PHILANTHROPIST AND AUTHOR
Lewis Cullman Works Hard to Give It Away
Originally published: January 11, 2005
Cullman, 85, built his fortune through leveraged buyouts, after helping engineer what many consider the first LBO, of Orkin Exterminating Co., in 1963. After selling the At-A-Glance calendar company to Mead in 1999, Cullman started giving away his millions, supporting the New York Public Library, American Museum of Natural History and many other organizations.
Cullman recently spoke with NEWSWEEK's Carl Sullivan about tsunami relief, the estate-tax repeal and his views on why more people should be giving more money to worthy causes. Excerpts:
NEWSWEEK: There's a confluence of government and private aid for the tsunami disaster. Should one take the lead over the other?
Lewis B. Cullman: It's important for the United States government immediately to speak up and say that as the richest country in the world, the United States, will do anything to help. Now the fact that private people have responded is a wonderful thing, but it doesn't in any way substitute for the government's responsibility. I think the two have to be kept apart.
So in a disaster of this size and scope, the private sector should be supplementing what the government does?
We don't know at this stage [what the long-term needs will be]. If you look at where we are in the pecking order now, it doesn't look very good because if you measure the announced support of the United States government as a percentage of GDP, Norway [and] Sweden are way ahead of us. That I think is not good PR for the United States government, to expose ourselves to that kind of criticism. The other thing, which differentiates private support from government support, government support is really a pledge. Private support is cash. Maybe very large private donors make pledges, but I think the average guy wouldn't consider sending in a pledge to the Red Cross. I would bet that most of the stuff we read about in the private sector is actually usable cash, but whether it sticks to somebody else's fingers or not, that's another thing to worry about. There are a bunch of crooks out there, so you have to be sure to pick and choose proper, well-established organizations.
There are so many causes in the world today. How does a person decide which one to give to? And how does one choose between giving for immediate disaster relief versus contributing to a group that has more long-term goals?
The best way I can answer that is, to my utter astonishment, I sent some money to Doctors Without Borders. They called me up and said, "We have more money than we can use [for the South Asian tragedy]. If you would like to reallocate that money for a future disaster, we can do that. Or otherwise, we'll be happy to send the check back." I think what's happened is the immediate relief, which I think is being done as expeditiously as possible, will probably pale in comparison to the long-term needs of rebuilding.
What did you do after Doctors Without Borders called you?
I decided to tell them to send me the check back and under the circumstances, maybe the best place was to double up my money on another group that I contributed to [which supports tsunami relief for the planned international city, Auroville, India]. I think the impact of [the tsunamis] would probably force the average person to think of the immediate relief and the more thoughtful ones might also think [of more long-term projects]. And I think even the government, the same thing, once this passes, a year or two from now, we'll be talking about whether or not the United States government is helping rebuild these countries. I don't think you'll hear much about that. That's an unfortunate situation.
In your book you said, "Too many of the people who really have the money to give away don't do so." Why is that?
A guy named Claude Rosenberg wrote a book about this. He thought wealthy people should not consider their giving as a percentage of their income but should revise that thinking as a percentage of their net worth. I went to a wealth-management forum, and even the guy who organized it said, "You know my wife and I give away all our income every year, but after that we seem to be worth more money." I felt like saying, "Then why don't you give some of your assets away?" [Laughs.]
Why don't people give away any of their assets?
The old-fashioned idea was that you never spent your principal, just your income. Even people of modest means, you give away 10 percent of your income. It's the same philosophy. It's always a percentage of income, but people of great wealth should give away some assets, too.
How does a person decide how much to provide for their children and grandchildren versus providing for society at large?
I have very strong feelings about that. I'll refer to what the Democrats like to call the estate tax and the Republicans like to call the death tax. Teddy Roosevelt's philosophy was that he did not want to see a landed gentry established in the United States--a bunch of people running around playing polo. So the original reason for the estate tax was to eliminate large amounts of money being passed from one generation to the next. Now that presents an interesting question: who can make the judgment about what's the proper amount? And I don't claim to know what that is, but you should provide your kids with an adequate education, whatever that means, and then a modest nest egg. I always say to young people, the buck you earn yourself is a far different buck than the one you inherit. The buck you inherit has all kinds of psychological problems attached to it, guilt feelings and God knows what. Inherited wealth in any large proportion takes away the motivating force.
How will repeal of the estate tax impact giving?
A few years ago, they came out with a regulation that if artists gave a painting to a museum, they got a deduction for the cost of the materials only. Well, guess what happened? That source of donations dried up. There was no incentive for an artist to give away a work like that.
So that motivation is gone?
It would definitely be counterproductive. It's not the only motivation, but it greases the rails. There have been all kinds of studies on how the estate tax affects giving. The United States of America is really envied in the rest of the world as having a wonderful system of philanthropy. Many of the European countries are attempting to emulate what we're doing, but they haven't really gotten there yet.
What was your favorite charitable gift?
I probably get more satisfaction out of Chess-in-the-Schools, which we started from scratch for disadvantaged kids in New York City, even though its financial impact is nowhere near as great as the New York Public Library or MoMA or any of the major charities that I support. I also get a lot of pleasure out of using my ingenuity to try to leverage what I do--challenge gifts, things like that. That's just another way of motivating other people to join forces.
Do you ever get tired of giving or solicitations?
Yes, the old gag, "No good deeds goes unpunished" is applicable here. [Laughs.] If you give a lot of money, it gives them the opportunity to ask you for more, every time. But I'm doing that myself [asking others to donate to charity]. I wear two hats. I have a simple theory that I've said to a lot of people: I think retirement is a joke. I think the most important thing for any individual is to have a reason to get up in the morning. I don't care what it is. When I sold my business, I dedicated all my energies to the not-for-profit world, so I'm probably working as hard at that as I was before, maybe harder.