Thursday, July 15, 2010


Does the blessed use of tainted money purify it?

Early on in this business I learned not to question the provenance of money. Not much "old" money was generated in a saintly manner. For "new" money much the same can be said much of the time. I don't know of charities turning away donations aside from those who turn away gifts from tobacco or liquor companies. Whatever your take on the evils of rum or tobacco the makers are acting legally if not morally.

But what about "Illegal" money? The Spence School and Asia Society, two of New York's most elite institutions are fighting the government's demand that they repay funds donated to them by a man later convicted and about to be sent away for running a Ponzi scheme. This claw-back strategy became a thing when the Madoff empire collapsed.

The institutions' argument is that they accepted the funds in good faith, they had no way to know the gentleman was a crook he was not so labeled at the time. Ergo they have no obligation to return the money.

The legal issue I will leave to the lawyers. The ethical question intrigues me because if every charity had to repay every cent of ill-gotten gains that they indirectly received through a good-faith (if not purely motivated) donation I would fear for the worst.This does not appear to be a clear and imminent peril but does lend light to the illusion that the government's on it. Would I advise the Asia Society or the Spence School to give back the money? I would not. Would you?

There's the old story about the wizened preacher who was offered $1000 of tainted money to repair the church roof. "Tain't enough," he replied.