Foundations: Their Power and Influence by Rene A. Wormser
Copyright 1958, Third printing by Covenant House Books, 1993
This book is an overview of the investigations of the Special Committee to Investigate Tax Exempt Foundations (the “Reece Committee”).
Rene Wormser was general counsel for the Reece Committee.
The preface (p. v) is by Congressman Brazilla Carroll Reece, the chairman of the Reece Committee.
Norman Dodd was the Director of Research. Interviews with Norman Dodd explaining the significance of the Reece Committee investigations are available.
The book lists some of the major foundations who were accused of being involved in social engineering research, propaganda for collectivist political systems, and subversion of traditional American values.
The introduction explains how the wealthy used foundations in estate and business planning to escape the death taxes of that time:
Had not the Ford family created this foundation [The Ford Foundation], it would have had to dispose of a large part of its ownership in the Ford Company to the public, for it is hardly possible that the family had enough liquid capital to pay the hundreds of millions of estate taxes which would have been due upon the deaths of two proprietors, Henry Ford and his son Edsel. . . . The family, by transferring about 90 per cent of its Ford holdings to a foundation, escaped estate taxes on approximately 90 percent of its fortune. At the same time, it retained voting control of the company. . .
In my opinion, because of death taxes and other taxes, it seems inevitable that much of the wealth of these families ended up in powerful institutions used for societal change.
Wormser quotes from a speech of his:
it is possible that, in fifty or a hundred years, a great part of American industry will be controlled by pension and profit-sharing trusts and foundations and a large part of the balance by insurance companies and labor unions. . . . It may be that we will in this manner reach some form of society similar to socialism . . .
The book includes naive attitudes towards the major foundations he is criticizing throughout the book, including praise towards their work outside of the social sciences (p. xiii):
The work of both the Rockefeller and Carnegie foundations in some fields of medicine, public health, and science, for example, deserve the thanks of the American people.
The Law is Supposed to Restrict the Activities of Tax-Exempt Foundations
The Reece Committee based their investigation of major foundations on the legal basis for foundations. In their view, foundations are not individuals who have the right to investigate and say whatever they want.
Underlying both the State and Federal laws applying to foundations, however, is the concept of public dedication—a fund administered by fiduciaries (whether called “trustees” or “directors”) for public benefit. The tax relief which foundations and their donors enjoy causes the public to pay more taxes than would be the case if the exemptions were not granted. Consequently, and because foundations are public trusts, the public has the right to expect those who operate them to exercise the highest degree of fiduciary responsibility (xiv).
An example of how the presence of enormous sources of money starts to alter the society and the independence of institutions:
several colleges and universities abandoned their sectarian affiliations and charter clauses relating to religion in order to secure endowments from the Carnegie Corporation (13).
Permitted activities, according to President Schurman of Cornell (a trustee of the Carnegie Foundation), included ” . . . economic and political reforms . . . championship of free trade or protectionism; . . . (12)”
The author states
It is in the field of ideas that foundations exert the greatest influence on our lives and on the future of our country (15).
One of the issues is whether a foundation is about “propaganda” or “education.” One of the tax-exempt organizations, “The League for Industrial Democracy,” had a clear agenda of creating a socialist society (35). It had a relatively small budget but a wide influence. The U.S. Circuit Court of Appeals upheld its tax exempt status using the broadest definition of the term “education” when it was alleged to be a political organization (36).
Despite its support for communism, the Rockefeller Foundation continued to make contributions to The Institute of Pacific Relations (mentioned in Carroll Quigley’s Tragedy and Hope) long after it was known to have supported communism.
Wormser writes that the IPR
probably had more to do than any other single factor with conditioning our people to abandon the mainland of China to the Communists. Its influence even permeated the State Department. And its support came chiefly from large tax-exempt American foundations (47).
Evidence of this behavior by the IPR had been presented by the McCarran Committee and by Alfred Kohlberg in 1944 (46).
The Social Science Research Council received funds from many of the foundations and became “the greatest power in social-science research” (68).
Another example of interlock, and a clearing-house organization that receives funds from many of the big foundations, is the American Council on Education (76,77,78).
To be continued . . .
Further Questions and Investigation:
Find Rockefeller’s obituary for Mao.
Are the U.S. rules still the same all of these years later?
Do similar foundations operate in the same way in Canada with the same privileges and rules?
Do the same U.S.-based foundations operate to influence Canadian organizations, including governments?
Is there still a concern about foundations owning large amounts of property, including shares in corporations and real estate?
Related online sources, including Wikipedia.