COMMENTARY: 'Drug' money causes concern for a nonprofit

By Berl Falbaum

Every morning when I read my newspapers, I keep an eye open for little gems that would tickle my warped and somewhat psychotic fancy.

I was more than rewarded the other day when I found a tidbit tucked away on Page A-21 at the end of the letters to the editor.

It involved the Sackler family some of whose members owned Purdue Pharmacy which is generally blamed for creating the opioid epidemic with the drug OxyContin. Many nonprofit organizations, including the National Academy of Sciences (NAS), have been criticized for accepting contributions from the Sacklers.

In a letter to the editor, Marcia McNutt, NAS president, stated that it tried to return contributions from the Sacklers but the family held firm. She wrote there was an “unwillingness of the Sackler family to accept returned funds ...”

That is what I would call a conundrum, a real conundrum! After chuckling and snickering for a couple of hours, I had questions galore.

Why did the Sacklers refuse? What did they say? How much money was involved? I posed these questions in an e-mail to the Sackler organization but did not receive a reply.

My first guess is that if NAS would not accept money it considered ethically tainted, the Sacklers would not do so either, even if it’s their money.

Maybe acceptance of the money would cause problems for the Sacklers with their IRS tax filings. How do you explain that the money you claimed one year as a contribution was void the next year?

What can NAS do?

It could write a check, but the Sacklers probably would not cash it and that would leave the organization’s checkbook out of balance forever.

It could stuff money—cash—in a bag and hang it on the door of one of the Sackler offices and hope nobody steals the bag.

Another option: It could sue to force acceptance. The legal route presents some fascinating issues. Lawyers, if they take a case pro bono, generally receive a third of a judgment if they win the case. If they were victorious and the Sacklers were ordered to accept the return of their donations, would the lawyers get a third of what was returned? Such a scenario would cost NAS lots of money because, according to my research, the amount involved is about $19 million.

McNutt touched on legal exposures for NAS in her letter, writing, “... there are legal implications for nonprofits to unilaterally breaching the terms of a contract with a donor.”

The implication is that the Sackler-NAS contract demanded that NAS accept the money and returning the cash would require agreement from the Sacklers.

Of course, if NAS sues, the Sacklers, having no shortage of lawyers, could counter-sue and try to force the NAS to accept the contributions.

Not only are the Sacklers refusing return of the money, but McNutt wrote, they insist the donations be applied to programs the family wants to support which means, it can’t be used to finance a lawsuit.

Did I mention this is a conundrum? I also e-mailed questions to NAS. Sadly, no reply.

Interestingly, some recipients of Sackler money have stopped accepting contributions from the family and some have deleted the name “Sackler” from buildings, programs, professorships financially supported by the Sacklers. I did not find any other organization other than NAS which tried to give the money back.

McNutt also mentioned that the two sides have been negotiating for months. Who would not like a transcript of these sessions?

NAS to Sacklers: How much are you willing to take back?

Sacklers: Nothing.

NAS: Come on, let’s be reasonable. How about we do this in payments over a few years?

Sacklers: Nothing. It’s better to give than to receive even when it’s your own money. Ever hear that you shouldn’t look a gift horse in the mouth.

Perhaps NAS could donate the money to a charity without divulging the source of the cash. Sure, that would violate Sackler stipulations but maybe it could do so on the sly.

President McNutt, please contact me to discuss a possible charity. I promise complete secrecy. I will not write about it nor even mention our conversation to my family.
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Berl Falbaum is a veteran political columnist and author of 12 books.