With Big Money and Brash Ideas, A Billionaire Redefines Charity

At the peak of a storm last February, several of the nation’s most gifted philosophers and political scientists met for a weekend at the Westchester County estate of George Soros, the Hungarian-born billionaire financier. As the wind rattled the windows, Mr. Soros raised a glass in honor of his guests and gave them a challenge: if they were to advise him on how to spend more money each year than the Ford Foundation does on philanthropy, much of it in the United States, what would they suggest?

”It was an astonishing session, as well as the most expensive philosophical tutorial anyone has ever had,” said Alan Ryan, at the time a professor at Princeton and now the warden of New College at Oxford.

The philosophers’ weekend debate, one of several ”Soros retreats,” as one participant called them, was pivotal in shaping the latest phase of Mr. Soros’s extraordinary philanthropic career. For after spending $1.1 billion, most of it since 1989 trying to transform the former Soviet bloc into thriving capitalist democracies, or what he calls ”open societies,” Mr. Soros, deeply concerned that America’s own open society is eroding, is bringing his philanthropy home. Along the way he is shaking up the philanthropic world.

A man who often seems to donate millions on impulse, Mr. Soros plans to devote half his annual giving — more than $350 million last year, almost all of it overseas — to five domestic issues: immigrants’ rights, death and dying, drugs, education and criminal justice. While other foundations and philanthropists are more comfortable healing the sick, housing the poor or feeding the hungry, Mr. Soros is unabashed in pursuing a political agenda.

Almost singlehandedly, for instance, Mr. Soros financed successful ballot initiatives this fall in Arizona and California to permit the use of marijuana for medical purposes. The support brought furious criticism from many conservatives, government officials and drug experts, who called it an arrogant social experiment that they fear is a disastrous first step toward full legalization of marijuana and other drugs.

But Mr. Soros, who amassed most of his net worth of $2 billion by taking huge risks in the currency and other financial markets, is undaunted by any fury. He says the philosophers’ weekend reinforced his determination to greatly increase his domestic giving — since 1994, he has committed $90 million — out of concern that the conservative drift in the United States has bred indifference to genocide abroad and to suffering and injustice at home.

”The core of an open society is under attack in our laissez-faire society,” Mr. Soros said in an interview, adding that he wanted to foster debate about divisive issues.

His giving has inspired comparisons to an earlier age.

”George Soros is the only American who rivals the great philanthropists of the 1890’s, John D. Rockefeller Sr., Andrew Carnegie and Julius Rosenwald,” said Nelson Aldrich Jr., the editor of The American Benefactor, a quarterly, and who is himself a cousin of the Rockefellers.

Alfred Stepan, who helped found the Central European University, a $55 million Soros project in Budapest, noted the scale of Mr. Soros’s philanthropy. ”If you rank a donor by assets, Soros is nothing,” said Mr. Stepan, a fellow at All Souls College at Oxford. the Ford Foundation, for example, which committed $342 million in 1996, has assets estimated at $8 billion. But, Mr. Stepan added, ”if you measure it by dispensed gifts, especially in proportion to income, Soros is the world’s single largest donor, individual or foundation.”

More than sheer numbers make Mr. Soros stand out, however.

”Soros is successful because his giving is openly political and daring,” said David Rieff, a writer who serves on one of Mr. Soros’s boards. ”He is determined to use his money to change the nation’s social agenda and is tough-minded about achieving his goals.”

The History

From Hardship Comes Toughness

Mr. Soros, 66, never tires of expounding, in his Hungarian accent, often arcane theories about how the world works — a ”failed philosopher,” he calls himself. He studied under Sir Karl Popper, whose critique of Marx and other proponents of historical determinism, expounded in the book ”The Open Society and Its Enemies,” deeply influenced his thinking. Of slight build, well tanned, with wire-rimmed glasses and expensive suit, Mr. Soros would not stand out in a room of multimillionaires as a multibillionaire.

There is only a hint in his deliberately calm tone of the toughness of someone who escaped the Nazis as a Jewish adolescent in Budapest and immigrated to the United States in 1956 to found an off-shore investment fund known today for its financial brinkmanship and unparalleled success. Having ”broken” the Bank of England in 1992 by betting that Britain would devalue the pound, Mr. Soros exudes confidence — arrogance, some detractors call it — a quiet certainty that his self-made wealth makes him worthy of being listened to.

None of his giving has created more fury than his support for a new approach to drug policy. Conservative critics say that in the guise of fostering debate about politically charged issues, Mr. Soros is trying to impose his liberal and misguided policy agenda on an unwitting public.

Public records show that since 1993 he has donated some $15 million to foundations and groups that favor changing the nation’s drug policies. Ethan A. Nadelmann, head of the Lindesmith Center, a New York City institute founded in 1994 with Mr. Soros’s money and budgeted for $828,000 in 1996, has called for legalization of marijuana and other drugs.

In addition to this charitable, or tax-exempt, support, he donated more than $1 million to the ground-breaking state ballot initiatives on drug laws in California and Arizona, contributions that are not tax deductible. Both measures were overwhelmingly approved by voters in November.

California’s new law allows marijuana to be grown and used by anyone, even a minor, with an oral recommendation from a doctor to treat ”any other illness for which marijuana provides relief.” Arizona’s measure allows doctors to prescribe any of 117 banned drugs, including marijuana, LSD and heroin, for a ”seriously ill or terminally ill patient.” It also releases prisoners serving time for personal possession of drugs.

”Neither initiative would have made it on the ballot were it not for George Soros,” said Stu Mollrich, a consultant to the California measure’s opponents. Three former Presidents, senior Clinton Administration officials, state law-enforcement officials and prominent drug and medical experts opposed one or both measures.

But Mr. Soros expresses no regrets and says he is ready to support similar initiatives in other states. Denying that he favors across-the-board legalization of drugs, he says he supports ”rational debate” about what constitutes a ”saner drug policy.” Since a drug-free America ”is an unattainable dream, our policy should aim at reducing harm connected with drugs.” Specifically, that means ”saving our jails for violent criminals and predatory drug dealers, not nonviolent drug addicts willing to undergo treatment or the occasional marijuana smoker,” he said.

That has not persuaded some drug-policy experts, who said Mr. Soros had given money not for debate, but to weaken drug laws.

Herbert D. Kleber, vice president of the National Center on Addiction and Substance Abuse at Columbia University, said that while Mr. Soros was ”playing around” with the idea of legalization of drugs, ”people will die from it.”

Mr. Soros dismisses such criticism, arguing that drug policy is surrounded by ”hysteria, passion and extremism.” When it comes to drugs, he said, ”even our politicians have become extremists by trying to cater to popular sentiment which has been whipped up and exploited for political purposes.”

Mr. Rieff, the writer, said that Mr. Soros’s lifetime of struggle against often deadly adversaries had made him impervious to such attacks. ”If you’ve fled the Nazis, fought the Communists and battled your way to the top of the West’s financial markets, a nasty column about you in a newspaper is no big deal,” Mr. Rieff said.

The Motivation

Lost Opportunities, Growing Concerns

Aryeh Neier, the human rights advocate who is Mr. Soros’s closest adviser and president of the Open Society Institute, the nonprofit foundation that supervises much of Mr. Soros’s domestic giving, attributed Mr. Soros’s shift in focus partly to his dismay at America’s failure to ”seize the revolutionary moment” offered by the fall of the Berlin Wall and collapse of the Soviet Union — he felt the country should have poured money into supporting democratic impulses in the former dictatorships, Mr. Neier said. Then came the genocide in Yugoslavia, with a belated American response. (Mr. Soros gave $50 million in late 1992 to help alleviate the suffering of Bosnia’s tormented civilian population.)

Mr. Soros was further ”repulsed,” Mr. Neier added, by the ”Gingrich revolution,” the triumph of conservative Republicans in the 1994 Congressional races, which symbolized for Mr. Soros the state’s abandonment of its obligations to citizens, particularly the poor and immigrants. And finally, Mr. Soros said, he was worried about the extent to which ”market values and excessive individualism” were permeating the professions of medicine, law, journalism and politics, turning them into businesses rather than callings.

Mr. Soros has shown little interest in achieving political change through traditional channels. He gives relatively little, by his standards, to candidates or major parties. His largest contribution this year was $100,000 to the Democratic National Committee, plus a total of $5,000 to three Senate candidates and $500 each to 25 Congressional candidates, mostly Democrats and a few liberal Republicans.

Nor does he assume that his giving will insure political influence. ”I can already see the President if I want to,” he said.

Rather, Mr. Soros, like most philanthropists, seems to know that his charitable contributions can provide even greater prominence and control.

Yet although he has written that he indulges his ”messianic fantasies” through his giving, he is shrewd and sensitive enough to the rules of democracy not to try to impose his views directly. Instead, he uses his money to foster debate about his agenda, hoping that an educated public will agree with him.

So Mr. Soros, advised by Mr. Neier and Gara LaMarche, both veterans of the Human Rights Watch organization, directs his spending to wide-ranging grass-roots projects that he hopes will help transform the nation’s political culture and protect Americans from what he calls ”unintended consequences” of bad government policy. There is variety in subject and amount:

  • *A $50 million commitment to the Emma Lazarus Fund, a project started in September to help legal immigrants attain full participation in American society. Mr. Soros described the grant as a spontaneous response to his ”outrage,” as an immigrant, over the recent law denying legal immigrants several types of public assistance and benefits.
  • *A $15 million commitment for three years to the Project on Death in America. The effort, headed by Kathleen M. Foley, a doctor and senior pain specialist at the Memorial Sloan-Kettering Cancer Center in New York, supports projects that enhance comfort, dignity, care and relief from pain for the dying. Mr. Soros says he is trying to end America’s ”denial of death.”
  • *A $12 million commitment over three years to the Algebra Project, which seeks to improve mathematics skills of rural and inner-city public school students throughout the country.
  • *The creation last spring of the Center on Crime, Communities and Culture, headed by Nancy Mahon, an expert on prisons. She has already awarded $1.4 million in grants to more than two dozen groups to support projects like prison guard training and research on how film and television affect individual and community perceptions of crime.

The Open Society Institute board approved in principal over the weekend $7 million more for criminal justice as part of $50 million in new pledges for 1997. Mr. Soros’s domestic giving is increasing exponentially, from $15 million this year to what Mr. Soros says will eventually be more than $100 million a year. Until recently, less than 10 percent of his annual giving was spent domestically.

The Personality

Too Restless To See It Through?

Few grant-makers challenge the unorthodox nature of some of Mr. Soros’s giving or his usual lack of support for either Jewish causes or traditional philanthropy. But some critics wonder whether he can sustain his interest in a domestic agenda.

A fellow foundation director remarked on Mr. Soros’s intellectual restlessness. ”He focuses on something and then moves on,” said the grant-maker, who spoke on condition of anonymity. ”And he likes to see results quickly. He has now chosen areas where it’s hard to see results quickly. Does he have the staying power?”

Mr. Soros says he does. As evidence, he points to what foundation officers call the ”professionalization” of his giving, or its institutionalization. Last year, for example, Mr. Soros published the first comprehensive annual report on his foundations’ projects. Mr. Neier and Mr. LaMarche, both highly regarded professionals in the foundation community, have insisted on strict budgets and project evaluations.

”Soros has not surrounded himself with yes men,” Mr. Rieff said. ”They talk back; they disagree. And they are running the projects, not George.”

His failures abroad also reinforced the need for more structure and accountability, he and his associates say. His Russian foundation, for example, has undergone three reorganizations since Mr. Soros learned that much of its budget was diverted into Swiss bank accounts and luxury cars.

The new emphasis on American philanthropy has resulted in an expansion of the Open Society Institute’s American staff, to more than 160 employees today from 64 in 1994. But the staff is still lean by foundation standards, and its members are not as well paid as their philanthropic counterparts. The foundations’ offices on 57th Street overlooking Central Park and Carnegie Hall — in the same building as Mr. Soros’s business offices — are spare.

”Why would we take pay cuts and smaller offices to come to work for a billionaire?” Mr. LaMarche said. ”Because of the chance to do truly creative, risky giving.”

Some question whether Mr. Soros, whose charity finances 50 offices and employs more than 1,000 people worldwide, is starting up too quickly and spreading himself too thin. That is a concern, Mr. LaMarche conceded. ”But all these issues are interconnected and must be addressed simultaneously if we are to see results,” Mr. LaMarche said.

Mr. Soros hopes that his giving will prompt other foundations to support risky projects and research. He said he knew that, like some of his early projects in Eastern Europe, China and South Africa, some American projects may fail.

”I don’t have all the answers,” he said. ”But I know what questions to ask. And after all, I can’t take it with me.”

Correction: January 1, 1997 
An article on Dec. 17 about charitable giving by the financier George Soros referred incompletely to the financing of ballot initiatives in Arizona and California to permit the use of marijuana for medical purposes. While Mr. Soros was the initiatives’ single largest donor, with gifts of more than $1 million, another donor, Peter Lewis, also played a major role, giving more than $800,000.