The Green Team, Pt 1
Twelve years ago, a trio of Wall Street upstarts founded the
anti-establishment Robin Hood Foundation. So how did a guerrilla charity
benefit become the hottest ticket in town?
From: The New Yorker
BY MERYL GORDON
Sure, there are more exclusive events -- a quiet dinner for six at Brooke
Astor's, perhaps, or an evening of restaurant-hopping on the Upper East Side
with Rudy and Judi. But by the heightened criteria that tend to matter most
to New Yorkers these days -- wall-to-wall glamour, enough boldface names to
make "Page Six" kvell, and a wealth index somewhere around the gross
national product of Denmark -- this has got to be the most prestigious party
you can buy your way into, either by writing a (gulp!) $2,000-a-plate check
or, more to the point, by paying $10,000 per couple to guarantee you won't
be seated in Siberia.
Eat your heart out, trustees of the Metropolitan Museum's Costume Institute
Ball: You've been eclipsed. With a star-studded benefit committee that
includes Gwyneth Paltrow and Lachlan Murdoch plus entertainment by the Who,
this Tuesday's extravaganza at the Javits Center won't be matched by any
other charity evening anytime soon. The event will raise more than $8
million (a city record for a single charity event) to benefit the quaintly
named Robin Hood Foundation. As Robin Williams, the evening's emcee, put it:
"It's going to be better than a bar mitzvah at Barbra Streisand's."
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"What appealed to me was the guerrilla nature of it," says Jann Wenner.
"They were going to find the outlaws, the heroes, the people who made a
difference."
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Started as something of a lark by three rich young Wall Street traders in
1988, the Robin Hood Foundation has become known as New York's most
innovative backer of eclectic good works, financing gritty neighborhood
programs to aid the defeated and desperately needy. Where other high-octane
charities benefit such upmarket causes as the opera, the ballet, and the
Met's fashion collection, Robin Hood actually lives up to its namesake's
slogan of stealing from the rich to give to the poor. (Or in this case,
persuading the rich to invest in the poor.)
Paul Tudor Jones, a Memphis-born commodities trader who now manages $5
billion in assets, launched the charity with the notion of applying a
stock-picker's mentality to backing poverty programs. "We thought part of
our job should be to provide seed capital to someone with a good idea," says
Jones, now 45, who recruited fellow traders Glenn Dubin and Peter Borish to
his cause. "We wanted to make sure we didn't just do the safe grants; we
wanted to try to find the Microsofts of the philanthropy world."
What Robin Hood has become known for -- whether it's a Harlem soup kitchen,
a Sunset Park job-training program, or a Bronx counseling effort to prevent
child abuse -- is an activist approach that goes well beyond merely writing
large checks. Led by executive director David Saltzman, the foundation's
twenty-person staff (Ivy League grads, M.B.A.'s, lawyers, inner-city
activists) gets directly involved in the daily operations of the
help-the-poor groups it funds. This year, it is providing more than $18
million to 100 programs, and in return for their investment, the foundation
demands results, cutting off funding if programs don't deliver on their
promises. Christine Letts, executive director of the Hauser Center for
Nonprofit Organizations at Harvard, says, "I think Robin Hood is one of the
best models of venture philanthropy. No one else does the package of things
they do."
Over the past decade, venture philanthropy has become the buzz phrase among
newly rich guilt-edged entrepreneurs eager to prove their smarts in yet
another challenging arena. Elbowing their way into territory long defined by
heavyweights like the Ford Foundation, members of this charity-minded
younger generation have rejected the idea of long-term studies and
blue-ribbon commissions -- they want to make a difference in the blink of a
nasdaq trade. Recent convert Bill Gates may now throw hundreds of millions
of dollars at poverty and illness, but the Robin Hood gang helped invent
this new form of fast-action, quick-results charitable giving.
Of course, it didn't hurt that Robin Hood, in its earliest days, became
known as one of the late John Kennedy Jr.'s favorite charities. By joining
the Robin Hood board in 1991, he gave this do-good venture fund an aura of
glamour that helped turn the annual June gala into the hottest ticket on the
charity circuit; when he died last summer, the foundation received an
outpouring of sympathy donations.
But the rest of Robin Hood's board members are hardly unknowns; in fact, it
would be hard to find a better-connected group in town. "I don't personally
have a clue about the social stuff; I don't understand it," says Kenneth
Langone, the founder of Home Depot and, at 64, the oldest member of the
mostly thirty- and fortysomething Robin Hood board. Yet he admits, sounding
slightly amused, that "this has become the board to be on." Indeed, the
nineteen-member board resembles a movie-screening A-list, including AOL guru
Bob Pittman, John Sykes of VH1, former Soros Fund honcho Stanley
Druckenmiller, Marie-Josée Kravis, and this year's new members Diane Sawyer,
Harvey Weinstein, Lachlan Murdoch, and Universal Music chairman Doug Morris.
The Wall Street contingent freely admit that they've wooed the latest
celebrities to add fund-raising pizzazz. "The truth is, I'm not that
interesting, Paul's not that interesting, Stan's not that interesting," says
Peter Kiernan III, the board's current chairman and a managing director at
Goldman Sachs. "Last year, we had a benefit that raised $6.5 million, more
than any other one-night event in the city. John Kennedy packed them in. If
we can get that number to $10 million by bringing Harvey and Diane in, I'm
game."
One reason the Robin Hood foundation has placed such importance on this
week's Javits jamboree is that until recently, the wealthy board members, so
used to being hit up for large sums of cash by others, found it socially
uncomfortable to do so themselves. "The reason Robin Hood hasn't done better
on donations is that we don't like to ask people for money," confesses
Stanley Druckenmiller. "I'm terrible about it." Another board member jokes,
"We have ask-itis. This stuff you'd think we'd be aces at, it's not our long
suit."
Yet as Robin Hood's Q rating ratchets up, the foundation's top players are
not unaware of the dangers of drifting deeper into Tom Wolfe territory --
the ironies of Park Avenue's stepping out to aid Bed-Stuy, and swells'
donning designer duds to dine on Glorious Food's canapés while thinking
uplifting thoughts about the downtrodden. ("I can't wait until the Who sings
'Street Fighting Man' for this crowd," riffs Williams, mangling the
authorship of the Rolling Stones classic.) There's something jarring about
an event in which Ron Perelman once forked over $100,000 for a hockey lesson
from Wayne Gretzky (ice skates not included), with the cash going to
programs that aid ex-cons and AIDS babies.
This incongruity has not gone unnoticed by board members, who are thrilled
by the financial windfall but sheepish about giving a party regularly
anointed by the New York Times' "Evening Hours" column as one of the city's
most memorable galas. "I have mixed feelings," says board member Peter
Borish, one of Robin Hood's founders, who runs his own money-management
firm, the Computer Trading Corporation. "The prices are high, which keeps
people out that you want to go. Here we are, giving the most lavish benefit
to help people who have a lot going against them. It's ironic -- and it's
New York. And Robin Hood is New York." Another board member described the
bidding frenzy at last year's gala as Bob Pittman and Gwyneth Paltrow
auctioned off weekends in Hollywood and walk-on movie roles. "To me, it's a
big disconnect. But we can't not do it. It raises an enormous amount of
money, and we think of all the good we can do with this money."
You can see what he's talking about the moment you walk into the forbidding
concrete building that houses the Harlem Middle School, a private academy
for low-income kids on a not-yet-gentrified block of 103rd Street. It's
filled with high-spirited, hard-studying kids, who virtually all qualify for
free government-lunch subsidies because their family income is below the
poverty line. Seventh-grader Erika Perez, 11, chatters excitedly about the
small class size (13, versus 40 in her previous public school) and the
fellow students who've won scholarships to elite high schools like Miss
Porter's. "The teachers are really hard on us, because they want us to get
into good schools," says Perez, who gets up at 5:45 a.m. to commute from her
Bronx home, and whose single mother works nights.
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"It's better if you're more concerned with the outcome," says George Soros,
"than with the personal gratification of people sucking up to you."
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Founders Hans Hageman, a Princeton-educated lawyer, and his brother Ivan, a
Harvard-educated teacher, were turned down all over town for grant money
when they decided seven years ago to start the school in a former drug-rehab
clinic that had been run by their parents. As scholarship students who had
attended the Collegiate School, they finally reached out to fellow
Collegiate alumnus John Kennedy Jr., who steered them to Robin Hood. Suffice
it to say that a good word from Kennedy proved pivotal; the foundation
handed over $25,000 and provided extensive behind-the-scenes aid, and still
provides a yearly $50,000 grant. "A lot of foundations have guidelines, and
if you don't fit in, they don't want you," says Hans Hageman, who has
several hundred kids on a waiting list for the coveted 63 slots. "Robin Hood
is not a faceless entity you're dealing with."
Just as investors swoop in when word gets out that George Soros is buying a
stock, other foundations often reach for their checkbooks upon hearing that
Robin Hood has "invested" in a fledgling charity. "Robin Hood is known for
doing aggressive due diligence and legwork," adds Hageman. "When other
foundations learn that Robin Hood is involved, it helps us."
The great truism of New York is that you can get anything you want if you
move in the right circles and know whom to ask. "What we do is all about
leverage," says Peter Borish. As with any prestigious board, useful contacts
are a prerequisite for being invited to join Robin Hood -- say, for example,
the ability to get free entertainment and other goodies for the gala. "Why
else would they want the head of a record company?" says Universal Music's
Doug Morris, a new board member who used his clout to get friend Pete
Townshend and the other surviving members of the Who to perform for free.
The Robin Hood benefit is a classic example of upper-echelon Manhattan
favor-swapping. For the auction, Harvey Weinstein put together a "Hollywood
Heaven" package that includes flying to Rome for a walk-on in the upcoming
Martin Scorsese movie with Leonardo DiCaprio and Cameron Diaz, a bit part in
the next Miramax- Gwyneth Paltrow movie, and prime Oscar seats. Lachlan
Murdoch is offering up an Olympics package, including opening-ceremony
tickets and a cruise with the Murdoch clan around Sydney's harbor.
Board member David Puth, a Chase Manhattan managing director, did his share
by contacting venture capitalist Jeffrey Walker, who persuaded an airline to
kick in free plane tickets. Liquor wasn't a problem, since half a dozen
board members are friendly with Seagram's Edgar Bronfman Jr. Stan
Druckenmiller called on his pal Mike Ovitz for a headliner, landing the
gratis services of Robin Williams.
Robin Hood's board is more than willing to make these kinds of help-us
calls. It's not a coincidence that the white-shoe law firms and accounting
giants that "voluntarily" donate their services to the foundation's grantees
do a lot of well-paid business with board members. Indeed, the Robin Hood
Foundation is a quintessential example of how to use friendships, business
connections, and media savvy to pull the levers of power in this city. In
little more than a decade, it has evolved from three guys sitting around
Paul Jones's Upper East Side one-bedroom apartment eating Chinese takeout
and wondering how to save the world to a powerhouse operation that has doled
out more than $100 million.
These nouveau riche Wall Streeters built their own organization from scratch
so they could deliberately break traditional foundation rules. They had
prospered enough to spend deadly evenings at black-tie balls with Social
Register snobs, but they were tired of writing checks and never knowing how
their money was spent. They thought most charities were not aggressive
enough, either in making grants or in investing assets. And they decided it
was better to waste money on wrongheaded ideas than never to try anything
daring at all.
The three originally planned to just give away just their own money,
establishing a foundation for its tax advantages, but decided to get more
ambitious after being deluged with grant requests. "We got 600 applications
the first year, and they were heartbreaking," recalls Jones, a University of
Virginia graduate who made his first few million in his twenties by trading
gold and cotton futures. "As we saw the scope of need, and how big an enemy
poverty was, we decided to gear up." Eager to counter the greed-is-good
ethos of the movie Wall Street, Peter Borish, who back then worked as the
research director for Jones, proposed the folk-hero moniker for the
foundation. "Every kid loves Robin Hood," says Borish, now 40, who got the
idea from his wife. He acknowledges that while Manhattan may not exactly be
Sherwood Forest, "if you live in New York City, you can't ignore the extreme
differences between the rich and the poor."
The first grants were relatively small, in the $25,000 range. A couple of
guys in Bed-Stuy trying to start a local ambulance company. A traveling van
to bring medical services to poor neighborhoods. An activist who wanted to
renovate an East Harlem building to house the homeless. "People were being
put up in these horrible places, with the smell of piss and drug dealers
selling crack in the hallways," says Saltzman, the foundation's first
employee, who had previously worked for the city on its approach to homeless
problems. Recalling the scene as homeless families moved into the newly
fixed-up apartments, Saltzman says, "People were weeping with joy."
After that emotionally gratifying experience, small wonder that Robin Hood's
founders encouraged Gretchen Buchenholz, who renovated that first building,
to think even bigger, with the promise of more funding. "It's scary to go
out and try to create programs," says Buchenholz, executive director of the
Association to Benefit Children, which has expanded to offer preschool
programs for homeless children, a nursery for HIV-infected toddlers, and a
job-creating bakery, receiving $200,000 last year from the foundation.
"Robin Hood had faith that what we pictured could actually be done."
Similarly, Robin Hood first began to back the South Bronx-based La Peninsula
Head Start in 1993. With help from the foundation's yearly $100,000 grant,
the program, which provides extended-hours day care and preschool classes to
3-to-5-year-olds so their parents can work, has now expanded to serve more
than 700 kids in five locations.
Beyond changing people's lives, Robin Hood's financier-founders also wanted
to show they could establish a charity with a new kind of fiscal footing.
Jones was appalled that foundations are required by law to give away just 5
percent of assets a year, and insisted that Robin Hood hand out 40 to 50
percent. "We're not in the wealth-building business. That dog ain't going to
hunt," drawls Jones, sitting in the sprawling Greenwich offices of his
investment firm. (In addition to his Greenwich home, Jones owns a private
island in the Bahamas and a Maryland-shore retreat.) Given that Jones and
his friends had made their fortunes as high-flying traders, they didn't see
any point in establishing the typical safe foundation portfolio, investing
instead in hedge funds that have brought returns of more than 20 percent a
year (they earned $7 million last year on $22 million in assets, and in this
volatile year the portfolio is still "comfortably positive," they say,
meaning up 4 percent).
As a way of demonstrating their personal commitment, the board members
decided to take care of all of the foundation's expenses themselves, rather
than use outside donations to pay the daily operating bills. "We're all
aware of concerns about charitable organizations which raise a lot of money
and it all goes to overhead," says Glenn Dubin, the third member of the
troika, a Washington Heights native who runs his own hedge fund, Highbridge
Capital Management. "This way, we can tell donors that every dollar they
give goes to support programs." Last year, the board kicked in $7.6 million,
which includes staff salaries, rent, research, and the benefit's
million-dollar cost (catering, décor, Javits Center rental).
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"There's something in this for you," says Stan Druckenmiller, "whether
you're a bleeding-heart liberal like Paul Jones or a coldhearted
conservative like myself."
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That kind of commitment was exactly what attracted billionaire George Soros,
who, despite the hundreds of millions he's given abroad, had never backed a
New York do-good institution to the tune of $4.5 million, which is what he
pledged to Robin Hood three years ago -- and he plans to give more. Soros
was impressed by the foundation's results-oriented approach: "It's
entrepreneurial. They find people with a sense of mission and help them
build viable organizations." Drawing a stark contrast between Robin Hood and
many other New York charities, Soros adds, "People generally want to feel
good rather than do good. It's better if you're more concerned with the
outcome than with the personal gratification of people sucking up to you."
One of the joys of starting your own club is that you get to pick the
members. The original founders went through their Rolodexes to recruit flush
and famous friends to the board. Jann Wenner, founder of Rolling Stone and
chairman of Wenner Media, was drafted early on by Dubin. "The guerrilla
nature of it was what appealed to me," says Wenner, who left the board
several years ago. "They were young guys, and instead of funding
Establishment things such as museums, they were going to find people having
a hard time getting money, the outlaws, the heroes, the people who made a
difference."
(Continued, next post) |
