The Interesting Case of Boone Pickens’ Charitable Gift

On December 30, 2005, billionaire Boone Pickens made a $165 million gift to a charity to establish a golf program at Oklahoma State University.  In part, Mr. Pickens took this action to take advantage of a special charitable gift tax deduction provided in Hurricane Katrina relief legislation (that is, he could deduct a charitable gift equal to 100% of his adjusted gross income rather than the normal 50% limit; in addition, he can carry the deduction forward for three years if necessary to offset income).

The $165 million spent less than one hour in the charity’s account before being invested in a hedge fund, BP Capital Management.  The twist is that Mr. Pickens controls this fund.  It appears, however, that despite the conflict of interest, there was no violation of federal law.

For more information, see Stephanie Strom, Billionaire Gives a Big Gift but Still Gets to Invest It, NY Times, Feb. 24, 2006.