Billionaire Gives a Big Gift but Still Gets to Invest It - New York Times

Billionaire Gives a Big Gift but Still Gets to Invest It - New York Times: "By STEPHANIE STROM
Published: February 24, 2006

Boone Pickens, the often controversial and always colorful Texas oilman turned investor, took advantage of a temporary tax break to make a gift that propelled him into the ranks of the nation's top philanthropists last year.
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Steve Sisney/Oklahoman, via Associated Press

Boone Pickens at a January news conference about his gift.
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Graphic Top Philanthropists in 2005
Top Philanthropists in 2005

But what Mr. Pickens gave away with one hand he continues to control with the other.

At the end of the year, he gave $165 million to a tiny charity set up to benefit the golf program at Oklahoma State University, reaping Mr. Pickens a tax deduction. Records show that the money spent less than an hour on Dec. 30 in the account of the university's charity, O.S.U. Cowboy Golf Inc., before it was invested in a hedge fund controlled by Mr. Pickens, BP Capital Management.

'It's all his money, and he's on the investment committee' of Cowboy Golf, said Mike Holder, the university's athletic director and former golf coach, who is on the board. 'If a person's making a gift of that size, he can stipulate what he wants it invested in.'

Asked whether investing in BP Capital had been a condition of Mr. Pickens's gift, Mr. Holder said no. 'That was my decision,' he said.

Lawyers said that even though Mr. Pickens still had investment power over the gift, the transaction appeared to be legal under federal law.

'Sadly, it's another case of a rich man manipulating charity for his own benefit,' said Marcus Owens, a lawyer who formerly headed the division of the I.R.S. that oversees tax-exempt groups.

To some, the question is whether a wealthy person should get a tax break now for money that has essentially not yet been put to charitable use. By giving the money before 2005 expired, Mr. Pickens was able to take advantage of a provision in Hurricane Katrina relief legislation that allowed him a deduction for a charitable gift equal to 100 percent of his adjusted gross income, double the normal limit of 50 percent. If he does not have that much income in 2005, he can carry the deduction into future years."