Alan Hassenfeld on the state of politics and philanthropy in R.I.
A simple question and answer session with former chairman and CEO of Hasbro Inc., Alan G. Hassenfeld, and current chairman of the Hassenfeld Family Initiatives turned into an hour-long discussion that ranged from the prospects for Middle East peace, to "social philanthropy" to the fact that it's still "pay to play" in Rhode Island.
WEIGHING IN: Alan G. Hassenfeld, former chairman and CEO of Hasbro Inc., discusses the state of the state, and what elected leaders here need to do to revive a "flatlined" economy.
PBN PHOTO/RUPERT WHITELEY
FROM THE HIP: Rhode Island business leader Alan G. Hassenfeld sits back in his office. He is currently the chief of Hassenfeld Family Initiatives.
What is your sense of Rhode Island's economic and political health in 2015?
Rhode Island is very fortunate that they have some companies that have been here a long time that are doing their best to stay. … But I think the economy if anything is flatlined.
I think the executive branch might understand it, but the legislative branch doesn't understand it. You can create law after law and do what you want to do, but unless there is some kind of oversight and ethics commission over the legislative body, why would any business want to move here? It's pay to play. I mean I've always been ecstatic that Hasbro is in the toy business. … We don't take government contracts or anything like that. But I really believe that the legislature doesn't understand that when businesses look at Rhode Island and coming here … they look at our past and our present and they see it's like the Wild West. And unless there's some type of ethics commission oversight, where people are held accountable, I think there's a real problem bringing business in.
That leads into another question. What one thing would you like to see happen in Rhode Island in 2016? More ethics oversight?
Well, yes, more ethics [oversight]. But I'm doing a lot of what we call social-impact investing. … You've got any number of investment [funds in Rhode Island]. You should take maybe some of the people who can afford to invest and say, look, we're going to set up a fund, a $100 million fund, an incubator. … I'm not even looking for public funds. Say, "Look, Alan Hassenfeld, would you put in a million or two millions dollars?" which I could, and we're going to incubate 50 businesses. Like any other investment you make, or gamble you make, there's a risk, maybe one of the 50 will work, like a Teespring.
How do we work together? You have in Rhode Island I think wonderful institutions of higher learning. However, I don't think we handle it properly. If I was the governor, I would be sitting once a month with my college presidents, both public and private. And in putting a group together, what can we do with a $100 million investment fund to stimulate the economy? Instead, right now we're still moaning and groaning over 38 Studios. Get over it, OK?
But you want to point a finger at [R.I. Commerce Corp. predecessor Economic Development Corp.], you want to point a finger at [former Gov. Donald L.] Carcieri, you want to point a finger at [former Gov. Lincoln D.] Chafee. But you have to point a finger at the legislature.
[Providence Mayor Jorge O. Elorza] called me, maybe six weeks ago, and I had had lunch a couple days before that with [former Mayor Angel Taveras], and I thought Angel was a good man, I think he is a good man. Angel and Jorge have much the same background, and I asked Jorge, "Have you sat down with Angel?" We in business believe in something we call exit interviews. We ask, "What did we do right, what did we do wrong, how would you do it differently?" He's never sat down with Angel. And right now, I think we're in deeper trouble in Providence than anyone comprehends. I'm not sure, and this will shock you, I'm not sure if we shouldn't pull a Detroit or Central Falls and level the playing field and start all over. I want decent jobs for decent people and I want decent wages and I want to take care of people. I don't like pulling anything away from people that they were promised, but … it's very hard for a businessman sometimes to comprehend the sick days, the vacation days, the things that people can accrue. I'm just scared. … Someday the plug will get pulled in Providence.
I don't mean to be negative. … We have an education board that goes K through higher education. Guys, you can't do it. Community College of Rhode Island, Rhode Island College, they're good schools, but they're very different than the University of Rhode Island. URI should be cut free, have its own separate board of trustees, regents, whatever you want to call them and let them run. But instead they're governed by archaic rules. The world is changing very quickly and no one is waiting for Rhode Island to change.
So, this started with a question about 2015. What do you see in 2016?
More of the same. … You know there's that old saying, the definition of insanity, which is doing the same thing but expecting a different result. I think the executive branch with [Gov. Gina M Raimondo] is trying. … Look, if I take what's going on in the Middle East similar to what's going on in Rhode Island, nobody's going to get the whole pie. We've got to find a way to work with the Russians, we've got to find a way to work with the Europeans and the Arabs and coalescing together. The [Rhode Island] Senate, the House, the executive and the judicial are going to have to learn to work together here.
I look up at the Brown University campus or the Rhode Island School of Design campus, and Johnson & Wales University over here, such assets, but they constantly see regulation after regulation. How do we get rid of that? My wife is British and she says, "What's united about these states?" If you want to be a nail person, you have to be licensed in Rhode Island, you need to be licensed in Massachusetts. You need different licenses.
Clean up our infrastructure, put people to work. If you have to, if the state has to go a little bit into debt, I'm talking the state of Rhode Island, but not the city of Providence. Our cities and towns are in dire straits. Go into debt, put people to work, create a proper atmosphere. But I just worry that we don't have the vision that we once had.
How do you evaluate the governor's first year in office?
I think good, not great.
Rhode Island is a very special place. Take tourism. I don't know who they finally gave the RFP to, who they're bringing in, but I think we had four different tourist groups, I don't know. God dammit, put your money together once and for all. … You have people saying, "Hey, I'm worried about Newport. Hey, I'm worried about Providence." Guys, worry about the entire state because we're such a small state.
I laugh, because we have 36 different school districts, which means 36 contracts, it's not 36 buying groups, it's probably only 20 different buying groups. … If Noah built his arc in Rhode Island, we would need, not two-by-two, but 36-by-36.
One of the things I'm doing with my philanthropic work is to try and be a catalyst for good change. I mean the Hassenfeld Institute for Public Leadership at Bryant University … comes off the [Kennedy School of Government at] Harvard, where we send five people a year for leadership training. Everyone that's gone there thought that their problem was unique, and they learned that there are a lot of people around the world and around the country that have the same problem they have, and it's been a godsend. … And then I decided I couldn't do more at Harvard, but what I wanted to do for Rhode Island was to take town councils and school committees – because many times people get into public service that way – and have training for them, not telling them how to vote, but giving them the skill sets to understand what it meant to be on a school committee, what a contract looks like. Most people don't even know what a contract looks like.
Do you think it's having an effect yet?
I've had some really good comments. We've worked in transition with [Pawtucket Mayor Donald R. Grebien] and we've worked some with Jorge, we've worked some with Gina's people. I think we stagnated, and I'm not meaning to say anything negative, but the four years under Linc were not our most progressive years.
We can't continue to tax our way out of this situation, [although] I was for the Taylor Swift tax, but not the way it was presented. Look, it's not the income tax that has the wealthy moving out of Rhode Island. It's 100 percent the estate tax. And when people move residence because of the estate tax, they no longer pay the income tax. … I was all for doubling the property tax on homes over a certain level, let's say, because to people who move out of Rhode Island but are here five months and 29 days in the good, old summer months, do they use the bay, do they use the roads, do they use the hospitals? Yes! But this obsession on the estate tax.
I don't know how you ever do it, no names mentioned, but if you went back to the year 2005, if you took the top 200 [individual] taxpayers in the state, what did they pay? … And if you took the top 200 in 2015, or 2014 or 2013, whatever, not who were they, but what did they pay? And I bet you that our income tax from the high end is much lower. Yes, jobs are coming in, maybe a $200,000 job is coming in, but … to save the estate tax, which brings in $25-$30 million, how much compounded are we losing on a yearly basis on the income tax? … Yes, I moved to Florida after my mom died because of her estate, because I want to give the money away. I want to do my philanthropy to study autism, asthma and obesity, I want Hasbro Children's Hospital to grow. Just trying to be a catalyst, but I won't get involved in politics.
I always wondered, you know we have so many issues in the state of Rhode Island. We elect two senators and two congressmen to go to Washington. When have you seen them stand up? Oh yeah, they bring some money back to Rhode Island, but when have they stood up on the issues that we're faced with in the state? … Where are they on 38 Studios? Where are they on the tolls? Their voices would be listened to. Where are they on the ethics commission? Where are they on convening groups here in Rhode Island to help move the state forward? Yes, they come back and meet sometimes with their constituents, and do their fundraisers, but after a while I just get tired of the same old, same old.
You started in on it, which is, what is your view of the state of philanthropy in Rhode Island?
It's getting more and more difficult. I just gave the keynote address at the University of Indiana's Lilly School of Philanthropy, their once-a-year forum, and I basically said there are too many NGOs, or not for profits, many of which are doing 80 percent of the same thing.
Obviously, wealthy New Yorkers or wealthy overseas people will find our coastline, and come and live for their three to four months of the year here. But do they give to philanthropy? Yeah, they give to social philanthropy, where they can be seen. Philanthropy is going to get more difficult because there is not that much new money coming in. … I have a rule, our foundation believes we can give to something for three years running and then we go dark for at least a year or two, because we don't want to be like the drug addict, where they always come back for their next [fix]. We want them to be able to stand up on their own.
And I've changed.
How have you changed?
More and more, I'm directing the gift the way I want to. You can't come to me and say, "Alan, I'd like you to give a million dollars to Brown." Well, I'll give you an example. [Massachusetts General Hospital], where I had my heart surgery 15 years ago. … And I knew Mass General would want a large gift from me. But I went to my doctor and I said, let's you and I create what you want to move the hospital forward. And we decided we would give … out three research awards of $50,000 a year at Mass General to heart researchers. I'm so proud because at the American College of Cardiology convention, one of my researchers from two years ago who got $50,000 from me now has been granted $2 million from them because of that research that we started.
I'm not an endowment person. Well, you say, "What do you mean by that?" Harvard's got $40 billion, and yet they have their deans going out to grovel. Tuition rates are going up because of administrative costs. How do I tell a child who's hungry, you know, we just drew down our 5 percent and we're out of money for this year. Come back next year if you're alive. The first day of the future, if you want to create it, is today. We create the future. We don't walk into it.
So, you've talked about yourself. Do you see the business community here individually and institutionally involved in the community as you would like to see?
First of all, there aren't as many as there used to be. I think that again, the problem with the business community is they have their own conflict. They have in most cases, three stakeholders. No. 1, your people, how do you take care of your people and create a place where they are comfortable and their morale is high? Then you have the community. And then you have your shareholders, and the three don't see eye to eye, ever.
The problem is we always get yelled at because we're not lobbying at the Statehouse. You're not lobbying at the Statehouse because … the world that we live in today is 24/7. This is not against the unions, I'd be doing the same thing, fighting for every inch of territory.
I look at, how do we educate even the unions? I remember, and I think it was Gina tried to cut the expected return [to 7.5 percent from 8.25 percent], someone started to fight her about it. I would have liked to have said to him, my god, who does your investing? If I could get 3 percent or 4 percent today, I'd be happy. I don't know what the models are any longer for the investment returns, but look, you're getting nothing from the banks, you've got to gamble and I just worry that we're in a fiscal time bomb here.
This will sound funny to you. I do a monthly budget. You'll say, what, Hassenfeld, yeah. I have a lot, I pay a lot of taxes. I have a mortgage, I have expenses, I have a wife, insurance. What is it that I'm taking in and what is it, what do I keep for the rainy day fund? It's not difficult.
Look, I remember a day when we were paying 26 percent at Hasbro, our house was mortgaged, and … there was a time when we couldn't scrape together two dimes. … Too many of the wealthy forget where they came from and they have to learn to give back and try and make a difference. And giving back doesn't only have to be money. Giving back can be time, it can be volunteerism.
Is it important or gratifying to see Hasbro the company ranking so highly on lists of ethical companies, sustainable companies?
I could not be prouder. … I would tell you that the team that [Chairman, President and CEO Brian Goldner] has around him at Hasbro today is the most we-team that we've ever had. … I am so proud of where they've taken it.
And yet I go back to Hasbro once every couple of months and to a group of 40 or 50 high-potential [staff]; I want them to understand the history and the culture of the company. We are a family company, we take care of one another, we take care of our community. But when someone becomes 60 and becomes passé or maybe becomes 70 and becomes passé, don't forget what they did, because if you forget what they did, you have to know that you probably wouldn't be sitting here today if it wasn't for those who came before you. … I'm trying to explain how we survived, and I really want people to understand the history and the culture.
Finally, what do you see for yourself going forward, philanthropy, politics, influencing the public discourse?
When I was in my 20s or 30s, I had an answer for everything. Everything was black and white. Today everything is gray to me. When people come wanting advice, I say, no, I can't give you advice. I'll make you ask yourself questions, but it's a different world today. I would like to be a catalyst for positive change, that's all. I want to be an honest broker. I chair the Jerusalem Foundation. I believe in coexistence. I took that on because I wanted to be part of the peace process. Look where we are. But my future is partly here. There are also any number of places I want to go.
Well, where haven't you been?
Haven't been to Tibet.
If I had a dream, it would be, No. 1, to make the United States united once again. And stop the gamesmanship.
One of the things is, stop the loopholes for the wealthy. Stop the loopholes for the corporations that don't pay anything. … And I can tell you right now, almost every American company would bring their money back from overseas if the tax rate was about 17 percent or 18 percent. Not the 35 or 36 or 38 that it is now.
But what do I want to do? I want to be a positive change agent. And have fun doing it. Meeting a lot of interesting people. Last month I had human-rights meetings in London that I was chairing, went on to Stockholm, went with the Nobel group on something. Then I flew to Shanghai to give three speeches … then I flew on to Lisbon to co-chair a Chinese-European economic conference, so I can keep busy. The thing is, I don't want to do things where I'm not using my brain.
How do you be a positive change agent for good? I don't have skin in the game anymore in a sense. I don't want anything from anybody, except to make sure every dollar I give away works as hard as it can. •