May 17, 2007
T. Boone Pickens Demands More From His Philanthropic Dollar
Posted by Christine Hurt

The Chronicle of Higher Education is reporting that T. Boone Pickens, a name well-known to corporate law practitioners and scholars, has made substantial, but controversial, gifts to two medical centers in Texas, Southwestern (Dallas) and M.D. Anderson (Houston), both of which are part of the University of Texas system.  Pickens, who has declared that he would like to give away the bulk of his estate during his lifetime (he's 78), has pledged $50 million each to these institutions on the condition that they invest the money so that the gifts grow to $500 million in 25 years.  If the gift does not reach that mark, the earnings must go to another Pickens charity, but the institutions get to keep the principal.  (I assume that the $50 million can't be spent now, otherwise I would just go ahead and spend it now and forego the earnings.  However, the difference in present value would be enough to play Pickens' game for the money 25 years from now.) 

I have heard fundraisers and donors alike grouse that academic institutions like to invest their donations in low-risk, low-interest vehicles.  What Pickens is asking for seems to be average returns -- a little less than 10% per year, I think.  And hopefully, the period is long enough to weather some bear markets with the upswing of bull markets.  Although the reporter wonders whether this is all a ruse for Pickens to get to donate money that will then be re-invested in his hedge fund, officials at Southwestern and M.D. Anderson say they have no plans in doing so.

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