Charitable Trusts About Power and Control, not Charity

by James on October 28, 2013 · 4 comments

Hi All,

The world is full of misconceptions about money and class.  One particular misconception that a lot of people don’t understand is the role of charitable trusts in maintaining wealth and power.

Charitable trusts are basically a way for the wealthy to retain control of business ownership without the tax man getting involved. When a large fortune is made, such as the Ford, Walton or Buffet dynasties, founding members often create charitable trusts and place their heirs in trustee other controlling positions on the charity to keep an eye on voting and dividend allocations.  This is key because large corporations pretty much own the economy by holding controlling interests in other corporations.  Once you’ve got that controlling position, you’re not going to want to give it up to the tax man when you pass away.  You’re going to keep it in the family by having your lawyers start a trust, transferring your shares into the trust and then assigning your heirs to watch the cash.

Don’t believe me? Think about it.  Relative to the amount of wealth controlled by these organizations the amount paid out by many major trusts is very, very low. Why? If the organization is devoted to helping poor people or doing good, why don’t they give away all their money?

gates-buffett-charity

The answer is primarily because they’re not about helping poor people. Charitable trusts really aren’t about charity, that’s just a public relations cover. Charitable trusts are about control of major blocks of stock ownership and efficient tax avoidance.  In short, their primary purpose is power and control. Any charitable activity that happens is often a second thought.



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