The Ingka Holding company owns and operates most of IKEA's 301 blue-and-yellow warehouse-style stores and is, in turn, owned by Stichting INGKA Foundation, a Dutch-registered charity. Officially dedicated to promoting "innovations in the field of architectural and interior design," the foundation has been deemed an "Institution for General Benefit" by the Dutch Tax Service. This means it and all its assets and earnings are largely tax-exempt.
IKEA's Corporate Structure
In 2006 The Economist ran an article detailing IKEA's unusual organization and Stichting INGKA Foundation assets. Using sales figures for Ingka Holding from 2004, the last year they were made available, The Economist calculated that the company had post-tax profits of around $1.7 billion. IKEA has no real global competitors, so Target was chosen as the closest equal and its price/earnings ratio was used approximate a valuation of the foundation's assets. The Economist estimated that the IKEA foundation was worth about $36 billion, which made it richer than the $35 billion Bill & Melinda Gates Foundation.
Why Is IKEA Owned by a Foundation?
Many have obviously wondered why IKEA, a global company earning billions of dollars, is allowed this situation. It pays almost no taxes and has to disclose virtually nothing about itself, making The Economist's financial calculations very difficult indeed. Apart from tax reasons, the foundation's ownership makes it nearly impossible for a takeover of the eponymous home-furnishing chain. This is because the founding Kamprad family has kept firm control of the foundation's board.
IKEA Foundation Charitable Giving
Though officially a nonprofit, Stichting INGKA Foundation and the affiliated Stichting IKEA Foundation do very little philanthropic giving. One of the few grants reported in recent years was a $1.7 million grant in 2004 to the Lund Institute of Technology, a 7,000-student technical school in Sweden. That compares poorly with the billions given away each year by the Bill & Melinda Gates Foundation.
Even hurting with the recession – Gates acknowledged in a public letter that the foundation has lost one-fifth of its value, or about $7.5 billion – the Bill & Melinda Gates Foundation has earmarked $3.8 billion for 2009. This represents about seven percent of the foundation's assets.
IKEA Foundation Might Start Giving More
Recently, Torbjörn Sköld, a lawyer and member of the five-person executive board of the Stichting INGKA Foundation, told Agence France Presse that founder Ingvar Kamprad "wants to open the foundation to do more." This is surely a hopeful sign that the IKEA foundation's billions will be put to better use. However, according to The Economist, the foundation's articles of association ensure that its mission – "innovations in the field of architectural and interior design" – cannot be amended.
References:
"Flat-pack accounting." The Economist. May 11 2006.
2009 Annual Letter from Bill Gates: The Economic Crisis
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