Mich. Lawmakers Offer Bill to Force Ford and Other Funds to Give More Within the State

By Ian Wilhelm

In a move highly criticized by foundation leaders, two Michigan state lawmakers introduced legislation this month that would essentially force the Ford Foundation to direct at least half of its giving to the state.

While the proposal is unlikely to become law, it reflects the growing concern among state legislators that foundations require increased scrutiny, nonprofit leaders said. If the lawmakers decide to introduce new rules for philanthropies, grant makers could be forced to navigate different regulations in each state.

“I’ve always said the worst nightmare of the field is a lot of different states beginning to take an interest in us,” said William S. White, president of the Charles Stewart Mott Foundation, in Flint, Mich., who opposes the legislation.

The Michigan bill would require that unless otherwise stated in a grant maker’s original charter, a foundation established in the state would violate donor intent if during the most recent three years it gave less than 50 percent of its grants to Michigan charities. In addition, a philanthropy would break the proposed rule if it made half of its contributions to groups different from the ones it supported during its “first years.”

The legislation does not mention Ford by name, but state Rep. Andy Dillon — a Democrat who drafted the legislation, along with Rep. Bill Huizenga, a Republican — said it is aimed at the foundation.

Ford’s headquarters building is in New York, but the grant maker was incorporated in Michigan in 1936 by Edsel Ford, the son of Henry Ford, who founded the Ford Motor Company.

While the foundation supports several charitable causes in Michigan, Mr. Dillon said that compared with its giving during the 1930s and 40s, the current grant making to the state is inadequate.

“Henry and Edsel Ford really seeded the foundation with all its money, and when they were alive over 90 percent of its gifts were to Detroit and southeast Michigan-based charities,” he said. “Now 0.07 percent of the gifts are to Michigan charities. I just don’t think that’s what the donors intended.”

‘A Starting Point’

Despite his concern, Mr. Dillon said he will not push for passage of the legislation, at least temporarily, to allow the Council of Michigan Foundations to study the issue of donor intent.

“This bill is just a starting point,” he said. “We’re not looking to create havoc in the foundation community,” he said.

The Council of Michigan Foundations will produce a report on the subject by September to educate lawmakers about the legal requirements foundations must meet to fulfill their donor’s wishes, said Robert S. Collier, chief executive of the organization.

The Ford Foundation also is receiving scrutiny from other government officials in the state. Michigan’s attorney general, Mike Cox, is investigating the organization, saying the grant maker has ignored the Fords’ philanthropic desires. He also has questioned whether its conflict-of-interest polices have been broken by board members and how much it spends on administrative costs (The Chronicle, April 20).

Marta L. Tellado, Ford’s vice president of communications, said the fund’s decision to give less to Michigan reflects Henry Ford’s grandson’s wishes. In 1950, she said, Henry Ford II approved changes in the organization’s mission, broadening its goals to include world peace and promoting democracy.

(Henry Ford II left the group’s board of directors in 1976, reportedly upset about the direction of the foundation’s work.)

Ms. Tellado said the foundation is cooperating with Mr. Cox’s inquiry.

The legislation can be found online at http://www.legislature.mi.gov. Search for bill number 6153.