Frank Luntz, the Republican political consultant who persuaded his party to rebrand inheritance tax as a “death tax” and Obamacare as a “government takeover of healthcare”, worries that no amount of clever linguistic tinkering can prevent a millennial tide of liberalism from washing through the US.
His recent poll of Americans aged 18-26 found them less enamoured of entrepreneurs than he expected, outright hostile to big business and twice as likely to express anger at inequality than they were to complain about taxes. “The hostility of young Americans to the underpinnings of the American economy and the American government ought to frighten every business and political leader as much as they excite activists for [Bernie] Sanders,” Luntz wrote at the time.
It frightens conservative donors, too, which is why preserving “donor intent” has moved up the philanthropic agenda.
Darrell West, a vice-president at the Brookings Institution think-tank, says a “massive intergenerational transfer of wealth” is coming over the next 15 years from the ageing millionaires and billionaires who fund the conservative movement’s think-tanks and educational programmes. They “cannot guarantee that their children will see the world as they do”, he says. “In fact, I can guarantee the children will not.”
The philanthropist’s natural desire to see their wishes carried out is hardly unique to one side of the political spectrum. But conservatives are more likely to believe there are enduring values that must be protected and less likely to agree with Andrew Carnegie that “conditions upon erth [sic] inevitably change; hence, no wise man will bind trustees forever to certain paths, causes or institutions”.
One does not need a conspiratorial mind to see that when charitable institutions drift from their original lane, they are more likely to veer leftwards than right. Henry Ford was — how shall we put this? — no friend of liberal causes in his lifetime; the same cannot be said of the professional staffers who dispense money from his foundation these days.
And if one cannot rely on one’s children or (especially) grandchildren, how best to ensure that fortunes, which today fund conservative causes, are not later diverted into something a little more liberal or, heaven forbid, socialist?
An obvious first step is giving more detailed instructions and information about your own philosophy. Jeffrey Cain, author of Protecting Donor Intent, tells the story of the Daniels Fund, founded by cable industry pioneer Bill Daniels, which has an interactive archive of its founder’s videos and writings to keep his values in view.
There are also tricks to be learnt from philanthropists of the last century. When James Duke, the tobacco and electrical power magnate, set up the endowment that funds the university that now bears his name, in 1924, he made it a requirement that trustees read out the entire indenture, a 45-minute exercise that is still done at a board meeting annually.
The Roe Foundation, built on a fortune made in lumber by Thomas Roe, has two external watchdogs — the Mont Pelerin Society and the Philadelphia Society, both conservative think-tanks — with a brief to sue trustees if they stray from Roe’s philosophy.
A conservative-minded donor-advised fund (Daf) might be an even safer option. While Dafs generally allow philanthropists and their heirs to decide how donated monies are distributed, legally the money belongs to the Daf itself and the fund’s administrators can shut out heirs who stray from conservative orthodoxy.
This is the promise of DonorsTrust, which has distributed $740m to more than 1,500 “liberty-minded charities”. Donors are free to pass on influence over the fund to their heirs, its marketing says, but “rest assured that their involvement would never compromise your original charitable intent”. Most wealthy philanthropists are keen to involve their children and grandchildren in their charitable work and hand over the reins in due course. But for those who worry about the leftward drift of what Luntz calls “the Snapchat Generation”, there are ways of keeping them on the right track.
Stephen is reading . . .
Dear Chairman: Boardroom Battles and the Rise of Shareholder Activism, by Jeff Gramm, in which Warren Buffett appears as a ‘friendly’ activist supporting the management of American Express amid a scandal in 1964. The picture is a partial one. He was just as likely to be hostile to management in his early activist days, making him the Daniel Loeb or Carl Icahn of his day.
Stephen Foley is the FT’s US investment correspondent