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Toxic Philanthropy — the demise of the Presidents Club
Update — from “Bonfire of the Vanities” to a bonfire of the charities — the fallout after the fallout — 19 February 2018
Writing about the Presidents Club and its future as a charity, following the Financial Times story in late January of sexual misconduct allegations at its annual dinner exactly a month ago, seems to have been very quickly superseded and overshadowed in the news cycle by allegations of far more serious sexual misconduct in much larger and well-known charities active in the developing world: in particular, Oxfam, and by the publicisation of complaints of “inappropriate behaviour” made against Brendan Cox at a time when he worked as chief strategist for Save the Children. The Presidents Club dinner could have come from the pages of the Bonfire of the Vanities. Recent news has read more like a bonfire of the charities, as each of these rapidly-spread news stories has illustrated the risks of reputational harm for charities, which rely on the fulfilment of good intentions for their continuing support.
It isn’t my intention to write about “toxic philanthropy” on the scale alleged in relation to Oxfam, or about Brendan Cox as a public figure involved with charity. My original intention was to put the Presidents Club story into the context of charities which are or have been based on a single personal reputation, or a single activity of which public perception changes over time, sometimes very abruptly. Charities such as Oxfam operate in a very different way from a charity like the Presidents Club, which was nothing more than the organisation of an annual dinner to raise funds for other charities. Larger charities have infrastructure, employees, varied and continuing programmes of activity, and receive a significant part of their funding from the state and sometimes from international or supra-national organisations. Their activities and omissions simply matter far more than those of a charity like the Presidents Club, and expenditure by the state on overseas aid is itself politically contentious at the moment. Investigations and inquiries which follow the breaking of the Oxfam news story may well have wide implications for charity governance and regulation and for Oxfam and other charities in the future. But it is scarcely news that individual philanthropists, especially those who work abroad, can have personal failings — as Dickens illustrated in his characters in “Bleak House” who practise “telescopic philanthropy” of a higher standard than their behaviour at home.
Original posting — 26 January 2018
Like many people, I had never heard of “The Presidents Club” — or to give it its full, if irritatingly apostropheless name, The Presidents Club Charitable Trust, before the evening of 23 January 2018, when the Financial Times published its story about the now-notorious fund-raising dinner the previous week.
Less than 24 hours later, in the late afternoon of 24 January, the story having dominated the news in the meantime, the club announced its closure, and in the following hours and days some of the charities which had been promised donations raised at the dinner announced that they would not accept them. In that highly accelerated news cycle there has been a great deal of commentary on the nature of the occasion as reported in the Financial Times, on what the story says about the behaviour of powerful and influential men towards women who are paid to entertain them at a men-only occasion, and on aspects of employment and equalities law which have a bearing on these issues.
I am not intending to add to those topics of commentary. As a trusts lawyer, I am interested in how charities work, or fail to work, and have for some time been interested in the question of “toxic philanthropy”. I came up with this phrase to describe the problems of charities associated with individuals of whom, or activities of which, public perception has sharply and adversely changed. I intended it as a conscious echo of Dickens’s “telescopic philanthropy” — his description of the character Mrs Jellyby in ‘Bleak House’: a woman whose intense concern with a charity in distant west Africa that could only be discerned with a metaphorical telescope led her to neglect her own family and household under her nose in London. I later discovered that the phrase “toxic philanthropy” already existed in a different context — the alleged misuse of and/or unintentional harm done by aid to the developing world.
Becoming and ceasing to become a charity
In order to be recognised as a charity in the first place, an organisation must have charitable purposes which it pursues for public benefit. And once recognised and established, since a charity can (unlike a private trust) potentially exist for ever, the law has long provided for the possibility that the original purposes of a charity can become obsolete and be changed, in the Norman French word “cy-pres”, which means as closely as possible to the original. A charity’s funds can be applied cy-pres if its original purposes have ceased to be charitable, because they have become “useless or harmful to the community”, or where they have ceased to provide a “suitable and effective method of using the property available”, having regard to the “spirit” of the original gift to the charity and to the “prevailing social and economic circumstances” at the time of the proposed alteration of the original purposes. But cy-pres deals with the purposes constitutionally written in to a charity, and not directly with the activities or personalities associated with it from time to time. A charity can, as the Presidents Club Charitable Trust does, have widely-drawn charitable purposes which are capable of continuing for ever.
Some charity projects which are very closely associated with individuals and their idiosyncratic wishes don’t even get off the ground. Two historic examples of these are the Reverend Gwyon’s knickerbockers and Arthur Pinion’s vanity studio museum.
The Reverend Gwyon’s knickerbockers
The Reverend John Gwyon, a disturbed and disturbing figure, who was found to have hanged himself on Boxing Day 1928, wanted to set up the “Gwyon’s Boys Clothing Foundation” after his death.
This was to provide “ordinary strong durable knickers (this was his word, but he meant not what we would think of as knickers, but “knickerbockers” which were knee-length baggy trousers for men and boys) such as were worn by boys every day” for the boys (and not in any circumstances the girls, “or other females”) of Farnham, each pair of knickers to be marked in the waistband “Gwyon’s Present”. He first set out this plan in a will made in 1912, and tinkered with its details — once less than a week before the outbreak of the First World War in July 1914, twice during the course of the Battle of Verdun in March and July 1916, and twice after the war had ended. Even after these revisions, his wishes were not fulfilled, because a year after his death, in late 1929[1], a judge in the High Court refused to accept that he had created a valid charitable gift. This refusal wasn’t because the idea was a thoroughly eccentric and distasteful-sounding memorial project, even more distasteful-sounding to modern readers, as the Reverend Gwyon had excluded boys who were black from his proposed gift. It was because the law of charities didn’t accept that the terms of eligibility for a “Gwyon’s Present” were drawn up in such a way as to ensure that the gift qualified as charitable, either for the relief of poverty, or as a local charity benefiting the inhabitants of Farnham.
The atrocious artist’s vanity museum
Thirty years later, in 1961, an artist and collector called Arthur Pinion died. Although little is known of him other than as recorded in the law reports, he seems to have had promise as a young man, winning a scholarship to art school in 1902 and having had portraits exhibited in the Royal Academy in 1909. He had an aristocratic family connection and a number of the paintings and objects in his studio were of members of that family or had belonged to them. He left instructions in his will that this studio (described in court as “extremely squalid and in very poor surroundings”) in Notting Hill, filled with his own paintings and others he had collected, along with furniture, china, glass and bric-a-brac, should be turned into a museum. He was hoping the National Trust would take it over, or, if not, that it would have an independent existence like the John Soane museum in Lincoln’s Inn Fields. The National Trust said ‘no’, the High Court then said ‘yes’, but the Court of Appeal[2] also said ‘no’ to the creation of an independent museum.
The Court of Appeal thought there was no public educational benefit in establishing a charity for this purpose. The patrician language of the judges, some of it quoting directly from the experts on art and furniture who gave evidence to the court, is memorably withering, describing Arthur Pinion’s own painting as “atrociously bad” and the paintings and objects he had collected as “absolutely worthless”, and concluding that “there was no useful object to be served in foisting upon the public this mass of junk”. There were “a dozen chairs which might perhaps be acceptable to a minor provincial museum”. And
“apart from pictures there is a haphazard assembly — it does not merit the name collection, for no purpose emerges, no time nor style is illustrated — of furniture and objects of so-called “art” about which expert opinion is unanimous that nothing beyond the third-rate is to be found. Indeed one of the experts expresses his surprise that so voracious a collector should not by hazard have picked up even one meritorious object”
The court ruled that Arthur Pinion’s project should not be carried into effect, and the artist was declared intestate. His only memorial is in the pages of the law reports — even the studio in Pembridge Villas (no longer “poor surroundings”) has been demolished and replaced with some anodyne infill building of 1972.
The decision about Arthur Pinion’s failed museum is remarkable, as a document of the mid-1960s, in its language of aesthetic judgment. There’s nothing in the law report to suggest that Pinion’s art was in any way modern or had followed of any of the movements in art — from Post-Impressionism to Pop Art — which had been the avant-garde of his lifetime. There is more to suggest a sense of adherence to tradition and family prestige, keeping in his collection three chairs with needlework done by a Georgian ancestress, and overvaluing his personal association with objects even to the extent of directing that anything in the studio which was “not of an antique nature” could be put into a vacant flat for the custodian of the proposed museum. An artist who keeps his great-great-grandmother’s needlework chairs for posterity is unlikely to be experimenting in the style of Jackson Pollock (Pinion’s first hurdle would have been clearing a path through the mass of junk in his studio to ride a bicycle over the painted canvas on the floor). The language of the judges and the experts is not (as it is in some other mid-20th century cases involving aesthetic judgment, such as the Lady Chatterley’s Lover trial) that of traditionalists faced with incomprehensible and disturbing modernity, but of men confident of their ability to differentiate between the quality of a mediocre upper-class portraitist’s work and a Gainsborough.
In modern times, at least two established charities associated with public figures have had to deal with the changing posthumous reputation of their benefactors.
The charitable afterlife of Sir Edward Heath
Former Prime Minister Sir Edward Heath, who died in the summer of 2005, set up a charitable foundation in his will. The charitable objects of the foundation largely involved the preservation of his home, Arundells, a historic house in the cathedral close at Salisbury, and its contents, many of which were associated with his political career, and opening it to the public. There was no question about the validity of this as a charity from the outset, given both the architectural interest in Arundells as a building, and the historical interest in it as the home of a former prime minister. A decade after his death, in August 2015, a police superintendent stood outside Arundells, and made an appeal for “victims” of alleged sex abuse by the former prime minister to come forward — the beginning of the much-criticised Operation Conifer which came to an end two years later after finding no corroborating evidence of any abuse by Heath, and no evidence of a conspiracy.
The fortunes of Sir Edward Heath’s Charitable Foundation have changed over the years since his death, but not, it appears, in any way connected with Operation Conifer and any shadow on his posthumous reputation arising from it. This means it isn’t an example of “toxic” philanthropy, in the sense of an abrupt reversal of perception leading to dissociation between name and activities, but suggests that people who are interested in Heath’s life and work and in Arundells as a house sensibly regard the allegations against him raised in Operation Conifer as irrelevant to a decision whether or not to visit. But in 2011, several years before the police inquiry began, the trustees of the Charitable Foundation asked the Charity Commission to permit a cy-pres scheme to change the charitable foundation and allow Arundells and its contents to be sold. This was because the trustees were concerned about growing financial deficits in running Arundells and opening it to the public, and pessimistic about its future as envisaged by Sir Edward Heath’s will, in view of a perception of declining public interest in his life and legacy. The Charity Commission published its decision, in which it refused to permit the scheme, believing that the trustees should first explore other options for stabilising the charity’s finances without selling Arundells, as the house itself was as much part of the spirit of the gift as creating a memorial to Heath’s life and work. The trustees did so, but were on the point of asking again for a scheme to permit sale in late 2012, when various proposals from key supporters enabled the foundation’s finances to be stabilised. As the trustees’ reports and accounts in more recent years show, Arundells remains open to visitors with an active programme of events and exhibitions and the charity’s income currently no longer falls short of its expenses.
The charitable afterlife of Sir Jimmy Savile
Jimmy Savile died in October 2011. About a year later, in October 2012, ITV broadcast a programme, Exposure: the other side to Jimmy Savile, accusing him of being a serial child abuser and sex offender — a broadcast which precipitated an abrupt, profound and prolonged re-evaluation of his character and works, including his prolific philanthropic activities.
One of his published obituaries stated that he had raised £40M for charities in his lifetime, and on his death his estate was valued at over £4M. In 1984 he had set up the Jimmy Savile Charitable Trust to benefit a wide range of objects, and it was the principal beneficiary of his will. It no longer exists, its charity registration having ended in September 2017 when its funds were transferred elsewhere. This was a planned demise, as not long after the Jimmy Savile storm broke in 2012, the trustees of both the Jimmy Savile Charitable Trust and the Jimmy Savile Stoke Mandeville Hospital Trust, with joint total funds of c.£5.5M announced their intention to distribute the entirety of their funds to other charities and to close, rather than simply to change their names in order to break the primary association of their activities with a now-tainted personal reputation.
Before winding up the charitable trust however, between the beginning of 2013 and 2014, as the principal beneficiary of Savile’s will, it was involved in hostile litigation in the High Court and the Court of Appeal, against Jimmy Savile’s executor, the National Westminster Bank. The National Westminster Bank was seeking approval of a proposed scheme for compromising hundreds of personal injury claims which had been raised against Jimmy Savile’s estate, and the charitable trust was attempting to remove the Bank as executor of the estate. The charitable trust was unsuccessful both in opposing the scheme and removing the executor, although the Court of Appeal mitigated a punitive costs order imposed on it by the High Court — still, the burden of meeting both the personal injury claims and the legal costs is reported to have taken up the entire estate, leaving nothing for charities who might otherwise have benefited at all.
The Presidents Club
According to its website, the Presidents Club Charitable Trust was founded 33 years ago, in 1985. This was the era of Big Bang (the deregulation of financial markets in the City) and the publication of Tom Wolfe’s Wall Street satire Bonfire of the Vanities, with its “Masters of the Universe” financial traders. It’s purely serendipitous that 33 years later the President of the USA is a man who may well have felt at home in the gold-plated surroundings of the Presidents Club dinner.
The only Presidents Club Charitable Trust records on the Charity Commission’s website however, are of a charity which was established by a trust deed on 21 January 1993 and registered as a charity a few weeks later. It is possible that there was a previous charitable trust, but there does not seem to be a trace of one, which suggests that the social and fund-raising activities of the Presidents Club started in the mid-1980s but only acquired charitable status, which confers legitimate tax benefits, some years later.
According to the Charity Commission’s published records, the charity’s objects direct the trustees to apply its income “in furtherance of the charitable purposes” at their absolute discretion. The annual reports published on the Charity Commission’s quote the charity’s objectives as set out in its trust deed as being
“to apply the capital and income of the Trust Fund for the benefit of such exclusively charitable objects and purposes as the Trustees from time to time in their absolute discretion think fit”
The annual reports also show that fund-raising at the annual event, and distributing the surplus income of it and donations raised at it to other charities is the sole purpose and activity of the Presidents Club — it is not a club in the sense of having premises and members and other activities, and it has no capital endowment or infrastructure or other distinct purposes of its own. The Presidents Club accounts for the years from 2012 to 2016, which can be read on the Charity Commission’s website, show that in some of the earlier reported years, the income and donations raised from the annual event did not greatly exceed the costs of the event itself. But in 2016 the event raised just over £2M, with event costs of just under £600,000 or 30% of the funds raised.
As a registered charity, the Presidents Club is subject to charity law, and to regulation by the Charity Commission, which published a statement of concern about it the day after the story broke, declaring that
“the alleged behaviour has no place being taken in the name of charity, whether raising funds for good causes or not”
No-one who had read their Dickens more carefully would be entirely surprised by the reports of the dinner. In his early work Sketches by Boz he describes the annual dinner of some public charity as a source of amusing scenes, concluding with the toast to ‘the Lady Patronesses now present’
“on which all the gentlemen turn their faces towards the ladies’ gallery, shouting tremendously; and little priggish men, who have imbibed more wine than usual, kiss their hands and exhibit very distressing contortions of visage supposed to be intended for ogling.”
From the outside, it looks as if the long establishment of the annual event may have made the charity’s trustees oblivious of, or complacent about changes in recent years in the regulation of fund-raising activities. The Charity Commission publishes guidance to trustees about the reputational risks faced by a charity’s approach to fund-raising, an activity which has been subject to increasing regulation in recent years — principally to protect vulnerable people from aggressive canvassing but also to raise standards in other respects as well. It’s difficult to understand how any assessment of reputational risk could have led the trustees to conclude that a men-only event for “presidents” who were reportedly welcomed to “the most un-PC event of the year” (in the year of #TimesUp and wide debate about sexual conduct in public life), with a full-page warning against sexual harassment of its hostesses in its brochure and auctions of cosmetic surgery treatments for the guests’ wives, was not bristling with reputational risk — both for the Presidents Club and for the charities supported by the funds it raised.
Given the constitutional and operating structure of the Presidents Club, distributing any funds it holds and closing it and removing its charity registration should not be a long or elaborate exercise. Update: The Charity Commission published an update on 16 February, in which it explained that the charity will not be dissolved until the regulatory compliance case is complete, and that there will be an orderly dissolution of the trust.
On 26 January the Charity Commission published a statement about donations which some of the charities who had benefited from the fund-raising at the dinner had decided to return, because they wished to dissociate themselves from the reported events at the dinner. This statement echoes the Charity Commission’s standing guidance to charities on returning donations. It’s clear that some decisions will have to be made about any such returned donations, which must be distributed to charity in some way, whether by the charitable trust before it winds up, or cy-pres — as I think it would be surprising if anything in these circumstances gave the individual donors any entitlement to have their donation returned to them.
Update: On 19 February it was reported that the trustees of Great Ormond Street Hospital’s charity, which was one of the most significant beneficiaries of the funds raised at the dinner, are intending to make a final decision as to whether or not to return their donation at a meeting on 27 March. The BBC reported the charity’s statement that:
“Guiding all our thinking is our aim to maximise the support to the hospital and the families it cares for.
“We can confirm that we are in discussions with the Charity Commission and are scheduled to meet them later this week.
“Following this meeting and taking into account the latest developments with the Presidents Club Charitable Trust and feedback from our supporters, we will consider our position at our March Trustee meeting.”
The “latest developments” presumably includes the announcement of winding up of the charitable trust and the recognition that any surplus funds on dissolution would be distributed to charity in one way or another.
In the hours between the story of the Presidents Club dinner appearing in the Financial Times and the trustees announcing the closure of the charity, the relentless pace and spread of the news and commentary cycle provided an acute example of a damaged reputation manifest as “toxic philanthropy”. One positive good that may come of the notoriety and rapid downfall of the Presidents Club is a better understanding of charity trustees’ duty to consider reputational risk in their fund-raising activities. Some commentators have described the Presidents Club’s charitable status as a “fig-leaf”. If it is, then the story illustrates how necessary it is for the trustees to position their fig leaf carefully and decorously, when as private individuals — providing their activities were otherwise lawful — they could flaunt the most minuscule fig-leaves they wished — or if they preferred, absolutely none at all.
An aesthetic footnote
Less than a decade after Arthur Pinion’s death in 1961, and only a few streets away from his “squalid”, “shabby and undistinguished” studio in Notting Hill, in 1970–1 David Hockney painted his now-famous “Mr and Mrs Clark and Percy”. This is a portrait of his friends, the fashion designers Ossie Clark and his wife Celia Birtwell, celebrities of the Swinging Sixties, in their spacious and luminous up-to-date interior. The Tate acquired and displayed the painting in 1971 and I remember seeing and admiring it myself as a schoolgirl in London not long afterwards. Although it’s a painting that draws on some historic portraiture conventions, the bright modernity of the figures in their setting makes the deferential ancestral portraits that Arthur Pinion wanted to put in his shabby studio-museum seem irretrievably fusty and anachronistic.
In a similar way, in 2018, at a time when women in their 60s in business dress hold powerful positions — as Prime Minister, as President of the Supreme Court, amongst others — the men-only invitation and the brochure for the Presidents Club 2018 dinner — glossy, black and framing a sultry but over half-a-century dead Marilyn Monroe with the Presidents Club logo of a gold-encircled P, seems utterly dated and anachronistic.
Although their respective endeavours, and the legal mechanisms which have deprived both the Pinion museum and the Presidents Club of an existence as charities in perpetuity, are different, there’s a telling similarity in the two failures to keep up with social and aesthetic change, which have gone hand-in-hand with their failure to attain or keep the privileged status of charities.
[1] In the Law Reports at [1920] 1 Ch 255
[2] In the Law Reports at [1965] 1 Ch 85
