Money for Nothing

This week marks the three-year anniversary of Jack Kent Cooke's death. The former Redskins owner intended that virtually all of his fortune go to charity, and he seemed most keen on the idea of funding college scholarships. If the foundation described in Cooke's will were to dole out merely the legal minimum required of a trust so well-moneyed, its annual gifts would dwarf even those of the fabled Rhodes Scholarship Trust.

But Cooke-Rhodes comparisons seem a tad premature right now, given that not one Cooke Scholar has yet been named, nor has a single charitable dollar been granted by the Cooke Foundation.

Truth be told, there isn't even a foundation.

"We haven't set it up yet," a trustee recently told me. "We're working on it."

Jack Kent Cooke, without question, knew how to live. He went through marriages and sports franchises at about the same pace, though history showed him to be a far better businessman than husband. He was married five times.

Although it is his ownership of the Redskins that Cooke is remembered for around these parts, his portfolio at various times also included the Toronto Maple Leafs--the AAA baseball team, not the hockey squad--the Los Angeles Lakers and Kings, and Elmendorf Farm--once one of the most powerful breeding operations in all of thoroughbred racing. His sale of the Lakers and Kings in 1979 for more than $67 million was hailed as the biggest transaction in sports history; that same year, his divorce settlement with first wife Jeanne Carnegie of $49 million also made the Guinness Book of World Records, as the largest amount ever paid to get out of wedlock. A year later, he took over the Redskins.

But, as it turned out, Cooke didn't know how to die, at least from a fiscal standpoint.

Forbes magazine put the Cooke family's wealth at over $800 million not long before the patriarch's passing. Most old coots this wealthy have their eponymous charitable foundations established long before perishing, to ensure that the government won't get its mitts on the leftover loot (the federal tax rate on such affluent estates is 55 percent of everything over $3 million), but Cooke had neglected to do so. Instead, Cooke's will instructed trustees, headed up by son John Kent Cooke, to set up a trust bearing the elder's name, then fund it with the proceeds from the sale of essentially everything he had owned.

The will also described how Cooke wanted his fortune disbursed. In its original rendering: "The Jack Kent Cooke Foundation shall be organized to award substantial scholarships to students pursuing a post-graduate degree who have shown unique overall excellence, both in academic endeavors and in extracurricular activities, during their undergraduate careers." (Cooke later inserted a codicil that contained vague language giving the foundation permission to hand out undergraduate scholarships as well, and to pay for "an orphanage or for children abandoned by their parents who need support and encouragement in their development.")

After his heart stopped for the last time on April 6, 1997, and foundation types began crunching Cooke's numbers, his only-on-paper charity was being ranked alongside the Ford and Carnegie Foundations in terms of benevolent dollars. Even when the market value of the Redskins was believed to be about $300 million--a price tag still far higher than any sports franchise had ever been sold for--the Cooke Foundation was thought to be on the verge of becoming one of only a few dozen billion-dollar trusts in the U.S., out of a pool of more than 50,000 such charities.

The trustees' blind auction of the Redskins, as we now know, ended up bringing in an astonishing $800 million, most of it Daniel Snyder's. Federal law dictates that at least 5 percent of a trust's worth must be disbursed every year for it to retain its tax-exempt status. Assuming that the trust, even with the additional revenues from the Skins sale, held merely an even billion dollars, the Jack Kent Cooke Foundation would have to give out an astounding $50 million per year. According to a recent survey by the Washington Business Journal, the most benevolent corporation in the area, the Fannie Mae Foundation, contributed a relatively paltry $16.6 million to charity last year.

Multiply the Cooke Foundation's hypothetical minimum annual gift times three, once for each year since its patron's death, and that's $150 million that could have been used for scholarships by now. Or about $50 million more than Michael Saylor pledged for his much-heralded cyber-university.

Instead, none of Cooke's money has done any of the good deeds called for by the will. And until the foundation is formed, no charitable donations need be made.

According to John Edie, general counsel for the Council on Foundations, a D.C.-based nonprofit, it takes "a maximum of a couple weeks" to complete the legal paperwork to set up a trust.

Edie was contacted by trustees for the estate not long after Cooke's death, and he says they appeared to be well on their way to getting the charity going.

"The trustees were interested in getting advice on how to get the foundation off to a good start," recalls Edie, who met with the group at Redskin Park. "I didn't sense anything unusual."

The Cooke trustees, however, apparently got sidetracked. The sale of the Redskins, the most valuable of the decedent's assets, turned into a fiasco. The team was first awarded by the trustees to a group headed up by Snyder and New York real estate mogul Howard Milstein, but NFL owners refused to approve Milstein. Executor John Kent Cooke's failed bid to obtain his dad's team probably sapped some energy from the effort, too.

But even with those hangups, Edie says, he's surprised to hear that the Cooke Foundation hasn't even been founded by now.

"I assumed that it was already [established]," he says.

A spokesperson for the Cooke estate declined to comment on the record about why the foundation hasn't yet started or predict when scholarships will be granted. One trustee, who asked that his name not be used, however, admits that there's no cash-flow problem.

"[Snyder's] check cleared, it sure did," says the trustee. "We're in good shape on that score."--Dave McKenna

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