Ford Foundation Is Established Summary

  • Last updated on November 10, 2022

Founded by Henry and Edsel Ford as a tax shelter against the Revenue Act of 1935, the Ford Foundation began as a charitable organization that gave millions each year to organizations in the Detroit area. By 1951, the foundation was donating billions of dollars to causes around the world.

Summary of Event

Very little has been documented about the actual day the Ford Foundation was incorporated, mainly because the press was not immediately notified, and the neither the Ford family nor its lawyers made any formal public announcement. The public became aware of its existence only after the director of the state of Michigan’s corporation and securities division in Lansing informed a reporter that a lawyer from the offices of Bodman, Longley, Bogle, Middleton, and Farley had filed incorporation papers (which consisted of only three pages). The law firm refused to make comments on the foundation, and when asked by reporters, Edsel Ford simply said that the foundation would have a small scope and that he did not expect the scope to increase, a very peculiar statement in light of the foundation’s later influence. [kw]Ford Foundation Is Established (Jan. 1, 1936) Ford Foundation Humanitarianism;Ford Foundation Philanthropy;Ford Foundation [g]United States;Jan. 1, 1936: Ford Foundation Is Established[09110] [c]Humanitarianism and philanthropy;Jan. 1, 1936: Ford Foundation Is Established[09110] [c]Organizations and institutions;Jan. 1, 1936: Ford Foundation Is Established[09110] Ford, Henry [p]Ford, Henry;Ford Foundation Ford, Edsel Ford, Clara Bryant

The Ford Foundation began with a donation of twenty-five thousand dollars from Edsel Ford and was headquartered at the Ford Engineering Laboratories in Dearborn. Although the paperwork filed with the state of Michigan stated that the foundation was nominally concerned with strengthening scientific, educational, and other charities, it is clear that the Fords used the foundation primarily as a way to pool their funds to assist local Detroit causes with which they were already involved: the Edison Institute (a campus for primary, secondary, and postsecondary education), the Henry Ford Hospital, the Detroit Institute of Arts, the Detroit Symphony, the Henry Ford Museum, and Greenfield Village (the first outdoor museum in the United States, dedicated to the American traditions of liberty, industry, and innovation). After incorporation and until 1950, the foundation continued to give approximately one million dollars a year to these charities. (This sum rose dramatically after the foundation went international in 1950.) However, it was no coincidence that the foundation became incorporated at nearly the same time the Revenue Act of 1935 Revenue Act (1935) went into effect.

The Revenue Act of 1935, part of President Franklin D. Roosevelt’s New Deal, raised the estate tax to 69 percent on estates worth twenty million to fifty million dollars and to 70 percent on estates worth more than fifty million dollars. Henry Ford and many others believed that the tax was directed specifically at the Ford Motor Company: Ford Motor Company The government, Ford believed, wanted to confiscate the family’s personal assets and force them into selling Ford stock to pay the tax. In addition to creating immense underwriting costs, the 70 percent tax would have left the Fords with almost nothing and no option but to surrender control and go public with the Ford Motor Company.

In fact, the Fords did face significant pressure to sell stocks. Wall Street, the Bureau of Internal Revenue, and other automobile companies may well have wanted the Ford Motor Company to cease being a family-owned corporation. This prospect appealed to competitors such as General Motors, which was beholden to its voting stockholders and their power to siphon off money that could be used in design and production by demanding more dividends. In contrast, the Fords could use its profits to improve plants, equipment, sales, and other areas as they saw fit.

The Revenue Act diminished the Ford Motor Company’s competitive edge, and at the same time it supported the interests of Wall Street, the federal government, and the American public. However, the act contained a loophole: A provision allowed a portion of an estate’s assets to be tax-exempt if they were given to charitable, religious, or educational organizations. A charitable foundation operated by the Fords would fit into that category. As a result, even though the Fords lost a vast amount of money to the Revenue Act, this provision allowed them to retain family control of the company, at least temporarily.

The foundation’s first administrators—Edsel Ford, Burt J. Craig, Craig, Burt J. and Clifford B. Longley Longley, Clifford B. —effectively functioned as its board of trustees. Craig had previously been the Ford Motor Company’s secretary and treasurer, and Longley had served as legal counsel for the company until 1929, when he left to establish a private law practice in Detroit. This board and Clara Bryant Ford, Edsel Ford’s mother, left a legacy of donating money to causes that the foundation still champions today. Even before the foundation began, Clara Ford, for example, was very involved with establishing the Berry School, which eventually became a liberal arts college in Georgia known for teacher education and teaching English as a second language. Her influence helped create the Ford Foundation’s tradition of championing liberal arts schools, teacher education, teaching English as a second language, and many other education-oriented endeavors.

Henry Ford.

(Library of Congress)

Although he did not publicly discuss his involvement with the foundation, Henry Ford consistently donated his own money to provide a hands-on secondary and postsecondary educational model to help students learn a trade, and his gifts funded the Edison Institute in Michigan and the Richmond Hill Project in Georgia. The elder Ford also believed that education should be used to help people help themselves, a goal exemplified by his creation of several programs in Michigan that taught self-sustaining agricultural and manufacturing techniques to troubled teens and impoverished communities. Furthermore, the Fords designed the Henry Ford Hospital, now the Henry Ford Health System, Henry Ford Health System to provide excellent health care at a price affordable to all citizens. The foundation carried its health- and education-focused mission throughout the United States and the rest of the world to help developing nations provide health care to as many people as possible. In addition, Edsel Ford used a great deal of effort and money to help the Detroit Institute of Arts become a world-class organization, and this endeavor launched the Ford Foundation’s tradition of championing art institutions.

Significance

By 1947, both Henry and Edsel Ford had passed away, and the Ford Motor Company was losing tens of millions of dollars every year. Henry Ford II, Edsel’s son, had control of the company, and his family’s lawyers and advisers recommended that he sell the family’s stock in order to save the company. Profits from the company’s sale gave the foundation so much revenue—$474 million—that the foundation became the largest in the nation, and the foundation’s board of directors decided to make it an international organization. By 1951, offices were based mostly in New York City, and the organization became an entity separate from the Ford Motor Company and the Ford family.

The eight-member board of independent consultants gave the foundation five primary goals: to promote world peace and a world order of law and justice; to secure and maintain allegiance to the principles of freedom and democracy; to promote stable economies that would facilitate the realization of democratic goals; to improve educational institutions and enable individuals to realize their potential and to promote equality in education; and to increase knowledge of factors that influence human conduct and extend that knowledge to benefit individuals and society.

These goals were inspired by the interests and concerns expressed by Henry, Clara, and Edsel Ford, and the foundation’s board interviewed hundreds of consultants from many backgrounds and fields. The wide array of opinions that shaped the foundation’s policies extended the organization’s revenue, workforce, and influence over almost every part of the world, but the foundation was not without its critics. Left-wing activists criticized it for championing right-wing ideals, and conservatives chastised it for being too progressive. Ford Foundation Humanitarianism;Ford Foundation Philanthropy;Ford Foundation

Further Reading
  • citation-type="booksimple"

    xlink:type="simple">Greenleaf, William. From These Beginnings: The Early Philanthropies of Henry and Edsel Ford. Detroit: Wayne State University Press, 1964. Provides an exhaustive description of these philanthropies. Greenleaf ends the book with a description of the foundation’s beginning.
  • citation-type="booksimple"

    xlink:type="simple">MacDonald, Dwight. The Ford Foundation: The Men and the Millions. New York: Reynal, 1956. Provides very specific information on the foundation from 1947 to 1955. Includes discussion of the controversy, leadership, early direction, and vision, as well as explanations of why and how the foundation went international.
  • citation-type="booksimple"

    xlink:type="simple">Magat, Richard. The Ford Foundation at Work: Philanthropic Choices, Methods, and Styles. New York: Plenum Press, 1979. In 1975, at the request of the board of trustees of the Ford Foundation, Magat provided this self-study of the foundation. Analyzes the foundation’s beginnings and possible future directions.

Carnegie Establishes the Endowment for International Peace

Ford Assembly Line Begins Operation

Rockefeller Foundation Is Founded

Ford Announces a Five-Dollar, Eight-Hour Workday

Categories: History Content