Leonardo DiCaprio Foundation's Ties to $3B Scam Lead to Questions, Criticism of Donor-Advised Funds
Leonardo DiCaprio is known for many things—his acting, his philanthropy, his unbridled love for Girl Scout cookies. But now, the actor might be in a bit of trouble over one of them, and it's not the Thin Mints.
According to a lengthy piece in The Hollywood Reporter, the U.S. Department of Justice named DiCaprio twice in its 136-page report investigating a $3 billion Malaysian embezzlement case. And while DiCaprio is, apparently, no more than a bystander, the report unearthed some connections that call into question the accountability and transparency of his charitable foundation.
Chief among those connections is Jho Low, the 35-year-old Malaysian businessman who allegedly skimmed billions off the top of a Malaysian sovereign wealth fund known as 1MDB. Low is a noted friend of DiCaprio—he even got a name-drop in the actor's Golden Globes acceptance speech for "The Wolf of Wall Street"—and has been a big supporter of the Leonardo DiCaprio Foundation. The Department of Justice report claims Low used 1MDB funds to purchase a pair of $1.1 million artworks in an auction benefiting the foundation, among other major donations.
That's about as far as the connection goes between Low and the Leonardo DiCaprio Foundation, according to the report. But it was enough to get The Hollywood Reporter looking more closely at the way the foundation does business. And what it found raised some red flags:
Set up not as a nonprofit but instead as a donor-advised fund (DAF) attached to the California Community Foundation, which is a nonprofit, the Leonardo DiCaprio Foundation therefore is not required to file itemized public disclosures about its own revenue, expenditures and disbursements. "It's difficult to characterize the giving of the DiCaprio Foundation because its status as part of the California Community Foundation makes it impossible to look at its finances," industry trade journal Inside Philanthropy noted in 2015.
Despite repeated efforts, DiCaprio, 41, the Leonardo DiCaprio Foundation and the California Community Foundation all declined to fully answer fundamental questions related to transparency and accountability of the foundation—a decision that disappoints charity experts consulted by The Hollywood Reporter. "Everything might be perfectly fine, but we don't know," says Aaron Dorfman, president of the Washington, D.C.-based National Committee for Responsive Philanthropy, of the Leonardo DiCaprio Foundation.
The Hollywood Reporter also called into question the foundation's lavish fundraising galas, the latest of which raked in $45 million but featured some, uh, inconsistent messaging ("guests helicoptering in to dine on whole sea bass after watching a short film about the dangers of overfishing," according to the magazine) and typical Hollywood excesses. But that's hardly unusual for an A-list celebrity event.
The main issue, it seems, is the foundation's unwillingness to openly discuss its financials or operating practices—and, on a larger scale, the insufficient oversight of donor-advised funds in general. The Hollywood Reporter noted that the IRS is investigating a number of donor-advised funds that appear to have been established for nefarious purposes—"generating questionable charitable deductions, and providing impermissible economic benefits to donors and their families," among other things, according to the IRS. (It's been a bad summer for donor-advised funds.)
The foundation has shown no evidence of this sort of wrongdoing. But as a highly visible charitable entity operated by the world's most famous actor and supported, at least in part, by an alleged key figure in a massive international embezzlement scheme, it may now serve as the unwitting poster child in the movement for increased regulation of donor-advised funds.
It's hard to argue that's a bad thing.
