![]() ![]() It’s problems like these that inspired Stanford philosopher Robert Reich to call foundations “ an institutional oddity in a democracy” and “virtually by definition, the voice of plutocracy.” (Remember the idea that Warren Buffett didn’t spoil his kids? Except he gave each of them a billion-dollar foundation!)” And the benefits, Sparks says, are multigenerational: “Colleges will court your kids, hoping for access to grants. ![]() Sparks highlighted the way this can entrench the privileged, calling it “basically as close as we come to Downton Abbey and the landed aristocracy in this country.” Since foundations are required to spend only 5 percent of their endowment per year - and they typically surpass that in their investment returns - they can endure for perpetuity.Īt every step of the way, they’re a source of power, connections, and insulation from risk for the families that run them. That means you don’t have to be good at charity - and can even be doing harm. Here’s the thing about private foundations that Sparks got at in his Twitter thread: They wield a lot of power in the nonprofit scene and they aren’t accountable for the results of their grants as long as they’re not fraudulent. But it’s a way to secure a great gig for life. It’s worth noting that the $1 million you pay yourself is taxed as normal, so this isn’t a loophole you can use to donate your money to yourself or get out more money than you put in. You can live well on a million bucks for life, plus the social prestige of running a large and generous charity. Per 990 filings, it is very reasonable to pay the CEO of a $1.6B foundation as much as $1 million. That means salaries most people would find eye-popping are well within the bounds of the law. You are not breaking the law if your salaries are reasonable, which market-rate salaries are typically presumed to be. There’s a lot of flexibility in the definition of “market” salaries, though, and as Sparks observed, they can reach around a million dollars a year. Those laws also encompass paying an above-market salary or offering a salary to someone who isn’t doing any work. There are laws against “self-dealing” that prohibit you from using your foundation to make loans or give gifts to family members. Is it really that easy to found a nonprofit and then live off it, as Sparks suggests? There are some restrictions, but they leave a lot of room for a comfortable upper-class life. Two-thirds have endowments of less than a million dollars, and the median is $500,000. In 2014, there were more than 86,000 private foundations in the United States. Vox’s Future Perfect is funded by The Rockefeller Foundation (which means it pays my salary).Īnd they’re not all billionaires. There’s a Clinton Foundation and a Trump Foundation. You’ve almost certainly heard of private foundations. How to live a life of privilege and get celebrated for it ![]() Many people are increasingly considering whether we can get the good without the bad - and, if not, whether the good is worth it. They also often invest in communities, causes, and research that no one else is investing in. They’re often vehicles of privilege without accountability. Private foundations really do wield the power Sparks mentioned - and do both good and bad with it. (Sparks has since expanded it into a post at Slate.) This scheme for managing lottery winnings struck some people as enviable and others as infuriating. Sparks’s tweets kicked off an online conversation about the role of private foundations in American life. You can read the rest of the thread here. It's a largely untaxed pot of money that grows significantly over time, and those who control them tend to entrench their own privileges and those of their kin. Meanwhile, the private foundation is as close as we come to Downton Abbey and the landed aristocracy in this country. ![]()
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