On Wednesday, hedge fund manager John Paulson donated $400 million to endow Harvard's School of Engineering and Applied Sciences, making it the largest gift in the school's history.
Soon after the news broke, the internet exploded with criticism.
The ire really picked up when best-selling author Malcolm Gladwell trashed the billionaire on Twitter.
"It came down to helping the poor or giving the world's richest university $400 [million] it doesn't need. Wise choice John!" Gladwell Tweeted.
That initial Tweet was followed by a series of Tweets suggesting Paulson should volunteer at the "[Hermès] store on Madison [Avenue]" or work the "coat check at Art Basel."
But is this a fair criticism?
We spoke to a number to hedge fund folks, and they don't think so. Nearly everyone we spoke with, both on record and anonymously, came to Paulson's defense.T. Boone Pickens, BP Capital: "I was amused by the criticism. My first thought was, hey, wait a minute, get the critic up there and ask, 'Wait a minute, pal, how much have you given?' You may find out he has given, but I have a hard time imagining anyone being critical of a charitable gift." Daniel Loeb, Third Point LLC: "Would they criticize him if he just sat on his wealth and 'compounded it' like certain others? It's a fabulous and impactful gift to a great institution. It will lead to discovery, life-saving innovation in biomedical engineering, opportunity, job growth and increased competitiveness in the United States. I don’t see why Malcolm Gladwell or others have a problem with that." Bill Ackman, Pershing Square Capital (Harvard/HBS alum): "Here's how I think about it: This money will go to help Harvard build one of the great engineering and science schools in the country. What comes out of that? Great research in biomedicine, software and other sciences, and a large number of talented graduates that will help improve the world. The people who go there aren't likely wealthy people. I'm sure a chunk of his money is going toward scholarships for graduates who will create the next great healthcare or software company that will employee hundreds of thousands of people. The leverage of helping build a great science and engineering school has global implications in a hugely positive way. This is not about subsidizing rich people." Hedge fund manager 1: "Putting capital in the hands of our brightest people has often had great multiplier effects for society as a whole. Think wartime innovations (Penicillin, radar, etc), the Royal Academy during the Enlightenment (Newton, etc.), the Medici (Leonardo da Vinci)." Hedge fund manager 2: "Who the f--- can criticize a guy who donated $400 million to his alma mater?!"... What's to criticize? Extremely generous and he is to be applauded. But maybe I'm an idiot. The inmates are running the asylum." Hedge fund manager 3: "It's his money, he doesn't have to give it away at all if he doesn't want. Here, he is plainly helping others and society. I can’t imagine criticizing that." Marc Andreessen tweeted: "America's research universities are our wellspring of scientific and economic growth. Gifts to them are moral virtues, full stop"
Paulson, a 1980 graduate of Harvard Business School, explained why he made the donation in a speech at the signing ceremony.
"There is nothing more important to improve humanity than education," he said.
"To become a leading school in Engineering and Applied Sciences it is essential that SEAS have a substantial unrestricted endowment to support faculty development, research, scholarships and financial aid."
He continued: "Today will mark the beginning of a new center of engineering and sciences. Harvard's School of Engineering and Applied Sciences will be transformational for Harvard, for Allston, for Boston, for the East Coast, for the United States and for the world."
Harvard actually helped Paulson with his tuition when he was working toward MBA. He said that Harvard has been instrumental in his success.
"There is no question that the support and education I received at Harvard was critical in helping me achieve success in my career," he said.
What's more is Paulson, like many others in the hedge fund space, comes from humble beginnings. He grew up in a middle-class family in Queens.
Paulson is now the 113th-richest person in the world with an estimated net worth of $11.2 billion.
He launched his hedge fund in 1994 with about $2 million in capital. He shot to fame after making billions betting against subprime during the housing crisis. He now manages close to $20 billion in assets.
He's also one of the top philanthropists in the country. Some of his recent donations include $100 million to the Central Park Conservancy; $20 million to NYU Stern; $22 million to the Children's Hospital in Guayaquil, Ecuador, where his father grew up; $5 million to the Southampton Hospital for the emergency room.
Those are just some of the gifts that are publicly known. Sources who know Paulson said that he makes many donations privately.
"John has been very generous in making anonymous gifts that directly benefit the poor," one source said.
Still, others felt like Gladwell had a right to his opinion, but Paulson also had the right to donate his money.
"I think that guy, Malcolm Gladwell, actually has an argument from a social standpoint," acknowledged one hedge fund portfolio manager. "The disparity of wealth in this country is going to be a problem. The middle class is shrinking. It's harder and harder for people to make it. Gladwell has the right to his opinion, but John Paulson has the right to do what he wants with his money."
He added, Gladwell "is technically part of the 1 percent. What's he doing to help people?"
That's a fair question too.
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