On Foundations
*Another brief section from the book*
Victor Pinchuk, like numerous others of the extremely wealthy, has his own personal foundation. The purpose of these foundations, in truth, has little if anything to do with genuine philanthropy. They allow the rich to put the lion’s share of their wealth somewhere exempt from taxes (due to their charity status). In the U.S. there are always calls from many on the political left to increase taxes on the wealthy. As most of the one-percenter’s (often referred to as such as they are in the top one percent of income) money is in foundations and not as taxable income this plan would invariably hurt the moderately successful who do not use these legal mechanisms much more-so than those the taxes were intended to target. As they are, at least nominally, charity foundations, the majority of the public does not want to tax them for fear of taking money from the needy. Because of that mental hurdle in the populace, foundations are the perfect tool to protect wealth from taxation. Charities are supposed to exist for willing giving, however, these foundations exist so that the world’s richest can maintain most of what they currently have.
The second reason is their use in various nefarious purposes. Foundations are perfect for both giving and accepting bribes. They are also useful for money laundering. Their usefulness is because foundations are afforded a great deal of secrecy. While the person or corporation who owns a foundation is generally known the beneficiaries are often not. This means that those who receive money and assets can be concealed from an unwary public. The private nature of it enables foundations to bribe, grift and launder while the foundation both gives it a veneer of legitimacy and couches corruption behind harder to decipher legalese should the information ever even become known.
KYC360-infographic-abuse-of-Foundations.pdf (riskscreen.com)
It does not matter if the foundation is the Victor Pinchuk Foundation, the Clinton Foundation, the Biden Foundation, the Obama Foundation, the Beau Biden Foundation, the TomKat Charitable Trust (belonging to Tom Steyer and his wife Katherine) the Bloomberg Foundation, the Open Society Foundations (belonging to George Soros), the Bill and Melinda Gates Foundation, the Paul and Nancy Charitable Foundation or even the Trump Foundation. They all exist primarily as tax shelters and/or slush funds. Some, admittedly, do have more of their money go to legitimate charity than others but none should be considered selfless charities rather than self-interested legal loopholes. Until society acknowledges greater transparency from foundations and possibly rethinks their tax-exempt status entirely (or at least makes it far more conditional) they will be vehicles for corruption and illegality.
The title of philanthropist is enormously useful for deflecting negative attention. No matter how corrupt the foundation, the owner of the corporation gets the social accolades of being a philanthropist. The list of supposed philanthropists contains such odious individuals as Jeffrey Epstein, Ghislaine Maxwell, Peter Nygard, Harvey Weinstein, The Sackler family, and Kevin Spacey. While all of these figures eventually had a fall from grace, it took them committing crimes far more horrible and brazen than anything most people could even dream of to do so. Some corruption mixed with genuine compassionate giving can be dismissed as the foibles of being an imperfect human. But when people commit acts this monstrous the value of the philanthropist label eventually falls to the wayside. Still, it acts as a shield against accusations of wrongdoing before the reality of the crimes is fully accepted in the minds of the public. This allows foundations to be used as useful public relations tools while also instruments of criminality at the same time.