Should private foundations exist in an Objectivist society?
I notice that many of the donors listed in this article are described as "private foundations". However, as far as I can see, the money and other assets of these foundations are not private property as Objectivists would define that term. No individual or group of individuals owns a foundation's assets. "According to the Foundation Center, a private foundation is a nongovernmental, nonprofit organization, which has a principal fund managed by its own trustees or directors." https://en.wikipedia.org/wiki/Private...
The relevant question is, does a person have a right to create a legal entity that is not privately owned, and transfer his or her property to that entity. In today's legal environment, I think both foundations and trusts would fall into this category. These types of legal entities often survive well beyond the deaths of the original donors.
The relevant question is, does a person have a right to create a legal entity that is not privately owned, and transfer his or her property to that entity. In today's legal environment, I think both foundations and trusts would fall into this category. These types of legal entities often survive well beyond the deaths of the original donors.
I see no reason these forms of organization wouldn't continue to exist in the future. Even without the tax advantages, the rich people who choose to create endowments for parks, concert halls, or chairs in certain subjects at universities might still choose to do those things with their money.
I recall one passage in AS which seemed to imply that Rand didn't believe it was valid for yesterday's owners to limit today's owners by placing restrictions. But isn't that a valid part of the right of yesterday's owner to decide what to do with his property? I'm not sure an exact line can be drawn, but I lean in favor of allowing such entail.
It's valid for an owner to decide to what to do with his property while he is alive, and to designate heirs to receive it upon his death. Beyond that yesterday's owner has no rights at all. "A 'right' is a moral principle defining and sanctioning a man's freedom of action in a social context." --Ayn Rand. Once a person is dead, he no longer has any rights because he does not exist.
If a foundation does not have anyone registered as a beneficiary then the trustee(s) are the owner(s).
But in either case the owners' control is subject to the conditions under which the original donor(s) entrusted their assets to the trust/foundation. And the founding document usually spells out what happens to the assets if the trustee/s do not follow the conditions.
The conditions on how donated assets are used are generally agreed on by those running the organization, which is why they are there -- in support of common values. If they violate the conditions then the assets should be disposed of in accordance with the original donor's directions. Some especially egregious exceptions are the major foundations originally funded by entrepreneurial capitalists and now used for far left and environmentalist political causes.
Contortions in today's laws governing different kinds of corporations, including non-profits, are either something we have to live with or are useful protection, including against taxes. Private organizations will always exist; the laws governing them can be better in a better, capitalist social system.
This is not an endorsement of every foundation, many of which today are established by and for unsavory politics or are promoting bad ideas or both (like Sorros or the classic example: the Fabian Socialists in Britain).
And that’s not the end to the problems created by a perpetual “private foundation” that has no real owners. Trustees who are decades removed from the original founders will have their own agenda and considerable discretion to advance their agenda, even if it does not honor the original founders’ vision. If they violate that vision, who has standing to sue them? Descendents of the original donors will have little standing or credibility (“My great-great-grandfather would not have wanted his money spent this way”), and those descendents may not even agree among themselves in regard to the foundation’s current activities.
In order to be private, an instance of property requires an owner or group of owners other than some fictitious legal entity that itself has no owners. An ownerless foundation with little accountability and the resources to greatly influence public policy does not belong in a capitalist society or legal system. We pay the price for the existence of such foundations every day.
A foundation is a corporation, but a corporation without owners. It is not synonymous with the employees running it, and its assets are not private property. Foundations as well as many other organized entities legally existing in a mixed economy would not be appropriate in a society based on Objectivist principles.
Whether or not a foundation would exist in a society with better laws depends on the purpose of those who establish them. There would ultimately be no need for a tax shelter, but an individual or group of individuals may still want to establish a foundation as an organization to promote some ideas or other purpose.
The question is whether such foundations should exist in an Objectivist society. I think the answer is “no”. Although a person has a right to designate heirs to which his property passes upon his death, a person has no moral right to exercise control of property from beyond the grave. In theory “private foundations” have no place in a capitalist society, and in practice they are easily corrupted into becoming vehicles for anti-capitalist activism.
In What is Capitalism Ayn Rand said, “Capitalism is a social system based on the recognition of individual rights, including property rights, in which all property is privately owned.” She was right.
https://www.youtube.com/watch?v=8RgRG...
But that was okay.
After all, it were those o so precious Clinton lib elites of all lib elites, the Evil Hag and her "bimbo eruptions" protected rapist darling Billy (aka Slick Willie aka The Teflon Man).
The Obama Foundation was established in January 2014 to carry on the great, unfinished project of renewal and global progress. Officially established as an operating, 501(c)(3) nonprofit corporation, the Foundation is governed by a volunteer board of directors chaired by civic leader Martin Nesbitt.
“Bid to buy for-profit college by former Obama insiders raises questions,” read the headline of Michael Stratford and Kimberly Hefling’s story. Questions like, Are you kidding me? For years the Obama administration has scrutinized and tightened the regulation of for-profit colleges, the most famous of which, the University of Phoenix, has been subject to multiple investigations and court actions. The battle has taken a toll. As Preston Cooper observes, shares of the Apollo Education Group, which sold at $87 when the president was inaugurated, have sunk to less than $10 a piece. Critics of the for-profits are gleeful. “Let’s hope this Phoenix does not rise from the ashes!” Alan Singer, a social studies educator at Hofstra University, lamely punned on the Huffington Post last spring. Sorry professor, but you might not get your wish. Because some of the very same people who decided that for-profit colleges should be run into the ground, and successfully achieved that result (with not a little help from the colleges themselves), have now decided, well, hey, what do you know, maybe these diploma mills aren’t so gross and hazardous after all.
Among Marty Nesbitt’s various enterprises is the Vistria Group, a private equity firm he founded a few years back and whose chief operating officer, Tony Miller, was formerly deputy secretary of Education under President Obama. Last February Vistria and other investors agreed to buy the Apollo group and the University of Phoenix for $1 billion in cash. When the deal closes, Miller will be chairman of the board.
Read more at: http://www.nationalreview.com/article...
I see no reason to refrain from using either the share-based (corporate) or partnership form in setting up a business venture, though a good case can be made for abolishing the corporate veil. Certainly I'd like to see bankers and brokers, who handle other people's life savings, be made liable to lose their own life savings if they screw up and lose yours through malpractice.
Strictly speaking, no, because rights are personal - not public. I can create a corporate entity, perhaps, but it's legal status can't be dictated by me alone. Legal status is granted by the rest of society and is usually governed by laws so that everyone understands the proper process and agree on the method and parameters employed. So the first question I would ask is step back and say "Would an Objectivist society create legal laws which recognized and legitimized the creation of corporations - ie companies of arbitrary or detached ownership." The alternative is to simply say that no legal status will be granted to any corporation or association which is not privately held.
That brings up a second question: if "public" corporations are not allowed, how does one go about raising investment money through stock offerings, etc.?
Classified that way, I think you run into a conundrum because two competing ideals would be in play. The first is the rejection of altruism which many Objectivists associate with charities. The second would be the Objectivist rejection of government meddling in the associations of businesses and private groups at all. So as a compromise between the two, I don't think you'd have any kind of official "disapproval" of such an entity, but societally such would be frowned on.
Legally, however, what would be the point of prohibiting such an arrangement? Most corporations are formed merely for the purpose of legal recognition for taxes and control - two notions Objectivists object to!
Conceptually, I don’t think foundations meet the standard of any rational definition of “ownership”. By its legally established nature, a foundation cannot be bought, sold or traded in the marketplace. The persons operating a foundation are “agents”, but agents that have no owner to report to. In a fully consistent capitalist society based on private ownership of all (non-government) property, a foundation of the type existing today would not be recognized as a legitimate legal entity.
Actually, if you go back to my original question, it answers why it exists: because someone feels it is in their interest enough to expend the resources and time to do so. Being recognized by society is secondary: mobs exist and are considered beneficiary to those who participate in them, yet they have no (positive) protective legal status.
"The beneficiaries in this case are people employed by foundations..."
You have to get into the why here, and that's not necessarily going to be the same for all foundations. My employer sponsors and runs one that works with legislators on educational issues. Sure, it benefits the three people who get paychecks, but my employer (who sponsors it) also feels that he personally benefits.
"Conceptually, I don’t think foundations meet the standard of any rational definition of “ownership”."
If one narrowly defines ownership as a pecuniary/investment interest, yes, it's easy to reach that conclusion. What is easy to forget is that money is merely a tool - a medium of exchange for getting some things in life. Money is not the only medium of exchange, however. Power and personal relationships are among others. My personal experience has been that foundations merely are trading houses for these other kinds of power.
The question “who benefits” is also irrelevant. Again, there will always be people who derive certain benefits from any kind of organization, otherwise that organization would have been formed in the first place. However, that does not answer the question of whether the organization’s assets are private property, as Objectivism defines the term.
I don’t define ownership as a “pecuniary/investment interest”, I use the Objectivist definition: the right to the use and disposal of a given unit of property. Foundation trustees use and dispose of the foundation’s assets; but they are not owners, they are agents who are not answerable to any owner, since there isn’t one. Essentially, a foundation’s assets are property without any real, identifiable owner, and thus they are not “private property” within the Objectivist meaning of that term.
Let us consider the concept of a corporation in the exact same sphere. Does the corporation exist ephemerally? Absolutely. It is merely a grouping indicator - the "corporation" does not act of its own free will and choice (which is the same reason I find the discussions on corporate "speech" to be a complete red herring). How is a corporation run? By placing assets into the hands of corporate officers for use. Are those corporate officers responsible to report to a Board or other group regarding their uses of those assets? Absolutely. And what actually constitutes "ownership" in such a corporation? A share of the profits - a monetary measure of value - according to the performance of corporation. If we compare that to the Foundation, all that is really different is that the type of profits being derived isn't measured in some kind of monetary remuneration. The money and "hard" assets of the Foundation are being used to pursue non-pecuniary interests rather than to grow the pecuniary interests.
This is where I come back to the purpose of money: as an exchange medium. If all we're doing through a corporation is to enable us to acquire other things, is there a certain class of things we want that do not have a direct "price" and for which another exchange medium (other than money) is necessary? I say yes. Thus the corporation - which is structured around monetary exchanges - becomes a poor facilitator of these types of exchanges where Foundations fit the bill.
The ability to sue a foundation is weak (who has standing?) and becomes weaker the longer a foundation is in existence. The original donors and their children can occasionally win lawsuits over improper use of a foundation’s assets, but successful suits become impossible after a few generations, as the descendents become more remote and the likelihood increases that they will disagree among themselves.
Money, profits and types of remuneration are not the issue here. The issue is whether real property with no identifiable owner is legitimate in a capitalist society. As I said in an earlier post, in order to be private, an instance of property requires an owner or group of owners other than some fictitious legal entity that itself has no owners. An ownerless foundation with little accountability and the resources to greatly influence public policy does not belong in a capitalist society or legal system. We pay the price for the existence of such foundations every day.
I agree, but as both the corporation AND the foundation are completely ephemeral constructs, I don't see any relevant rebuttal in this statement. Neither corporations nor foundations can act. Neither can utilize or dispose of assets. Only people can utilize or dispose of assets. Let's not get distracted with a straw man. (Although it does raise an interesting question: if a corporation is merely an idea and Objectivists hold that individuals are entitled to the products of their minds, then corporations - and Foundations - can then be considered (intellectual) property. Hmmmm...)
"They are both agents, and their right to the use and disposal of the assets they oversee is a derived right."
That they can be held responsible post facto and removed from their stewardship or agent role is irrelevant to the fact that those individuals have the power to utilize and/or dispose of the assets of his firm - ownership according to the Objectivist definition supplied.
Let us examine what an agent really is, because I think it may be constructive. An agent has the ability to control and act usually for the purpose of disposing of or use of assets. Whether they are agents for others or agents for themselves concerns only the future prospects for the further disposition of other assets - it has nothing whatsoever to do with the present assets under their control - their ownership.
Take a delivery truck driver, for instance. Is he an agent? Yes. He is being given the control and disposition of a truck and the cargo on the truck. Thus he is being made the owner of those items. That he is expected to transfer the ownership of those items (both cargo and truck) at a future time is irrelevant in measuring ownership at a given point in time. If the driver performs his duty and transfers ownership of the cargo to the customer (and the truck back to the motor pool), he is then evaluated as having made appropriate ownership use of those assets and he is rewarded (paid) AND given the opportunity (he keeps his job) to take ownership again of a truck and goods to deliver the next day. If he slides off the road and rolls the truck (destroying the cargo), however, there is no recourse in the ownership of the goods - they have been permanently disposed of and ownership irrevocably transferred. Can the driver be evaluated for his agent performance? Absolutely. Can the driver be punished with a loss of his job? Yup. He can even be ordered to pay fines and restitution if he was found criminally negligent. But that in no way affects the fact that at the time the driver controlled the disposition of the property in question - he owned it. If he did not own it, he would not be responsible to answer for its disposition.
http://www.dictionary.com/browse/agen...
Neither corporations nor foundations are “ephemeral constructs” any more than ownership itself is. Both corporations and foundations are legally established forms of organization. Corporations typically have owners, agents and assets. Foundations have agents and assets, but no owners.
An agent is not an owner, either in an everyday sense or in a legal sense. To say otherwise is to say, for instance, that a motorist does not own his car while it is in the repair shop being serviced by others, or that a brokerage owns the stock in your account. An agent is one who is given the responsibility of performing certain actions on behalf of an actual owner, who is typically the one holding legal title to the asset in question. Objectivism holds that certain rights can be delegated to an agent, but ownership is not thereby transferred to that agent.
A foundation has assets and agents but no legal owner. That is why it is an inappropriate form of organization in a capitalist economy in which all (non-government) property is private.
Sure they are. Again: can a corporation or foundation vote? No. Can they purchase property or hire people? No. Only people can do those things. Corporations are convenient containers for legal purposes - nothing more. It is only the people within the organizations who actually do anything.
What is the real purpose someone creates a corporation in the first place? Tax and legal liability. It is to shield their personal assets to some degree from business liabilities and to provide a convenient method for the government to tax you. That's about it. Foundations are created pretty much for the same reasons, they just tend to try to avoid the taxation part altogether.
"An agent is not an owner, either in an everyday sense or in a legal sense."
According to the definition you wanted to use - the Objectivist one - I can't see any real differentiation there. The definition has no limitations or exclusions for agents.
"A foundation has assets and agents but no legal owner."
I think you've constructed a straw man and now you're tilting at windmills. I'll leave you to it.
If my wife and I should both die before our kids are adults, our wealth would go into a trust for the kids' benefit. A financial institution would manage the trust and pay for their expenses, including the cost food, rent, entertainment, education, a house, or a well-planned business, all up to reasonable limits. When they're 30 y/o, they'd get the rest.
How would this wealth be managed without trusts? We could give it relatives to manage, but they might get sued for something unrelated or have an addict or thief in their life steal it. I also like the notion of the people caring for our kids being different from the place managing their wealth, so the could sort-of keep one another from going overboard.
Foundations
Our UU society has a foundation managing its wealth. Some people want to donate money to a fund that will be earmarked for a specific purpose such as the music program, social justice, maintaining the building, or children's programming. I think having the foundation helps people fund the things they want to fund.
And there still remains the question: Under Objectivist legal theory, would the assets of a foundation or trust be considered private property? If not, do such arrangements violate the principle that all (non-governmental) property should be private?
Status only to then have those same foundations fund the destruction of the rugged individualism, that is what the minutes of the carnage foundation meetings contained among other statist agendas.
The only issue here is the tax approach to this collection of donations, to which there are a variety of approaches and no doubt, opinions.
If so, I'm not sure the ownership part is the issue, but the separate government treatment.
Seems like the articles of the foundation are the Constitution and the agents are then the executive branch. In that way, how is a foundation really different than the founding of a company or country? Seems like a non-profit could function identically.
If I were really wealthy, I can imagine trying to set up a foundation or a company to further the ends of individualism and achieve some modicum of immortality.
ment, it must be privately owned,or it is not owned at all. People have a right to get together and put their money together, if nobody is forcing them to. It
may not be very sensibly done; it may not be very rationally administered in a particular case; but that does not change the fact that people do have a right to deal with one another,by their own free choice. (This does not mean they have a right to commit fraud).
When my ship comes in, the Atlantis project will be funded.