David Koch $600 Million and Counting To Charity: Arts, Medicine, and Theater

So it seems like David Koch has been pretty generous with his money lately. A while back I talked about how generous David Koch was with his money which can be found here.  This year Koch was very generous again donating $100 million (over 10 years at $10 million per year) to New York Presbyterian Hospital (I guess Mr. Koch does care about helping people). A list of large gifts Mr. Koch has given since 2007 can be found here.

In 2012 Koch donated $137 million to charity ($35 million to a museum, $20 million for a day care center at MIT, and $10 million to a food allergy institute at Mount Sinai.

Notice that David Koch has been generous with his own money even though he doesn't have to give anything back. He has already given back to society by helping create a company that now employs 100,000 people helping them put food on the table, help pay for tuition, and helping people pay for vacations. Also people criticize David and his brother Charles of increasing pollution when in fact Koch Industries has been decreasing pollution by making their plants more efficient using fewer resources and David Koch himself is in charge of a Koch subsidiary that purifies water in order to make it drinkable to people around the world.

David Koch $100 Million To New York Presbyterian and $600 Million to Charity

It seems as if David Koch is getting greedy with his charity giving. It was announced recently that Koch would donate $100 million to New York Presbyterian Hospital.  This is still a lot given his net worth (1984-2013 net worth here). As I pointed out here David Koch so far has given away $435 million. This donation would mean he has given away $600 million (including the $65 million given away in January to The Metropolitan Museum of Art) during his lifetime. This gift was the largest gift the hospital ever received. The donation will help build a 450,000 square foot ambulatory care center. As a result of the generous donation nine floors will have ambulatory surgery, cancer infusion services, radiation and oncology, along with a floor for gastroenterology. In addition to all of this, treatment rooms will be large and allow family members to stay together during a procedure. David Koch himself said he would rather give his money to “outstanding institutions” than give purchase a “bigger house or $150 million painting or things of that nature”.  Koch also said he will continue to give his money to great institutions as long as he is living.

What is interesting is that people decades from now will claim David Koch was a modern day robber barron. He and his brother Charles Koch expanded Koch Industries as I mentioned here. What people don’t realize is that David Koch help create jobs, helped employees put their children through college, helped employees put food on the table, and help employees purchase cars. In addition to this Koch Industries creates products that people use on an everyday basis (toilet paper, water, fabrics, etc) by selling those products at a lower price and higher quality than the competition.  People always seem to think that wealthy people owe something to society. The people who got rich only got rich by figuring out the wants and needs of society and giving it to them at a reasonable price.  One criticism you also might here is that David Koch is trying to buy good publicity. This is utter nonsense as David Koch has been giving to charities (hospitals, theater, arts for many years). One perfectly good reason he might give money to medical institutions is because he himself was is a prostate cancer survivor. The odd thing is because David Koch is self interested in his own health and gives money to these medical institutions he is not only benefiting himself but anyone else who uses these medical institutions.  

David Koch 2011 Hope Funds Fundraiser for Cancer Research

People forget in the 1990's David Koch suffered from prostate cancer and still deals with it to this day. He has raised hundreds of millions of dollars to support places like M.D. Anderson Center in Houston, John Hopkins, and a $100 million facility at MIT to promote cancer research. Too bad you will never see this kind of video on MSNBC...

Patrick Soon-Shiong: Billionaire Taking Genome From 8 Weeks to 1.47 Seconds

Since I am always interested in new technology I thought it was pretty cool when I saw this story about Patrick Soon-Shiong who is a billionaire are selling companies he started. Currently, he is worth $7.3 billion and is chairman for Nanthealth.

What Patrick wants to do is launch a genomic supercomputing platform that would reduce the time needed to sequence a cancer genome from currently 8-10 weeks to just 47 seconds. Soon-Shiong just presented some data that showed that after collecting 6,017 cancer genomes from 3,022 patients (having over 19 different types of cancer) they were able to be analyzed in 69 hours which is very quick. This was also a lot of data coming in at over 96,000 gigabytes of data. The idea is to provide real-time information to doctors and patients to help them make better decisions when it comes to health. Nanthealth who worked with oncologist (cancer doctors) saw incorrect recommendations drop from 32% to basically 0%.  

I have always wondered why supercomputers where modeling climate change, weather, or the earth’s crust. Putting a supercomputer to use for things like helping patients is a much better use of taxpayer money if it can lead to timely information that can be used by patients. As the number of people on the network grows, doctors will gain more information, meaning they will be able to help more people.  In 2012 it is estimated 1.8 billion people will get cancer and the supercomputer will be able to analyze about this amount (5,000 patients per day). The cost of the genome has dropped dramatically and will continue to drop as the quality increases (one thing I worry about right now is how accurate the genomes are however this should prove over time).

 I discussed in this post the failure of the war on cancer from the government. This has the potential to also help sequence other types of diseases that could give doctors and patients again more data. Trial and error will give quick feedback to what really works and what doesn’t work. This is how a market system works. I suspect however privacy groups will be up in arms about sharing any type of information as they always are. One question I always ask if they are so concerned about privacy why do they post about their bowel movements on Twitter or Facebook?

David Koch Team Builder and Generous Guy

I am across this interesting article a while ago published in the Summer 2012 Philanthropy Magazine about David Koch. Koch started at MIT when he was 19 years old in 1958 and was team captain of the MIT basketball team leading the team to a 17-4 record his senior year. What is interesting is that his final game was played against the University of Chicago (home of Milton Friedman) which is known for free-markets. David was the second highest in scoring average and had 545 rebounds. Not bad for a future billionaire and philanthropist.

The article talks about how even before Koch Industries became large David was still philanthropic. In the mid-1980’s he joined the New York University-Presbyterian board. He became more interested in medical boards in the 1990’s when he was diagnosed with prostate cancer. Koch first went through radiation therapy, then had his prostate removed, then the cancer came back again and he had hormone therapy. That didn’t work so now Koch is using Zytiga for his cancer. In addition to this not too long ago Koch suffered from diverticulitis. To treat this Koch received intravenously antibiotics which if they were not available would have torn up his colon and might have killed him.  I am not sure if the media truly understand the battle David Koch has already fought. This has caused him to pore millions into cancer research ($25 million to M.D. Anderson where he is treated), $30 million for Memorial Sloan-Kettering, and $20 million for John Hopkins. He has also had 10 special surgeries at Hospital for Special Surgery in New York. Koch has donated since 1998 close to $400 million to medical research. His donations have even created jobs to help fight research. His gift to MIT to create a cancer institute has 650 researchers after his $100 million gift. Koch believes that in the next decade or so we will see breakthrough discoveries and treatments. As long as the FDA can limit their involvement everyone will be better off.

 Much of the money David Koch makes comes through his dividends. As I pointed out in this post in the 1980’s William Koch was getting what would be today equal to an $11 million dividend and that was when Koch Industries was much smaller than it is today. I have no way of knowing but if the company still does pay 7% dividend and you take a modest return (7%) on $110 billion in revenue and factor in 42% ownership from David Koch I would estimate maybe $200-$250 million in dividends per year (again back of the envelope calculation ). This is also in line with the analysis I did of the Koch net worth from 1984-2012 here. Koch does plow back 90% of their earnings into the company so 7% may be reasonable for a dividend. Also David Koch has around $25 billion in net worth in addition to his dividends which makes him pretty flush with cash. If taxes for dividends increase then he will give less. Dividends on taxes next year will jump from 39.6% up from 15% if Congress fails to act.

I think sometimes people forget that people respond to incentives. People forget that John Rockefeller with a little less than 5% of his net worth created the University of Chicago. M.D. Anderson was named after a successful cotton trader who gave his estate to charity. Capitalists are needed in building future charities.

Charles and Liz Koch Wichita State Alumni Presentation

I found this clip on YouTube which is a presentation from Wichita State's appreciation for Charles and his wife Liz Koch. Charles Koch donated $6 million for the Charles Koch Arena where the basketball team plays. So many people make Charles Koch out to be some evil guy when really is a wealth creating charitable individual.

Koch Giving and Charities: Given Away $435 Million

Source: LIFE Magazine 

So far David Koch has given away $435 million to things like the arts, medical research, and the theater. I covered David Koch’s giving in this post. The media often complains that David and Charles Koch really don’t donate money to charity but however give it to organizations like Americans for Prosperity or the CATO Institute which really are not charities. What is even more interesting is that people claim that the Koch brothers want to just continue to pollute more so they make more money. I have a few problems with this. First do the Koch brothers breathe different air than the rest of us? Pollution has actually been declining since 1980 as this chart shows.  Second, promoting free market economics is actually not in their self interest because then Koch Industries would face more competition. From what I understand the Koch brothers care more about promoting individual liberty and making everyone better off as a whole than to serve their own self-interests. Of the $435 million has actually gone to charities so let’s break it down:

$185 million- MIT Total ($100 million for David Koch Cancer Center (David Koch is a survivor of prostate cancer)

$100 million- New York State Theater

$65 million- Metropolitan Museum of Art (New York)

$35 million- Smithsonian Institution (dinosaur hall)

$20 million- John Hopkins University (new cancer building)

$20 million- American Museum of Natural History (New York)

$10 million- Mount Sinai Medical Center (New York)

$435 million (Total)

I am curious why this has not got covered on CNN, MSNBC, or even Fox News. It is interesting that liberals complain about David Koch yet he is help funding medical research and a large contributor to the arts. Next time people complain about David Koch they should stand up and clap for his enormous generosity.

David Koch Donates $35 Million to Smithsonian's Natural History

The other day David Koch gave $35 million to the Smithsonian’s National Museum of Natural History in order to build a dinosaur hall. This is not Mr. Koch’s first donation to the museum. In 2006 he gave $20 million to create the David H. Koch Dinosaur Wing and then in 2009 he gave $15 million for the Hall or Human Origins (which now bears his name). No doubt that this money is for a good cause. As I mentioned in this post David Koch is an American hero not only for running a successful company but also for his very generous charitable giving. Nearly every article I have read in some way shape or form mentions how Koch has been a long time donor to the Republican Party. I would be willing to bet that his charitable donations have far surpassed his donations to any political party.

Koch credits his father for taking him and his twin brother Bill at any early age to visit the museum.  It is great that Koch is giving back. Although, you could argue he really doesn’t need to give back considering how many jobs he has created, how much food he has put on the table for Koch employees, and how many retirees are benefiting from working for a company that exploded in value under both David and Charles Koch.  As Walter E. Williams would say the only people that owe anything to society are criminals since they are really the only people who took from society. Koch has not only created wealth for himself and Koch employees but is now using that wealth to give back to charities whom will do far more good than the government. In fact, maybe someone should nominate David Koch for the Nobel Peace Prize by creating thousands of jobs, increasing the standard of living of many more, and giving back to charity. It is really sad when the media vilifies the Koch brothers considering how much they both have benefitted society. 

The Giving Pledge: Reducing Income Inequality

I feel as if many people misunderstand how the top 1% are important to philanthropy. To be honest some of the largest donors are in the top .001% category. People claim how greedy we are. However, the data shows that the United States is in fact the most generous nation in the world. Let’s look at the data to reveal just how generous we are. According to “Giving US: The Numbers”, in 2010 total contributions to charity were $290 billion. $211 billion of this total amount was made by individuals. Family foundations contributed $19.5 billion while corporate donations were over $15 billion. Clearly, these are some large amounts.

This brings me to my next point of income inequality. True, there is income inequality however inequality exists in so many different aspects of our live. Brad Pitt and George Clooney have an inequality of women they can get or date compared to the average guy. Obese people have inequality in the terms of the calories they consume. Bill Gates has a net worth has a net worth that is over 104,000 times that of the average American. This is something that professor Don Boudreaux at George Mason has pointed out. Sure Bill Gates has a net worth that is 104,000 times the average American however does Gates enjoy 104,000 times more calories or 104,000 times more homes as the average American or 104,000 times happier than the average person . I think the average person tends to believe that Bill Gates life is 104,000 times better than their own given how much money he has. However, I would argue Bill Gates has a rougher life than most. If you look at his work schedule, how often he travels, and people always asking him for money and the stress that creates I think people would still want their old life back. Everyone wants more money, however if you got to the point of having Bill Gates kind of money it would become more of a burden. Also people like to imagine having as much wealth as someone else but never can imagine the work that has to be put in to earn that money. This is what I call invisible inputs yet visible outputs. People see the outputs of wealth or income yet easily forget how much hard work was put in to get to that point.

Bill Gates has amassed so much wealth he is giving most of it away to charity. In fact the second richest person Warren Buffett is giving all of his money to another rich person Bill Gates! Really what is happening is Warren Buffett pledged nearly all his net worth to the Bill and Melinda Gates Foundation. If anything this will reduce income and net worth inequality. Buffett and Gates are signed the “Giving Pledge” which is a pledge to donate at least 50% of one’s net worth to charity. As of 2010, 69 billionaires were signed up to give away and at least $125 billion has been promised by the first 40 donors. Of course this figure should grow since the billionaires will no doubt get richer which will increase the amount that goes to charity. I have a feeling more billionaires will join which will also increase the amount. It would be interesting to see if anyone backs out if the economy were to collapse.

What is interesting however is that Buffett and Gates want other people to not only pledge to give their money away but also pay higher taxes. My own theory on this is that they want anyone else to never become as rich as them. If you favor the estate tax, higher taxes, and for people giving all their money to charity it makes it harder to amassed large sums of wealth which make Buffett and Gates look even better in historical terms. Buffet and Gates are extremely competitive people and it seems as if they want to enhance their legacy from beyond the grave.

David Koch: An American Hero

Recently, an article came out about David Koch in the Palm Beach Post about Koch attending a fundraiser to raise money for M.D. Anderson Cancer Center in Houston. Even though the title of the article was “David Koch intends to cure cancer in his lifetime and remake American politics” people seem to be picking up on his comments about the politics. The comment that seems to have gotten the most attention was when Koch claimed “If unions win the recall, there will be no stopping union power”. He is absolutely right. Unions have been in decline since the 1950’s and have done little to protect the worker. I have often said that unions exist to protect the incompetent workers at the expense of highly skilled workers who could go elsewhere.

Koch has donated more than $750 million to good causes like cancer research, culture causes, and the arts. Despite this the media and other people claiming how much the Koch brothers give to conservative causes when David Koch has given far more to charity. For every dollar that he gives to political causes he gives $4 to charity. However, you could easily argue that the media coverage over his political donations gets four times more coverage than his charitable donations. In addition to this, he holds many seats on charitable boards.

One reason why David Koch might be interested is cancer research is because he himself suffers from prostate cancer. He was diagnosed in 1992 with prostate cancer. Since then he has been treated by Dr. Christopher Logothetis of M.D. Anderson Cancer Center in Houston. As a side note M.D. Anderson has been consistently ranked number one for treating cancer and attracts people from all over the world. What is amazing is today is that even though David Koch has prostate cancer he is still able to be executive vice president of the second largest private company in America. A couple of decades ago this probably would have not been possible but with breakthroughs in medicine David Koch is able to live a healthy life. He has an incentive to fund prostate cancer research since he is suffering from it. However, the money Koch gives to prostate cancer benefits millions of men who are not only now affected by prostate cancer but also the future men who are diagnosed with prostate cancer. Self-interest can work wonders even when it is trying to save your own life.

David Koch should be seen as an American hero. He is a man who worked hard for many years help building a successful company with his brother into the second largest private company in America. As a result each of the Koch brothers together are worth $25 billion. Many people point out that the brothers inherited the business from their father. However, it was Charles Koch and David Koch who turned around the company and I would argue made it more valuable then perhaps their father ever could. People also forget that just because you inherit something means you will be wealthy forever. Many people who inherit property or money can blow it quickly. I really hope the Koch brothers publish their autobiographies. This would be the only way both of them could set the record straight on the truth instead of having future journalists and historians rewrite history. Plus, wouldn’t you like to hear a tale of how two brothers amassed billions in personal wealth?