Page 106 - Social Enterprise A New Business Paradigm for Thailand

foundations is to distribute grants, including scholarships, to individuals and organizations.
However, they may also implement charitable programs directly.

In 1914, Frederick H. Goff, a prominent banker, pioneered the establishment of a foundation

funded through public or community donations. This type of foundation is commonly referred to
as a “community foundation,” “public foundation,” or “public charity.” The assets of public
foundations are typically derived from donations made by a broad range of contributors, including
individuals, government agencies, corporations, and even private foundations.

Public foundations differ from private foundations in their governance structures. They are
generally overseen by a board composed of local stakeholders, offering a higher level of
transparency and public accountability. In contrast, private foundations are typically controlled
by individuals or families, who retain full authority over the foundation’s management and use of

assets. Examples of well-known public foundations include the Make-A-Wish Foundation and the
Susan G. Komen Foundation. High tax rates have played a significant role in encouraging wealthy
individuals to establish foundations as a means of reducing their tax burden, which in turn has
contributed to the development of the civil society sector and the growth of social enterprises in
the U.S.

Private foundations have long enjoyed property tax exemptions, a practice dating back to the
period when the United States was still a British colony. They were also granted income tax
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exemptions beginning in 1894, when Congress passed the first federal income tax law. However,
after World War II, income tax rates in the U.S. rose sharply. Notably, in 1944, the top marginal
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income tax rate reached 94%, one of the highest in American history. These elevated rates
remained in place through 1963, before beginning to gradually decline starting in 1964. Even now,
U.S. income tax rates remain relatively high, ranging between 30% and 40%, making tax-exempt
charitable foundations an appealing instrument for philanthropy among high-net-worth
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individuals. The U.S. government has long been aware of the issue of foundations being used as
a tool to avoid tax obligations. During the presidency of Harry S. Truman, efforts were made to

tighten the legal framework surrounding the establishment and operation of foundations.
However, it was not until 1969 that a significant legislative step was taken, with the enactment of

54 Act of August 15, 1894, Section 32, 28 Stat. 533, c.349; อ้างใน William H. Smith and Carolyn P. Chiechi, Private
Foundations,
Before and After the Tax Reform Act of 1969, The American Enterprise Institute for Public Policy Research,
Washington, D.C.,
1974, p. 10.
55 Wolters Kluwer, Historical Income Tax Rates, Source: https://www.wolterskluwer.com/en/expert-insights/whole-
ball-of-tax-
historical-income-tax-rates, December 30, 2022.
56 Ibid,
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