The Colour of Money, ST, 30 Oct 2019 Pg 1 of 5

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Colour of money: Should non-profits accept

'tainted' donations?
Willie Cheng For The Straits Times
PUBLISHED OCT 30, 2019, 5:00 AM SGT

Pragmatists will argue money is the same, no matter its source.

What if funds are taken with naming rights? Caution is advised.
…………………………………………………………………………………………………………………………………………………………………

The consequences of tainted money can be more far-reaching than initially thought at
the time the money was offered and taken.

Picture this: You are on the board of a charity. Like most other non-profits, it is short
of cash. Now imagine that a person or organisation of dubious repute offers a massive
donation. Would you take it?

In October 2017, when Hollywood film producer Harvey Weinstein was investigated
for sexual abuse, he pledged US$5 million (S$6.8 million) for a scholarship
foundation for female directors studying at the University of Southern California
(USC).

Eventually, many non-profits will be confronted with a similar dilemma of whether to

accept or reject money that is or could be tainted. The responses, I have found, can be
polarising.
The Colour of Money, ST, 30 Oct 2019 Pg 2 of 5

PRAGMATISTS: MONEY IS MONEY

Pragmatists will argue that the colour of money is the same, no matter its source.

They will take the money because the charity and its beneficiaries need it. "If we don't
take it, somebody else will anyway."

They might rationalise further that it can be a good thing to help such persons find
redemption. "So what, if it is to wash someone's conscience? Who are we to judge?"

Habitat for Humanity founder Millard Fuller was said to have often laughed that "the
only problem with tainted money is that there 'taint enough", suggesting that such
gifts should be judged by what they can accomplish, rather than the character of their
donors.

A person no less than the saint, Mother Teresa of Calcutta, was criticised for having
received significant donations from controversial public figures such as Robert
Maxwell and Charles Keating. Maxwell, after he died, was found to have embezzled
£450 million from his publishing companies' pension funds, and Keating was
convicted of wire and bankruptcy fraud. However, there was no suggestion that she
was aware of such fraudulent activities before accepting the money.

IDEALISTS: VALUES MATTER

On the other end, there are those who believe that the source of money matters. They
would not accept money from morally dubious activities that would be contrary to the
mission and values of the non-profit.

For them, how a non-profit accepts money defines its public and private character.

Non-profits - charities especially - are meant to be values-based and need to operate

with high levels of integrity.

In the case of Weinstein, the USC later rejected the gift on the grounds of his
"admitted behaviour" and after a petition by its students to cut ties with the producer.

The Weinstein scandal eventually kick-started the #MeToo movement against sexual
harassment and assault.

Some non-profits seek to avoid such sticky situations by defining upfront, clear
policies on the kind of money they will or will not accept.

For example, Caritas Singapore, the umbrella Catholic charity, has a publicly stated
policy of not making investments in or accepting donations and support from
organisations engaged in unethical or immoral practices such as gambling, tobacco
and unjust labour.

Some non-profits avoid not just "sin" money, but also money that could be perceived
to impair aspects of their mission.
The Colour of Money, ST, 30 Oct 2019 Pg 3 of 5

The environmental advocacy group, Greenpeace, for instance, does not accept
"funding from corporations, political parties, governments or the European Union"
because "independence is vital to be effective in campaigning work".

Similarly, Ashoka, the world's largest association of social entrepreneurs, does not
accept any government funding. When it accepted the Economic Development
Board's invitation to set up a presence in Singapore in 2011, it declined the board's
grant to help it do so, taking on the more difficult route of raising money from private
donations.

RISKING TAINTED MONEY

Some organisations seek a middle ground of accepting dubious money only if they
can internally justify that the funding would not likely impair their ability to fulfil
their mission, and that the source could be kept discreet. Keeping a donation private
would save the organisation the trouble of publicly accounting for it and deny the
donor the prestige of such a donation.

However, this is a fine line to walk.

Recently, former president Tony Tan Keng Yam, chief patron of the Securities
Investors Association (Singapore), acknowledged that the association's reliance on
corporate funding had opened it to criticism that it cannot be objective and truly
independent in its work to protect minority investors.

Keeping a low profile on the money given may not always be possible. Indeed, some
charities that had previously been happy to quietly accept grants from the Singapore
Tote Board (whose income is derived from gambling) are now having second
thoughts - especially as the Tote Board, to promote its own image of community
support, is increasingly asking for public recognition of its donations.

POST-DISCLOSURE
The disclosure that tainted money has been received invariably creates negative
optics.

In 2008, the London School of Economics (LSE) granted a PhD degree to Mr Saif
Gaddafi, the son of Colonel Muammar Gaddafi who was then the leader of Libya. In
2009, LSE accepted a £1.5 million pledge from the Gaddafi International Charity and
Development Foundation of which Mr Saif Gaddafi was the chairman. There were
allegations that the donation was solicited when he was being examined for his PhD.

As a result of the ensuing scandal from revelations of the interactions and relationship
between LSE and the Gaddafi regime, the LSE's director resigned in 2011, citing
"errors of judgment".

More recently, the MIT Media Lab admitted that it had received funding from
multimillionaire and convicted sex offender Jeffrey Epstein. On Sept 6, the director of
MIT Media Lab resigned, the day after an article in The New Yorker revealed how he
had worked to conceal donations from and affiliations with Epstein, who was already
listed as a "disqualified" donor in MIT's database. The university announced an
"immediate, thorough and independent investigation" into the matter.
The Colour of Money, ST, 30 Oct 2019 Pg 4 of 5

RETURNING TAINTED MONEY

Sometimes, public pressure can force organisations to deny donors their privileges or
to return the tainted money.

A prominent example is the current activist campaign against the billionaire Sackler
family, who are known for their philanthropy and support of cultural and educational
institutions.

The Sacklers own Purdue Pharma, a major pharmaceutical company that makes pain
medicine or opioids. There were allegations of Purdue's drugs having a high potential
for addiction and being irresponsibly marketed.

The backdrop to the controversy is that drug overdoses have become the leading
cause of death of Americans under 50, with two-thirds of those deaths caused by
opioids. As a result, lawsuits have been launched in the United States against
pharmaceutical companies and their executives, including Purdue Pharma.

Purdue Pharma has filed for Chapter 11 bankruptcy protection. An offer of US$48
billion in cash, treatment drugs and services was rejected by US local governments.

The settlement would have included the family giving up ownership of the company,
and addiction drugs manufactured by the firm being given to the public cost-free.

The court case is ongoing.

Meanwhile, an activist group called P.A.I.N. (Prescription Addiction Intervention

Now), formed to respond to the opioid crisis, has been campaigning against the
Sackler family's connection to the arts. The negative publicity from its highly
publicised protests has forced the Louvre and other museums to remove the Sackler
name from their galleries and to refuse future donations from the family.

However, institutions that have granted naming rights in exchange for large donations
would generally have difficulty returning money that has been spent.

Vanderbilt University learnt this lesson the hard way in 2016, when it sought to
rename a 1935 building called the Confederate Memorial Hall. It was felt that the
word "confederate" was a symbol of slavery and exclusion. The United Daughters of
the Confederacy (UDC), which had donated US$50,000 for the naming rights, sued.
The courts ruled that the university needed to repay the UDC the value of the
donation adjusted for inflation if it dropped the name. The university finally paid
UDC the sum of US$1.2 million and changed the name of the building to, simply,
Memorial Hall.

STAKEHOLDERS
In general, the decision to take possibly tainted money should not be made casually,
nor purely for reasons of expediency and the needs of beneficiaries.
The Colour of Money, ST, 30 Oct 2019 Pg 5 of 5

After all, non-profits have stakeholders beyond their immediate beneficiaries. These
include their employees, volunteers, other donors and the community at large. And all
of them are watching.

It would thus be unwise to accept contributions from sources that raise questions
about what the non-profit stands for. When other stakeholders see a discrepancy
between the non-profit's public and private faces, they may withdraw their support,
and the organisation's ability to receive future donations and to deliver its mission
could be undermined.

At the same time, most non-profits would likely not find it practical to scrutinise
every donor. But making some effort to consider major potential donors is wise, not
just to determine if the money is tainted but in the interest of better donor
management.

• Willie Cheng is the former managing partner at Accenture and former

chairman of the Singapore Institute of Directors. He sits on several commercial
and non-profit boards. His non-profit books include Doing Good Well, Doing
Good Great, and The World That Changes The World.

A version of this article appeared in the print edition of The Straits Times on October 30, 2019, with
the headline 'Colour of money: Should non-profits accept 'tainted' donations?'. Print Edition | Subscribe