The Foundation Administrator: A Study of Those Who Manage America's Foundations

Introduction

Introduction Although foundations have played a prominent and, on the whole, commendable role in promoting American scientific and cultural life, the way in which they operate and make decisions remains largely a mystery to the general public. Often, it is a mystery to that part of the public which is otherwise well informed. This study of the foundation administrator has been undertaken in the belief that systematic knowledge about the managers of an enterprise is a key to understanding the enterprise itself. Knowledge based chiefly on empirical data that have been objectively analyzed and interpreted is especially useful. In any case, a better understanding of those who administer foundations will, it is believed, make foundations themselves more understandable and more meaningful, and thus help to clear away much of whatever mystery or ignorance may currently surround those institutions. What Is a Foundation? Before proceeding with a study of the foundation administrator, it is necessary to identify the organization that employs him. This is a difficult task, for a foundation does not lend itself to precise definition. The difficulty is aggravated by the diversity of activities of organizations that call themselves foundations. Some may be essentially research organizations or academic institutions. Others may be social welfare agencies or even trade associations . The word "foundation" also graces the names of fund-raising organizations, community welfare funds, patriotic societies, church endowments , college and alumni funds, and voluntary health organizations. The diversity of foundations' legal structures also contributes impre1 2 / The Foundation Administrator cision to the concept of the organization. Some foundations are corporate entities, others are trusts, and a few are mere associations. A corporate foundationl is established under a charter granted by some governmental authority . Because of its origin, a corporate foundation somewhat resembles the legal concept of a business corporation. Unlike the latter, however, a corporate foundation is operated not for private profit or gain but for the benefit of the general public, and those who direct and administer it may not derive a private benefit from it.2 A trust, on the other hand, is created by an individual who, by means of an appropriate legal instrument, transfers title to property to a group of individuals (or possibly to an institution such as a bank) called trustees, who thereafter hold the property and (usually ) administer it for the benefit of others. In the case of a trust established as a foundation, the beneficiaries are the public or named public entities. Often, a trust is so restricted as to its administration and purpose that it has little in common with the usually more liberal corporate concept of a foundation. Table 1, adapted from The Foundation Directory, Edition 3,3 classifies foundations as to their legal form. It shows that about two-thirds of all foundations are corporations and that about one-third are trusts. Table 1. The Legal Form of Foundations and the Number Created During Each of Several Decades of the Twentieth Century Period Corporations Trusts Other Before 1900 19 (73%) 6 (23%) 1 (4%) 1900-1909 12 (67%) 6 (33%) 0-1910 -1919 39 (51%) 36 (48%) 1 (1%) 1920-1929 125 (71%) 52 (29%) 0-1930 -1939 194 (66%) 98 (33%) 2 (1%) 1940-1949 1,116 (71%) 450 (28%) 17 (1%) 1950-1959 2,524 (66%) 1,253 (33%) 40 (1%) 1960-* 497 (66%) 227 (30%) 30 (4%) Total 4,526 (67%) 2,128 (32%) 91 (1%) * The records for the period since 1960 are fragmentary. Total 26 18 76 177 294 1,583 3,817 754 6,745 1 As used here, the phrase "corporate foundation" refers solely to the legal form of a foundation. It does not identify foundations founded by business interests or business corporations. In this volume such foundations are termed "company-sponsored foundations." 2 Cases of abuse of the purposes of foundations, revealed by some recent investigations , hardly affect the validity of this statement. 3 "Legal Form of 6,654 Foundations, by Decade of Origin after 1900," The Foundation Directory, Edition 3, New York: Russell Sage Foundation, p. 13. Introduction / 3 A third factor contributing to the difficulty of clarifying the concept of the foundation results from the way in which the federal government has handled the foundation's tax-exempt status. Over the years, the government has commingled foundations with other tax-exempt organizations such as churches, private schools and colleges, universities, museums, and the like, and extended to...