I confess that I spent most of my life blissfully unaware of something called “private equity” and the role it plays in the world. That is, until last week, when I read Megan Greenwell’s new book, Bad Company: Private Equity and the Death of the American Dream. And then, just as I was finishing the book, I came across an article revealing some startling news about a private equity firm gifting an enormous donor-advised fund to its CEO as part of his compensation package.
I would say that this was a happy coincidence, but it didn’t make me happy. Angry? Yes. Concerned? You bet. Happy? No.
Capitalism run amok
Bad Company describes how private equity firms essentially make everything worse.
A major example in the book is when a private equity firm borrowed heavily (which is something they do) to purchase Toys R Us, and then saddled the company with the debt that they — the private equity firm — took on to make the purchase. (This is legal, somehow.) Repaying the private equity debt made it close to impossible for Toys R Us to be profitable, and the private equity firm made that harder still by selling off the hundreds of stores that comprised the company’s real estate (pocketing the money in the process). This left Toys R Us having to pay rent on property that, up to that point, it had owned. Meanwhile, the private equity firm cut staff, kept salaries meager, and did nothing to improve any physical or strategic aspects of the business.
It was therefore no surprise that Toys R Us declared bankruptcy and went out of business, leaving 33,000 employees unemployed. The employees did not even get a previously negotiated severance package, though the private equity firm did find the wherewithal to pay the outgoing Toys R Us CEO over $40 million in his final year at the helm.
The book describes similar devastation wrought by private equity firms in undermining the viability of rural hospitals, destroying hundreds of newspapers, and allowing large apartment complexes to deteriorate and fail. It’s not a fun read, but it was an eye-opening exposure to modern capitalism at its worst.
From the debris, great fortunes, and some philanthropy
Private equity firms may be terrible at running retail businesses, apartment complexes, hospitals, and newspapers. But there’s one thing private equity leaders are exceptionally good at: earning money for themselves. Private equity companies like Bain Capital, KKR, Blackstone, and Apollo Capital pay themselves handsome fees, take 20% of all profits, and charge their investors 2% a year for the privilege of having their assets managed by modern-day robber barons. Plus, as mentioned above, they make major money by selling off the real estate of the companies they buy.
These private equity guys (and, yes, they’re almost all men, but you knew that already) make a ton of money, and that often gets translated into major philanthropic gifts. For example, Stephen Schwarzman, chair of Blackstone, has buildings and programs named after himself at the New York Public Library, Yale, MIT, Oxford, Tsinghua University in Beijing, a veterinary center in New York City, and the National Library of Israel. But even after giving away billions in charity, Schwarzman is still estimated by Forbes to be worth over $45 billion. I guess there’s a lot of money to be made by destroying businesses, selling the component parts, and taking exorbitant fees throughout.
For those who give credence to Balzac’s comment that behind every great fortune there is a crime, none of this is surprising. But a new twist by one of Schwarzman’s fellow private equity overlords deserves special scrutiny, particularly by those of us in the charitable sector.
As a special bonus: Your own huge DAF!
A couple of days ago, my friend Bill Cohan, a best-selling journalist who focuses on Wall Street, dropped the news that Marc Rowan, CEO of Apollo Capital, had signed a new five-year contract. Rowan’s salary is only $100,000 a year, which comes as no surprise to those who read my December post, “Charity in Lieu of Taxes.” As I explain in that piece*, the billionaire class avoids at all costs earning taxable income. Their soaring wealth comes not from high salaries, but from the market appreciation of their stock holdings, growth that remains untaxed unless they sell their shares. (And the point is that they almost never sell those shares – and then at their death they pass along the stock, pretty much untaxed, to their heirs.) Anyway, the twist in this story is not Rowan’s mere middle-class salary, which is par for the course, but the fact that Apollo also provided him with a $200 million donor-advised fund for his charitable pleasure.
Now, one would think that Marc Rowan could afford to fund his own DAF, given that he has a net worth of approximately $8 billion. But let’s look at the implications of this largesse by Apollo – particularly because what’s innovative in this instance may well become standard for all the Wall Street masters of the universe within a few years.
First, you may think that the $200-million donor-advised fund should in some way be treated as taxable income to Rowan, much as the use of a company car or plane would be considered income. After all, it is an undeniable personal benefit to him: He can leverage that enormous DAF to earn invitations onto prestigious charitable boards, get his name on prominent museums and university buildings, and draw invitations to exclusive parties, all thanks to funds that his company has provided. But, of course, that $200 million is not taxable to Rowan, because the money has flowed not into his pocket but to a 501(c)(3) public charity. In fact, thanks to the unique gray area inhabited by DAFs, Rowan can argue that he doesn’t even have the legal power to determine grants. That power is legally retained by the DAF sponsoring organization – Fidelity Charitable or wherever his DAF is lodged – even though, in practice, Rowan and his pals at Apollo will call the shots on who gets grants. So, no, billionaire Marc Rowan will pay no taxes for getting the huge DAF handed to him as a freebie.
Second, not only will Rowan avoid paying taxes, but Apollo Capital will presumably get a $200 million tax deduction toward its corporate taxes, because the firm is putting those funds into what technically is a charitable organization.
Third, Rowan and Apollo will now have all the privacy advantages offered by DAFs. They can distribute grants to good or nefarious causes, and nobody will know. They can choose to grant out funds, or not give out a penny. We’ll never know if they don’t tell us. There’s zero transparency.
What’s behind the DAF? It’s anybody’s guess.
This means that Rowan, whose name had been bandied around as a possible Treasury Secretary in the Trump Administration, and who has been a major financial supporter of Trump, could, for example, use his DAF to slip a few million to Trump’s White House Ballroom scheme. In so doing, he would be paying obeisance to Trump and winning his favor – the one clear route for advancement in the current regime – while shielding his donation from public scrutiny. Is this what Rowan and Apollo intend to do? I don’t know. And the point is, we’ll never know – because of the lack of transparency around DAFs.
So, in summary, a billionaire CEO who makes his money by exploiting and ruining companies, discarding their workers, and undermining their communities, and who essentially pays no federal taxes on his ungodly and ill-gained wealth, just got his company a huge income tax deduction by having them fund a DAF that he can use to burnish his public image, buy political favor, or simply raise his charitable profile. And it didn’t cost him a penny – though you and I and other taxpayers subsidized this scheme by providing a tax deduction to Apollo Capital.
So every time my friends in the DAF industry (and I still have a few – well, maybe one or two) talk about how donor-advised funds “democratize philanthropy” by making it possible for regular folks to build philanthropic vehicles, I will ask them to think about Marc Rowan and Apollo. It’s all well and good for DAF leaders to tell heartwarming stories about the family that sold its small chain of shoe stores, used some of the proceeds to create a $100,000 donor-advised fund, and now engage their children and grandchildren every Thanksgiving in deciding how much money will go to which organization. That’s all swell.
But the hugely predominant benefit of having DAFs is going to the wealthiest among us, not to the family next door. Marc Rowan has made his fortune by recognizing and seizing opportunities and not giving a damn about who gets hurt in the process. And that’s exactly what he and Apollo Capital, yet again, seem to be doing here.
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*Credit once again to Ray Madoff for her brilliant 2025 book, The Second Estate, which evocatively explains how the billionaire tax dodge works.
Copyright Alan Cantor 2026. All rights reserved.
