Ford Foundation
The Ford Foundation is a prominent nonprofit organization founded in 1936, rooted in the wealth of the Ford family associated with the Ford Motor Company. Its establishment was influenced by a response to a 1935 U.S. law imposing high estate taxes on wealthy Americans, which Henry Ford sought to circumvent to protect his family's fortune from significant taxation. By creating the foundation, Ford ensured that the majority of his family's wealth would be directed toward public benefits rather than federal taxes, while still allowing the family to maintain control over the company through specific stock arrangements. Over the decades, the Ford Foundation has evolved into one of the largest and most influential private foundations in the United States, with a focus on educational and social services. By the early 21st century, it had amassed assets estimated at around $11 billion and continued to be a leader in funding initiatives aimed at social justice, poverty alleviation, and education globally. The foundation's work reflects a commitment to addressing critical societal issues and promoting equity across diverse communities.
Ford Foundation
Identification Philanthropic organization
Date Established January 15, 1936
Establishing the Ford Foundation provided Henry Ford a vehicle for avoiding payment of high estate taxes and eventually made available significant funds to support charitable causes worldwide.
The Ford Foundation was created in part as an act of spite by automaker Ford. In 1935, the U.S. Congress, encouraged by President Franklin D. Roosevelt, passed a law establishing high tax rates on estates of wealthy Americans. Estates of more than $50 million were to be taxed at 70 percent. Ford despised Roosevelt and his New Deal policies and was adamant that the family fortune—estimated by some to exceed $1 billion—should not be seized by the federal government when he died. Ford was equally determined that the Ford Motor Company remain a family business and not become a publicly traded corporation.
Almost as soon as the new law passed, Ford directed company attorneys to determine how to circumvent the new tax. Attorneys proposed the establishment of a foundation into which the three members of the Ford family who together held 100 percent of the company’s shares would bequeath the bulk of their holdings when they died. The Fords divided their stock into two classes: Five percent of each member’s holdings would be Class B stock, with voting privileges; the remaining 95 percent, designated Class A, carrying no voting privileges, would be willed to the foundation. As a consequence, the foundation would receive nearly all of the Fords’ wealth, but the family could retain control of the company through the Class A shares, which would be bequeathed to children and grandchildren when the three principal shareholders died. Although Ford had never been particularly generous with his fortune, he was willing to see it set aside for the public good rather than pass into the federal Treasury.
Impact
Although the immediate impact of the creation of the Ford Foundation was minimal, when Henry, Edsel, and Clara Ford died the bulk of their estates was transferred into the foundation, where it created the largest single nonprofit in the United States. Since the 1950’s, the foundation has been a world leader in sponsoring educational and social-services programs. At the outset of the twenty-first century, it was still the largest private foundation in the United States, with assets of approximately $11 billion in 2008.
Bibliography
Brinkley, Douglas. Wheels for the World: Henry Ford, His Company, and a Century of Progress. New York: Viking Press, 2003.
Lacey, Robert. Ford: The Men and the Machine. Boston: Little, Brown, 1986.