Saturday, February 23, 2008

"the only thing wrong with tainted money is there tain't enough of it"

The title comes from the Grantsmanship Center News by way of Mike Burns raising the question "when is tainted money "keepable"?

The topic comes up because of Phil Munger's letter to the Anchorage Symphony about tonight's (in Anchorage it should be happening as I start to write) concert underwritten by Exxon/Mobil and the Association's custom of asking the audience to applaud the donors. Phil felt that since Exxon hasn't paid the plaintiffs in the 1989 oil spill case and that the final arguments are going before the Supreme Court this week, that rather than applaud, they should ask the audience to observe a moment of silence for those plaintiffs who have died waiting for their settlements. [Note: Munger isn't just some crank off the streets. He's a professor of music at UAA who has composed a number of serious musical pieces, at least one of which, I believe, the Anchorage Symphony Orchestra has premiered.]

The letter Munger got back said, "While some organizations exist to engage political and economic issues, that is not the Anchorage Symphony Orchestra's mission."

It was also my intent when I started this blog to stay out of political issues. However, it became clear to me that to say nothing was to support the status quo. To accept Exxon's money and then to ask the audience to applaud Exxon is a political act whether the Orchestra wishes to acknowledge that or not.

The question then is whether there is anything wrong in that. First, is the money 'tainted.' Second, must all tainted money be declined?

Looking for guidelines on this topic was interesting. I couldn't find much in the way of guidelines for declining charitable contributions.

Jewish law has thoughtful guidelines for giving charity.

The Talmud describes these different levels of tzedakah, and Rambam organized them into a list. The levels of charity, from the least meritorious to the most meritorious, are:

1. Giving begrudgingly
2. Giving less that you should, but giving it cheerfully.
3. Giving after being asked
4. Giving before being asked
5. Giving when you do not know the recipient's identity, but the recipient knows your identity
6. Giving when you know the recipient's identity, but the recipient doesn't know your identity
7. Giving when neither party knows the other's identity
8. Enabling the recipient to become self-reliant

These guidelines really were developed for individuals, not corporations. They suggest that the most meritorious giving is when the giver doesn't know who gets the money and the receiver doesn't know where the money comes from. And the money helps move the recipient to self-reliance. So, ideally, Exxon-Mobile would have, under this standard, given money to a third party who would give the money to the Orchestra without the Orchestra knowing the source or Exxon knowing who got it. And it would be given in such a way that it would help the Orchestra become self sufficient.

Of course, this is a high standard. Orchestra board members and donors would all tell you very little money would be donated on those terms. But that also means that they aren't doing it simply to be good citizens and because they believe in the orchestra. If they want their name on it, it means Exxon's (and others who give) purpose is to be seen as an organization that supports the community. The intent is to improve its image. And there is nothing wrong with that.

But what guidance is there for organizations for evaluating whether money is 'tainted' or not? It's hard to find.

Politicians decline money, or give it back, if they think accepting it would lose them votes. From MSNBC
Jack Abramoff has already pled guilty and many politicians, including President Bush, are rushing to return money linked to the disgraced former lobbyist.
The decision is made, not on moral grounds, but practical grounds.

Ethics of receiving organ donations
revolves around whether donors risk their lives because of their poverty to the benefit of wealthy receivers. This is a clear moral decision that is in opposition to market rules - let the buyer and seller make their own deal. Of course, the ideal market assumes the buyer and seller have an equal ability to walk away from the deal.

Department of Interior has a list of prohibited sources of donations

D. Prohibited Sources

1. Departmental agencies, or employees on behalf of their agencies, should not accept (or solicit or accept under a cooperative Foundation program) donations from persons and entities who:

(a) Have litigation pending with, or have or are seeking to obtain a contract, lease, grant or other business, benefit or assistance from the agency that would receive the donation.

(b) Conduct operations or activities that are regulated by the agency that would receive the donation.

(c) Appear to be offering a gift with the expectation of obtaining advantage or preference in dealing with the Department or any of its agencies.

These are really conflict of interest issues, concerned with whether the donations affect agency decision making or appear to, not with whether the money is tainted.

This is similar to the James Beard Foundation Code of Ethics which discusses donors' rights and discusses avoiding donations from suppliers and others with business with the Foundation that might bias business decisions. But they don't talk about dealing with tainted money.

Blind trusts are one option so that one does not know where the money is coming from. Here's a Maryland ruling about a judge setting up a blind trust for his legal defense. But once again, here the purpose is to avoid bias or compelling donors to give, not with whether the money is tainted.

The one article I found that dealt directly with the question of accepting tainted money was again using Jewish law, discussing the Marc Rich pardon case. Rabbi Chaim Steinmetz identifies three problematic aspects of receiving charity from questionable sources:

1. Accepting Charity from Disreputable Figures
2. Charity With Ulterior Motives
3. Speaking on Behalf of a Donor: Corruption or Advocacy?

The Orchestra, like most non-profits, needs money. Large corporations have lots of money. So the Orchestra has to wrestle with the question of whether they should take money from an organization that first soiled Alaska with the biggest oil spill we have ever had, and second, has fought the court judgments for almost 20 years, leaving plaintiffs without the payments the courts ruled for them. Of course, Exxon has every right to take this to the Supreme Court. And I'm sure there are people on the Orchestra board who are fully supportive of Exxon's actions in Alaska.

You could make a good argument for accepting the money, even money from someone with a disreputable past. If someone has amassed a great fortune, through questionable means, should they not be allowed to try to make some amends by giving it away later on.? But if that is what they are doing, the charity receiving the money could set conditions for accepting it. According to the Jewish guidelines it would be better to give it away anonymously. Without the recipient even knowing where it came from.

Ideally this would be a blind trust for donors so that they don't know where the money went and the receivers don't know where it came from. And gifts that make the non-profits more independent of future donations would be the best.

But Exxon doesn't fit into the reformed sinner category. They plea before the Supreme Court this coming week, I believe, to appeal the judgment made in the oil spill nearly 20 years ago. Even the State of Alaska and several living former governors have briefs in opposing Exxon on this

One story that explains corporate giving as honest interest in improving the communities where they live. And I'm sure there are Exxon employees who believe this story. It's in their moral interest to believe they work for a good, ethical company. But just like large corporations want politicians to need lots of money so that they can have influence on them, having financially starved non-profits makes it possible for large corporations to launder their reputations, cheaply.

And at the Anchorage Symphony Orchestra washing away oily memories comes pretty cheap. To get into the Maestro's Circle, the highest level of donor according to their website costs a mere $1500 or more. Even I could afford that if I really, really loved classical music. In contrast, the Anchorage Opera has four levels above that:
Sustainers ($2,500-$4,999)

Benefactors ($5,000-$7,499)

Guarantors ($7,500-$9,999)

Founders ($10,000+)
Now Exxon's 2007 after tax profits were about $40 Billion. Let's say they kicked in $40,000 (I'm guessing it might not be that much, but it's easier to calculate. Someone making $100,000 before taxes, if I calculated this right, would have to donate 10 cents to donate an equivalent percent of their income. [We're working with a lot of zeros here and it's late, so someone check the math.]

Do we applaud those who worked hard last year and gave ten cents to the Orchestra, the same percentage of his net profit that Exxon gave?

A lot of people have complained about how Anderson, Kott, and Kohring took money from lobbyists in return for favors. All three have said, in their own defense, "The money didn't change how I voted or what I did. I already believed in these causes." But most of us know it was wrong.

And we've all (except Ray Metcalfe) winked and nodded at the money our Congressional delegation has brought home. And we know that it is no coincidence that Exxon is getting itself applauded at the Atwood Center the same week it is announcing "a new project to develop and produce hydrocarbon resources from the Point Thomson field on the Alaska North Slope" and just before the US Supreme Court will hear its appeal on the Prince William Sound oil spill.

So it seems that Munger is asking the Orchestra to ask itself what they are willing to do to get Exxon's money? He didn't ask them to give it back. He only asked that they not have people applaud Exxon this week in Alaska. But hey, I've got a dime I'm willing to contribute, that's a larger percent of my income than Exxon's donation was of its income. Will you read my name and ask for applause for me too?

1 comment:

  1. A very thoughtful, thorough analysis of the morality underlying this issue, Steve. Thanks for taking the time to write about it.

    Although my letter to the Symphony board early last week expressed my sentiments, the actual request came from friends who are plaintiffs, using me to bring the request, because the ASO has a long relationship with me and my work, and because I lived, fished and worked for ten years on Prince William Sound and have a direct connection to the people and place, and knew many of the 6,000 now deceased plaintiffs.

    And, for accuracy's sake, the ASO has played eight works of mine over the past 18 and 1/2 years - three for full orchestra, and five chamber or solo works. More of my works have been performed in the Anchorage PAC and at UAA than by any other living composer.


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