From “Principles of Public Giving.” Rosenwald, who became a partner in Sears, Roebuck & Co. in 1895, chartered the Julius Rosenwald Fund in 1917 “for the well-being of mankind.” After stepping down as president of Sears in 1924, Rosenwald dedicated his life to philanthropy, particularly in African American communities, establishing five thousand “Rosenwald schools” throughout the South and giving many grants to black artists and writers. The fund was not designed to last in perpetuity, and it was depleted in 1948.
When I was a boy in Springfield, Illinois, the covered wagons, westward bound, rolled past our door. The road ahead was long and full of hardships for the pioneers. They were hardy and self-reliant men and women, but many of them were so inadequately equipped that if misfortune overtook them, as it frequently did, they were almost certainly doomed to suffering, and perhaps death.
The worst hardships and dangers of the Western trail had passed in my boyhood, but there was still use then for the Bryan Mullanphy fund, established in 1851 for “worthy and distressed travelers and emigrants passing through St. Louis to settle for a home in the West.” A few years later the trustees could with difficulty find anyone to whom the proceeds of the fund might be given. Some years ago, for lack of beneficiaries, the income had piled up until the fund totaled a million dollars. I have not followed its later fortunes, but, unless the courts have authorized a change in the will, that money is still accumulating, and will accumulate indefinitely. The Mullanphy gift was a godsend in its brief day. The man who gave it found one of the most urgent needs of his time and filled that need precisely. He made only one mistake: he focused his gift too sharply. He forgot that time passes and nothing—not even the crying needs of his era—endures. He deserves to be remembered as a generous-hearted man who realized, perhaps better than anyone else in his generation, that a wealth of pioneer blood and energy was being dissipated in the creation of our American empire. If he is remembered at all, it is more likely as the creator of a perpetuity that lost its usefulness almost as soon as it was established.
Neptune Offering Gifts to Venice, by Giovanni Battista Tiepolo, c. 1757. © Palazzo Ducale, Venice, Italy/Bridgeman Images
I am opposed to gifts in perpetuity for any purpose. I do not advocate profligate spending of principal. That is not the true alternative to perpetuities. I advocate the gift which provides that the trustees may spend a small portion of the capital—say, not to exceed 5 to 10 percent—in any one year in addition to the income if in their judgment there is good use at hand for the additional sums. Men who argue that permission to spend principal will lead to profligate spending do not know the temper of trustees and the sense of responsibility they feel toward funds entrusted to them, nor do they appreciate the real difficulties which face donors and trustees of foundations in finding objects worthy of support. I am prepared to say that some of the keenest minds in this country are employed by foundations and universities in seeking such objects; yet, when a real need is discovered, it often cannot be met adequately, simply because of restrictions placed on funds in hand.
I am certain that those who seek by perpetuities to create for themselves a kind of immortality on earth will fail, if only because no institution and no foundation can live forever. If some men are remembered years and centuries after the death of the last of their contemporaries, it is not because of endowments they created. The names of Harvard, Yale, Bodley, and Smithson, to be sure, are still on men’s lips, but the names are now not those of men but of institutions. If any of these men strove for everlasting remembrance, they must feel kinship with Nesselrode, who lived a diplomat, but is immortal as a pudding.