They’re Not All Bad
Patriotic Philanthropy: Not an Oxymoron
The man—a Democrat—who founded the Carlyle Group explains why he gives it away. Here’s one rich man who doesn’t think he did it all himself.
Billionaire investor David Rubenstein counts among the reasons for his success an intact family, scholarships to the best schools, a lot of good role models, and the fact that he wasn’t a great lawyer. “It required more attention to detail and more confidence than I had,” he says, reflecting on the path that led him to found The Carlyle Group, a global asset management firm that has made him “more money than I can consume intelligently or than my children should ever have, so I decided to give it away,” he says. “A large part of my philanthropy goes back to the country.”
He calls it patriotic philanthropy, and he defines it as giving money to projects that government would be doing if it had the resources. Last month, he announced a $10 million gift to restore the home of James Madison, the nation’s fourth president. In July, he gave $12.3 million to refurbish the Virginia home of Robert E. Lee, the Confederate General. He also picked up half the $15 million tab to rebuild the Washington Monument after a 2011 earthquake, and his copy of the Emancipation Proclamation is on loan to the White House.
At an event in early October arranged by The Atlantic at their Watergate headquarters in Washington, Rubenstein explained how he decided “honestly, on the spur of the moment” to buy the Magna Carta, which Texas billionaire Ross Perot had put up for sale. Rubenstein said he thought the only copy of the 1297 document in existence in the United States shouldn’t leave the country, so he bought it for $21.3 million. He jokes about going through airport security with the then 800-year-old document, which is now on loan to the National Archives.
Rubenstein grew up in Baltimore, where his father made $7,000 a year working for the post office, and his mother was a homemaker. Rubenstein says they gave him “unconditional love.” His father didn’t graduate from high school or college, and placed a high premium on his only child getting a top-notch education. A college-prep high school led to Duke University, the University of Chicago Law School, and a job at a prestigious New York law firm working for JFK speechwriter Ted Sorensen.
When in 1976 he told Sorensen he might leave for Washington and a job at the White House, Sorensen didn’t dissuade him. “I got the hint that I was not a great lawyer,” Rubenstein said, a theme he sounded often in conversation with James Fallows, national correspondent for The Atlantic. In the Carter White House, where Fallows was a speechwriter, Rubenstein served as domestic policy advisor Stu Eizenstat’s deputy, where he became known for his prodigious work habits.
A Newsweek profile noted that he ate dinner most nights out of vending machines in the White House complex, and quoted him saying the machine food was “underrated.” Those who knew him then and covered him (as this reporter did) would never have predicted that this ascetic workaholic, with no apparent interest in creature comforts, would go on to accumulate such extraordinary wealth.
When Carter lost reelection in 1980, Rubenstein had to scramble. “When you’re out of power in Washington, you’re a dead man,” he said. “It took months to find a law firm that would take me. I wasn’t a good enough lawyer, and I knew that.” He took notice of a phenomenon just getting underway, the leveraged buyout, and after consulting with Carter Treasury Secretary Bill Miller, recalled saying to him, “You were Chairman of the Fed (Federal Reserve Bank), why don’t you start a financial firm, and I’ll help you.”
“Had I been a great lawyer, there would have been no time to think of anything else,” Rubenstein marvels. G. William Miller & Co., Washington’s first buyout firm, would become the springboard to The Carlyle Group. Rubenstein was 31 years old when he left the White House, and he was restless to make his mark. He read an article that said the average entrepreneur is between 28 and 37. “After 37, it’s just like a woman’s biological clock. Reproduction is still possible but the chances of success are reduced,” he says. “I read that when I was 37.”
That same year, 1987, he raised $5 million. He introduced the idea of more than one fund in private equity, expanding choices way beyond the traditional single fund, and he recruited people more talented than himself to run the funds. “I wasn’t a great fundraiser or a public speaker, but to make myself useful, I got money from friends and family, which is hardest to get, and I traveled 250 days a year begging for money.” A key to Carlyle’s success, he says, is its base in Washington. “I could tell people what was going on and they thought I knew something.”
Over the years, Carlyle has been lauded in some quarters and condemned in others for its global deal-making and relentless pursuit of the almighty dollar. As though to reassure skeptics that good can come from unbridled capitalism, Rubenstein says when he hires he looks for people “who don’t think there is anything wrong with making money—and know what to do with it when they have it.”
Rubenstein turned 65 in August, and he appears as trim and energetic as when he pulled all-nighters in the Carter White House. “I work as hard as I can,” he says. “I’m sprinting to the finish line.” He remembers his parents reading the obituary page. “Now I do that,” he says. “I’m in reasonably good health, but I don’t know when that might go away. I’m not doing anything I don’t want to do.”
Rubenstein has taken the “Giving Pledge,” under which billionaires like Bill Gates and Warren Buffett and Mark Zuckerberg, and others not so well known, dedicate more than half their wealth to philanthropy. Rubenstein makes it sound like it was an easy decision. He thinks leaving large sums to children is a disincentive for them to go out and do great things on their own. “I didn’t want to leave much for them,” he says of his three children. “And I didn’t want to buy multiple houses and baubles and die and have my executor give it away.”
Patriotic philanthropy gets the most attention because not many people are doing it, but Rubenstein also gives generously to medical research and education. He recently put up $50 million for half the cost of the Kennedy Center expansion, where he is chairman of the board. He doesn’t give money to politicians, and he is profoundly grateful to the country that gave him so much opportunity. “Philanthropy is a Greek word that means ‘love of humanity, ‘ not rich people writing checks,” he says.