Think Before You Ask: Five Takeaways for Fundraisers from the Epstein Scandal

The Massachusetts Institute of Technology recently issued a new report as part of an effort to move beyond the controversy surrounding its acceptance of gifts from the late sex offender Jeffrey Epstein, who abused underaged girls.

The pedophile, according to the report by an outside law firm, visited MIT’s campus nine times. Out of 10 Epstein gifts to MIT between 2002 and 2017, nine of them totaling $750,000 were made after the sex offender’s 2008 criminal conviction. That money went to MIT’s Media Lab and to research by MIT Professor of Mechanical Engineering Seth Lloyd.

The professor was recently placed on administrative leave. In addition to Epstein’s donations of $225,000 for Lloyd’s research, the new report found the professor had also accepted a $60,000 gift from the sex offender that Lloyd deposited in his personal bank account without reporting it to MIT. (Lloyd has denied the gift was used for personal gain; the only reason Epstein’s money went to his personal banking account, he wrote a few days ago, is because it was taking too long to set up a tax-exempt organization to accept the funds.)

The new report—which will be used in creating revised gift-acceptance policies to be released this spring by two newly formed MIT committees—contains few fundraising lessons aside from a glaringly obvious one: It doesn’t pay to take money from a convicted criminal.

Still, there’s much fundraisers can learn from the Epstein scandal, the biggest sex-abuse controversy to hit the charity world since 1990, when Father Bruce Ritter, the founder of Covenant House, stepped down after years of sexually abusing runaway teen boys in his care. Here are five fundraising takeaways Inside Philanthropy has gleaned from Epstein’s more recent demise and its impact on MIT, Harvard University and other nonprofit organizations he supported.

1. Beware of anonymous donors. Never use anonymity to cover up infamy. If you know that the reason behind a donor’s request to remain anonymous—or your organization’s decision not to name a benefactor—involves questionable activities by the donor, it is probably time to look for a new fundraising job, according to seasoned fundraising experts.

2. Leave organizations that aren’t transparent. Raising money for a charity shielding a criminal donor’s identity—even when there’s little or no contact between that donor and fundraising staff—can endanger your development career.

Just ask Peter Cohen. Last year, after being hired by Brown University in 2018, Cohen, a development director, was placed on administrative leave when it emerged that he’d had contact with Jeffrey Epstein in his previous fundraising job at MIT’s Media Lab. Cohen’s main mistake, it appears, was to go along with decisions made by others and not to leave MIT earlier than he did.

“When I joined MIT in 2014, there were gift acceptance policies and practices in place regarding Mr. Epstein which I understood were authorized by, and implemented with the full knowledge of, MIT central administration,” Cohen said in a written statement to Inside Philanthropy. “Notwithstanding my personal discomfort regarding Mr. Epstein… I did not believe I was in a position to change MIT’s policies and practices. I did not witness anything I understood to be illegal, and I never solicited gifts from Mr. Epstein… my personal dealings with him were limited to a very few, brief interactions during my MIT tenure. In 2018, I was honored to be offered a position at my alma mater, Brown University, and to become a member of Brown’s development team. I very much hope to be able to resume my duties there and continue my work in accordance with Brown University’s policies and values. I have no further comment at this time.”

Placed on administrative leave in early September, Cohen’s professional future at Brown University is still uncertain more than four months later.

[Editor’s Note: The morning after this article was published, Inside Philanthropy received the following information from Brown University: “Peter Cohen has resigned his position as Director of Development for Computer and Data Science,” wrote Brown spokesman Brian Clark. “While at Brown, Mr. Cohen’s performance was deemed effective and he was a valued member of the team. The university wishes Mr. Cohen the best in his future endeavors."]

3. Safeguard your organization’s reputation. The reputational risk of protecting a predator is much greater than the risk of doing something about it—for both an organization and its staff. If you cannot vouch for an organization’s fiscal and mission-related integrity, you shouldn’t be raising money on its behalf, experts say. And for organizations you believe in, everything you do on the job should enhance its community standing—not detract from it.

4. Check your grantmaking organization’s status. When you receive a grant, especially from a foundation headed by a living individual or family, make sure that the Internal Revenue Service regards that grantmaking entity as a tax-exempt organization. Epstein’s foundation lost its tax-exempt status in 2008, but continued operations, including greatly exaggerating its assets and making inaccurate claims about gifts to MIT, among others. If MIT fundraising staff or other leaders had simply checked the IRS listings, it might have avoided the fallout it suffered by continuing to accept money from a convicted sex offender.

5. Don’t keep tainted money. When the Council on Foreign Relations announced in November that it would replace the full amount it received from Epstein to combat sexual harassment, it raised a question about why Harvard University, one of the nation’s wealthiest institutions, hasn’t done the same thing. Marketing and other experts have called on Harvard to return all of the Epstein money. Despite this, Harvard has to date returned only $186,000 of Epstein’s nearly $9 million in donations to the university.

Harvard retained Foley Hoag, a Boston law firm, to help it conduct a review of Epstein’s donations, but no timeline has been announced. A separate review of Harvard gift-acceptance policies is also ongoing. The university has not said definitively whether the reviews will be made public or prompt any further return of Epstein’s money. Meanwhile, news reports have emerged that at least one Harvard professor had closer ties to Epstein after his 2008 conviction than were previously known.

Harvard public affairs staff declined to respond to questions about the status of the reviews because they are still ongoing. Harvard also declined to provide contact information for development staff who could answer questions about if and how Harvard’s fundraising has been affected by the Epstein revelations.

Could Harvard’s ties to Epstein and its management of the controversy ultimately hurt its fundraising or result in more restrictive gift-acceptance policies? The answers could affect the university’s massive development operation for years to come.

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