting in your corner and watching your numbers grow already far beyond any likely personal consumption it seems like a waste. Just my opinion of course :)

Buffett used to believe that he could compound his assets during his life to result in a far larger bequest than any charity could manage on their own.  (He's been on the boards of university foundations, so he would know.)  He figured that giving it all away would be Susie's problem.  Then she died and he was planning to dump the same problem on his kids,  but then he had the pivotal discussions with Bill Gates. 

Buffett still believes that he can grow the money faster than Gates could manage it, so he's compromised by spreading the bequest out over a 20-year period.  He also doesn't want to end up creating a perpetual charity like the Ford or Rockefeller foundations, so he's required the Gates Foundation to cash out his donated shares every year and to spend it all within a certain time period (which I believe is 20 years after his death). 

One of the things that annoys me about some charities is that, once I donate, they continue to solicit me for donations at an alarming frequency.  Often I end up feeling like every dime I donated in the first place gets spent mailing me stuff to try to get me to give them more (although it has the opposite effect in my case.)  I don't want to be called, sent "informational emails," or to receive magazines, return address labels, and the like.  I also don't want people pandering to me and trying to butter me up to get more donations, and this is what happens as a follow up to particularly large donations.  Perhaps that factored into his decision to just keep it quiet and give a giant chunk at the end?

Well, he could've opted for a charitable gift fund.  That's the answer for the rest of us, unless we use our own funds to buy tickets to a charity event. 

MacDonald could have tried a second option:  Charles Feeney co-founded the company that became Duty Free Shops.  When he first started giving away his money, he included a confidentiality clause that forbid the beneficiary from even acknowledging the name of the charity (let alone Feeney).  He gave away hundreds of millions before his philanthropy became public knowledge, so it can be done:  http://www.forbes.com/sites/stevenbertoni/2012/09/18/chuck-feeney-the-billionaire-who-is-trying-to-go-broke/

MacDonald was probably just more like Buffett than Feeney.

Third possibility:  my spouse served with an officer who was gung-ho Navy blue and going for admiral... until her parents passed away.  The parents' will established a charitable foundation from their estate and placed her in charge of administering the millions of dollars in assets.  As soon as she realized that she was entitled to a reasonable salary for her duties, she filed the military's fastest retirement request.  Her attitude and her priorities changed so quickly that her CO called BUPERS and said "Get her outta here-- now".  Instead of the typical 6-12 months, BUPERS made it happen within 60 days.

So maybe MacDonald was trying to give someone lifetime employment.

[amha]

Felix Salmon, the (smart, thoughtful) finance blogger, is also somewhat critical: http://blogs.reuters.com/felix-salmon/2013/12/02/philanthropy-stock-picking-and-presbyterian-frugality/ :

But the fact is that if he were really philanthropically inclined, he would have given much more money away many decades ago. And he wouldn’t be giving away only the barest minimum now that he’s dead.