Nonprofits That Benefited From Michael Steinhardt’s Dirty Money Need to Own Up to Their Complicity

For once, Michael Steinhardt can’t simply dust off his dirty work. Last week, the Manhattan District Attorney’s office concluded that the hedge-fund billionaire and philanthropist engaged in the illegal acquisition of antiquities. The telltale clue — dirt.

Specifically, the D.A.’s office found that 101 out of 180 illegally procured objects “appeared dirty (or unrestored) in photographs; and 100 appeared covered in dirt or encrustations prior to Steinhardt’s purchase.” According to investigators, the dirty objects were a clear indication that they had been looted from 11 countries, in many cases during periods of civil unrest.

Well known for his gifts to New York University, Jewish philanthropic causes, and New York area cultural institutions, Steinhardt never seemed to worry that dirty work — illegal or not —might sully him. To the contrary, he played in the dirt and won, time and again. The spoils of his victories have lined his own pockets, while also enabling him to enrich investors and philanthropic organizations, which have, in turn, helped scrub him clean for the next round.

Whatever rewards organizations may have gained from Steinhardt’s largess, they can’t easily wipe away the stains left behind. Institutions that accepted Steinhardt’s gifts have a responsibility to follow the trail of his wealth and make amends to the nations and people he plundered. Steinhardt’s story is yet one more example of why nonprofits should demand higher levels of accountability and transparency from their donors.

For years, Steinhardt deftly avoided such accountability. An early and successful entrant into the hedge-fund business, he credited his “aggressive and combative” managerial style for his fund’s stellar performance, unabashedly writing in his autobiography No Bull that employees characterized the experience of working under him with terms such as “battered children,” “mental abuse,” “random violence,” and “rage disorder.”

Steinhardt’s hard-hitting approach attracted investors but also drew the attention of the Securities Exchange Commission. A Justice Department and SEC investigation from the early 1990s revealed “fraud and manipulation in the market for U.S. Treasury securities” by Steinhardt Management Company and resulted in a multimillion-dollar settlement payout.

Unsurprisingly, just as Steinhardt was paying out his part of the legal settlement, he became a serious player in the world of philanthropy, establishing a high-profile private family foundation in 1994, seven year after starting a more modest one. Whatever else motivated him, philanthropy held the possibility of burnishing his reputation. Yet he behaved with remarkable consistency, writing candidly in his autobiography, “It seems clear that I should act in philanthropy as I did in business.” That meant pursuing high returns on his philanthropic investments and apparently continuing his abusive behavior toward subordinates.

Steinhardt’s ambitions fit the turn-of-the-millennium moment when philanthropy embraced the language and logic of finance. In an often-cited article published in the Harvard Business Review, Harvard Business School professor Michael Porter and Mark Kramer, then chair of the recently established Jewish Funders Network, defined philanthropic purpose as “creating value.”

Steinhardt imported his business practices into his support for the Birthright program, which he helped launch in the late 1990s to give every young Jewish person a free 10-day trip to Israel. Philanthropic returns on the program would be calculated precisely. They would include the number of young people who went on the trips; empirical data gathered by Brandeis University’s Steinhardt Social Research Institute demonstrating participants’ connections to Israel and their likelihood of marrying Jews; and new dollars generated to support Jewish philanthropic causes.

Generosity as Cleansing Agent

In addition to bringing his investment sensibility into his philanthropic work, Steinhardt deployed his aggressive and domineering management style. As institutions chiseled his name onto their walls and celebrated his gifts, he translated his capital — already deployed to scrub away his indecencies and legally dubious practices — into a powerful cleansing agent: his own generosity.

A case in point, revealed in a 2019 ProPublica investigation, was Steinhardt’s pattern of propositioning women with whom he interacted professionally and making lewd and demeaning comments about their bodies and reproductive capacities. Staff members of Birthright and Hillel, both organizations Steinhardt substantially funded, reported the painful and lurid details of harassment they endured from him.

An internal investigation conducted by Hillel before the ProPublica reporting had found that even when supervisors and chief officers learned of or saw firsthand Steinhardt’s conduct, they did not confront him. Instead, they devised workarounds, such as making sure that women never had one-on-one meetings with him and eventually removing his name from the board of governors listed on its website.

It wasn’t until after the 2019 reporting that Steinhardt received public rebuke and faced reprisals from some Jewish communal organizations. In response, Steinhardt admitted in his foundation’s public statement that he could be “boorish” and “disrespectful,” but went no further than apologizing for “the unintended feelings his remarks have caused.”

Steinhardt was right to bet on the continued support of most organizations he funded. His name has remained tied to Brandeis University and NYU and to multiple Jewish programs. Last December, when introducing Steinhardt at a Zoom event, the rabbi of New York City’s Fifth Avenue Synagogue enthused: “There are few people out there, in this world, for whom it can be said that they potentially touched the lives, enriched the lives of a major portion of the Jewish world.”

Scrutinize the Origins of Wealth

If Steinhardt is to be credited for supporting vast philanthropic efforts, then the means of his support must also be scrutinized. The latest developments about his illegal procurement of cultural artifacts raise serious questions about whether his “rapacious appetite for plundered artifacts,” as described by Manhattan D.A. Cy Vance Jr., also financed his similarly rapacious appetite for philanthropic largesse and recognition.

Manhattan District Attorney’s Office

The investigation found that Steinhardt not only illegally bought cultural artifacts, but he also sold some of them. A question for any institution that has received philanthropic support from Steinhardt is whether the proceeds from these sales, which would have accrued capital gains, enriched philanthropic gifts.

When a donor makes a gift of appreciated property, especially antiquities and art that undergo complicated valuation procedures, the tax benefits are even more favorable than a straightforward deduction, meaning that such gifts are often as attractive to donors as they are to nonprofits. A recent article in the Cornell International Law Journal notes, “In the arts and antiquities world, the U.S. charitable deduction is often credited with contributing to the looting of archaeological sites and encouraging the sale and purchase of unprovenanced antiquities.”

Back in 2019, when he was accused of sexual misconduct, Steinhardt’s foundation castigated reporters for “trying to dig up dirt” on him. It’s striking that his professional handlers wanted the world to believe that finding dirt on Steinhardt required digging. In truth, Steinhardt has displayed his dirt as a badge of honor, fulsomely reporting it to readers of his autobiography, demeaning women in plain view of co-workers, and bragging about the looted objects he bought. Purchasing dirty antiquities gave him little pause. After all, they were highly valued objects that he could possess and, when he wished, unload for high returns.

Steinhardt probably expected the world, especially those cultural, educational, and Jewish organizations reliant on his gifts, to launder his dirty work into social good, all while using his own generosity to scrub himself clean. In the end, however, the dirty objects — not only the antiquities but the cultures and people he sought to own and profit from — may help expose the unvarnished truth.