For more than a century before Andrew Carnegie penned “Wealth” in 1889—republished the following year in The Gospel of Wealth and Other Timely Essays1—an often heated discussion had taken place in England, France, and Germany over what should be the proper public policy stance regarding perpetual endowments and foundations. That debate was driven primarily by the large number of press reports about perpetual endowments whose principal purposes had been made obsolete by the changing times. A concomitant objective was to figure out how legally to alter a donor’s explicit directions in order to make use of the endowment’s income for public benefit in contemporary times. Julius Rosenwald’s criticism of perpetuities that had become impossible of achievement may have been based in part on a belief that existing legal rules permitting modification (so-called “cy pres” or “deviation” proceedings) were inadequate, too costly, or ineffective. The simple fact that there were so many endowments that had outlived the purposes intended by their creators ultimately led to the establishment of an English Charities Commission with the authority required to modify the terms of perpetual endowments. The obsolescent endowments were typically hosted by freestanding nonprofits, which were stymied by the restrictions governing their use.
The situation is different for freestanding perpetual foundations, because, almost always, such institutions were not and are not limited to specified purposes. They tend to have broader objectives and an internal governing board with the power to allocate expenditures according to their discretion.2
The primary issues in the English discussion were such questions as: Should public policy permit permanent endowments of any kind? and If they are permitted, could government act to terminate them or alter their donors’ express purposes if, in the judgment of state officials, current public need would be better served by such changes? The often strong, unequivocal views expressed on all sides suggest a pronounced antipathy to the very idea of foundations that could involve themselves in public-benefiting expenditures independently of the government. In France in 1757, for example, the distinguished economist, author, and public official Anne-Robert-Jacques Turgot, Baron de l’Aulne, launched the discussion in an article entitled Fondations for the Encyclopédie, in which he argued that perpetual foundations are inherently unable to function properly, simply because, as he put it, “the founder [of a foundation] is a man who desires to eternalize the effect of his will, and no person alive today can know what will be the needs of the public tomorrow.”3 Turgot’s basic argument is that perpetual foundations and endowments should not be permitted by law and that, where they exist, the state should retain the power to amend the express wishes of the endowments’ founders to any extent officials think proper. To American ears—attuned to the deeply held belief that a creator of wealth has full rights under law to dispose of it for charitable purposes of intended benefit to the public (in whatever way the donor interprets public benefit) and for as long into the future as he or she wishes—Turgot’s position constitutes fighting words.
Yet, on the European continent, especially in “statist” countries such as France and Germany, the view was that many public services traditionally provided by the state, such as education and social services, were at that time essentially monopolies of the state. These functions were thus considered substantially off-limits for action by private individuals or nonprofit organizations; public policy did not, and in this view should not, permit foundations, whether perpetual or time-limited, to augment or reform them. In Germany in 1791, for example, Wilhelm von Humboldt, the distinguished philosopher and founder of Humboldt University of Berlin, took a position that is similar to Turgot’s.4
Even in England, a less “statist” country, the discourse on this subject was vigorous, primarily because of the frequent writing and lecturing of Sir Arthur Hobhouse, an eminent lawyer who gave up legal practice to take a position as a member of the Charities Commission, in which role he energetically led the battle against charitable perpetuities. His book, The Dead Hand,5 reads like a legal brief for the proposition that dispositions of private wealth for the public good must be controllable and amendable by the state at any time and, in any event, should not be created in perpetuity.
By 1880, when Hobhouse’s book was published, John Stuart Mill, the widely respected public intellectual and philosopher of utilitarianism, had already entered the fray with his characteristically eloquent essays taking the theories of Turgot, von Humboldt, and Hobhouse to task.
Mill’s position on “perpetuity,” and on the extent to which a donor’s wishes had to be respected in the use of an endowment, had been a constant in his life. In 1833, he had published an article in Jurist6 detailing the same argument. Here are a few excerpts from that essay:
If endowments are permitted, it is implied, as a necessary condition, that the State, for a time at least, shall not intermeddle with them. The property assigned must temporarily be sacred to the purposes to which it was destined by its owners. The founders of the London University would not have subscribed their money… if they had thought that they were merely raising a sum of money to be placed at the disposal of Parliament, or of the ministry for the time being.…
The sacredness of the founder’s assignment should continue during his own life, and for such longer period as the foresight of a prudent man may be presumed to reach, and no further. We do not pretend to fix the exact term of years; perhaps there is no necessity for its being accurately fixed: but it evidently should be but a moderate one.…
All beyond this is to make the dead, judges of the exigencies of the living; to erect, not merely the ends, but the means, not merely the speculative opinions, but the practical expedients, of a gone-by age, into an irrevocable law for the present.… Under the guise of fulfilling a bequest, this is making a dead man’s intentions for a single day a rule for subsequent centuries, when we know not whether he himself would have made it a rule even for the morrow.
… If, then, it be in truth desirable that foundations should exist, which we think it clear from the foregoing and many other considerations, it would seem to follow, as a natural consequence, that the appropriation made by the founder should not be set aside, save in so far as paramount reasons of utility require; that his design should be no further departed from than he himself would probably have approved, if he had lived to the present time, and participated to a reasonable degree in its best ideas. If foundations deserve to be encouraged, it is desirable to reward the liberality of the founder by allowing to works of usefulness (though not a perpetuity) as prolonged a duration and distinguishable existence as circumstances will admit.7
Even though Mill was not prepared to allow England to validate donor wishes in perpetuity, he was clearly not fully comfortable with state modification of donors’ specifications:
And all that the higher principle requires is, that a term, not too distant, should be fixed… at the expiration of which their appropriation should come under the control of the State, to be modified, or entirely changed, at its discretion; provided that the new purpose to which they may be diverted shall be of a permanent character, to remove the temptation of laying hands on such funds for current expenses in times of financial difficulty.… In such case, until the expiration of the term during which testamentary directions in general may be allowed to be valid, the intention of the testator should be respected so far as it is not mischievous; the departure from it being limited to the choice of an unobjectionable mode of doing to the persons, or the sort of persons, whom he intended to benefit; as, for instance, by appropriating to a school for children what was destined for alms. The State is not entitled to consider, so long as the fixed term is unexpired, what mode of employing the money would be most useful, or whether it is more wanted for other purposes. No doubt this would often be the case; but the money was not given to the State, nor for general uses. Nothing ought to be regarded as a warrant for setting the donor’s dispositions prematurely aside, but that to permit their execution would be a clear and positive public mischief.…
What tempts people to see with complacency a testator’s dispositions invalidated, is the case of what are called eccentric wills—bequests determined by motives, and destined for purposes, with which they do not sympathize.… But does not this genuine intolerance of the majority respecting other people’s disposal of their property after death, show how great is the necessity for protection to the rights of those who do not make resemblance to the majority their rule of life? A case of bequest which has been much noticed in the newspapers… strikingly exemplifies this need. A person left a sum of money by will to found a hospital for the treatment of the diseases of the lower animals, particularly birds and quadrupeds. He made the mistake of appointing as trustee for the purposes of the endowment, the University of London—a body constituted for special objects, and which could not with propriety undertake a duty so remote from the ends of its appointment. But can it be pretended that an hospital such as was designed by the testator, would not be a highly useful institution? Even if no regard were due to the animals themselves, is not the mere value of many of them to man, and the light which a better study of their physiology and pathology cannot fail to throw on the laws of animal life and the diseases of the human species, sufficient to make an institution for that study not merely useful, but important? When one thinks of this, and then considers that no such institution has ever been established in Europe; that a person willing to employ part of his superfluities [emphasis mine] in that way, is not born once in several centuries; and that, now when one has been found, the use he makes of what is lawfully his own is a subject of contemptuous jeering, and an example held up to show the absurdities of testators, and the folly of endowments; can one desire a more conclusive evidence of what would happen if donations for public purposes were only valid when the purposes are consonant to the opinion of the majority?…
Because an endowment is a public nuisance when there is nobody to prevent its funds from being jobbed away for the gain of irresponsible administrators; because it may become worse than useless if irrevocably tied up to a destination fixed by somebody who died five hundred years [ago]; we ought not on that account to forget that endowments protected against malversation, and secured to their original purpose for no more than two or three generations, would be a precious safeguard for uncustomary modes of thought and practice, against the repression, sometimes amounting to suppression, to which they are now exposed as society in other respects grows more civilized. The fifty or hundred years of inviolability which I claim for them, would often suffice, if the opinion or practice is good, to change it from an uncustomary to a customary one, leaving the endowment fairly disposable for another use. Even when the idea embodied in the endowment is not an improvement, those who think it so are entitled to the opportunity of bringing it to a practical test.8
While foundations as we have come to know them today were not prevalent or even much in existence when Mill wrote, everything he says about endowments’ value to society, to the virtue of philanthropic wealth in the service of facilitating change in public attitudes and governments’ behavior, applies just as strongly to today’s foundations and philanthropically minded individuals. Moreover, as we shall see, some of what John Stuart Mill pointed out as criticisms of perpetual endowments is plainly evident in today’s ideological attacks on the roles of foundations and individual philanthropists in American society.
When I read Carnegie’s The Gospel of Wealth and note his injunction to his fellow wealthy individuals to give away their “surplus wealth” during their lifetimes, I hear echoes of Mill’s “superfluities” as quoted above, written 20 years earlier. When Carnegie writes that his overall purpose in devoting his wealth to benefit society is to foster many greater opportunities for community across class divisions that have been created by capitalism, I hear Mill’s voice arguing against state prevention of private initiatives to improve the administration of such public services as education and social service.
Clearly Carnegie stood on the shoulders of John Stuart Mill. It is not likely that they met, however, since Carnegie made his first business trip to London in 1870, when he was 30; at that time Mill was 63 years old and at the peak of his fame, having just finished serving as a Liberal Party member of Parliament from City and Westminster, in which role he had been the first member in that governing body’s history to call for women to be given the right to vote. Because Mill died three years later, which was well before Carnegie had become celebrated among London’s “important people,” a personal relationship is highly unlikely. However, because Mill’s ideas on philanthropy, especially his 1869 essay on endowments, were likely the subject of conversation among those Londoners of sufficient wealth to be interested in philanthropy—and with whom Carnegie did interact during the following two decades before he published “Wealth”—it is not farfetched to conjecture that those ideas would have found their way to Carnegie. So I urge the reader to keep Mill in mind as you consider what Carnegie himself wrote and did.
The man who dies thus rich dies disgraced.
—Andrew Carnegie, 18899
Why are so many of the important practices in American philanthropy attributable to Andrew Carnegie? The first person who credited Carnegie with establishing the model of American giving was a famous contemporary of his—John D. Rockefeller Sr. In 1896, on the opening of the Carnegie Library in Pittsburgh, the oilman wrote a letter to steelman Carnegie that included the following sentence: “I would that more men of wealth were doing as you are doing with your money; but, be assured, your example will bear fruits, and the time will come when men of wealth will be willing to use it for the good of others.”10 On another occasion, Rockefeller allegedly wrote Carnegie, acknowledging “Everything I know about philanthropy I learned from you!”11
A quick scan of The Gospel of Wealth suggests countless examples of post-1990 nonprofit and philanthropic phenomena that are closely related to Carnegie’s philanthropic practices and preferences. Think “social entrepreneurship,” for example, which Carnegie personified with his frequent leadership of the institutions that he founded or supported. Think “venture philanthropy,” which is what Carnegie did in establishing and initially funding what is now TIAA-CREF, one of the largest pension funds in America. Think of Carnegie’s insistence on serious research in the style of Grogan’s work at The Boston Foundation prior to funding, which moved him to commission Abraham Flexner’s study of American medical education. That exercise involved Flexner’s interviewing of virtually every faculty member in every American medical school and producing a set of findings and recommendations that literally transformed medical education from science-absent to science-based in one generation. Think of today’s widespread use of the challenge (or matching-required) grant across America’s civic sector and many foundations. It really is no exaggeration to attribute to Carnegie so many of the practices that dominate America’s nonprofit and philanthropic life to this day.
Andrew Carnegie’s essay on “Wealth”12 embodied the first American philanthropic giant’s attempt to articulate the detailed plan he had developed and applied to his own giving. As he wrote in that essay, he did so not only in the interests of transparency and self-justification but also and explicitly because he hoped to persuade other wealthy individuals to adopt his rationale for giving.
The most important point that Carnegie wished to drive home was that every wealthy individual should give away his assets during his lifetime. He reasoned that a wealthy person facing death has only three choices: to give his money to his children (if he has any), bequeath it to others (individuals or institutions) at his death, or give it away during his lifetime. He dismissed the first option by declaring that giving it all to his children would ruin them forever and asserted that the second option risked the possibility, indeed the likelihood, that after his death the recipients would not use his wealth as effectively as he himself would have done. That left only option 3, which he strongly preferred, primarily because he believed that the successful creator of wealth is best positioned to bring to bear on the wise administration of his wealth the self-same talents and skills he had used in creating it. Note that rarely in his writings is there an emphasis on the concern that dominates the thinking of some of today’s would-be spenders-down, who feel driven to dispose of their philanthropic wealth before they die: that their fortunes will inevitably be wasted or frittered away if deposited in perpetual foundations. Carnegie did take note of the possibility that the donor’s intentions might be thwarted, however, when he wrote the following: “The cases are not few in which the real object sought by the testator is not attained, nor are they few in which his real wishes are thwarted. In many cases the bequests are so used as to become only monuments to his folly.”13 But that observation does not appear to have been Carnegie’s dominant concern. It was certainly not strong enough to deter him from leaving a sizable proportion of his wealth to a perpetual foundation, to the successor trustees of which he gave almost unlimited discretion. Carnegie’s insistence on “Giving While Living,” therefore, is almost wholly positive and not dominantly based on any fear about the likely future misuse of his philanthropic dollars.
Carnegie worked hard to identify the individuals who seemed most worthy of support, according to his values and philanthropic objectives, as spelled out in The Gospel of Wealth. His philanthropy is well known for his earliest and longest-lived “Carnegie Libraries,” which he catalyzed by challenge grants scattered in cities and towns all over the United States and in parts of his native Scotland and late-adopted England. They were motivated by his reputed injunction, “You cannot push anyone up the ladder unless he is willing to climb himself.”14 Or in Carnegie’s terms, “Rather than give a man a job, teach him how to read.”15 Hence the libraries, the first of which he authorized in 1880 in Dunfermline, Scotland, his birthplace, and was dedicated in 1883. The second Carnegie library, commissioned in 1886, was to be in Allegheny, Pennsylvania, where he grew up, but it was not dedicated until 1890, one year after the library he commissioned opened in Braddock, Pennsylvania, the site of one of the Carnegie Steel Corporation plants. Over the next 20 years, the number of Carnegie libraries swelled to 1,679 in the United States, with a total worldwide number of 2,509.16
Between the time that Carnegie began to crystallize his intention to sell Carnegie Steel Corporation—which was ultimately sold in 1901 to J. P. Morgan and became the US Steel Corporation—and 1919, when he died, Carnegie devoted most of his energies to his philanthropic giving, especially the founding and guiding of major institutions that continue to bear his name. It is worth noting the enormous scope and ambition of his grantmaking—not only because it is so impressive but because, as we shall see, it still wasn’t enough to reach his goal of putting all his charitable wealth to use during his lifetime. The following are just some of his more significant contributions.
Perhaps most famous of all is Carnegie Hall in New York City, established with a gift in 1889 of $2 million. What is relevant to this book’s primary focus and notable indeed is the extent to which Carnegie endowed for perpetuity so many of the institutions that he founded or supported. In 1893, with an initial gift of $1.12 million, Carnegie founded The Carnegie Institute in Pittsburgh, which later, with additional gifts from Carnegie, added the Carnegie Library of Pittsburgh, the Carnegie Museums of Pittsburgh, and the Carnegie Music Hall. A $2 million gift in 1900 was used to establish Carnegie Technical Schools, which was reorganized in 1912 into the Carnegie Institute of Technology and in 1967 became Carnegie-Mellon University. In 1901, Carnegie gave $10 million to establish The Carnegie Trust for the Universities of Scotland, also based in Dunfermline. That same year he established The Carnegie Institution of Washington, now known as The Carnegie Institution for Science, with an initial endowment of $10 million, followed by a total of another $12 million in subsequent gifts in 1907 and 1911. In 1903, Carnegie endowed the Carnegie Dunfermline Trust to benefit his hometown; in 1904, with an initial gift of $5 million, he established the Carnegie Hero Fund Commission to celebrate and publicize acts of lifesaving heroism by individuals in the United States and Canada, followed in subsequent years by creating funds with an identical mission in Scotland, Ireland, Northern Ireland, England, and all parts of what is now known as the United Kingdom, and thereafter additional Carnegie Hero Funds in France, the Netherlands, Germany, Norway, Sweden, Switzerland, Denmark, Belgium, and Italy. In 1905, Carnegie established the Carnegie Foundation for the Advancement of Teaching and endowed it with $10 million. That foundation originally provided pensions for retired professors, but today it seeks to improve teaching in colleges as well as in graduate and professional schools. From that original mission of supporting professors’ retirements grew one of Carnegie’s most notable achievements: the founding and initial funding of Teachers Insurance and Annuity Association, which has evolved into TIAA-CREF, today’s retirement income provider for most university and college faculty and staff, as well as for the staff of nonprofits and foundations.
In 1910, on the occasion of Carnegie’s 75th birthday, he founded the Carnegie Endowment for International Peace, first in New York but soon thereafter moved to Washington, with an initial endowment of $10 million. In 1911, he established the Carnegie Corporation of New York, initially endowing it with $25 million, to which in the following year he added another $75 million in endowment and which received still another $35 million on his death in 1919. In 1913, he established the Carnegie United Kingdom Trust, located in Dunfermline, for the benefit of the people in Great Britain and Ireland; and, finally, in 1914, he founded the Church Peace Union with a $2 million endowment given by the Carnegie Corporation of New York, which has had several different names over the years and is now known as the Carnegie Council on Ethics and International Affairs.17
The creation of the Carnegie Corporation of New York, which is the only general-purpose foundation among his many gifts, comes very near the end of his benefactions in their chronological order. It has often been observed that the reason for that sequence is that, although Carnegie was determined to give away all of his wealth to specific recipients during his lifetime, by the beginning of his last decade he had run out of opportunities that appealed to him as worthy of supporting. This is striking and indeed worth keeping in mind as you read this book: not only did he bestow permanent endowments on many of the institutions he created—thus extending the reach of his philanthropy many generations beyond his lifetime—but he concluded his philanthropic career by establishing a perpetual institution. When he could no longer meet the high standards he had set for his giving, despite a breathtaking list of achievements that were wide ranging not only in their geographic locations but also in their substantive purposes, he relented and chose as his default course of action the creation of a perpetual general-purpose foundation. That choice is virtually equivalent to the option of giving by bequest at the point of death that he rejected in Wealth. In a very real sense, there were no more specific purposes or institutions that commanded his interest, so he put the remainder of his assets in a perpetual foundation to be distributed by his carefully chosen associates serving as trustees of the Carnegie Corporation of New York.
Therein lies a very important precedent for those wealthy individuals who are tempted to deploy all of their philanthropic assets to purposes that are dear to them during their lifetimes. If Andrew Carnegie, among the most visionary and resourceful philanthropists in history, could not identify in his lifetime worthy recipients of all his wealth who were doing or wishing to do things that Carnegie cared about passionately, perhaps his example will be a cautionary word to those who are sure that they can achieve all the charitable impact they desire while they are alive.
To be sure, all of the recipient organizations of Carnegie’s beneficence were different in kind from the intended recipients of many of today’s wealthy, who often talk in terms not of creating ongoing institutions, such as Carnegie founded, but rather of solving specific, grievous global problems. Obviously, Carnegie had the humility to recognize that there were significant limits to what he could achieve in his lifetime, even with his vast wealth. He often wrote and spoke about the need for mechanisms to bring peace to Europe, calling for the creation of a “League of Peace,” and later a “League of Nations.” In 1903, he financed the Peace Palace in The Hague. He spent enormous amounts of time and energy in trying to persuade Theodore Roosevelt, both during and after his presidency, to bring Kaiser Wilhelm II of Germany together with Britain’s King Edward VII for talks intended to prevent war. When all of his exertions failed and war broke out, Carnegie was cast into a deep depression, the worst of his life, and many speculate that it was his heartbreak over the occurrence of World War I that hastened his death one year after it ended.
So, while Carnegie cared passionately about the need for peace among nations and spent his final years trying to make it happen, he recognized that it would require many years and the continuing efforts of countless others and of resilient institutions bolstered by perpetual endowments to accomplish that elusive goal. One might well call what he did a strategy of “hedging his bets.” He gave his all during his lifetime, throwing his energy and financial resources into the causes about which he cared passionately, but he was wise enough to recognize that their magnitude and complexity were beyond his powers of direct action during his lifetime. Therefore, he created and endowed institutions that would be around to enlighten and empower the leaders of subsequent generations so they could devote themselves to lasting solutions to the problems to which he devoted his life.18
For all his multiple successes, both in business and philanthropy, Carnegie’s hope of disposing of his philanthropic wealth during his lifetime fell short—though it was a “failure” that has since bestowed a century of benefits and continues to bear philanthropic fruit. However, for one of Carnegie’s successors among the great philanthropists of the early 20th century, the prospect of completing one’s giving before death was not merely a hope but a cause—one that would define his life as a donor and would grow, a century later, into something of a cause célèbre.
The horrors that are due to race prejudice come home to the Jew more forcefully than to others of the white race, on account of the centuries of persecution which they have suffered and still suffer.
—Julius Rosenwald, 191119
Julius Rosenwald became a partner of Sears, Roebuck and Company in 1895 and was promoted to vice president the following year. SearsArchives.com gives a barebones summary of his leadership of the company:
From the moment he joined Sears, Roebuck and Co., Rosenwald’s abilities meshed amazingly well with those of Richard Sears. He brought a rational management philosophy to Richard Sears’ well-tuned sales instincts. From 1895 to 1907, annual sales skyrocketed from $750,000 to $50 million. In 1908, Rosenwald was named president when Richard Sears resigned. After World War I, Sears was in dire financial shape and Rosenwald brought Sears back from the brink of bankruptcy by pledging some $21 million of his personal fortune, in cash, stock and other assets to rescue the company. By 1922, Sears had regained financial stability. Rosenwald continued to serve as president until 1924, when he became chairman of the board, a position he held until his death in 1932.20
That summary helps to explain why Rosenwald is almost always referred to as “The Man Who Built Sears, Roebuck,” which is the first half of the subtitle of his biography, written by his grandson Peter M. Ascoli.21 While it was Rosenwald’s years of running Sears, Roebuck that created his wealth, what earned him fame was his decision to devote most of his fortune to improving educational opportunities for African American children by building schoolhouses, as spelled out in the second half of the subtitle: “and Advanced the Cause of Black Education in the American South.” His gifts were structured as challenge/matching grants, in emulation of the model Andrew Carnegie employed in building his many public libraries.22
Initially, Rosenwald began building schools at the suggestion of Booker T. Washington. From 1912 (seven years before Andrew Carnegie died) until 1937, when the last Rosenwald school was opened in Warm Springs, Georgia, at President Franklin D. Roosevelt’s personal request, close to 5,000 Rosenwald schools had been erected. The impact of those schools is clear from this brief statistic: “In 1928, Rosenwald schools accounted for one out of every five African American schools in the South, and these schools enrolled one of every three Southern African American pupils.”23 In 1915, Aviva Kempner produced a widely reviewed and admired documentary film on Rosenwald’s achievements, Rosenwald: The Remarkable Story of a Jewish Partnership with African American Communities.24
Five years after starting the first school, he founded and gave $25 million to the Julius Rosenwald Fund. In 1928, four years before his death, Rosenwald contributed about 20,000 shares of Sears, Roebuck stock to the Fund and instructed his trustees as follows: “I have stipulated, therefore, that not only the income but also all of the principal of this fund must [emphasis Rosenwald] be expended within 25 years of my death.”25 That injunction made the Rosenwald Fund the earliest (and for decades afterward the best-known) spend-down foundation.
The limited-life model Rosenwald imposed on his own foundation became the focus of his speeches and writings aimed at persuading other wealthy individuals to follow his example. Opposition to perpetual foundations became the signature theme of Rosenwald’s public pronouncements about philanthropy. He quickly became well known for the first of two articles he published in 1929, “The Burden of Wealth.”26 A second article, in the May 1929 issue of Atlantic Monthly, elaborated on the same points but was “far more scholarly”27 and not as widely circulated.
Frequently, Julius Rosenwald is lumped together with the much wealthier and more prominent Andrew Carnegie, whom he did not personally know but with whom he occasionally corresponded. Rosenwald clearly revered Carnegie. The primary reason for that admiration, I think, is that he felt a kinship with most of the message that Carnegie delivered to the public in The Gospel of Wealth—essentially, the latter’s pioneering role in advocating “giving while living.” Rosenwald’s overall interpretation of Carnegie’s writing and speeches suggested that he and Carnegie were indeed on the same page in their views and actions regarding perpetuity in philanthropy, but clearly they were not. While there are many statements in Carnegie’s The Gospel of Wealth with which Rosenwald undoubtedly agreed enthusiastically, none of them jibes easily with Rosenwald’s determined, even relentless, opposition to perpetual foundations. Here are Rosenwald’s words in The Saturday Evening Post article that made him famous:
My differences are not with philanthropy, but with certain of its methods or tenets. In fact, my chief quarrel is with only one of these tenets: the principle of perpetuity endowment. I am emphatically opposed to never-ending endowments.… I unqualifiedly disapprove of the efforts made by certain benevolent trusts and foundations to perpetuate themselves by restricting their enterprises and expenditures to the interest on invested capital, and not only leaving the principal untouched but even adding from time to time to it from unused income.28
Both Carnegie and Rosenwald preached that wealthy individuals should give away all of their surplus wealth during their lifetimes and not wait until they are at death’s door to dispose of it. Carnegie, however, did not oppose perpetual foundations. In fact, he established two of them. As we have also seen, he founded and endowed many other perpetual institutions and created perpetual endowments in many other institutions that he supported. Moreover, Carnegie was willing to allow the Tuskegee Institute, to which the Carnegie Corporation had made a gift of endowment, to modify the use that had been originally specified for it when the gift was made. Furthermore, there is good evidence that Carnegie was comfortable in allowing donors to permit the recipient institutions to spend endowment capital, as opposed to interest on capital, if they wished to do so.
Rosenwald’s article in Atlantic Monthly, although much shorter than Carnegie’s The Gospel of Wealth, articulated much of what Carnegie preached but, as we have noted above, was not what Carnegie actually practiced. In comparing the stances of the two men, Rosenwald’s biographer acknowledges as much:
But Carnegie did not carry his ideas far enough, for he did not, in fact, give the bulk of his fortune away in one generation.… By making his foundation self-liquidating, Julius Rosenwald’s inspiration for the duration of his foundation came from a philosophical view that was already rapidly diminishing in its force even in England as well as in the United States, but which led him nonetheless to try to breathe new life and blaze a new trail that significantly departed from the example set by Andrew Carnegie and John D. Rockefeller, Sr.
That new trail gained very little traction in Rosenwald’s lifetime, as all but a handful of the foundations that were being born in the next half-century were created with no limit to their lives.29
As we shall see, however, the movement toward limiting the lives of foundations acquired new momentum from highly publicized incidents in the philanthropic world, beginning with Henry Ford II’s resignation from the Board of Trustees of the Ford Foundation. Like dominoes falling, this strategy of limited spending horizon began to enjoy resurgence among the newly wealthy technology and financial industry billionaires starting in the last decade of the 20th century.