Dead billionaires whose foundations are thriving today can thank Henry VIII and Elizabeth I

Henry VIII ruled England from 1509 to 1547. The Metropolitan Museum of Art^[18]

The Rule Against Perpetuities developed in response to political upheaval in the 1530s^[19]. The old feudal law made it almost impossible for most properties to be sold, foreclosed upon or have their ownership changed in any way.

At the time, a small number of people and the Catholic Church controlled most of the wealth in England^[20]. Henry VIII wanted to end this practice because it was difficult to tax property that never transferred, and property owners were mostly unaccountable to England’s monarchy. This encouraged fraud and led to a consolidation of wealth that threatened the king’s power^[21].

As he sought to sever England’s ties to the Catholic Church^[22], Henry had one eye on changing religious doctrine so he could divorce Catherine of Aragon, and the other on all the property that would become available when he booted out the church.

After splitting with the church and securing his divorce, he enacted a new property system^[23] giving the British monarchy a lot more power over wealth and used that power to seize property. Most of the property the king first took belonged to the church, but all property interests were more vulnerable under the new law^[24].

Henry’s power grab angered the wealthy gentry, who launched a violent uprising known as the “Pilgrimage of Grace^[25].”

After quelling that upheaval, Henry compromised by allowing the transfer of property^[26] from one generation to the next, but did not allow people to tell others how to use their property after they died. The courts later developed the Rule Against Perpetuities to allow people to transfer property to their children when they turned 21 years old.

At the same time, wealthy Englishmen were encouraged to give large sums of money and property to help the poor^[27]. Some of these funds had strings attached for longer than the 21 years.

Elizabeth I codified the rule

Elizabeth I^[28], Henry VIII’s daughter with his ill-fated wife Anne Boleyn, became queen after his death. She used her reign to codify that previously informal charitable exception. By then it was the 1590s – a tough time for England, due to two wars, a pandemic, inflation and famine^[29]. Queen Elizabeth needed to prevent unrest without raising taxes^[30] even further than she already had.

Queen Elizabeth I ruled England from 1558 to 1603. The Metropolitan Museum of Art^[31]

Elizabeth’s solution was a new law decreed in 1601. Known as the “Statute of Charitable Uses^[32],” it encouraged the wealthy to make big charitable donations and gave courts the power to enforce the terms of the gifts.

The monarchy believed that partnering with charities^[33] would ease the burdens of the state to aid the poor.

This concept remains popular^[34] today, especially among conservatives in the U.S. and U.K.

The charitable exception today

When the U.S. broke away from Great Britain and became an independent country, it wasn’t always certain that it would stick with the charitable exception.

Some states initially rejected British law^[35], but by the early 19th century every state in the U.S. had adopted the Rule Against Perpetuities^[36].

In the late 1800s, scholars started debating the value of the Rule Against Perpetuities^[37], even as large foundations took advantage of Elizabeth’s philanthropy loophole^[38]. As of 2022, my co-authors and I had found that 40 U.S. states have ended or limited the rule^[39] and that every jurisdiction, including the District of Columbia, permits eternal control over donations.

Although this legal precept has endured, many scholars^[40], charities^[41] and philanthropists^[42] question^[43] whether it makes sense^[44] to let foundations hang onto massive endowments with the goal of operating in the future in accordance with the wishes of a long-gone donor rather than spend that money to meet society’s needs today.

With such issues as climate change, spending more now could significantly decrease^[45] what it will cost later to resolve the problem.

Still other problems require change that is more likely to come from smaller nonprofits. In one example, many long-running foundations, including the Ford, Carnegie and Kellogg foundations^[46], contributed large sums to help Flint, Michigan, after a shift in water supply brought lead in the tap water to poisonous levels. Some scholars argue this money undermined local community groups^[47] that better understood the needs of Flint’s residents.

Another argument is more philosophical: Why should dead billionaires get credit for helping to solve contemporary problems through the foundations bearing their names? This question often leads to a debate over whether history is being rewritten^[48] in ways that emphasize their philanthropy over the sometimes questionable ways that they secured their wealth.

Some of those very rich people who started massive foundations were racist^[49] and antisemitic^[50]. Does their use of this rule that’s been around for hundreds of years give them the right to influence how Americans solve 21st-century problems?

Authors: Nuri Heckler, Assistant Professor of Public Administration, University of Nebraska Omaha

Read more https://theconversation.com/dead-billionaires-whose-foundations-are-thriving-today-can-thank-henry-viii-and-elizabeth-i-194962

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