The problem was that we allowed the Board of Directors to become dominated by people who did not share our founding views. We ended up raising virtually all the money to support the Foundation, while they would spend it on activities which were not consistent with the founding views. Finally, we and most of the original Board members, resigned from the Foundation.
We vowed we would never lose control of our philanthropic endeavors again, and began to research ways we could avoid this problem in the future. We discovered many examples of business owners who gave to charities that did not support things that the business owner would support. We even found instances where the charity actively worked against the business owner’s interests and often even attacked the very economic system (capitalism) which created the wealth for the gift in the first place. Moreover, when the business owner established his own charitable foundation to avoid this loss of control, his “donor intent” was still often violated when the donor died and administrators took over.
During our research, we read Martin Wooster’s books: Great Philanthropic Mistakes (available at Hudson.org) and The Great Philanthropists and the Problem of Donor Intent (available at amppubgroup.com). Martin’s conclusion was that the only way to avoid the violation of donor intent was for a philanthropist to give away all wealth before he died or sunset his foundation within a short time of his death. But, Martin also informed us that the philanthropist, Sir John Templeton, wrote him a letter in which he said “I want to work with you to preserve donor intent for the centuries to come”.
After lengthy discussions with Martin, reflecting on the demise of our foundation and studying some of America’s most successful businesses, we concluded that there was indeed another solution: keep the giving tied to the business that created the wealth. By doing this, we discovered several benefits:
- the giving was larger, more effective and more permanent, because it was benefiting the giving business,
- the violation of donor intent was eliminated both during the lifetime of the business founder, but also after his death, if the business survived him, and
- the business that did the giving became more successful.
And, we discovered two other very beneficial results of this Enlightened Capitalist “giving”:
- Enlightened Capitalists tended to take the long view and were more honest, ethical and fair minded in their business dealings,
- The philosophy could serve as a unifying political philosophy around which disparate political views could unite behind free markets (libertarians, conservatives and liberals) and create more prosperity for more people.