Tulsa has seen just a small fraction of George Kaiser’s fortune. Yet he has a long-range vision of how the George Kaiser Family Foundation will spend its last dollar.
His namesake philanthropic organization continues to spend tens of millions of dollars each year on early childhood education, reducing female incarceration, economic development and, of course, that two-thirds-finished park on the Arkansas River. The foundation, according to executives and tax filings, has spent about $1 billion.
There are billions more left for the oilman and banker to give away. And still Kaiser is thinking about the end, about what will happen to the Bank of Oklahoma — the bank he bought because he worried about what the city and state would look like without it. He has pondered what he hopes his fortune will accomplish and come up with a strategy to achieve it, a plan that will last long after he has gone on, as he says, “to one of those two unknowable places.”
Kaiser’s plan will eventually give a nonprofit, the George Kaiser Family Foundation, control of Oklahoma’s largest bank. The bank is a corporate entity that has thousands of employees and about $32 billion in assets.
The transfer itself is part of the unwinding of an economic engine that will leave the foundation, an institution dedicated to breaking the cycle of poverty in Tulsa, even larger than it already is. It’s part of Kaiser’s promise to give away the majority of his wealth — the Giving Pledge. Unlike some billionaires who took the pledge, Kaiser’s philanthropic focus is almost entirely local.
He could still change his mind, but Kaiser, 75, doesn’t plan on selling his controlling interest in BOK Financial, the Bank of Oklahoma’s parent company.
He told the Tulsa World that he and his namesake foundation have designed “a plan to avoid the necessity of selling a controlling position in BOKF because of the importance of the bank in supporting Oklahoma small and medium-size businesses.”
How the transfer will take shape is still being worked out with regulators, but it would likely take place through his estate after Kaiser’s death.
The bank’s stock forms the core of Kaiser’s remaining fortune. His 61 percent stake was worth $3.2 billion at close of trading Friday. There’s about $7.8 billion, according to Forbes, left of his personal fortune.
Kaiser has given the George Kaiser Family Foundation more than $4 billion in cash, stock and stakes in businesses, according to the foundation’s annual tax filings with the IRS.
He himself is mum on how much there is to give away, saying the foundation will receive “the balance” of his remaining personal assets when he dies.
“The amount depends upon when that day is and how successful I am in enhancing or dissipating the assets in the meantime,” Kaiser said in an email. “I plan to keep flying coach, shopping at Wal-Mart and buying Joseph A. Bank suits to help preserve the ultimate foundation corpus.”
The foundation is a bank customer.
The foundation’s IRS Form 990 for 2015, the latest year available, shows that it had a $206 million line of credit from BOKF and a smaller loan for $2.3 million for work in the Brady Arts District. In 2013, there was a loan for $55 million, that year’s filing showed.
The documents describe the loans as “arms-length transactions,” which means the loans are at market rates, giving the bank, mostly owned by Kaiser, the ability to make revenue off philanthropic efforts.
Kaiser said loans from BOKF to him are typically at higher rates than loans he has from other banks.
However, GKFF is among several customer relationships BOKF has with members of its board and shareholders, including Kaiser. If properly disclosed, they aren’t unusual or illegal. They are closely regulated by the Office of the Comptroller of Currency.
BOKF CEO Steve Bradshaw said: “That’s a significant relationship. The foundation is a large entity here in Tulsa. … We’re going to try to earn our fair share, which we consider to be nearly 100 percent of any great relationship that’s available to us. We compete for that. GKFF certainly doesn’t do all their business with us.”
The relationship is a two-way street. BOKF, according to SEC filings, purchased $7.5 million worth of historic tax credits from the foundation in 2016 — which were used to offset the company’s state income tax liability in 2016 — and in 2017.
Following the money
The relationship between BOKF and the foundation is part of a larger pattern of Kaiser’s for-profit enterprises interacting with the George Kaiser Family Foundation — a pattern that has persisted despite media scrutiny.
The foundation itself is a complex entity whose holdings are a window into Kaiser’s own, tax filings show.
At the end of 2015, the foundation, like Kaiser, owned a stake in Memjet Holdings LTD, a San Diego-based printing company; a solar energy company; and The Oil Center buildings in downtown Oklahoma City. It also owns a ship used by Kaiser’s natural gas importing company, Excelerate Energy. And more than 4 percent of BOK Financial, per SEC filings.
The two are legally separate. Kaiser can’t appoint a majority of the voting power to the foundation’s board, and once Kaiser has contributed something to the foundation, it can never revert back to him.
However, the slow growth of the foundation’s giving, its legal structure and the failure of one of its government-financed investments, Solyndra, have attracted scrutiny over the past decade.
Kaiser co-owned Excelerate at the time and now wholly controls the company, according to its website.
The Bloomberg report came eight years after The New York Times used GKFF as an example of how supporting organizations — the type of nonprofit that the foundation is — give tax benefits to those who endow them without being required to give away a certain amount of their assets every year, unlike private foundations.
The Times reported in 2005 that the foundation had given away only $3.4 million to charitable causes.
Fred Dorwart, Kaiser’s longtime attorney and friend and a GKFF board member, told the Times that Kaiser wanted to help fund a safety net for the Tulsa region, beautify Tulsa and have a program for disadvantaged children.
That story came at a time early in Kaiser’s giving — the first Educare early childhood education facility was being planned. The foundation’s giving would soon ramp up into the tens of millions, then the hundreds. All around Tulsa, what Dorwart described is coming to fruition.
Kaiser, in an email to the World, compared his foundation’s principles to those of the Times.
He said: “One of the many guiding principles of GKFF could be called the New York Times rule. Their masthead … says ‘all the news that’s fit to print.’ GKFF feels the same way about its flexible budget — if the somewhat proven, good charitable ideas within our mission prudently require less than our ideal contemplated distributions, we will underspend the ‘budget.’ On the other hand, if we have more good ideas than money, we will overspend.”
GKFF spent $132 million in grants and contributions in 2015. In 2014, that number was $200.5 million. By comparison, the city of Tulsa’s general fund spent $257.7 million in fiscal year 2014.
Ken Levit, executive director of the GKFF, said that in 2016 the foundation spent more than $200 million in grants, contributions and other projects.
While Kaiser has pledged “virtually all” of his remaining fortune to GKFF, it appears that he is in no hurry to give it away or to sell companies he controls.
He backed away from selling The Woodlands, Texas-based Excelerate Energy earlier this year, according to media reports. However, he did sell his stake in Tulsa-based Summit ESP to Halliburton in early July.
Kaiser said the same “Times” principle applies to distributing his remaining fortune and to the long-term draw-down of the foundation’s assets.
“We will let needs and solutions guide the speed of our distributions rather than put intense pressure on the trustees to liquidate in a hurry at some point and make sub-optimal judgments,” he said.
Impact down the line
Bradshaw and other business associates describe Kaiser’s business practices as those of a “contrarian” — willing to buck the status quo in favor of pursuing long-term profits.
That long-term view is seen by Bradshaw as a competitive advantage for BOKF.
“We don’t waste time thinking about the bank selling, because George is not a seller,” the bank’s CEO said. “I can’t emphasize enough what a gift that is.”
The size and scope of Kaiser’s gifts, both present and future, aren’t lost on another business associate, QuikTrip CEO Chet Cadieux, who serves on the BOKF board of directors and the foundation’s board.
He noted that while other cities had seen large-scale philanthropic giving, those cities are often larger and wealthier and have bigger economies. As a percentage of Tulsa’s economic output, Kaiser-originated philanthropy has to be larger than most, he said.
“I can’t imagine there’s another city that has someone who’s been as generous as he has,” Cadieux said in an April interview with the World.
He also noted that the time frame GKFF is investing over isn’t a brief window.
“I think a lot of the stuff that they’re doing is going to have a much bigger impact than people know, because they’re long plays,” Cadieux said. “He is working to try to treat the cause rather than the symptoms of various problems in our city. … It takes decades to have an impact, and in all likelihood the person who gave isn’t going to be around for everyone to say, ‘Hey, way to go.’ ”
An end-point, but not a date
In its close to two decades of existence, GKFF has spent $1 billion, a significant but not large fraction of its current assets. Theoretically, with the continued contributions of Kaiser’s remaining wealth, the foundation’s assets could last forever. It has a stock portfolio worth hundreds of millions, and the returns could fund its efforts in perpetuity.
While the foundation hopes to earn a good return on investments, Kaiser said the “dominant goal” is to distribute the funds. That distribution could occur over several decades, beyond the lifespan of Kaiser and those he has entrusted to accomplish his philanthropic objectives.
Commitment to, and knowledge of, Kaiser’s objectives and the foundation’s long-term mission will lessen as the people who have witnessed the philanthropy’s path die, he believes. The foundation’s board members — trustees — will be tasked with continuing the mission. Once there are only three of those trustees, or their successors, remaining, the foundation will cease to exist in the way it does today.
“We will distribute our last dollar when … the identified trustees and successor trustees diminish to a minimum practical governance group,” he said in a May email. “The foundation will distribute its remaining proceeds — over a leisurely time period — to supported organizations or to an administrative trust established for their benefit.”
Kaiser and Levit have long acknowledged that the foundation’s mission could be an 80- to 100-year project, giving its benefactor the ability only to guess as to how the transfer of wealth will work out.
“Ken is indomitable and will be there at or near the end, as will my kids, I suspect; I don’t think I’ll make it,” Kaiser said.