Rolling Over in the Grave

Since Henry Ford II’s resignation from the Board of the Foundation his grandfather created, the trustees and staff of the Ford Foundation have been widely held up as the ultimate example of every foundation founder’s legitimate concern – the hijacking of donor intent.

By the time Henry Ford II resigned, the direction of the foundation was antithetical to the values and practices of his grandfather. The Ford Foundation was virtually synonymous with the funding and support of liberal causes around the world.

In his letter of resignation to the Board in 1976 Ford wrote, “In effect, the foundation is a creature of capitalism, a statement that, I’m sure, would be shocking to many professional staff people in the field of philanthropy. It is hard to discern recognition of this fact in anything the foundation does. It is even more difficult to find an understanding of this in many of the institutions, particularly the universities that are the beneficiaries of the foundation’s grant programs. I’m not playing the role of the hard-headed tycoon who thinks all ‘philanthropoids’ are Socialists and all university professors are Communists. I’m just suggesting to the trustees and the staff that the system that makes the foundation possible very probably is worth preserving.”

Of course, by then it was pretty much an empty gesture as the Ford family had long ago lost the leadership of the foundation. Like many of us, I have recounted these words and the history of the Ford Foundation in conversations and meetings about the inherent dangers of professionals and trustees changing the course of the founder’s intent. How many times have we heard, “He would be rolling over in his grave if he knew what they were doing with the foundation.”?

However, a friend, Curtis Meadows, challenged me to read the original charter of the foundation and then explain to him how the trustees had wandered from the intent.

I called the Ford Foundation and they sent me a copy of the original charter. There is nothing in Henry Ford’s instructions that would give his successors any indication of what his intent was for the foundation except to “receive and administer funds for the scientific, educational, and charitable purpose, all for the public welfare, and for no other purpose…”

Essentially, you could drive a train through the gaps in that instruction.

Waldemar Nielsen in his classic on donor intent reported, “After the most comprehensive combing of the family and company papers, these people from the law firm of Cravath, Swaine & Moore were unable to find a single sentence or a single note from old Henry (Ford) expressing any interest in, or ideas about, his philanthropy.”

In other words, there was probably donor assumption but no stated donor intent. Henry Ford either had no interest in what they did, or he simply assumed his family and trustees would do what he would do. They didn’t, and more than likely, neither will yours if you are making assumptions instead of clearly expressing your intentions in writing.

But not only is written donor intent important. Henry Ford II’s involvement with the foundation illustrates something even more important. He did not share his grandfather’s values and fundamental ethic that would have kept the foundation on course had he done so.

Early on, as William Rusher writes in an excellent piece, “Keeping Faith: Donor Intent in the 21st Century,” he abdicated his responsibilities by announcing he would assume the role and title of Chairman, but the Ford family would not be interested in controlling the Foundation and that “their influence would be no greater that that of any other members of the board.”

The family was not prepared by anyone to carry on the values of the founder and that, from our perspective as Christian givers, is the greater tragedy. No one in the family was interested in the responsibility of actively promoting the values until it was far too late.

So, what is the application for you? Henry Ford’s foundation didn’t reverse course in the second or third generation. It virtually never had a course, so it was easy prey for the “philanthropoids.” Still, it was just as much his and his family’s shirking their responsibility that sealed the fate of the foundation.

Do you have a written document that communicates your intent and not just your assumptions? Who in your family shares your values and will be prepared to be both responsible to “keep the faith” of the foundation and to prepare the next generation? It’s important to think about and to do right now.

24 Comments

  1. Brilliant

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    • That’s high praise from you, Glen! I keep looking for ways our organizations can work together.

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  2. Excellent blog Fred. Had heard that the direction of the Ford Foundation was antithetical to Henry’s personal philosophy but had never heard he’d left no instructions. Astonishing…..
    But, i remember not too many years ago having a heartrending conversation with a Christian Philanthropist who had last control of his family foundation and the direction of the Foundation giving became an almost daily anvil of reality.
    Thanks for casting a klieg light on this subject and a solution……peb

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    • I love that phrase “daily anvil of reality”, Peb. That’s just the right image, isn’t it?

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  3. Thanks Fred. I will pull out our founding documents from 1987 to see if succession planning is included. By the way, we have personally benefited from the Ford Foundation. My granddaughter is a Ford Scholar at Eckerd University. The purpose of the Scholarship is to encourage the top students to explore a career teaching at the University level. She has to work hard to maintain the support. A recent trip to Peru to evaluate the building of an expressway near a tribal village allowed her to witness her Christian beliefs to an unreached population. I hope Henry would approve.

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    • There is no doubt the Ford Foundation has done many, many remarkable and good things, Ron. Just a brief look at their history shows that. However, it is a classic case of abdication instead of delegation.

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  4. Fred, I love the post. I have two thoughts:
    1. It’s a shame the Ford Foundation isn’t headquartered in Detroit, the city that housed most of his employees. This is definitely in line with Ford’s philosophy (he didn’t really like the city and left as quickly as possible).
    2. Have you read much of Ford’s personal philosophy? I recently learned about his connection to the Dearborn Independent (http://en.wikipedia.org/wiki/Dearborn_Independent). Would love to hear your thoughts on this.

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    • Michael, yes I had known about HF’s affiliation with the Dearborn Independent. If you want the hair to stand up on your neck, look at the indirect relationship between Hitler and the Carnegie Foundation. The earliest work in eugenics was funded by the trustees of Carnegie because they genuinely believed in it and created research that bolstered Hitler’s argument for anti-Semitism and the elimination of the weak species. There were others during those same times who were seriously misguided and duped – including several of the Kennedy and Lindbergh families.

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  5. Great words Fred! Guess I need to get some things in writing!!

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    • Well, you could do it with video as well if you wanted to make it a little more accessible to the next generation. Writing is always good.

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  6. This reminds me of the famous will of William M. Rice, who specified “no tuition and no blacks” at Rice Institute. In spite of being legally specific, the will was broken.
    It is tough to govern from beyond the grave.
    Jack

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    • It’s tough enough to govern before the grave! Actually, I don’t think there is an instrument of donor intent that a good lawyer could not break given enough time and money. However, if you read what Sir John Templeton left in instructions it would almost require a Supreme Court decision.

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  7. Fred – you have absolutely nailed it! Henry Ford never specified what to do and what not to do, and he never appointed trustees to carry out his specific intent (because he had none.) The same thing has happened at most foundations. Sad but true.
    Thanks.
    Dan

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    • Thank you, Dan. By the way, I had a good talk with our friend Rick as a result of your introduction.

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  8. Fred: interesting observations that raises all kinds of questions. But my one addition is this: I think the second of the Ten Commandments is quite serious and true when it describes our God as a jealous God. That is, if we want to assure that something will pass away at some point, just do everything in your power to make it permanent and “eternal”. God will not allow anything to achieve that status, even if you put it in your will and are very clear about what could and could not be supported with your estate. As creation has evolved so will organizations and systems and structures. Nothing that humans create (i. e. nothing “created” will last forever, because we would be so tempted to make it our “god” and “worship” it rather than the Creator. This does not mean we should no be clear about our intentions; but I think it is a warning not to get too restrictive and think we can create something that will last forever.

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    • Thank you, Mike. I agree. There should be some flexibility. Otherwise, you completely eliminate creativity and the sense of mature responsibility a founder should want to see in the next generations. There are so many things a donor cannot foresee. A friend once told me that “donor intent begins in the cradle” and he was right. It’s a matter of the parent accepting the responsibility of, ideally, raising a child who is not a clone but is mature.

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  9. Fred: I really appreciate the depth and insights you provided in this message on Foundations. I am a member of The Forum (it’s like an Australian version of The Gathering) and our family also has a Foundation. We have a goal to prayerfully distribute all of the Foundation’s assets prior to our deaths. I know that’s not the goal of every Foundation’s founders but we figure that the needs of tomorrow will be no greater than the needs of today, so we give today. We believe that God will raise up a whole new family of givers to meet tomorrow’s needs. I’m not advocating that everyone should use this model but it sure helps us to avoid “rolling over in our graves”! I look forward to meeting you one day Fred.

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    • Julian – I like your rationale. Sometimes we assume the next generation cannot create wealth and nothing could be further from my experience. Arguments can be made for foundations “in perpetuity” but, as my friend Curtis Meadows says, “perpetuity is a very long time.”

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  10. Fred, Two other bits of history might help fill out the picture of the Ford Foundation. At the end of WWI the car company had to move from war footing to civilian production. Henry Ford II decided he couldn’t be chairman of both and chose to run the company, a decision he later came to rue. Lawyers will tell you that donor intent can be derived from the practice of the founder if the founding documents are opaque. That is what HFII relied upon. The precipitating cause of his resignation from the foundation was its refusal to give any money toward a new wing of the Henry Ford Hospital in Detroit, which was his grandfather’s favorite charity.

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    • Mark – That additional bit of history is very helpful. We make so many assumptions, don’t we?

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  11. I have worked for two large private foundations. Both foundations had donors with strong beliefs and that did not write a statement of intent of grantmaking policy. The staff members at both at least for a while looked through the records of past giving by the donors for guidance.
    During my time at the first one, the senior staff would ask what would the donor do in general terms. Later after I left the first foundation when the fourth president was hired, the donor was not mentioned in his opening statement to the public.
    The second foundation was established from by a will when the donor unexpectedly died in his early 50’s. He was interested in his businesses and was helping good causes through a small foundation he created to honor his late mother. He did not plan on passing away and guiding his eventually larger foundation. Fortunately, the foundation board knew the donor and what he wanted to do.
    Billy Graham visited a board meeting of the second foundation I helped once when he was in town and I asked him how he thought donor intent could be kept. He remarked about a large East Coast foundation he knew that had stopped after the donor’s death helping many of the religious and policy causes the donor supported. The donor had a careful statement of donor intent with a safety clause to keep it relevant( standard lawyer boilerplate, I think). The following boards took the safety clause leeway as an opening to change course. So, Billy Graham told us he thought the choice was “to pick good trustees” who know what the donor wanted. I think the second foundation has matured and grown with its new trustees and compatible staff.
    A former foundation that was well known during its heyday was set up to go out of business 20 years after the donor’s death with the view that the board of trustees would be best able to know the donor’s intent and follow it for that period.
    Another large foundation today has in essence a donor intent board that oversees the foundation board to insure the grantmaking is consistent with the donor’s intent.
    With some trepidation, I can offer some suggestions, but I know each situation will require attention and prayer. I believe it is wise to have a well thought out statement of charitable policy and consider future alternatives and, if possible to develop a habit of and reasons behind grantmaking with a purpose of helping today plus guiding any succeeding trustees and to consider ways to choose trustees who know the donor and his values and policies.

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    • Drew – Your experience in this discussion is invaluable. Very few people have had the exposure to this you have. Thank you for responding. While it is impossible/difficult/unhealthy to rule from the grave, there has to be some standard of responsibility to the life and intent of the donor. The only other option is to sunset the foundation. While that may have been easier with smaller amounts of money some of the foundations being formed today with hundreds (and thousands) of millions of dollars make that increasingly difficult. It’s not a sunset as much as it would be a nuclear explosion for the budgets of recipients. We are in uncharted territory, I think. Some of the principles remain the same but the way they play out will be different given the size and scope of the assets.

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  12. I recently read a great book that speaks in this same arena. Mission Drift by Peter Greer and Chris Horst…Identifies the ways in which nonprofit organizations and charities can stray from their core values and presents actions that can be taken in any organization ( including foundations ) to prevent mission drift.

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    • You are so right Jim. What complicates the matter for foundations is their missions are often reactive and broad but not as well defines as the non-profits they fund. You are right about Peter’s and Chris’s book. It is a winner.

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