THE MORNING RANT: Re-thinking Charitable Giving to Foundations

I’ve been meaning to write about the problems with foundations for some time, but I’ve just never gotten around to it, because there are so many awful stories to tell, so many facets to the problem, and so much research that could be done for a good long-form essay. Since that great essay I’ve intended to write apparently isn’t ever going to get written, I’d just like to highlight a few thoughts I have about my disdain for foundations, and suggest that you make sure any foundation you are donating to is using your money as you prefer. Or, as an alternative, you might consider donating directly to charitable organizations that will spend your donation rather than investing it.

Here are a few of my biggest problems with foundations.

1) Long-established foundations get hijacked by activists, and no matter what the original purpose of the foundation was, in time it will be used for left-wing activism. John Rockefeller and Henry Ford never intended for the foundations they established with their fortunes to eventually become anti-American funding sources that promote global communism and “climate justice,” but that is what their money is being used for now.

2) Local foundations established to support worthwhile charities eventually tend to redirect their focus toward money management and compensation for those managing the investments. The actual money that makes it to the charity tends to be doled out grudgingly, and only after all the administrative expenses of the foundation (including salaries) are subtracted from the minimum required distribution. Let’s say a foundation has a $20,000,000 portfolio and it is required to distribute 5% for its annual distribution, or $1,000,000. After the salaries, travel, and other expenses of those managing the money are paid, just a few hundred thousand dollars may make it to the actual charity in a given year.

3) “Charitable” foundations established by affluent individuals are used as a way to launder their travel and living expenses as tax deductions.

The great Oilfield Rando has a hilarious example of Number 3:

I gave plenty of money to various foundations over the years until I began to understand how little of my money was getting to the intended charity. No more. Rather than give to the (hypothetical) “Widows and Orphans Foundation,” I will now only donate directly to the operations of the Widows and Orphans organization itself. A $1,000 gift to the operating fund of the charity will provide it with $1,000 dollars to use this year, whereas a $1,000 donation to its associated foundation might result in perhaps $20 or $30 making it to the actual charity this year.

[buck.throckmorton at protonmail dot com]

posted by Buck Throckmorton at 11:00 AM

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