Freeman

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Book Review: The Tax-Exempt Foundations by William McIlhany, II

NOVEMBER 01, 1981 by TOMMY W. ROGERS

Arlington House, 333 Post Road West, Westport, Connecticut 06880)
302 pages • $20.00 cloth

This study explores the degree to which the major tax-exempt foundations have advocated, propagandized for, and mobilized opinion on behalf of statism and collectivism in the areas of education, health policy, and public welfare. It reviews the various congressional investigations of foundations from 1912 to 1969, and it specifically examines the major foundations (Carnegie, Rockefeller, and Ford), as well as the smaller activist foundations, such as The Twentieth Century Fund, the Field Foundation, and the Stern Fund. McIlhany has sifted through the publications of those founda tions, he has weighed the activities promoted by them, and he has had extensive interviews with those in charge.

McIlhany’s research corroborates the suspicion that tax-exempt foundations are “promoting, almost exclusively, socialism at home and world government abroad, and doing so at taxpayers’ expense.” These ideological goals are consistently of a coercive and anti-free market nature, “controversial at best and destructive of the entire social system which originally produced the funding wealth at its worst.”

The author’s philosophical persuasion is libertarian and Austrian. He advocates a laissez-faire economy in which government would be limited to the provision of local criminal justice and national defense, all other products and services being offered on the free market. He does not think “it is unreasonable to suppose that under such a system individuals would voluntarily pay the state for its two functions since they would not be forced to pay for anything else.” And, as he notes, “in a free economy all problems relevant to tax-exempt foundations would disappear, except instances of criminal conduct punishable under other laws. All charities could function as competing, profit-making companies, offering some investment return to their contributors, or they might compete solely on the basis of their beneficent accomplishments.” Such, he writes, is the ideal form of public accountability.

Meanwhile, foundation promotion of statist orthodoxy must be challenged “if we are to be able to create sufficient public understanding to prevent the foundations from destroying what remains of the system that made possible the creation of accumulated wealth which sustains them.” McIlhany has accomplished a major step toward that public understanding. He has produced an excellently researched, substantively documented, analysis of the impact of the tax- exempt foundations. This book is definitely worth reading, including the footnotes.

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November 1981

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