It’s best to bestow when the going is good.
Aug 23, 2010, Vol. 15, No. 46 • By MARTIN MORSE WOOSTER
But the judge in the case ruled that some of Buck’s wealth had to be used to create three national organizations: the Buck Institute for Age Research, the Beryl Buck Institute for Education, and the Marin Institute. The judge who ordered the creation of these organizations declared that 20 percent of the trust be used to create ‘major projects . . . of national significance and importance.’ There is no evidence that Beryl Buck was interested in influencing public policy.”
Milton Hershey said that because he had no children, “I decided to make some of the orphan boys of the United States my heirs.” In 1919 he left several thousand acres and a majority stake in the Hershey Company to the Milton Hershey School. But the dramatic growth of the Hershey Company has ensured that the school has more money than it needs to run the school, which has an endowment that rivals that of the wealthiest prep schools in the United States.
For Madoff, the Buck and Hershey cases show that courts “pay only minimal attention to current societal needs” when ruling on donor intent. But the Marin County Foundation has plenty of applicants for its grants. Courts could rightfully declare that Milton Hershey more than amply satisfied his wishes in creating his school, and that the Hershey wealth could be partially diverted to create smaller and less lavish Hershey schools in the inner cities.
The problem of donor intent comes about not because of “dead hand” control, but because of the abandonment of the principles of the foundations’ founders. With the important exception of the Barnes Foundation, these cases involve liberals seizing control of foundations created by free-market conservatives, such as Henry Ford, J. Howard Pew, John D. MacArthur, and Andrew Carnegie. By creating foundations with a strict term limit of no more than 20 years after a donor’s demise, today’s wealth creators can ensure that their fortunes can be spent on causes they prefer, rather than having people they do not know spend the money in ways they would not like.
George Eastman was the greatest American philanthropist who never set up a foundation. By the time of his death in 1932, he had given away $125 million, and had hired only one assistant to help him. When asked by a journalist in 1923 why he didn’t set up a foundation, Eastman said, “It is more fun to give money away than to will it. And that is why I give.”
Ray D. Madoff is wrong in most of her analysis of philanthropy. But she is absolutely right in her fundamental point: It is better for donors to put their charitable dollars to work now than to create perpetual foundations that may or may not help our grandchildren and great-grandchildren.
Martin Morse Wooster, senior fellow at the Capital Research Center, is the author of The Great Philanthropists and the Problem of ‘Donor Intent.’
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