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I am pretty sure this has never come cross your mind. But in theory, in fact IKEA is a charity organization. How come???



1) What makes IKEA a charity organization?
In fact, IKEA founder, Kamprad doesn't technically own IKEA any more. In 1982, his ownership stake in the company was given to the newly formed Stichting Ingka Foundation, a Dutch charity. The foundation in turn administers the stores through Ingka Holdings, a wholly owned subsidiary that operates as a for-profit company.With an estimated endowment of over $36 billion in 2006, the Stichting Ingka Foundation is arguably the world’s largest charity. The charity’s stated goal is “to promote and support innovation in the field of architectural and interior design”,  surely a noble aim, but it’s unclear how generous its support is. It’s been confirmed that the foundation has given 1.7 million Euros a year to Sweden’s Lund Institute of Technology for some time, but even that amount seems fairly tightfisted in light of its gigantic endowment.


2) So what is going on here? Is IKEA actually a non-profit organization?
The answer is yes. All of this sounds pretty clever, but if the stores are all owned by a charity, how can Kamprad and his family make any cash off of them? Maybe he’s doing all this out of the goodness of his heart after all, right? The company’s been just as clever in that regard, too. If the Stichting Ingka Foundation is really just a giant piggy bank, it’s got a rather sizable hole in it. While the charitable foundation owns the IKEA stores, it doesn’t own the IKEA trademark or concept. These items belong to Inter IKEA Systems, a private, for-profit Dutch company. Inter IKEA Systems collects hefty franchise fees from each IKEA store; according to The Economist, these fees amounted to 631 million euros in 2004. However, thanks to a convoluted multi-national system of ownership here, too, the company ended up paying a scant 19 million euros in taxes on this huge sum.
It would seem that the entire charitable foundation is a clever, if dubious, way for IKEA to avoid paying taxes. In 2004, the company pulled in a 1.4 billion euro profit, but since it’s owned by a tax-exempt charity, it didn’t pay a dime. Moreover, the Byzantine structure of for-profit holding companies nestled within non-profit charities effectively safeguards Kamprad from any sort of outside takeover bids for his housewares behemoth. 




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