Welcome to Cause & Capital.

My goal: Inform your giving strategies.

Every month, I break down a brand’s corporate giving campaign or one of the world’s leading philanthropists, uncovering what worked, why it worked, and how you can apply those insights to your own cause investments, whether you’re giving as a brand or an individual.

Let’s get into it.

In May 2019, Robert F. Smith stood at a Morehouse College podium and did something nobody expected.

He announced he would pay off the student loan debt of the entire graduating class, roughly 400 young men. Then he expanded it to include their parents’ loans too.

The final gift: $34 million.

Graduates wept. The moment went viral. One student told reporters the burden had been lifted. He wouldn’t have to live off peanut butter and jelly sandwiches anymore.

Eighteen months later, Smith entered a $139 million settlement with the Department of Justice for tax evasion.

Today, we’re breaking down both sides of this story: what his philanthropy accomplished, how it was structured, and what the tax case means for how we evaluate philanthropic leadership.

Robert F. Smith is the founder, chairman, and CEO of Vista Equity Partners, a private equity firm focused on software that manages over $50 billion in assets. He’s been ranked as the wealthiest Black American, with an estimated net worth between $10-12 billion.

In 2017, he became the first Black American to sign the Giving Pledge, committing to give away more than half his wealth during his lifetime.

Smith grew up in Denver, the son of two school principals — his father led an elementary school, his mother led George Washington High School. And both held PhDs in education.

He’s talked about watching his parents donate to the United Negro College Fund every month, regardless of their financial situation. That, he says, shaped his view that giving is investment in the next generation.

He runs his philanthropy primarily through Fund II Foundation, which he founded in 2014. The foundation has made roughly $250 million in grants across education, health equity, cultural preservation, and environmental access.

Smith frames his philanthropy around one idea: liberating the human spirit.

His focus is removing barriers, particularly student debt, which he sees as a wealth-destroying force in Black communities. Research supports this: Black college graduates carry on average 188% more student loan debt than white graduates four years after graduation.

Smith’s approach is structural. He’s not just writing checks to institutions. He’s trying to build systems that address root causes of economic inequality, particularly in communities that have been historically underbanked and under-resourced.

Cause Selection

Economic mobility for Black Americans, with a particular focus on education, healthcare access, and financial infrastructure. His giving targets what he calls “upstream” barriers to wealth creation.

Partnership Approach

Smith operates through institutional partnerships with HBCUs, community development financial institutions (CDFIs), and corporate coalitions. He co-led the finance subcommittee of the Business Roundtable’s racial equity initiative alongside Jamie Dimon.

Methods Used

The Morehouse gift was direct debt elimination for 400 graduates and their families.

But Smith designed what came next to be systemic. Student Freedom Initiative offers income-contingent loans to HBCU students in STEM fields. Students can borrow up to $20,000 per year and repay based on income after graduation.

And he also introduced The 2% Solution which asks corporations to invest 2% of net income into Black communities over ten years. Netflix adopted the model, allocating $100 million to Black financial institutions.

And finally the Southern Communities Initiative which focuses resources on six cities where more than 50% of Black Americans reside: Atlanta, Memphis, New Orleans, Birmingham, Houston, and Charlotte.

Scale, Spend, and Reach

The numbers across Smith’s giving:

Fund II Foundation has made approximately 80 grants totaling roughly $250 million since 2014

1. Immediate, visible impact

The Morehouse gift wasn’t abstract. Graduates have spoken publicly about what debt elimination allowed them to do: attend medical school, start businesses, buy homes, invest. One graduate launched a nonprofit providing scholarships to HBCU freshmen in STEM. Another started a tech company. The ripple effects are documented and real.

2. Systems designed for sustainability

Student Freedom Initiative isn’t a one-time gift. It’s structured so repayments fund future students. If it works as designed, the initial $100 million could support HBCU STEM students indefinitely.

3. Corporate influence

The 2% Solution gave executives a concrete framework and a peer example when Netflix moved first. Smith used his position in the Business Roundtable to push the conversation from statements to commitments.

4. Targeted geography

Southern Communities Initiative concentrates resources where impact can be measured and compounded, rather than spreading thin across the country.

In October 2020, the Department of Justice announced that Smith had entered a non-prosecution agreement related to tax evasion.

The facts, according to court documents and DOJ statements:

From 2000 to 2015, Smith used offshore entities in Belize, Nevis, and the British Virgin Islands to conceal approximately $200 million in income from the IRS.

In 2014, Smith established Fund II Foundation with assets from these offshore accounts.

Smith admitted in a signed statement that he “knowingly and intentionally” failed to report the income and pay taxes on it.

Under the settlement, Smith agreed to pay $139 million in back taxes and penalties, abandon $182 million in charitable contribution deductions, and cooperate with federal prosecutors in their case against Robert Brockman, the businessman who helped structure the offshore accounts.

Brockman was charged with what prosecutors called the largest tax evasion case in U.S. history. He died in 2022. This week, his estate settled with the IRS for $750 million.

Smith was not criminally charged. Legal experts have noted that non-prosecution agreements of this kind for individuals are rare and typically reserved for corporations.

This is where it gets complicated.

Some facts are not in dispute: Smith’s gifts created real, measurable impact for real people. The Morehouse graduates are better off. Student Freedom Initiative is operating. Fund II Foundation continues its work.

Also not in dispute: Smith admitted to a 15-year scheme to hide income from taxation. A portion of the assets that funded his foundation came from accounts he used to evade taxes. He claimed charitable deductions he was not entitled to.

People will weigh these facts differently.

Some will argue the impact stands on its own. What matters is the outcome for beneficiaries, not the source of the funds. Others will argue that philanthropic leadership requires moral standing and that tax evasion undermines the credibility of someone who positions himself as a voice for economic justice.

There’s also a structural question: Smith avoided $200 million in taxes that would have funded public services (schools, healthcare, infrastructure) that serve the same communities his philanthropy targets.

I’m not here to tell you how to resolve that tension. But if you’re evaluating philanthropists as potential partners, or thinking about your own giving philosophy, it’s worth sitting with the question.

1. Design for sustainability

Smith’s Student Freedom Initiative is built to outlast any single gift. If you’re making a major philanthropic investment, ask whether it can compound over time or whether it requires perpetual funding.

2. Target strategically

Southern Communities Initiative focuses on six cities rather than trying to address national problems everywhere at once. Geographic concentration allows for measurable impact and learning.

3. Use your platform to shift peers

The 2% Solution gave corporate leaders a specific ask and a peer example. If you have influence in your industry, consider how to make it easier for others to follow.

4. Transparency matters

Smith’s bad acts came to light. They always do. For donors and brands building philanthropic reputations, the alignment between public values and private behavior will be tested.

5. Impact and integrity are both part of the equation

This is the harder lesson. Smith’s philanthropy is genuinely impactful. His tax conduct was genuinely problematic. Both are true. When evaluating philanthropic partners or role models, decide how much weight you give to each.

Cheers,
​Christine​

P.S. - If this was helpful, feel free to share it so others can find it too.

P.P.S. - If your work includes leading or advising fundraising teams, I also write a weekly brief called Chief Fundraiser Weekly. It focuses on the decisions and tradeoffs that come with leading growth. It’s different from this content, and it may be helpful if that’s part of your world.