The names of businessmen Ronnie and Gerald Chan may not leap off the screen, but back in 2014, the billionaire brothers were responsible for what Harvard called “the largest gift” in its history: a $350 million donation to the university’s school of public health through their family’s giving vehicle, the Morningside Foundation. The distinction was short lived. A year later, John Paulson gave Harvard $400 million for its engineering and applied sciences school. Such is life for a university with an endowment that eclipses the GDPs of many countries.
Nonetheless, the Chans’ donation — which, if we’re splitting hairs, was a commitment, since the foundation disbursed the amount in chunks over subsequent years — turned out to be portentous, as it solidified the Chan family’s elevated status in the rarified world of higher ed mega-giving.
The brothers kept the philanthropic spigot open. By 2019, their foundation was moving $78 million out the door, placing it at number 35 for that fiscal year in our analysis of the largest private foundations helmed by living donors. Mega-naming gifts for higher ed kept flowing — $175 million to the University of Massachusetts’ medical school in 2021 and $100 million to MIT a year later — while the Chans also funneled support to churches, arts organizations and research organizations.
All told, the brothers have cultivated an interesting brand of mega-giving, making headline-grabbing donations and yet maintaining a low public profile. Their approach is traditional in many ways (Gerald is a Harvard alumnus), but it also flouts convention. Their foundation made that UMass gift — an unrestricted, one by the way — after Gerald received an unsolicited letter from the school’s chancellor. And at a time when billionaires grapple with how much money to leave their heirs, Ronnie is on the record implying that his two sons won’t get a dime.
Needless to say, I think all of that warrants a closer look at the Chan brothers and their family’s Morningside Foundation.
Meet the Chans
Born in China in 1923, the family patriarch, Chan Tseng-hsi (T.H. Chan), founded the Hong Kong-based real estate company Hang Lung Group in 1960. He passed away in 1986 and is survived by his wife, Chan Tan Ching-fen, the group’s largest shareholder, who is currently over 100 years old. In February, Forbes named her the 27th-richest Hong Kong resident, with a net worth of $3.2 billion.
The couple had three sons, two of whom took over the family business. Ronnie is the former chair of the Hang Lung Group. A devout Christian, Ronnie earned bachelor’s and master’s degrees in biology from California State University, Los Angeles, and an MBA from the University of Southern California, where he’s a life trustee. Meanwhile, Gerald is a director at Hang Lung Group. He received a bachelor of science and a master of science from the University of California, Los Angeles, a master of science in medical radiological physics, and a doctor of science in radiation biology from Harvard.
Gerald leads the family’s Morningside Group, a private equity and venture capital investment firm. Its charitable arm, the Morningside Foundation, has an office in Newton Centre, Massachusetts, and Ronnie and Gerald are directors at the foundation. Forbes pegged the brothers’ collective net worth at $2.2 billion in 2016.
The foundation’s web presence, which is subsumed under the Morningside Group’s site, is a spartan affair, listing a handful of news items pertaining to its two priority areas — supporting science and enabling education. As with most private foundations led by living donors, we can safely assume grantmaking is by invite only. (Emails to Morningside Group were not returned.)
Two more mega-gifts
That said, the Morningside Foundation’s $175 million gift to the UMass medical school — which was renamed the UMass Chan Medical School — is a big exception, in a way. The gift was unusual because donors rarely give nine-figure gifts, much less unrestricted ones, to schools to which they have no personal connection. It also had its origins in an unsolicited correspondence.
In September 2021, MassLive’s Michael Bonner looked at how the gift came together. In short, after UMass Chancellor Dr. Michael Collins learned about Morningside’s Harvard donation, he wrote Gerald Chan an unsolicited letter laying out the school’s work. Incredibly, Chan responded, and the rest is history. “I never asked him for a gift,” Collins said. “When you’re having those kinds of conversations, that’s not just something you [ask]. Maybe, if I’m asking someone for a $25,000 scholarship, I may say, ‘I need a $25,000 scholarship.’ You don’t say to someone, ‘how about giving me $175 million?’”
Last March, the Morningside Foundation went in big for another Boston-area private school, this time with a $100 million gift to MIT. But instead of bankrolling public health or medicine, the gift created the MIT Morningside Academy for Design, a global hub for design research, thinking and entrepreneurship. “If science and engineering education equips the students with technical prowess, design education gives them the process to innovate with their technical prowess,” Gerald Chan said.
Crunching the numbers
A closer look at the Morningside Foundation’s Form 990s show that its Harvard commitment sucked up a lot of grantmaking oxygen in the mid- to late 2010s. For the fiscal year ending 2014, its $61 million installment to the school constituted 97% of total dollars disbursed. That figure dropped to 94% the following year and 73% by 2018, when it gave the school $37 million.
The most recent Form 990 for the fiscal year ending December 2021 shows a more balanced approach. Fifty-four percent of the $46.6 million the foundation disbursed to 20 organizations came in the form of a $35 million gift to UMass, suggesting the foundation will also pay out its $100 million commitment to that school in increments.
The foundation made four six-figure gifts, the largest clocking in at $3 million for the Winthrop Park School in Newton Centre, Massachusetts. It earmarked 45% of gifts for educational purposes, followed by religious purposes (35%), the arts (10%) and general-use medical and research (5% each). Sixty percent of gifts flowed to organizations outside of Massachusetts.
That most recent 990 shows the foundation had $37.9 million in incoming contributions from two sources — matriarch Chan Tan Ching Fen ($31 million) and the Morningside Foundation Limited in Hong Kong ($6.9 million). At the end of the year, the fair market value of all assets stood at $51 million — $4.4 million more than it disbursed for the year. This illustrates that the foundation, like most charitable vehicles operated by living donors, operates as a “pay-as-you-go” entity rather than seeking to build up a substantial endowment.
One critical variable in a pay-as-you-go model, of course, is the fact that significant changes to the donor’s wealth can drastically affect the vehicle’s grantmaking. In this case, the Chans derive a large portion of their fortune from the boom-and-bust cycles endemic to the Hong Kong real estate market. The Hang Lung Group also has a big presence in many major mainland Chinese cities — and the country’s property sector is in full-blown crisis mode right now.
Time will tell if these headwinds affect Morningside’s grantmaking moving forward, but a review of the data points to a possible correlation. The Hang Lung Group stock is listed on the Hong Kong Stock Exchange, and its share price is down 45% over the past five years. Moreover, the $46.6 million the foundation disbursed for the fiscal year ending December 2021 marks a 38% decrease over its average payout amount of $75 million from 2016 through 2019. Nevertheless, the larger trend has been one of fairly steady smaller gifts punctuated by mega-commitments. And assuming the Chans’ real estate fortune remains reasonably intact, it seems likely that trend will continue.
“Don’t ever leave them anything”
Speaking to the Asia Society Korea Center in 2016, Ronnie Chan spoke candidly about his approach to philanthropy. “I didn’t make the money, my late father made the money,” he said. “I am just a lucky guy who was just born into a wealthy family.” His credo is simple: “You make money from society, you give the money back to society.”
Chan expressed admiration for Bill Gates’ and Blackstone Group Chairman Stephen Schwarzman’s “very systematic” approaches to giving. “These are thoughtful people who [have] everything planned out,” he said. “In my family, frankly, not really.” Education had always been a core priority, Chan said, “but we also ventured into new directions,” such as restoring cultural relics and historic sites around the world.
In the same talk, Chan also ruminated on that big Harvard gift. While he believes medical schools and hospitals rightfully receive substantial support for improving patients’ quality of life, “public health never gets any money because nobody directly benefits from public health work, at least that they are aware of,” he said. “If you were to look at the last 200 years of human history, advances in public health has [sic] done far more good to mankind, to health, than any single medical breakthrough.” He also noted that his brother was a graduate of what was formerly known as the Harvard School of Public Health.
Another nugget from the talk caught my eye. “I cannot think of a better way to destroy your children than to give them a lot of money. Don’t ever leave them anything,” Chan said. Four years later, his thinking apparently hadn’t shifted all that much. “Dealing with family can be difficult,” he told the South China Morning Post in 2020. “If no one can dip their hands in the pot, then there are no arguments.”
Ronnie, who said he never expected to inherit money from his father, has yet to sign the Giving Pledge. He has two children. One son, Adriel, is a vice chair at Hang Lung Properties. Will Ronnie, currently 74, pass over his heirs or have a change of heart? Where might the fortune of elderly matriarch Chan Tan Ching-fen end up when she passes away? And what of Gerald, who also has two children and, to my knowledge, hasn’t been as forthcoming on these matters? Stay tuned.
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