On a
cool summer afternoon at Dublin’s Heuston Station, Chuck Feeney, 81, gingerly
stepped off a train on his journey back from the University of Limerick, a
12,000 - student college he willed into existence with his vision, his influence
and nearly $170 million in grants, and hobbled toward the turnstiles on sore
knees. No commuter even glanced twice at the short New Jersey native, one hand
holding a plastic bag of newspapers, the other grasping an iron fence for
support. The man who arguably has done more for Ireland than anyone since Saint
Patrick slowly limped out of the station completely unnoticed. And that’s just
how Feeney likes it.
Chuck
Feeney is the James Bond of philanthropy. Over the last 30 years he’s
crisscrossed the globe conducting a clandestine operation to give away a $7.5
billion fortune derived from hawking cognac, perfume and cigarettes in his
empire of duty-free shops. His foundation, the Atlantic Philanthropies, has
funneled $6.2 billion into education, science, health care, aging and civil
rights in the U.S., Australia, Vietnam, Bermuda, South Africa and Ireland. Few
living people have given away more, and no one at his wealth level has ever
given their fortune away so completely during their lifetime. The remaining
$1.3 billion will be spent by 2016, and the foundation will be shuttered in
2020. While the business world’s titans obsess over piling up as many riches as
possible, Feeney is working double time to die broke.
Feeney
embarked on this mission in 1984, in the middle of a decade marked by wealth
creation–and conspicuous consumption–when he slyly transferred his entire
38.75% ownership stake in Duty Free Shoppers to what became the Atlantic
Philanthropies. “I concluded that if you hung on to a piece of the action for
yourself you’d always be worrying about that piece,” says Feeney, who estimates
his current net worth at $2 million (with an “m”). “People used to ask me how I
got my jollies, and I guess I’m happy when what I’m doing is helping people and
unhappy when what I’m doing isn’t helping people.”
What
Feeney does is give big money to big problems–whether bringing peace to
Northern Ireland, modernizing Vietnam’s health care system or seeding $350
million to turn New York‘s long-neglected Roosevelt Island into a technology
hub. He’s not waiting to grant gifts after he’s gone nor to set up a legacy
fund that annually tosses pennies at a $10 problem. He hunts for causes where
he can have dramatic impact and goes all-in. “Chuck Feeney is a remarkable role
model,” Bill Gates tells FORBES, “and the ultimate example of giving while
living.”
For
the first 15 years of this mission Feeney obsessively hid the type of donations
that other tycoons employ publicists to plaster across newspapers. Many
charities had no idea where the piles of money were coming from. Those that did
were sworn to secrecy. “I had to convince the board of trustees that it was on
the level, that there was nothing disreputable and this wasn’t Mafia money,”
says Frank Rhodes, the former president of Cornell University who later chaired
Atlantic Philanthropies. “That was difficult.” Eventually Feeney was outed ( in
part due to FORBES), but his fervent desire for anonymity remained (until this
year he had done about five interviews in his life). Now that his quest to give
until nearly broke is coming to its conclusion, he’s opening up a bit. What
emerges is one of strangest, most impactful lives of all time.
Feeney
prefers showing to telling. In Dublin he sends me on a three-hour tour of
Trinity College to witness everything from the library gift shop he designed to
his genetics complex and department of neuroscience, complete with lab rats
with electrodes implanted in their heads. The next day he endures the six-hour
round-trip to the University of Limerick to personally walk me through its
Irish World Academy of Music & Dance, its new medical school and its new
sports center (now home to Ireland’s Munster rugby team), where hundreds of
young kids were playing soccer on the all-weather turf. Rather than walk me
through his life story, he invites Conor O’Clery , the author of the Feeney
biography , The Billionaire Who Wasn’t (PublicAffairs, 2007), to dinner in
Dublin’s Peploe’s Bistro. At dinner Feeney sits quietly in a frayed navy
blazer, sipping chardonnay that he dilutes with a splash of water, occasionally
throwing in a point for emphasis or, more often, a witty, self-deprecating
joke.
The
story that emerges is this: Feeney grew up in an Irish-American neighborhood in
the blue-collar town of Elizabeth, N.J., coming of age in the Great Depression.
He served in the Air Force during the Korean War before attending the Cornell
School of Hotel Administration on the GI Bill. After graduation in 1956 he
traveled to France to take more college classes and later got involved in the
business of following the U.S. Navy’s Atlantic fleet, selling tax-free booze to
sailors. Competition was intense, but he got ahead by using his military
experience to talk his way directly onto ships and gathering intelligence on
the fleet’s next destination by chatting up local prostitutes.
He
brought fellow Cornell alum Bob Miller into the business, and the pair started
selling cars, perfume and jewelry to servicemen and tourists. They later added
tax lawyer Tony Pilaro and accountant Alan Parker as owners to help manage the
bootstrapped business more professionally. By 1964 their Duty Free Shoppers had
200 employees in 27 countries.
It
was a nice little business, but soon the Japanese economic boom would transform
the scrappy operation into one of the most profitable retailers in history. In
1964, the same year as the Tokyo Olympics, Japan lifted foreign travel
restrictions (enacted after World War II to rebuild the economy), allowing
citizens to vacation abroad. Japanese tourists, along with their massive store
of pent-up savings, surged across the globe. Hawaii and Hong Kong were top
destinations. Feeney, who had picked up some Japanese language and customs
while in the Air Force, hired smart, pretty Japanese girls to work the stores
and filled his shelves with cognac, cigarettes and leather bags that gift-crazy
Japanese snatched up for co-workers and friends. Soon Feeney and company had tour
guides on the payroll who herded tourists to DFS stores before they had even
checked into the hotel so they couldn’t spend money anywhere else first.
The
Japanese were such lucrative customers that Feeney hired analysts to predict
which cities they’d flock to next. DFS shops sprung up in Anchorage, San
Francisco and Guam. Another target was Saipan, a tiny tropical island just a
short flight from Japan that he predicted could become a hot beach spot for
Tokyo residents. There was a catch: The island lacked an airport. So in 1976
DFS invested $5 million to have one built.
The
aggressive growth strategy placed DFS in the perfect position for the
subsequent Japanese economic explosion. Feeney received annual dividend payouts
worth $12,000 in 1967, according to O’Clery. His payout in 1977? Twelve million
dollars. Over the next decade Feeney banked nearly $334 million in dividends
that he plowed into hotels, retail shops, clothing companies and, later, tech
startups. He remained obsessively secretive and low key, but the money was now
too big to ignore.
In
1988 The Forbes 400 issue included a four-page feature that exposed the success
of DFS and the vast wealth of its four owners. The story by Andrew Tanzer and
Marc Beauchamp, and the subsequent attention, was so jarring to Feeney that
O’Clery devoted an entire chapter of his biography to the episode. The article
pulled back the curtain on how DFS operated: its Japan strategy, the 200%
markups, the 20% margins and blistering annual sales of roughly $1.6 billion. FORBES
estimated that Feeney’s Waikiki shop annually generated $20,000 of revenue per
square foot–$38,700 in current dollars, more than seven times Apple’s current
average of $5,000. “My reaction was, ?Well, there goes our cover, ‘ ” says
Feeney. “ We tried to figure out if it did us any damage but concluded no, the
info was in the public domain.” The piece identified Feeney as the 31st-richest
person in America, worth an estimated $1.3 billion. His secret was out.
But
FORBES had made two mistakes: First, the fortune was worth substantially more.
And second, it no longer belonged to Feeney.
Only
a close inner circle knew of the latter: that Feeney himself was worth at most
a few million dollars and didn’t even own a car. Feeney’s team contemplated a
secret meeting with Malcolm Forbes to see how they could set the record
straight but in the end decided to let the issue go. Feeney would be listed on
The Forbes 400 until 1996.
Although
he had shifted his ownership to Atlantic via a complex Bahamas-based asset swap
to minimize disclosure and taxes, Feeney continued to aggressively expand DFS,
traveling the globe to conquer new markets, expand margins and outmaneuver
rivals. He loved making money but had no need for it once it was made. Feeney
was happy with simple things. He had grown up in a humble, hardworking house
and watched his parents constantly help others. In an oft-told story, each
morning his mother, Madaline, a nurse, would jump in the car and conveniently
drive by a disabled neighbor as he walked to the bus just to give him a ride.
This tradition of charity was not extended to business rivals. “I’m a
competitive type of person whether it’s playing a game of basketball or playing
business games,” says Feeney. “I don’t dislike money, but there’s only so much
money you can use.”
The
money was how Feeney kept score, and while it no longer flowed into his pocket,
he helped rake in as much as possible as an active DFS board member throughout
the 1990s. Since his foundation’s wealth was built on the illiquid stake in
DFS, his grants lived and died on the cash dividends the company paid out–a
major problem when the Gulf war and subsequent dive in global tourism
restricted the once gushing cash flow to a trickle. Even as the economy
recovered, a desire for the freedom of a cash pile, plus a gut instinct that
DFS’ best days were behind it (Japan was clearly slowing down), motivated
Feeney to push his three other partners to start looking for a suitor to buy
DFS. There were few companies big enough to absorb and run the global
operation. The French luxury powerhouse LVMH, helmed by billionaire Bernard
Arnault, was the clear favorite. Feeney got owner Alan Parker on his side
early. Pilaro and Miller would prove harder to convince.
For
two years the four owners battled with themselves and Arnault over prices and
deal terms. Each player brought their own high-powered attorneys into the
scrum. “Every time I’d see a new a lawyer I’d say, ?Holy Christ, how much are
we paying this guy? ‘ ” Feeney laughs.
Feeney’s
philanthropic secret ended in 1997, after he (along with Pilaro and Parker)
sold their share of DFS to LVMH, and the world learned Feeney’s $1.6 billion
cut belonged not to the man but to his foundation. Through the sale he
reluctantly gave up his anonymity but in the process gained a better tool for
good: a powerful following. Two of the world’s richest men, Bill Gates and
Warren Buffett, credit Feeney as a major inspiration for both the $30
billion-strong Bill & Melinda Gates Foundation and the Giving Pledge, which
has enlisted more than 90 of the world’s richest to (eventually) grant half
their wealth to charity. “ Chuck is fond of saying that none of us has all the
answers,” says Gates, “but I know that Melinda and I have learned a great deal
from him in the time we’ve spent together.”
Part
of the kindred spirit that Feeney and Gates share stems from their
entrepreneurial backgrounds and how they apply them to giving back. In many
ways Atlantic was the forerunner to the Gates Foundation, practicing
high-margin philanthropy: choosing causes that will maximize the impact of each
dollar pledged, whether it’s $250,000 for Haiti earthquake relief or $290
million to build a new medical campus for the University of California, San
Francisco.
He
forces charities to compete for his cash, requesting detailed business plans
with clear milestones and full transparency. If a project runs off course,
Feeney cuts funding. He chooses programs that promise exponential returns that
will allow people to lift themselves up. He pumps billions into university
research in places like Ireland and Australia because he believes it creates a
skilled workforce and attracts top talent, setting the table for high-tech
industry and foreign direct investment. Operation Smile, a charity that
corrects cleft palates in children from poor nations, is a classic Feeney
cause: a one-time $250 investment to cover the cost of a simple surgery that
will markedly improve every day of the patient’s life. He’s given $19.5 million
there.
To
further maximize return, Feeney leverages every dollar the foundation
gives–using the promise of substantial gifts to force governments and other
donors to match. In one famous example, in 1997 he proposed pledging roughly
$100 million to Ireland’s universities but only if the cash-strapped government
matched the amount. It did. (A total of $226 million in Atlantic grants have
leveraged $1.3 billion of government money to its university system.) He works
the same tactic with other wealthy people and development offices. Feeney never
slaps his name on a library or hospital, since he can collect additional money
for the project from more egocentric tycoons who gladly pay millions for the
privilege.
Casual
observers categorize Feeney as frugal, but that’s a simplistic diagnosis. On
the spending side Feeney obsesses over value, and on the cost side, he loathes
waste. Atlantic’s president and CEO, Chris Oechsli, recalls staying in a
Vietnam hostel with him on one business trip but adds that Feeney also once
sent him back to the U.S. on the Concorde because he understood the need to get
him home in time for the holidays. As for Feeney, he flew millions of miles in
coach because first class didn’t get him to his destination any faster. He
wears a rubber Casio watch because it keeps time like a Rolex. During our train
back from Limerick he would curse and shake his head each time we passed one of
many abandoned housing developments (ghost estates) left over from the
country’s real estate bust. “I’m always the first guy to ask how much is that or
what does it cost?” Feeney says about living the high life. “I never tried it
because I knew I wouldn’t like it.” Feeney rarely owned a car because they were
difficult to park in cities–although he admits briefly owning a used Jaguar
when he lived in Hong Kong. No yacht? “I guess the answer to that is I get
seasick easy.”
Although
he raised his family in multimillion-dollar mansions (his ex-wife and five
children later split $140 million of the DFS fortune), today Feeney lives out
of three foundation-owned apartments in Dublin, Brisbane and San Francisco, and
crashes in his daughter’s apartment while in New York. Atlantic’s Irish
operations are housed in a stately town house in the posh district off St.
Stephen’s Green–Feeney and wife Helga (his former secretary) live in a small
stone mews apartment out back. Even Feeney’s taxes underscore how he thinks: He
has aggressively tried to avoid taxes at every stage in his career–from setting
up his early business in Lichtenstein, incorporating his holding company in
Bermuda and listing it under the name of his then wife Danielle, a French
citizen–despite gaining no personal advantage in his later years. Eventually,
less taxes meant that he could give away more.
This
waste/value mind-set explains how a frenetic penny-pincher is also completely
comfortable deploying massive amounts of cash on projects where he sees the
chance of a high return. Take his recent $350 million pledge that helped
Cornell, along with Technion-Israel Institute of Technology, win the bid to build
a $2 billion technology institute on Roosevelt Island. This Silicon Valley East
will attract the best engineers and students to the region. Feeney is betting
top tech firms and new startups will follow, eventually producing thousands of
jobs and billions of revenue for the region. “The visionary gift will pay
dividends not just for Cornell but for New York City,” says Mayor Michael
Bloomberg. It’s a textbook Atlantic investment, including leverage in the form
of $100 million plus land courtesy of New York City taxpayers. Feeney’s only
regret is that the opportunity came late for him and he won’t live to see the
project completed.
That’s
a lesson he wants to teach the new class of philanthropists: Don’t wait to give
your money away when you’re old or, even worse, dead. Instead, make substantial
donations while you still have the energy, connections and influence to make
waves. “People who have money have an obligation,” says Feeney. “I wouldn’t say
I’m entitled to tell them what to do with it but to use it wisely.” That’s why
that man who obsessively guarded his privacy for decades has participated in
the biography, spent three days with me and on Sept. 6 publicly accepted an
honorary doctorate of law granted jointly from every university on the island of
Ireland–the first time such an award has been given.
Feeney
might soon gain access to the biggest megaphone of all: Hollywood. George
Clooney has reportedly considered adapting Feeney’s story for the silver
screen. Who should play him in the film? Feeney thinks deeply on our way back
from Limerick and chuckles before sharing his answer: “Probably Danny DeVito.”
How do you give away $7.5
billion? Follow timeline below of the Atlantic Philanthropies’ greatest hits.
1982: Makes first grant of $7
million to Cornell. Total gifts will reach $937 million.
1984: Transfers his 38.75% DFS
ownership to Atlantic.
1988: Gives $142,000 to support
the Cancer Research Institute.? Worldwide cancer grants will hit $370 million.
1990: Atlantic makes its first
grant to University of Limerick to construct advanced research, conference and
cultural facilities. Lifetime grants: $170 million.
1991: Funds peace-building and
reconciliation in Northern Ireland.
1997: Feeney goes public about his
charity activities.
1999: Invests in Vietnam in the
areas of higher education and health care.?
2001: Funds biomedical research at
Australia’s Queensland U. of Technology; Total Aussie medical grants: $320
million.
2002: Makes grant for South Africa
AIDS relief: has invested over $117 million in South African health care.
2004: Begins funding efforts to
abolish the death penalty in the U .S. –has invested $28 million to date.
2006: Starts efforts to ensure
health coverage for the almost 8 million uninsured children in the U .S.
2008: Makes $125 million grant for
medical center at the University of California, San Francisco Mission Bay
campus. Total UCSF grants: $290.5 million.
2012: With a $350 million
investment, supports Cornell’s winning bid to develop NYC Tech Campus on
Roosevelt Island.
2016: Will complete $1.3 billion
worth of grants.
2020: The Atlantic Philanthropies
will close.
