Of Quakers and Corporations

Author(s): 
Department: 

George Fox and the early Quakers made their witnesses to authentic and original Christianity public by their testimonies. The English word, testimony, derives from the Latin word for “witness,” which is primarily an outward expression “to the whole world … actions and words, intended to proclaim, demonstrate and convince” (from The Quaker Peace Testimony, Friends House, London, 1993).

I left the Catholic Church with my wife Genie in 1980 because it emphasized dogma, authority, hierarchy, and male priesthood. We found Quaker theology and spirituality to be more consistent with Jesus’s teachings as originally constituted. But we found it difficult to leave behind the most valuable parts of Catholicism – exemplified by the Catholic Worker and Catholic Peace Movement – which seek to witness for social justice directly, outside the legal and economic governmental structures of corporate privileges.

Quakers conduct witness for social justice based on their religious testimonies. Recently the American Friends Service Committee published “An Introduction to Quaker Testimonies” stating their work “is based on the testimonies of the Religious Society of Friends (Quakers),” as is the work of Quaker churches and meetings. They name these testimonies as Peace, Equality, Integrity (formerly Truth), Simplicity, Community and Stewardship. The AFSC pamphlet summarizes the general meaning of these testimonies, which emerged from the early Quaker witness. As an attorney and a theologian, my question today is this: Do the Quaker testimonies complement or conflict with American laws of incorporation and federal tax exempt privileges and obligations, which Quaker Yearly Meetings, churches, and various nonprofit organizations willingly and perhaps unquestioningly adopt as their own? When placed side by side, they appear to me to be in conflict

We live in a different Quaker milieu than early Friends did. “Being comfortable” is now readily given as a prerequisite to decision making among Friends. So it is not surprising that when given the chance to accept preferential treatment from the government and join the great world of corporate enterprises, we see no problems with that, joining the rest of pragmatic America. We overlook the inequality and complicity intrinsic to corporate structures, which are defined in fictitious and untruthful ways, thus lacking the essence of integrity.

Some say that the institution of incorporation was originally created as an act of freedom from monarchial control. Others say that it was to finance war by generating pools of money in exchange for privileges to communities of individuals. This is especially evident in the conquests of seventeenth century Great Britain and later nationalist expansions (Ferguson, The Ascent of Money (2008), pp. 127-138). The policy established was essentially, “We cannot make war without trade, nor trade without war.” If the corporation’s original purpose was  to serve people, it has now become a political/economic tool of the government and the military, and a weapon of the top one percent.

The corporate way is anchored in the secular capitalist value of egoism. In economic terms, egoism highlights self-interest. Adam Smith, the father of capitalism, states clearly that:

It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own self-interest. We address ourselves not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. Nobody but a beggar chooses to depend chiefly upon the benevolence of his fellow citizens. (The Wealth of Nations, Book 1, Chapter 8)

How is this philosophy exemplified in American law? Our economic system mandates that commercial corporations should maximize their profits over everything else. Most economists preach that ethical values have no relevance to positivist capitalist economics. Although Quakers do not necessarily incorporate to make a profit, they take on many of the characteristics that define the systematic power imbalances of incorporation in general – protection of land ownership and wealth. Moreover, American corporate law imparts a substantial privilege to corporate directors, namely, to free them from the legal consequences of negligent acts as individuals. Quaker testimonies, on the contrary, are grounded in personal responsibility for our acts.

I believe that religious persons, meetings, churches, and organizations – particularly Quakers – should forbear corporate privileges and thereby give witness to their testimonies instead. When giving tax-exempt privileges, the U.S. government reserves the power to determine who may be eligible for tax deductions and who may not. The criterion is what constitutes, under the tax Code, deductions that will “benefit the government.”  They are bestowed “for the convenience” of the government. Placing one’s church or meeting “under the care of the U.S. government,” as is required even for nonprofits, inhibits the free choice to practice one’s rights and duties of war tax resistance, conscientious objection, and civil disobedience. (For more information, check the Internet under “Should Churches Incorporate?”)

Quakers refused to have their meetings incorporated for at least 250 years. In fact, church members of all Christian denominations in the 18th and 19th Centuries steadfastly refused this privilege (and subjugation) on the basis that no church can be free and independent of any government that incorporates it. Not until 1811 did any religious organization attempt to incorporate in the United States. It was first tried by the new Episcopal Church with its strong connections to monarchial power abroad. President James Madison (whose wife Dolly was a Quaker) vetoed a bill that year that would have allowed religious incorporation, giving as his reason: “Because the Bill exceeds the rightful . . . distinction between Civil and Religious functions.” It wasn’t until 1898 that New Jersey became the first state to allow religious bodies to incorporate, and not until the mid-Twentieth Century did incorporation of church organizations become the status quo.

Quakers generally resisted incorporation until it became common.  Their reasons were well articulated by several Friends in the case of Stacy Decow and Joseph Hendrickson v. Thomas L. Shotwell (New Jersey Court of Appeals, Trenton, 1834). Said attorney Garrett Wall, “The Society of Friends has always refused to receive acts of incorporation . . . For this plain reason, acts of incorporation would take out of the hands of its members, the right to decide in regard to their fellow members.” Attorney George Wood added: “This Society is unincorporated [because] . . . Had they applied for an act of incorporation they must have submitted to the dictation of the government as to the terms of their union . . .” Finally, Attorney Samuel Southard said, “Our rights are not to be adjudged upon principles applicable to incorporation; we act as individuals, the property is common and joint.”

As a part of their movement towards reunification during the first half of the Twentieth Century, Quakers, led by Rufus Jones, took on the modern advantages and comfort perceived to be available through sophisticated, incorporated Quaker institutions. One such example was the Friends Fiduciary Fund, which under incorporation saw its responsibility to be towards its investors, a responsibility to be fulfilled by maximizing their profits, even though that economic responsibility might run counter to Quaker religious testimonies. This ultimately led to a situation exposed by the research of several young Quakers in 1987, revealing that the fund was invested at the time in Apartheid South Africa and multi-national weapons manufacturers. While those particular situations were eventually corrected, the fund remained vulnerable to conflicts between its corporate values and traditional Quaker values. (See S. Francis Nicholson, Quaker Money, Pendle Hill Pamphlets 290, 1990, p. 38.)  Not only can incorporation threaten to replace Quaker values with corporate values in Quaker institutions, incorporation can also result in increasing numbers of modern Friends becoming assimilated into the existing capitalist culture and accustoming themselves to its economic and legal tax benefits. Happily, in 2012 the Friends Fiduciary Fund was one of the first to divest itself of investments in two major corporations that benefit from the Israeli occupation of Palestine.

In March 2011, the annual meeting of the AFSC Corporation took place in Philadelphia. I am the Colorado representative to that organization. A central topic of that meeting was different ways that the corporation could be restructured. One of those ways would have eliminated AFSC’s corporate status, though not for the reasons discussed above. I raised the general issue of conflicts between our corporate status and our Quaker testimonies. The responses I received were interesting. One person said we need our corporate status “to protect our property.” Another said “it’s too late,” and a third said it’s just an “aphorism.”

There are other secular legal forms – besides incorporation – that would be more in conformity with Quaker testimonies, such as voluntary associations, partnerships, and cooperatives. These other forms of organization are not intrinsically in conflict with our testimonies, they protect individual and communitarian social responsibilities, and they relinquish less control to the government. Why not use those forms, rather than incorporation? (It is a fallacy that unincorporated groups cannot receive 501(c)(3) status.)

The U.S. government and business groups prefer incorporation over partnerships, cooperatives, or voluntary associations, because corporations are easier to control. By offering churches preferential benefits, the governmental encourages churches to comply with its priorities. The incentive for nonprofits to incorporate is created by the benefits of 501(c)(3) status. Corporations for profit can also take advantage of these benefits, by simply setting up their own non-profits for a variety of profit-maximization goals. A recent example is Whirlpool Corporation in Benton Harbor, Michigan, which set up a nonprofit to take advantage of a “cash-starved city and to tap into a stream of federal and state grant money.” At the same time, Whirlpool had “not paid any federal corporate income taxes in the U.S. for the last three years.”  (Mahler, “When All Else Fails,” New York Times Magazine, 12/18/11, p. 43.)

Of the various religious groups that I have founded or been a part of, three were never incorporated – the Catholic Worker, the Community for Creative Nonviolence, and the National Center on Law and Pacifism. Genie and I continue our membership in incorporated Quaker organizations because of the tremendous contributions that Quakers have made to the world. Nevertheless, we do not accept the benefits of incorporation or tax-exempt status ourselves. (Secular organizations follow secular values, so these religious and spiritual criticisms don’t necessarily apply to them.)

When one considers that there are other secular alternatives less intrusive upon our testimonies, such as voluntary associations or cooperatives, it seems to me that alignment with the multi-national corporate world is a serious secular step in the wrong spiritual direction for Quakers. Our witness has been to inform Quakers so that we are all in a position to make an informed choice and to act on that choice as we are led to do so. ~~~

Bill Durland is a lawyer who holds a doctorate in Religious and Political Philosophy. Over the years, he has been a member of the Philadelphia, New England and Intermountain Yearly Meetings, as well as a member of monthly meetings in Media, PA; Burlington, VT; Albuquerque, NM; and Colorado Springs, CO. His longer, unabridged version of this article is available upon request at: durlandwe@gmail.com.