He Vowed To Die Broke

Hello! This is Deep Pockets #9.

Between 1984 and 1996, a shadowy foundation called “Atlantic Philanthropies” donated more than $600 million to universities, hospitals, and various other charities. I say “shadowy” because no one knew who was behind the foundation or the source of its seemingly endless wealth. Charities had no idea how they were chosen, and the donations were paid by cashier’s checks to even further hide the source.

Over one thousand buildings, mainly on hospital and college campuses, were constructed using Atlantic’s money. Not one of them features the donor’s name.

Atlantic Philanthropies was so serious about keeping the source of its funds secret that the founder incorporated in Bermuda to avoid US disclosure laws. That also meant he couldn’t accept the basic tax benefits generated by his donations on his personal tax returns every year.

His identity was revealed in 1996 thanks to a lawsuit from his longtime business partner. And while that may have been a pain for the secretive billionaire, in a surprise twist, losing his anonymity unintentionally inspired the largest philanthropic movement of all time…

DEEP DIVE: He Vowed To Die Broke

Charles “Chuck” Feeney was born in Elizabeth, New Jersey, on April 23, 1931. He grew up at the height of the Great Depression. Chuck’s family was poor. They struggled every month to pay their $32 mortgage.

After graduating from high school in 1948, he joined the Air Force. He spent the next four years serving as part of the American occupation of Japan after World War II.

Upon completing his military service, he returned to America and enrolled at Cornell. He graduated in 1956 and moved to Europe to seek his fortune. In Barcelona, he befriended a like-minded fellow Cornell grad named Robert Miller.

Chuck already had a business idea in mind for the young partnership.

During his time in the Air Force, Chuck purchased groceries and other goods at military-run stores called commissaries. One major benefit of commissaries was that if the soldier was traveling home, their purchases were not subject to local taxes and tariffs. This was especially nice for typically high-tax items that could fit in a suitcase and were not perishable. For example, perfume, cologne, liquor, cigars, and cigarettes.

At some point during his military years, Chuck had an important revelation:

Those tax and tariff discounts were not necessarily restricted to shopping done by soldiers on military bases. Any shopper who was in transit to another country could also qualify to not pay local taxes and tariffs. For example, someone shopping while they waited for a flight at an international airport.

On November 7, 1960, Chuck Feeney and Robert Miller opened the very first Duty Free Shoppers Store at the Hong Kong Airport.

In 1962, DFS won the exclusive right to operate duty free stores in Hawaii. Their Honolulu airport location was the first duty free store in the United States. Their timing was perfect. In 1964 Japan lifted foreign travel restrictions that had been put in place after WWII. Following suit, Japan Airlines launched a direct route between Tokyo and Honolulu using a brand new fleet of Douglas DC-8 long-range jetliners. Business boomed as Japanese tourists with pockets full of pent-up savings traveled the world. By the end of 1964, DFS employed 200 people in nearly 30 countries.

In 1968, DFS opened its first non-airport location in Kowloon, Hong Kong. A dozen more non-airport locations soon followed, mostly in Asia.

As the company expanded, Chuck and Robert took on two minority partners, one owned 20%, the other 2%. Chuck and Robert each retained 39% of DFS Group.

In 1967, Chuck’s 39% stake in DFS translated into a $12,000 dividend. That’s the same as making around $112,000 today.

In 1977, his dividend was $12 million. That’s $62 million in today’s dollars.

In 1979, Chuck’s dividend was $35 million. That’s around $150 million today. And thanks to a tax loophole on international income, Chuck’s dividend income was 100% tax-free. Just like the goods in his stores that made him rich.

With DFS throwing off major cash in the 1970s, Chuck Feeney did what any of us would do. He bought a private jet, limousines, cars, yachts, jewelry and more. Every luxury a millionaire could buy, he bought.

On the day Chuck turned 50 in 1981, he owned SIX palatial mansions around the world. He had estates in New York, San Francisco, Aspen, Honolulu, Paris, and on the French Riviera.

Then something funny happened. For reasons he never fully explained, Chuck Feeney suddenly had a bit of a reverse mid-life crisis. Instead of buying a sports car at 50, Chuck gave up his car collection. He sold the yachts and the limos. He downsized his real estate.

But it wasn’t enough.

Atlantic Philanthropies

These major lifestyle downgrades didn’t satisfy Chuck. He decided he had to give it all away. Anonymously.

Why anonymously? Other than showing that he had a complete lack of ego, Chuck’s theory on giving was that if you make a big deal about donating money to a charity, you might actually prevent someone else from donating to that charity in the future. He called it the “crowding out effect.” Had he insisted his name be featured on a building at Cornell, some other billionaire might not donate to Cornell. In his lifetime, Chuck gave over $1 billion to Cornell. Not a single building on Cornell’s campus features his name.

In 1982, Chuck Feeney founded Atlantic Philanthropies to manage his donations. He incorporated the foundation in Bermuda to avoid US disclosure laws. That would allow him to give money away completely anonymously BUT it would disallow him from taking what would prove to be extremely generous annual tax write-offs on his personal income.

It still wasn’t enough.

In 1984, Chuck transferred his 39% stake in DFS to Atlantic Philanthropies. At that point, his stake was valued at $500 million. That’s the same as $1.5 billion today. And once again, he did it without taking any tax write-off for giving away a half-billion-dollar asset. Financially speaking, any accountant would tell you this was sheer madness, but it allowed Chuck to maintain his anonymity.

Between 1984 and 1996, Atlantic Philanthropies gave away more than $600 million totally anonymously. Recipients like the Mount Sinai School of Medicine in Portland were paid by cashier’s checks issued by a bank. So they often never even knew the name “Atlantic Philanthropies.”

The Secret Is Revealed

Chuck’s secret was revealed in a lawsuit in 1996. Prior to the lawsuit, the luxury conglomerate LVMH agreed to acquire 61% of DFS (Chuck’s 39% stake, as well as the 22% combined stakes owned by the two minority partners). Chuck would receive $1.6 billion from the sale. Actually, that last line was not technically accurate. And that technicality was the crux of the lawsuit that exposed his secret.

Chuck’s original partner, Robert Miller, didn’t want to sell to LVMH. He sued to invalidate the sale, claiming Chuck didn’t actually own the 39% stake, Atlantic did. Therefore, Chuck didn’t have the right to negotiate or accept a sale.

In the end, Robert’s lawsuit was not successful.

I wouldn’t feel too bad for him, though. Robert was not forced to sell his own stake and continues to own 39% of DFS under LVMH. Robert is a multi-billionaire sailing champion who owns one of the largest estates in Great Britain. His middle daughter Marie-Chantal is the Crown Princess of Greece thanks to her 1995 marriage to Pavlos, the son of the King of Greece. He has two other daughters. One married into German royalty, and therefore, her children are referred to as a prince and princess. His other daughter married the grandson of Jean Paul Getty, of Getty Oil, who was the richest person in the world at the time of his death in 1976.

Vowing To Die Broke

As for Chuck Feeney, after his secret was revealed, he made a public vow to “die broke” after giving all of his money away to charity. He also began to take advantage of every tax benefit available to maximize his giving.

Countless charities were supported with millions upon millions of dollars thanks to Chuck. Over a thousand buildings around the world, mainly on hospital and college campuses, were constructed with Chuck Feeney’s money. Not one bears his name.

His gifts included:

• $4 billion to educational institutions

• $900 million to human rights organizations

• $700 million to health care causes

• $350 million to turn New York City’s Roosevelt Island into a tech hub

• $62 million to dispel the death penalty in the United States

Between 1996 and 2020, Atlantic Charities gave away $8 billion. Wait… how did he go from $1.63 billion to $8 billion?

Well, as it turned out, Chuck was also an extremely shrewd venture capital investor. In 1980, he founded a private equity firm called General Atlantic. General Atlantic initially focused on real estate, oil, and natural gas investments. However, because they were located in San Francisco in the 1990s and early 2000s, General Atlantic was exposed to some of the earliest tech revolutions. General Atlantic amassed very early stakes in tech companies like Priceline, E-Trade, and Facebook. These stock holdings doubled the foundation’s assets.

In 2020, Atlantic Philanthropies was closed because it no longer had any assets. General Atlantic continues to operate as a standalone private equity firm with more than $80 billion in assets under management.

Chuck Feeney died on October 9, 2023, at the age of 92, having successfully accomplished his vow to die broke.

Between 1990 and his death in October 2023, a period when he managed billions of dollars, Chuck Feeney lived in a modest San Francisco apartment. He wore a $10 Casio watch, flew coach, and did not own a car.

Chuck was married twice. He had four daughters from his first marriage, which lasted from 1959 to 1990. In 1995, he married his former secretary, Helga. They remained together until his death.

And before you feel too bad for Chuck’s children, their mother did receive a $140 million divorce settlement from Chuck in the mid-1990s.

The Giving Pledge

Chuck Feeney’s example of giving enormous amounts of money to charity while he was alive caught the attention of a pair of fellow billionaires who were trying to figure out what to do with their own enormous wealth.

Upon learning his story and meeting him in person, Bill Gates and Warren Buffett were so inspired by Chuck's "Giving while Living" concept, they decided to follow his lead. In June 2010, they established the now-famous "Giving Pledge," which encourages wealthy people to give at least 50% of their fortune to charity before they die. Chuck himself signed the pledge in 2011.

To date, more than 200 people have committed to giving more than $600 billion to charity before their respective deaths. This would not have happened without Chuck Feeney.

In 2014 Warren Buffett presented Chuck with a lifetime achievement award for philanthropy. In his introduction, Buffett said:

"It's a real honor to talk about a fellow who is my hero and Bill Gates' hero. He should be everybody's hero."

FINAL WORD

Speaking of Bill Gates and Warren Buffett! On the next edition of “Deep Pockets,” we will tell you the story of how Warren cost Bill a TRILLION DOLLARS.

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