Ford and the Fords: A "Creature of Capitalism" Reconnects with an Industrial Dynasty

There was big news from the Ford Foundation last week: the election to the foundation’s board of Henry Ford III, an executive with the Ford Motor Company who happens to be the great-grandson of Edsel Ford, and the great-great-grandson of Henry Ford, the father-son duo who together created the foundation in 1936. There hasn’t been a Ford family member on the foundation’s board for more than four decades, and we don’t yet know the full backstory of why that’s now changed.

Yet we do know the historical backstory to this development, one that involves Henry Ford III’s grandfather, Henry Ford II, the last member of the Ford family to serve on the foundation’s board. When Ford II left the foundation, it was on less than gracious terms: He resigned with a public, censorious flourish in 1976. It was one of the most remarked-upon departures in recent philanthropic history, the climactic scene in a conflict between the nation’s leading institutional philanthropy and one of its wealthiest families, whose resolution we might now be witnessing.

Henry Ford II inherited his father’s seat as president of the foundation in 1943, and became chair of the foundation’s board in 1950. In his nearly three and a half decades of service, he was perhaps more responsible than any other individual for the creation of “the modern Ford Foundation,” with its international orientation, the massive resources at its disposal, and its increasing disassociation from the Ford family and the Ford Motor Company.

So it was a significant development when Ford II resigned from the Ford board in December 1976—and even something of a surprise to the other trustees. Ford II sent a letter explaining his decision to each of them. And though it contained an assortment of grievances (included some that anticipated recent critiques of top-down philanthropic overreach), coverage of his resignation tended to focus on one of them: the charge, as he wrote, that although “the foundation exists and thrives on the fruits of our economic system,” it was clear that “many professional staff in the field of philanthropy” had seemed to forget that “the foundation is a creature of capitalism.”

He continued:

I’m not playing the role of the hard-headed tycoon who thinks all philanthropoids are socialists and all university presidents are communists. I’m just suggesting to the trustees and the staff that the system that makes the foundation possible very probably is worth preserving. Perhaps it is time for the trustees and staff to examine the question of our obligations to our economic system and to consider how the foundation, as one of the system’s most prominent offspring, might act most wisely to strengthen and improve its progenitor.

On January 12, 1977, the New York Times reported the resignation under the front-page headline: “Henry Ford 2d Quits Foundations, Urges Appreciation for Capitalism.” And it was that line about a foundation being a “creature of capitalism,” out of the various felicitous phrases in the letter, that ended up capturing public attention. So the rift between the Ford family and the foundation created out of its wealth became understood as a symptom of a larger conflict between establishment philanthropy and the free enterprise system which sustained it.

In part, this is because the resignation quickly became a major rallying event in the development of conservative philanthropy. It’s hard to overstate the power it held—and continues to hold—in the imaginations of conservative donors. It served as both origin story and cautionary tale, confirming their suspicions of the deep hostility to the free market system harbored within the heart of the liberal establishment. Conservative donors took from the episode two lessons. First was the need for business leaders and entrepreneurs to channel their philanthropic resources into institutions that would honor their accumulative talents and to stop, in the words of former Treasury Secretary and Olin Foundation President William Simon, “this absurd financing of one’s philosophical enemies.” It inspired the establishment of a conservative counter-establishment.

Ford II’s resignation also affirmed conservative philanthropy’s commitment to the preservation of donor intent (which had a kinship to the theories of legal originalism that had begun to predominate in conservative judicial circles). The incident spurred a number of conservative donors to consider limiting foundation lifespan as a means of countering donor drift, which, given the progressive bias of many philanthropoids, they assumed nearly always carried the institution leftward.

John Olin, for instance, the conservative chemical and munitions company magnate, was deeply affected by Ford II’s resignation. As his biographer notes, “The lesson Olin took from this public flap was that his foundation would likely come under the sway of people who did not share his principles. If this could happen to the Ford Foundation while a member of the family still served on the board, it could certainly happen to the John M. Olin Foundation.” So Olin instructed the trustees of the foundation he established to spend down its assets over their lifetimes. It ended grantmaking in 2005.

That’s the context in which Ford II’s resignation has been understood for most of the last four decades—it bolstered the rise of both conservative and spend-down philanthropy. Yet within the last few years, there have been some notable reassessments of the episode that, in a sense, anticipated last week’s news of Ford III’s election, and provide an alternative context for understanding the development.

One was prominently featured in a 2017 book, Putting Wealth to Work, by philanthropy scholar and former foundation executive Joel Fleishman. In an attempt to defend the value of perpetuity from its detractors, Fleishman sought to restore to Ford II’s decision the nuance that had been stripped from it by conservatives who he believes exploited the incident in their campaign to valorize donor intent.

Fleishman argues that if you read Ford II’s entire resignation letter and consider the entirety of Ford II’s career, it becomes clear that his decision to leave the board was not the product of some deep disillusionment with the course of the foundation’s grantmaking. It had more to do with what Fleishman calls “donor remorse”—disappointment with losing control of the foundation more generally (a fate that Ford II helped to set in motion by encouraging the enlargement of the board beyond the Ford family and actively recruiting new board members).

There were certainly programs and points of emphasis that he objected to—such as Ford’s funding of public interest law firms. But overall, Fleishman argues, it’s clear that even at the moment of his departure, Ford II appreciated the foundation’s “magnificent record of achievement,” as he termed it in his letter, a record that he could claim considerable responsibility for shaping. He simply felt his own power over the foundation waning and sensed that it was time for him to move on—as he did as CEO of the Ford Motor Company just a few years later. In other words, Fleishman argues that the final rift between the Ford family and the foundation was not as wide as it has been presented—and therefore, the conflict between capitalism and philanthropy not as profound as it has been imagined. In fact, much of the work that Ford II had encouraged the foundation to pursue over his tenure could be understand as following the dictates he himself laid out in his letter, efforts to strengthen and improve the free enterprise system.

A related and even more consequential reinterpretation of Ford II’s resignation came from a 2015 essay, “Toward a New Gospel of Wealth,” written by the current president of the Ford Foundation, Darren Walker, in which he affirmed the foundation’s recent reorientation toward a focus on inequality. Walker adapted his title from Andrew Carnegie’s foundational “Gospel of Wealth” essay, which argued, in Walker’s terms, that massive inequality was an “unavoidable condition of the free market system and that philanthropy is one effective means of ameliorating the conditions the market produces.”

Yet Walker noted that if this is the case, then philanthropy must push its responsibility further and address the roots of inequality itself. Doing so did not represent a threat to capitalism. On the contrary, it represented the foundation’s “obligation to capitalism”—and here, in an impressive bit of rhetorical jujitsu, Walker cited Ford II’s famous “creature of capitalism” remark from his resignation letter in support. But for Walker, honoring Ford II’s injunction to “strengthen and improve” capitalism did not mean engaging in capitalist cheerleading. It meant addressing and extirpating the excesses and grotesqueries of free-market orthodoxy. It meant figuring out how to extend the benefits of a free market system beyond the top 1 percent or the top 10 percent; it meant “foster[ing] a stronger safety net and a level playing field.”

It’s possible to regard the election of Henry Ford III to the Ford board as the personnel corollary to Walker’s “New Gospel of Wealth” essay, an effort to heal a wound that had come to represent a particular understanding of the relationship between philanthropy and capitalism. Of course, this is not precisely how the foundation itself is presenting it. Instead, it is highlighting the move as a function of its re-commitment to Detroit (it moved its headquarters from the city to New York in 1953).

“Although we were established to be an independent institution,” Walker announced in a press release, “our recent efforts in southeastern Michigan have marked a reconnection with the Ford family, coming full circle with Henry’s election to our board.” (In fact, Ford III himself disclosed that Walker had kept an “open line” to the family since his appointment as president in 2013). The foundation placed the election of Ford III in the context of the foundation’s contribution of some $125 million as part of the Grand Bargain to pull Detroit out of bankruptcy and of its opening an office in the Motor City in 2017. Yet if Ford III’s election is also intertwined in a larger story about the relationship between capitalism and philanthropy, then it can also be interpreted as arguing that a New Gospel of Wealth is best practiced in a local context, and that late capitalism can best be redeemed through a commitment to place-based giving.

Walker’s “New Gospel” essay was not merely aimed at conservatives convinced that establishment foundations were inherently hostile to capitalism. He was also courting segments of the left that assumed the inverse: that as a “creature of capitalism,” philanthropy was irredeemably tainted by it and could not be counted on as an ally to combat its abuses. Because it tended to ignore the structures of political economy, they argued, elite philanthropy could offer only palliatives once the damage had been done and wealth and income inequality had become entrenched. Walker pledged to take those inequities head on.

Of course, the election of Henry Ford III to the Ford board is unlikely to cheer the staunchest progressive critics of philanthropy. They will not likely be won over by Walker’s reports that Ford III impressed him in early meetings with “his knowledge of the history of the civil rights movement” and with his commitment to social justice. Even if the election does signal the Ford Foundation’s commitment to championing the responsibilities of corporate wealth, it will likely disappoint those who have called on philanthropy to bring in underrepresented and minority voices into foundation boards. After all, there are plenty of folks in Detroit besides Ford Motor Company executives whose perspective could help “strengthen and improve” capitalism.

Which brings me to a final point. The welcome the Ford Foundation now offers to the Ford family can be viewed as just one example of the foundation’s broader engagement with its own past under the stewardship of Darren Walker (full disclosure: The foundation has supported some of my own work on the history of philanthropy). As much as any other foundation, Ford has devoted substantial resources to the mining of its own history. Yet the rapprochement with the Fords illustrates how that history can be both a blessing and a burden. On one hand, Ford’s legacy provides a storeroom of models that can inspire, instruct and help secure commitments to values, places and institutions. Yet institutions can also be haunted by their legacies. It can be liberating to exorcise the ghosts of the past, but the compulsion to do so can itself be a form of constraint.

Benjamin Soskis is a research associate in the Center on Nonprofits and Philanthropy at the Urban Institute and the co-editor of HistPhil.