Rich people only do charity to get richer....

[TZ]

or thats the attitude in GD anyway.
There is a thread going on about teh evul Bill Gates foundation..how its only a plot to harm poor Africans by letting his pharma friends experiment and of course plant teh evul GMO's!
Having worked on malaria vaccines being tested on african children (who have the highest mortality rate from malaria) with the Gates foundation, it infuriates me that the doofus there don't seem to think researching and TREATING with donated meds, TB, AIDS and malaria is a good thing.
God this place infuriates me sometimes.:banghead:

[JackRiddler]

1. Providing a link to the thread...

would make it easier for people to judge for themselves, also to assess your false, simplistic characterization of the critique against the Gates foundation advanced therein.

[TZ]

3. Do you think Warren Bufffet (a huge liberal)

is teh evul as well? He's done quite a bit with the Gates foundation. And as I told you before I HAVE WORKED WITH THE GATES FOUNDATION. I think that gives me a better insight over paranoid, googlicious "keyboard warriors", who know little of the blood sweat and tears that the people receiving these funds shed!!

[JackRiddler]

4. The signs you show don't point to a rational discussion here.

1. "teh evul." Please. Grow up.

2. "keyboard warriors" - that would be both of us, equally, unless that's someone else behind your 15,390 posts. Obviously invalid argument. Either what one writes on the keyboard is valid or not, not the fact that one uses it.

3. "I HAVE WORKED WITH" in caps - to the pedestrian mind might indicate an interest that you are personally invested in defending. The caps part indicates more an emotional involvement than anything else. Take it as a tip for future posts; people will tend to think you're conflicted from the form of your responses, even if the content is valid.

4. Misinterpretation that critique of the Gates fund is automatically an attack on the recipients, or their blood and tears. I'm sure many of the recipients are worthy, and your program, which you have not specified, may have been among the worthy causes. My first and most important point about GF is related to something entirely different: the common misconception, repeated uncritically, that he "gave away" his fortune to "charity." No. The fortune was rolled over into a foundation structure that keeps the fortune as an endowment invested in a diversified portfolio that is supposed to grow, over which the Gates family maintains control. This side matters, it is in fact the main activity involving the vast bulk of the money in any given year: investment decisions concerning the endowment. The proceeds from that each year are mostly dispensed to favored causes, but this cannot be properly characterized as "giving away" the fortune.

5. Buffett: If what you said is true - we can get into it later - how would this change #4. You can't just cite an association with him, slap the label "liberal" on him, and use that as an argument for why it's all good.

Thanks. Maybe take a break and try again with more logic and less outrage.

[Name removed]

5. Deleted sub-thread

Sub-thread removed by moderator. Click here to review the message board rules.

[Warpy]

2. They're partially right, there are two things at work here

and Gates doesn't seem to be particularly involved with the latter.

First, you run into what has been termed the foundation death spiral. That means large charitable trusts give to other large charitable trusts with money being taken out at every transaction in order to pay the salaries of the children of the rich who are in charge of large charitable trusts. This is how the wealthy got around hefty inheritance taxes, by naming their children as the heads of large charitable trusts and due large charitable salaries. Every foundation enters the death spiral at some point, and I'm afraid the Bill & Melinda Gates Foundation is one of them. Institutional giving is a major crapshoot and everybody who does it will get burned at some point.

Second, you find the wealthy hosting charitable events: large, ostentatious parties that can be written off because a portion of the price of admission goes to a charity. This is one of the purest scams out there, an excuse to tart oneself up, fire up the family jet and go out to see and be seen while being lavishly fed and entertained, with a tiny portion of one's admission price going to some charity. The whole thing is a huge tax deduction, a way to write off one's social life.

So the grumblers have a minor point with the Gates foundation and a major point with a lot of other "charities." However, they do need to get a grip and realize that the Gates family is doing a zillion times more good in the world than the others, even though the death spiral is reducing the bang they're getting for their bucks. They're certainly better than most.

[HamdenRice]

6. I use to work for a foundation, and yes, they are often run for the benefit of the founders

I worked as a consultant for a large well established foundation in New York. It was definitely not run for the benefit of the family, because the foundation board had many years earlier wrested control from the founding family. So there was a certain smugness about their superiority over other foundations, and we were encouraged to learn about the heroic period in our foundation's history when it became independent of the family.

One reason wealthy families, especially families that control corporations, create foundations is to maintain control of the corporation while avoiding inheritance taxes. Note that these are two separate problems.

Inheritance taxes used to be very high, and on the death of the founder/major stockholder, the family basically could either give much of their wealth to the government or give it to a charity that would perpetuate the family's name, and carry out the founder's public policy preferences. Many chose the latter.

But there was also a financial interest. In corporate finance, there is a very valuable aspect of majority control of a corporation sometimes called a "control premium." If someone owns 51% or more of a corporation's voting stock, that person can control the policies of the corporation, the election of board members, the appointment of management, and can prevent the hostile takeover of the corporation by new owners. That premium plus the value of the shares, is worth far more than the value of the shares alone.

Wealthy families use foundations to maintain the value of their control premium. For example, if Bill Gates (this use of Gates is just hypothetical, but actually occurred with the founders of the big older foundations) owns 70% of Microsoft, and puts, say, 60% of microsoft stock into the Gates Foundation, retains 10%, and appoints himself or family members as the directors of the Foundation (with the power to vote its stock), then Gates will own the control premium equal to ownership of 70% of the shares while actually only owning 10% of the shares. There will only be 30% of the shares outstanding held by the public and institutional investors, but none of them can threaten Gates' control of the corporation.

The NY Times has used a different technique. They wanted to sell shares to the public, but wanted the Sulzberger family to maintain control of the company. They created a special class of stock with majority voting control, even though it doesn't have majority capital value. This is why the NY Times remains somewhat more independent that the corporate controled media; it's still basically a family owned newspaper.

Many of the big foundations were set up this way -- to avoid taxes and to maintain control premium. In the 1950s, the boards of some of the major foundations managed to pursuade the families to allow the foundations to sell the family corporation's shares, using the argument that the foundation boards had a fiduciary duty to follow best investment practices by diversifying stock ownership away from exclusive reliance on the family corporation, and that was the wedge that also was used to wrest control of the policies of the foundations from the families, and they became controlled by "self-perpetuating" independent boards. That was when several foundations switched from being quite conservative in terms of policy to quite liberal.

So yes, foundations, especially newly created foundations that have not gone through control struggles, tend to be very profitable for the founding families.