Meet Ray Madoff, the Woman Saving the World From Philanthropy
WHY YOU SHOULD CARE
We all benefit from getting more out of charity.
By Steven Butler
Ray Madoff isn’t morbid, though her Boston College Law School office is alive with death — at least on her bookshelves. After all, she teaches and writes about the hands of the dead reaching from the grave to control the living. Yep: estate law. But why, she has wondered, do we let the deceased do that?
Innocent question, maybe. Yet Madoff’s attempts to answer it have landed her in a thicket of controversy, from the living, of course. “I’m just raising perfectly normal questions,” insists Madoff (no relation to Bernie). With works like Immortality and the Law and a series of op-ed articles in The New York Times and elsewhere, Madoff has become one of the most vocal critics of charitable foundations — calling for them to spend more and questioning how they spend their money. One of Madoff’s original ideas has even worked its way into tax-reform legislation now being considered by Congress.
“Clearly people in Washington have been reading [her] stuff,” says Alan Cantor, a consultant on nonprofits. Madoff’s achievement, he adds, has been taking philanthropic community debates and “breaking through to the larger world.”
Take the topic of taxes, for instance. Yes, Madoff argues, your tax bill could be less if more than $1 trillion of assets weren’t parked in private foundations and university endowments largely protected from Uncle Sam. “It is important that we revisit the rules to see if they are producing the result we want,” says Madoff, who has found that, well, they aren’t. Instead, too much money is locked away, much of it spent for dubious reasons (Leona Helmsley’s $8 billion for dogs, for example), not at all or on causes dictated undemocratically by the dead or the very wealthy, all tax subsidized.
Rep. Camp proposed a payout requirement of five years for these funds. “That was all right out of Ray’s writing and speaking.”
Alan Cantor, a consultant on nonprofits
Madoff is an unlikely rebel. Modest in appearance and bookish — with long brown hair flecked with gray, glasses that are rimless on the bottom and pearl earrings — she is also friendly and soft-spoken. By her own admission, she started as a mediocre student (there’s that D in high school French) and found a circuitous route to Brown University, where she blossomed as a philosophy major. “I have a theory that philosophy majors end up as tax lawyers,” she jokes.
She found tax law, which she practiced in New York City and Boston, interesting, but she concluded, “I wouldn’t want me for a lawyer.” (She didn’t care enough about making money for the client.) This self-described “compulsive cook” is a homebody who grew up in Newton Centre and now lives next door in Newtonville; she walks to work, has one of three kids still at home and is married to a public interest/environmental lawyer who works out of the house. She has surprised herself by ending up in the spotlight because she doesn’t think of herself as an activist. “It’s more like, ‘Hey, this really doesn’t look right to me,’” she says.
Take donor-advised funds, which Madoff recently dubbed the Thing That Ate Philanthropy. These made the news after Facebook CEO Mark Zuckerberg donated nearly $1 billion to the Silicon Valley Community Foundation in December 2013. Generous, sure, but under current law, that money could sit there forever, earning fees for some money manager without being spent, while Zuckerberg gets an immediate tax deduction. (Zuckerberg didn’t respond to a request for comment, but he and his wife have already committed to spend more than $200 million in the next few years to support local schools and pay for medical equipment.) Then, last year, Rep. Dave Camp proposed a payout requirement of five years for these funds in a tax-reform plan. “That was all right out of Ray’s writing and speaking,” says Cantor. Camp didn’t comment and has since retired, though his legislation is still being considered.
Even so, the philanthropy establishment has fired back at Madoff’s ideas. The Council on Foundations, an association with some 1,600 members, opposes any payout requirement that would tie the hands of donors to “invest strategically in a community’s future,” says spokesman Jesse Salazar. “At the heart of these critiques,” he adds, “is a troubling and misguided effort to call into question the value of endowed philanthropy.”
Criticisms like this haven’t stopped Madoff from also calling for ways to nudge private foundations with total endowments greater than $600 billion to spend more than the legally required minimum of 5 percent, all of which could now go toward administrative salaries and even travel expenses to conferences in the Bahamas. Universities don’t escape scrutiny, since the lion’s share of tax subsidies goes to elite schools like Harvard, Yale and Princeton, with their multibillion-dollar endowments. “If you are interested in educational opportunity,” Madoff asks, “is that really the best way?” The list goes on: dynasty trusts, perpetual trusts and tax-deductible gifts to churches, which have no reporting requirements.
Still, Madoff hopes to engage her critics, and she has started raising money for a limited-duration organization focused on finding practical fixes for the issues she has highlighted. The last time Congress reset the rules on philanthropy was back in 1969 — and Madoff figures it’s time for another overhaul. If she succeeds, she might yet cause some to turn over in their graves.
- Steven Butler, Steve landed at OZY after years of reporting all over the world and living for long stretches in Asia and Europe for the Financial Times and U.S. News & World Report. He has managed correspondents everywhere as foreign editor at Knight Ridder but is delighted to be free of the printing press. Follow Steven Butler on Twitter Follow Steven Butler on FacebookContact Steven Butler