Foundation helped save family's control of company
Because of new tax laws in 1935, taxes rose to 50 percent on estates over $4 million and to 70 percent on those over $50 million.
Henry Ford and his son, Edsel, sought a way to avoid the huge taxes that would come due when they died. The result was the birth of the Ford Foundation on Jan. 15, 1936.
The Fords set up the foundation by creating two classes of company stock. A large block of nonvoting Class A stock - 3.3 million shares - was given to the foundation, and all the Class B stock - about 5 percent of the total shares - went to the family.
Despite the massive gift to the foundation, the Class B stock came with voting privileges, allowing the family to maintain control of the company. About 58 percent of the Class B stock was owned by Henry and his wife, Clara, with the rest divided among Edsel's wife, Eleanor, and their four children: Henry II, Benson, Josephine and William.
Edsel Ford died in 1943, and Henry Ford died in 1947.
"Had the foundation not taken most of the estate, it was estimated that Henry's and Edsel's heirs would have paid federal inheritance taxes of $321 million," according to Ford: Decline and Rebirth by Allan Nevins and Frank Ernest Hill.
Henry Ford II then took over the foundation, and it became one of the world's largest philanthropies. By the end of 1955, it had granted or appropriated about $875 million, say Nevins and Hill.
But Henry Ford II grew tired of its politics and quit as chairman in 1956.
It was "the worst mistake of my life," according to Henry: A life of Henry Ford II. Author Walter Hayes wrote, "It taught him that he must never, under any circumstances, allow the family to lose control of the Ford Motor Co. as it had lost control of the foundation."
By the mid-1960s, the foundation's portfolio was worth $3.7 billion, according to Hayes.
The foundation got rid of its last Ford stock in 1974. It has no ties to Ford Motor Co. and is based in New York.
The Ford family's philanthropic ways continue through Ford Motor Co. The Ford Fund, a company-controlled and company-funded nonprofit organization, was established in 1949 and operated independent of the Ford Foundation.
The Ford Fund supports education; the environment; public policy, health and social programs; civic affairs and community development; and arts and humanities.
"Education will always be a top priority because it allows people to take care of themselves," says Sandra Ulsh, president of the Ford Fund.
At the local level, the Ford Fund supports areas in which Ford Motor Co. does business. Volunteers run 41 community relations committees.
Ford Motor Co.'s 2002 philanthropic spending was $133.6 million, including the Ford Fund's $83.9 million.
The total contribution fell 3.9 percent from 2001, including a 25.5 percent drop from the Ford Fund.