Charitable foundations play a large and important role in American life. Beginning well over a century ago with the creation of charitable foundations by several very wealthy men, they have enriched our national life in many ways.
John D. Rockefeller Sr., Andrew Carnegie and Henry Ford were among those leading the way, but they have been followed by literally thousands of others who have seen to it that their wealth served purposes far higher than merely enriching their children.
Almost from the start, however, problems arose when control of these foundations passed from their founders to trustees in the oncoming generations. Henry Ford had pronounced views on all sorts of things, and intended to promote them in suitable charitable ways through his foundation. But the hijacking of the Ford Foundation by its subsequent directors, and the activities it has promoted since his death, have become the textbook case on what can happen when a foundation falls into the hands of people not particularly interested in carrying out the donor's intent.
This problem of the "donor's intent" has quite properly become the central focus of attention in discussions concerning charitable foundations. The donor had at least a vague idea, and often a quite explicit one, concerning the purposes to which he wanted his foundation put. But when he passed on, it often turned out that one of his nephews on the board of trustees had very different thoughts on the subject. And if, as was often the case, the trustees included, or came to include, distinguished professors of one sort or another, these too often had ideas of their own concerning the uses of the late donor's money. You can see the potential for conflict.
But there is another aspect of foundation management which, it turns out, is also susceptible of abuse, and recent developments suggest that this matter, too, deserves looking into. The Foundation Management Institute, which (as its name suggests) keeps an independent eye on how foundations are run, has found some disturbing figures in the tax returns submitted by various big foundations for 2005.
It isn't that foundations are doing badly. On the contrary, all is going exceptionally well. The problem is with how much the management of these institutions is costing.
William Rusher is a Distinguished Fellow of the Claremont Institute for the Study of Statesmanship and Political Philosophy and author of How to Win Arguments .
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