FORTUNE — The Robin Hood Foundation — Wall Street’s favorite charity — was named, rather cheekily, for the lovable fictional character who stole from the rich to give to the poor. But with this week’s news that Robin Hood board member Steven A. Cohen will pay a record $1.2 billion in fines due to insider trading at his 100%-owned firm SAC Capital Advisors, life is suddenly imitating reality in a rather uncomfortable way.
According to the plea, it turns out SAC did indeed steal from the rich by insider trading, gaining an unfair edge over other investors. Indirectly, it redistributed some of those gains to the poor, via the $256 million given away by the Steven A. and Alexandra M. Cohen Foundation over the last decade to the likes of Stamford Hospital, North Shore-LIJ Health System, NYU Medical Center, and, of course, the Robin Hood Foundation, to which Cohen has donated more than $80 million.
It’s an awkward situation, to be sure — accepting funds for good causes that may have come, in part, from ill-gotten gains is a moral dilemma at best. So what happens now? Does Cohen stay on his boards and continue to give away money — which, despite its origins, can still help people? Does he step down and stop donating to avoid tainting these organizations with guilt by association with his firm? Or does he actually amp up his giving, much as Michael Milken — who, unlike Cohen, was personally convicted of a felony — did a few decades back in an effort to improve his image? So far, it sounds like option three; Cohen, in a statement, said: “The Cohens expect to continue to increase their charitable giving in future years, as they have over the past decade.” A spokesperson for the Robin Hood Foundation told Fortune that “Steve Cohen is a valued and thoughtful member of Robin Hood’s board, and his leadership and generosity over the past nine years has benefited countless New Yorkers in need. We are not asking him to step down, and we have no reason to believe that he will.”
That could be good news for Cohen’s biggest beneficiaries — several of which, such as Brown University, where Cohen sits on the board of Trustees, and L.A.’s Museum of Contemporary Art, where Cohen is also a director — didn’t respond to requests for comment. Of those who did respond, none of them see a donor whose firm (not the individual himself) has pleaded guilty to a serious crime as embarrassing enough to warrant giving the money back or even changing the names on the entrance to a building.
Says Christopher Riendeau, senior vice president of fund development at Stanford Hospital, which has received millions from the Cohens and is now building a pediatric care center to be named after them: “We stand by their philanthropy. They’ve been extremely generous to this community.” At New York University, which in February announced a $17 million gift from the Foundation to create a new research center for veterans’ mental health issues, “we will be keeping the gift,” says spokeswoman Lisa Greiner, and the name (the Cohen Veterans Center) will not change.
This is not the first time that a rich man with philanthropic leanings has ended up in legal hot water, of course. It takes only one visit to, say, the (Michael) Milken Institute or Gould Memorial Library (funded from the profits of 19th century robber baron Jay Gould) to remember that many of the country’s most important cultural institutions were founded by businessmen with ethical or legal challenges.
Maybe that’s why you don’t see charity clawbacks like you do with bonuses these days; when it comes to philanthropy, at least someone wins.
Additional reporting by Marty Jones