The Magazine

The Duke of Duty-Free

How to spend money without attracting attention.

Feb 11, 2008, Vol. 13, No. 21 • By MARTIN MORSE WOOSTER
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Negotiations between DFS and LVMH took eight years, in part, because two of Feeney's partners didn't want to sell (one eventually did sell and the other became a minority investor in LVMH). The extensive court record showed that Feeney didn't actually own his share of DFS, but had transferred it to Atlantic Philanthropies, a mysterious Bermuda-based charity. Feeney was a very secretive entrepreneur: DFS, a privately owned partnership, was successful, in part, because its rivals had no idea how large the firm was and couldn't guess how much the company could spend on bids for airport concession contracts. So Feeney decided to apply the same privacy to his philanthropy.

His philanthropic adviser, New York University law professor Harvey Dale, gave his client a thick packet of materials about the importance of giving anonymously. He noted that the world's major religions all taught that the best way to give was privately. As St. Matthew tells us, in the Sermon on the Mount, Jesus taught, "When you give to the needy, do not let your left hand know what your right hand is doing, so that your giving may be in secret. Then your Father, who sees what may be in secret, may reward you." Maimonides, the great medieval rabbi, agreed with Jesus, believing that there were 12 levels of tzedakah (giving), and that while the highest level was teaching other Jews to become self-reliant, the second highest was anonymous charity.

Finally, Feeney was persuaded by the timeless advice of Andrew Carnegie. In his 1889 essay "The Gospel of Wealth," Carnegie wrote that donors ought to use their fortunes on universities, libraries, and other organizations that provided "the ladders upon which the aspiring can rise." Carnegie also believed that donors, after providing for themselves and their families, should strive for "modest, unostentatious living, shunning display or extravagance." This advice suited the thrifty Feeney, who delights in inexpensive clothes, cheap watches, and flying coach.

But as O'Clery shows, anonymous giving is hard work. Feeney decided to base his charity in Bermuda to avoid American disclosure laws. He lived in Bermuda for a year to establish residency prior to the creation of his charity in 1982, and his lawyers successfully lobbied the Bermuda legislature to pass a law allowing him to run his charity in secret. In addition, all of Atlantic Philanthropies' grant recipients had to sign nondisclosure agreements saying they couldn't reveal where their money came from. Finally, public relations consultants offered advice about what should happen if anyone found out about what Feeney was doing.

In hindsight, Feeney could have achieved many of his goals in the United States if he had created a donor-advised fund rather than a foundation. If he had decided to create a private operating foundation, which has a severely limited list of grantees, he could have avoided the truckload of grant requests every medium-sized or large foundation must plow through. And given how poorly the American press covers philanthropy, simply not publicizing his foundation's activities would have given him a substantial amount of anonymity.

But the structure and nature of Atlantic Philanthropies has allowed Feeney to be a very hands-on donor. In O'Clery's account, Feeney's giving has often been impulsively based on articles he happened to be reading. In 1997, he picked up a copy of the San Francisco Examiner in the airport and read about the East Meets West Foundation, which helps improve health care for the poor in Vietnam. That led Atlantic Philanthropies to spend a great deal of money on hospitals in Vietnam. Feeney has also been a generous supporter of research at universities in Ireland and Australia.

In 2001, Feeney declared that Atlantic Philanthropies would spend itself out of existence by 2016. By doing this, Feeney's charity can give far more than other organizations with very large endowments and relatively limited giving. "The dollar you give today can be doing good tomorrow," Feeney said in an interview. "Giving five percent of it doesn't do as much good."

It should be noted that Chuck Feeney is a leftist who vigorously opposes the Iraq war and has given small amounts to the Democratic party and larger ones to Amnesty International and Human Rights Watch. But Feeney should have the right to spend his wealth for causes he prefers. Conservative and libertarian donors, by contrast, often have their fortunes subverted by left-wing staff, particularly if they create foundations that aren't term limited.