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| Philanthropy |
Laying a Foundation
Jan Alexander
07/01/2004
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Edsel Ford’s name lives on for reasons other than a misbegotten car. Edsel,
the man behind the development of the United Way, created a family foundation
with his father in 1936. The Ford Foundation, which in 2003 controlled nearly
$10 billion in assets, has preserved a family name that looms large in
grantmaking. Although the foundation lost its connection to the family in 1976
when Edsel’s son, Henry Ford II, resigned from the board after criticizing its
left-of-center policies, today the organization signifies the gold standard for
families that hope to carry on their intellectual and monetary capital through
generations.
 But, like the gold standard itself, the family foundation may be
in danger of becoming a relic of the past. The number of us considering
establishing our own foundations in today’s climate of rising administrative
costs, market jitters and uncertainty about the future of the estate tax is
dwindling. The number of new large family foundations, which advocacy and
research group the Foundation Center defines as having assets of at least $1
million, has slipped from a record peak of nearly 1,200 in 1997 to fewer than
1,000 each year since.
Estate taxes, part of the American landscape since
1916, helped popularize the practice of creating large endowments for charitable
donations as an alternative to leaving money to the government upon death. In
recent years, however, the looming possibility of estate tax repeal has not been
the only reason for the decline in the number of new foundations. Investment
market setbacks from 2000 until 2002 destroyed a great deal of wealth that could
otherwise have been used to seed foundations. Indeed, even established
foundations saw endowments tumble: the Ford, Starr, David and Lucile Packard,
William and Flora Hewlett, and Robert Wood Johnson foundations, giants among
family organizations, each lost at least $1 billion in 2002.
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