I'm now curious how this all works in practice.
https://en.wikipedia.org/wiki/Robert_Bosch_GmbH#Corporate_af...
I like this part of the results:
> For example, in 2004, the net profit was US$2.1 billion, but only US$78 million was distributed as dividends to shareholders. Of that figure, US$72 million was distributed to the charitable foundation, and the other US$6 million to Bosch family stockholders. The remaining 96% of the profits were invested back into the company. In its core automotive technology business, Bosch invests 9% of its revenue on research and development, nearly double the industry average of 4.7%.
I was told however, that nowadays, due to a lot of acquisitions it's really hard to tell what kind of quality you get when it says Bosch on the box.
[0] https://www.bosch.com/stories/origin-robert-bosch-stiftung/
too bad that despite that they still decided to help vw fudge the emissions tests numbers
Neither private nor public businesses have to put profit maximization above all else. It's entirely a myth that that is a legal requirement or responsibility.
That is especially the case for private companies (ie most businesses), which further do not typically have the pressure of huge numbers of shareholders or large institutional investors / funds.
Sometimes one might wish a company would actually focus on sustainable profitability, not just on the short-term appearance of profitability. You'll routinely find incompetent management that does a poor job of focusing on sustainable profitability at all, and the business always suffers for it. From IBM to GE. Instead, their management put a focus on financial engineering - creating a conveniently expedient fake profile of profitability, while the bottom rotted out from under them.
Berkshire Hathaway by contrast - a $500 billion company - has openly pointed out to shareholders for 40-50 years now that they had no intention of pursuing a strategy focused on merely maximizing profit above all else. Simultaneously they have one of the greatest records of the last ~200 years for business performance. Berkshire knows the winning formula is to focus on the long-term and focus on having healthy businesses (which always means not only focusing on profitability), that the opposite is like a high sugar diet, maybe a bit of fun in the short run, and it'll kill you in the long run.
Most businesses that last a very long time and generate great returns operate more like Berkshire Hathaway, rather than the opposite (and certainly during their heyday they do, which may provide fuel to last a long time even as they rot). There are a seeming infinite number of ways a major corporation can try to focus on profitability at the expense of all else, and that's always a mistake. Smart, long-term thinking managers know that. If you find a company that actually focuses on profitability above all else, sell and don't look back, it won't end well; it never does. Focusing on profitability above all else means paying all of your best employees very poorly, which means you'll always be starved for talent and your business will fail given time.
There is a large amount of nuance involved in operating a for-profit business. Choosing to focus on the long-term vs short-term, financial engineering vs investing for the future, sacrificing shorter-term profits for a healthier longer-term business. The best businesses typically focus on the longer-term, not the shorter-term, and do not focus just on how they can blow out quarterly earnings or max out their profits here and now (inevitably that catches up with the business, and it all implodes).
I'm no expert on German stiftungs, but I tend to think of foundations as a subset of charities and that "not charity" wouldn't be quite right.
What makes you think they don't?
Edit: a more proof version is to put the 1% into another entity like a C-corp or a trust that you control. Estate planners have a field day dreaming up these schemes.
A bankruptcy judge would not hesitate to void this clause if those shares were being transferred by virtue of bankruptcy seizure.
The shares immediately loose all voting rights in that process.
The reason is to prevent a potentially hostile party from entering the shareholder group.
Edit: Here’s a better reference with an example what such a clause in the companies charter could look like: https://gmbhg.kommentar.de/Abschnitt-2/Einziehung-von-Gescha...
Seriously, look at their 'project list,' a film award is #2!
I'm looking at their financial report for the year 2019 and that's just not true. They are a very complex organization and simply looking at one film award project and calling the whole thing a scam is very wrong and frankly lazy.
Personnel and other operating expenses attributable to administration + Financial expenses, depreciation and amortization, and changes in provisions
and you're just cool with that?
It may not be charity, but at least it’s stable.
The Wittelsbacher family got of easier so, than the Habsburg rulers (they lost everything, Austria even went so far to abolish every single noble title) and the Hohenzollern of Prussia. I guess it helps not being in the main crosshairs of the Entente back then.
All this is to say that the broader public seems to be more efficiently entrepreneurially (in terms of creating new wealth) than what is achieved by hereditary wealth. Hereditary wealth transfer already has a huge leg up through social and educational networks and educational “legacy” that backstopping through actual wealth transfer on top of that doesn’t seem great for society as a whole.
On the other hand, if you have some data to indicate that children of entrepreneurs are better capable at starting new businesses than the general public I’m certainly interested to see that. My understanding above is a synthesis from studies I’ve come across and the general concept of reversion to the mean (eg the most unique individuals in any field/specialty you could name generally pop up spontaneously in the general population rather than consistently being overrepresented in a lineage). This makes sense for the survival of the species too- you want diversity so that you don’t overfit a given ecosystem and become hypersensitive to those conditions remaining true.
Like I’m sure all the black business owners in Tulsa would have loved to do the same for their grandchildren, but were systematically denied that opportunity. Why should we go so far out of our way to support the will of certain dead people but not all of them?
We need generational wealth in the country. For people who are in top .01% they should have a wealth tax but for those in the top 1% and below they should be able to make sure future generations can have a chance to be successful.
Taxing those ill-gotten gains and improving the welfare state would probably be a more just outcome, no?
I wonder if the Bill & Melinda Gates Foundation has the same criticisms?
I mean, the arts are something I support, because it is something I can afford. If I had more money, Id probably want to try harder to make a difference.
That's just my opinion, though. I'm happy they are doing something rather than nothing.
The Bosch family is not involved. I only notice them via public news essentially.
It is nice to know that a big part of our profits goes into a charitable foundation instead of faceless stock holders.
Not being a public company means nobody cares about quarterly results. There is rather a yearly rhythm. The downside is that Bosch cannot get big cash infusions quickly. In case of a pandemic, this is an additional risk. Worked out though.
And this is why I like Bosch so much (as an employee for a very similar amount of time). The working climate in most places is relaxed compared to most competitors and there's less focus on looking great in random metrics every quarter, which makes actually doing your work easier.
> The downside is that Bosch cannot get big cash infusions quickly. In case of a pandemic, this is an additional risk. Worked out though.
Yep, it actually worked out much better than anticipated. They were able to generate a free cash flow of 5 billion Euro. AFAIK that was mainly because Bosch has a very good reputation of being financially stable. (Here is the source in corporate speech https://www.bosch-presse.de/pressportal/de/en/bosch-stays-on...)
Btw, I remember your nickname from your lobsters post about software architecture. Pretty cool to see fellow Boschlers active here or on lobsters!
The Stiftung has no voting rights, however. Its voting rights are with a KG entity, which in turn has no ownership in the operative auto supplier entity.
The Stiftung receives a share of the auto supplier entity profit every year. Both entities operate separately, with the Stiftung pursuing various focus areas in healthcare, education, etc. The Stiftung also has a separate board whose mandate it is to execute on the Stiftung’s mission. It has nothing to do with making operative decisions at the auto supplier.
In 2020, the auto supplier paid approx 50% of its pretax profit in taxes.
The Carlsberg Foundation spends its proceeds from Carlsberg on funding science and arts, so if you want to drink beer with a good conscience…