MIT Media Lab
Tony Luong

Tech Policy

Seven dilemmas the Jeffrey Epstein funding scandal creates for universities

It’s time for a broad reckoning on the ethics of funding, but creating good policies won’t be easy.

Sep 18, 2019
MIT Media Lab
Tony Luong

When it comes to money, how tainted is too tainted?

After the MIT Media Lab came under fire for accepting funding from alleged sex trafficker Jeffrey Epstein, its cofounder, Nicholas Negroponte, outraged a lot of people by asking the awkward question on a lot of other people’s minds: why, exactly, was Epstein’s money beyond the pale? “Epstein is an extreme case,” he told the Boston Globe. “But then do you take Koch money? Do you take Huawei money? And on and on?”

Negroponte was right. Around the corner from the Media Lab stands a cancer research institute funded by David Koch, who along with his brother Charles poured money into climate-change denial. In February, MIT refused to cut its funding ties with Saudi Arabia after the country’s leaders allegedly ordered the assassination of journalist Jamal Khashoggi. In 2016, four months of student protest failed to convince the university to divest money from fossil-fuel companies.

In the absence of clear guidelines, fund-raisers’ chief ethical criterion appears to be to just avoid scandal. And one might well ask, as Negroponte did, why funding for serious research should be hostage to what’s scandalous at any given moment.

But just because there haven’t been clear ethical guidelines up to now doesn’t mean there never will be. Funding is increasingly coming under scrutiny. Most prominently, world-famous museums like the Guggenheim and the Louvre have begun to turn down money from the Sacklers, the family whose company manufactured OxyContin, the painkiller blamed for worsening the US’s opioid crisis.

So let’s say that a university like MIT—or Harvard, or any of the other numerous institutions and scientists whom Epstein graced with his largesse—wanted to institute a clear ethical policy, henceforth and forever more, on what kinds of money it was and was not okay to take. What might that policy look like?

It won’t be easy to figure out. And it’s not just because people will debate endlessly who is worse—Jeffrey Epstein or the Saudi royal family?—but because it raises thorny questions about what morality even means when it’s applied to money.  

Create transparency

It’s not that there are no rules at all, says Rob Reich, a Stanford political theorist and author of Just Giving: Why Philanthropy Is Failing Democracy and How It Can Do Better. “All nonprofits are already making decisions [about funding ethics] in the background.” 

But these decisions—which Reich calls “gut checks”—are usually neither systematic nor transparent. The Boston Globe contacted 20 top colleges and universities to ask how they vetted donors, and only one responded. We asked MIT about a list of “disqualified” donors it reportedly maintained and got no answer. (We eventually learned from Media Lab whistleblower Signe Swenson that most of the people on it were “disqualified” only in the sense that they weren’t considered likely to donate.)

The first step, then, is to make the system transparent. Benjamin Soskis, a research associate at the Center on Nonprofits and Philanthropy at the Urban Institute, says that another important step is to bring in new people—people not from the elite, mostly white male groups who dominate the nexus of big money and big science—to come up with new guidelines.

Answer some big questions

Here are some of the dilemmas those people will have to grapple with.

Is there a difference between bad money and money from bad people?

In a defense of Joi Ito, the former Media Lab director brought down by the Epstein scandal, Harvard law professor Lawrence Lessig distinguished money made from hurting people, like the Sackler fortune, and money earned legitimately by someone who committed other crimes, like, supposedly, Epstein.

Opinions vary on how legitimate this distinction is. While Reich says it’s important, Sharon Batt, a bioethicist at Dalhousie University, argues that it’s too one-dimensional: the morals of money have to do not only with how it’s earned but also with how it’s spent. “Whether Epstein’s money was derived from criminal activity or not, his wealth was instrumental in the harm he did to young women,” she points out.

How should harm be measured? 

Epstein’s alleged sex trafficking was heinous and directly destroyed the lives of his victims. But the knock-on effects were much wider. His position as a patron of the tech intellectual circuit—hosting science conferences and attending science dinners—also contributed to the exclusion of women in STEM. “What happens when women don’t get invited to these dinners is they lose out on professional opportunities,” external Media Lab fellow Sarah Szalavitz told the New York Times. “When you have an event on a private beach owned by a sex trafficker, women don’t get invited.”

The Sacklers and Kochs caused a different type of harm. More than 200,000 people have died from prescription drug overdoses—fueled in part by the Sacklers—since 1999. Koch-funded climate-change denial has made it harder to take action against global warming, which has already decimated biodiversity and could lead to 250,000 additional deaths per year by 2030. Philosophers have long argued about how best to weigh harms. Now, institutions will need to do the same. 

What kind of crime makes money dirty? 

Sex abuse receives a lot of attention, but white-collar crimes like money laundering or fraud are far more common. “Practically all [pharmaceutical companies] have been convicted and settled out of court for falsifying data or antitrust price-fixing, to the order of paid fines in billions of dollars,” says Marc Rodwin, a professor of law at Suffolk University who studies institutional corruption. Practically all of these companies still fund research.

Can bad money become good if it’s used for good purposes?

Reich says that nonprofits shouldn’t benefit from money amassed by doing harm unless it “is directed philanthropically toward causes that repair the very harms that were caused in the first place.” So he would take the Sacklers’ money to fight opioid addiction, for instance, but not for art museums.

For money from “bad” donors who earned it legitimately, Reich would leave it up to the nonprofit being offered the money to weigh the good it could do against the harm of sanitizing the donor’s reputation. Epstein might be a clear no, he says, but in many cases “there’s going to be reasonable disagreement.” The justification should be transparent, and the donor cannot be anonymous.

When is anonymous donation okay?

In a public letter, MIT’s president, Rafael Reif, wrote that his staff had asked Ito to keep Epstein’s donations anonymous because they “believed it was important that Epstein not use gifts to MIT for publicity or to enhance his own reputation.” Lessig, similarly, argues that tainted money, if taken at all, should always be anonymous.

But that creates its own problems. Keeping a donation secret means any other benefits the donor might be getting stay secret too. Epstein’s name may not have been on his gifts, but they allowed him to remain in the orbit of the Media Lab, have influence over its director, tour the space with young women he brought along, and have a say in how some of the money was spent. 

Staff like Swenson, the whistleblower, felt compromised by being asked to hide his involvement. A student directed to make and send Epstein a token of appreciation felt complicit in his crimes and apologized in Media Lab-wide email for not pushing back more.

Is dirty money clean again if the donors have been convicted and punished?

Offering second chances is often well-intentioned, and it might be tempting to decide that the results of conviction are punishment enough. But for both wealthy individuals and companies with enormous coffers, conviction and fines hardly act as deterrents. It can be hard to assess whether the redemption is genuine. 

Ito insisted (and Lessig backs him up) that he truly believed Epstein had stopped abusing women after his conviction. Yet Epstein had been labeled a Level 3 sex offender—meaning he was considered likely to reoffend—and had been seen as recently as last November exiting his private jet with underage girls

How far back does the reckoning need to go?

Harvard took nearly $9 million from Epstein before his 2008 conviction. The university has long maintained that it won’t return any money because—unlike in MIT’s case—Epstein’s crimes weren’t yet public knowledge when he donated it. (Harvard will give the $186,000 that hasn’t yet been spent to help victims of sexual assault.)

But some universities are confronting their ties to the much older injustice of slavery. Students at Georgetown voted to create a fund to benefit the descendants of slaves who were sold to support the university. (The trustees haven’t yet approved the plan.) The Virginia Theological Seminary, which was partly built on slave labor, is also planning to pay reparations.

Next steps

The debate over the ethics of philanthropy isn’t new. As Reich highlights in Just Giving, John Rockefeller was criticized for trying to whitewash the bad things he’d done by creating the Rockefeller Foundation. A century later, many of those bad things—like monopoly business practices and union busting—have been forgotten. The Guggenheim museum that now rejects the Sackler money was built with a fortune made from toxic lead and copper mining, points out Wired’s Adam Rogers.

So why should anything change now? Certainly, if only a handful of institutions revise their funding guidelines, it’s unlikely to have much impact, says Batt. She points to the example of pharmaceutical company GlaxoSmithKline, which in 2013 became the first company to stop paying doctors to promote its drugs. Rival companies didn’t follow suit, so GSK went back to paying doctors five years later

This time, though, the cultural shift might just be big enough to force a shift in behavior. “The real issue is that Epstein comes on the heels of Sackler, which comes on the heels of a whole bunch of other issues, which connects philanthropy to issues of patriarchy, of equality, to real questions of power,” says Soskis. “What might have been a complicated and circumscribed institutional question now is one I think the public really is wrestling with … For a long time these institutions existed in that safe space, to borrow a phrase, and the funding relationship wasn’t highly scrutinized. I think that is no longer the case.”

Correction: an earlier version of this story incorrectly identified both Koch brothers as funders of the cancer research institute at MIT, rather than just David Koch.