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Stockbroker and philanthropist Richard Gilder, who has made a number of high-profile gifts to Yale himself, came up with the idea for the 54/50 Fund, an unusual fund-raising effort in which he and other members of his class pooled $75,000 in 1981 and invested it themselves in anticipation of their 50th reunion. They succeeded beyond anyone’s expectations: in June, the Class of '54 was credited with a reunion gift of more than $120 million, $90 million of which was attributed to the 54/50 Fund.
Y: So everybody wants to know: how did you guys make so much money?
G: Well, we had very lucky timing, both getting in and getting out. We had the benefit in 1981 of a tremendous growth stock market that went on as interest rates were falling and taxes were being cut. This went on through 1994, and then we had another rush with the high-tech stuff. And just at the peak in 2000, President Levin had the idea that improvements to Science Hill were really needed and asked if we would make the first commitment. Everybody thought it was a great idea, so we turned most of the money over four years early. That meant we got out at the high, although we certainly didn’t know it at the time.
Y: Hadn’t Yale been uneasy about the class investing the money itself?
G: The head of the Yale Alumni Fund, Tom McCance ['55], loved the idea. So we got started, and a number of other classes were about to start, when Tom McCance got a job at the Smithsonian. He was replaced by a whole new team at the Yale Alumni Fund, and they took a look at this and said, “Oh my goodness! We can’t have each class doing its own thing. Think of the fiduciary responsibility and obligation.” So they killed all the others before they got started, but we had gotten all our legal work done, we had our money in, we were investing, so we could say, “Sorry, we’re going to keep doing what we’ve been doing.”
Y: Where was the money invested?
G: It was invested with Joe McNay ['56] of Essex Investments. It was only $75,000 when we started. After five years he had built it up to around $350,000, and we opened a margin account. That meant that people could make a five-year pledge that we could borrow against. With that we got another $300,000 in.
Y: Did you just invest in stocks or also private equity?
G: All stocks. Over the years some people wanted to go into leveraged buyouts, and some people wanted to invade the fund for one reason or another, but we just stayed with the same manager the whole time.
Y: You say your results were just good timing. But a lot of people presumably had that advantage. Is there any other explanation for your exceptional return?
G: I think Joe’s style is very interesting. He buys many stocks, so we might have had at any moment 40 or 50 different stocks in our portfolio, even when we were much smaller. They’re all in interesting areas—science, technology, health—and he’s very well informed. But he would never have one stock be hugely dominant. We can’t point to one or two stocks and say, “Ah! That’s what did it. We got Xerox at just the right moment.” It was very broad; that’s what’s so impressive about it.
Y: How involved were you and the other investors from the class in deciding where to invest the money?
G: Well, we made the decision to invest with Joe. And then of course we left him alone. We'd never interfere.
Y: Did the class play a part in deciding how the money would be spent at Yale?
G: Our research committee, which was chaired by our classmate Bob Quinlan, interviewed a number of former college presidents to try to get ideas about what we should give our growing fund to. We met with Yale regularly as well. But we just couldn’t agree. So we were sort of scratching our heads, and thank goodness at that moment President Levin came to us about the chemistry and environmental science buildings. And I just was thrilled at that. This is the age of the nerd. Yale wasn’t nerdy enough, so here was a chance to get in there and nerd it up and get our name all over the place. But the buildings only cost maybe a little under $60 million, and our total donation from the fund amounted to $90 million. Joel Smilow, our class secretary, had the idea of a matching fund. We set up a $20 million challenge to any classmate: if you wanted to endow a chair or something and it cost two-and-a-half million, all you had to do was put up a buck and a quarter and we would match it.
Y: Do you guys have the run of the campus now when you come up?
G: Well, we have the run of the Environmental Science Center. People are on hand to take us through and show us all kinds of dead things. If death is your bag, our class is just the one for you.
Y: I’ve heard something about a 54/60 Fund.
G: Oh yes, it’s up and running. It has about $1.3 million in it already. Now the questions for our next class council meeting in September are: should we have a 70th reunion fund? At the 70th there'd be some members alive—we'd be, what? 91? I would like to have a fund for the 80th. We just want to be a curse around Yale’s neck. Everywhere they look it’s still the Class of '54 haunting them—70th, 80th, when are they going to die, for God’s sake?
Zephyr Teachout ’93
After graduating from Duke law school, Zephyr Teachout cofounded the Fair Trial Initiative, a North Carolina nonprofit that works for effective defense in death penalty cases. But she became better known last year as director of online organizing for the presidential campaign of former Vermont governor Howard Dean ’71. She recently joined America Coming Together, a political group mobilizing Democrats in 17 states that provided swing votes for George W. Bush in the 2000 election.
Y: How did you become affiliated with the Dean campaign?
T: I’d worked for him before, in 1994, on his re-election campaign [as governor of Vermont]. I’d just moved to Montpelier, and I happened to ride the elevator with his chief of staff. It was nothing more profound than that.
Y: But you didn’t stay after he won the election.
T: I went to Morocco for half the year. I wanted to travel around the world but then I ran out of money. I was completely incompetent at staying in one place.
Y: So what drew you back to work on his presidential campaign?
T: I studied game theory at Duke. One of the dangerous things with game theory is you end up making charts to optimize what you’re doing. I made this chart that listed the biggest problems in the world and what I could do in relation to them, and the odds of me having an impact. I decided that although the likelihood of being successful on a presidential campaign was very low, the potential outcome was very high, and I volunteered.
Y: As the campaign’s Internet director, you wrote a lot of entries on the “Blog for America,” and the electronic community of “Deaniacs” who read it seemed to have great affection for you.
T: It’s quite mutual. I was so smitten with these folks and what they’re willing to do. I mean, look, I get all this press, and I get props and stuff, but people are doing this because they think it’s the right thing to do, and they’re doing it with such imagination, and they’re doing it in really lonely places. Like Lubbock. You know, [Dean volunteer] Sue Leninger woke up one morning in Lubbock and said, “Next election, whatever I do, I’m going to do more than just vote.” She managed to build an organization of 40 people in Lubbock, Texas—the county that voted the most for Bush in the country. That, to me, is really heroic. I hadn’t met too many people like that in my life, and suddenly, I got to meet hundreds of them.
Y: You’re a poker player. Has the game changed the way you look at politics?
T: The biggest thing is that you don’t overvalue sunk costs. So that when you’re a lawyer with a $70,000 debt left over from law school, which I am, you don’t overvalue the fact that you went to law school to the point where you don’t consider going to work for a presidential campaign. The most wonderful similarity about the Dean campaign and poker was that there was this incredible cross-section of society showing up. If you walk into the Flamingo at five in the morning, and you go to the lowest-stake hold-'em game, you’re going to see the 22-year-old kid and the Chinese grandmother at the table together. It was really like that in the local volunteer groups.
Y: Are you now officially hooked on politics?
T: If I get hooked on anything, it may be this. I mean, I’m not that good at staying with one thing, but I love the connectedness of it. It’s the most imperfect art, and you really have to get down in the gutter. I love how, at the same time that it’s just this ugly sport, at the core its aspirations are so high. Listening to so many different people express their political views is very moving. We’re political animals. I like that—“political animals”—it expresses it in one phrase. The highest and the lowest.
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