mental_floss magazine
SUBSCRIBE >
GIFT SUBSCRIPTIONS >
DIGITAL SUBSCRIPTIONS >
subscriber services >
If it’s possible to assemble a piece of IKEA furniture without cursing at the top of your lungs, I’ve never seen it happen. There’s always a missing piece of hardware, an unclear spot on the instructions, or an excruciating amount of hex wrenching to be done. The next time you ball your fists mid-assembly and curse all things Swedish, though, try to calm down. After all, IKEA’s just another charity trying to get by.
Wait, what? You read that correctly; IKEA’s technically a charity. But before you write down the umlaut-riddled name of your most recent dresser purchase as a charitable donation on your next tax return, it’s worth exploring this ownership structure, which was brought to light by a 2006 article in The Economist.
Ingvar Kamprad founded IKEA in Almhult, Sweden in 1943 when he was just 17 years old. Kamprad originally sold low-priced consumer goods from his home and by mail, but added a furniture line in 1948. As the company began opening its trademark sprawling stores, Kamprad grew fabulously wealthy, although he retained frugal tastes like driving an aging Volvo and always flying economy class. By some debated estimates, Kamprad is the world’s richest man, and even Forbes’ more conservative accounting pegs him as the seventh-richest person in the world with a net worth in the neighborhood of $31 billion.
Why can’t anyone agree on how much Kamprad’s worth? Well, for one he doesn’t technically own IKEA anymore. 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. In other words, if you’re an aspiring architect waiting for some financial support from IKEA, you’re probably better off getting a job as a cashier at one of their stores than hoping for a grant.
So what’s going on here? 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. The five-member board of the foundation, which is headed by Kamprad, is the de facto management for all of the IKEA stores.
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.
Who owns Inter IKEA Systems and its maze of parent companies? Nobody knows. Since they’re private companies incorporated in various locations, their ownership is kept secret, and IKEA’s certainly not about to spill the beans. It would seem reasonable to suggest that Kamprad probably owns it.
Should we really be surprised, though? These are the same people who can make a dresser that weighs just ten pounds, fits in a box the size of a deck of cards, and sells for four dollars. Just remember, when you scarf down a two-dollar plate of Swedish meatballs after buying furniture, you shouldn’t feel ashamed for pigging out. Instead, hold your head up high and know that you’ve made your contribution to charity today. (Wait, you have some sauce on your chin. You’ll probably want to wipe that off first.)
Comments (35)
Comment
Ummm…putting together furniture isn’t that hard, it may be frustrating but I don’t understand the level of complaining…also, whenever I have put together IKEA furniture I have never been missing a piece.
posted by Kevin on 5-6-2008 at 10:59 am
Kevin must work for IKEA…
posted by Lauren on 5-6-2008 at 11:03 am
Not related to the article, but I pretty much hate the new layout.
posted by Konstantine on 5-6-2008 at 11:05 am
Another thing they do with those profits: provide health care benefits for every employee, no matter how many hours they work. Including dental, life, and mental health. I am a former IKEA cashier, which was career #36 in the last 10 years (done a lot of temping) and it was the best gig I’ve had.
posted by Mary Sue on 5-6-2008 at 11:12 am
I am with Konstantine – I liked the old layout better. Just FYI.
posted by Sarah on 5-6-2008 at 12:49 pm
Nobody works at IKEA, you just follow the yellow brick road around and around and then you leave through the back.
I just think it is weird how everyone complains about that store. You have to put it together because that’s the reason you were able to buy it for so cheap. It’s not a big deal.
By the way I don’t think that if I did work at IKEA that I would somehow feel the need to defend it. Haha.
posted by Kevin on 5-6-2008 at 12:56 pm
Also, I would like to be the third vote against the new website layout.
posted by Kevin on 5-6-2008 at 12:59 pm
It’s frustrating to put together any kind of furniture, but IKEA furniture is doubly difficult. Maybe Kevin is some kind of furniture whiz kid and we just don’t know it.
I like the new layout. At first I was reluctant, but now that i’ve embraced it, I like it a lot better. The color of the box on the top weirds me out though. Maybe if it had lines or something in it, instead of being just a big white box. Or in some other color?
But I do like how I can see the new stuff all categorized. This way I don’t miss things just cause I don’t check the website every second.
posted by Julia on 5-6-2008 at 1:16 pm
This is funny, I spoke with several people at lunch about this and they were all of the opinion that their furniture was by far the easiest to put together. I mentioned that I had never had missing parts and one of my co-workers had had missing parts but he said that you just go to the store and they have all the small parts behind the counter and they just hand you whatever you need. Why would you buy furniture from there if it is SO RIDICULOUSLY difficult to put together?
posted by Kevin on 5-6-2008 at 1:39 pm
4th vote- go back to the old layout!
posted by jzimm on 5-6-2008 at 2:04 pm
I agree that Ikea furniture is easy to put together, and I Love it, and most of it is actually decent quality compared to “Jysk” (a knock off company that tries to be like Ikea but on a smaller scale). I have lots of Ikea I bought 20 years ago that is still in excellent shape and I constructed it myself……my Jysk from 3 years ago s already falling apart!
posted by sandie on 5-6-2008 at 2:11 pm
OT– i don’t like the new layout especially, either, but that’s because i’m not used to it. like anything, after a bit, i’ll figure out how it all works and it’ll be okay.
posted by shelly on 5-6-2008 at 2:25 pm
I like IKEA for small stuff, like tea lights, plates and utensils, etc. But I will never buy any furniture from them again. Of the 3 that I did buy, ALL were missing pieces and 2 broke after less than 6 months.
As for the new layout, I like it as well as the old one. But since i come here for the content and not the presentation, it really doesn’t matter.
:-)
posted by Sheldon Siegel on 5-6-2008 at 2:46 pm
I love IKEA! It’s awesome. Where else can you have a good breakfast for a couple of bucks, “follow the yellow brick road” as Kevin said, have Swedish meatballs for lunch, and buy an entire room full of furniture that’ll fit in your minivan? BTW, when I actually went to IKEA, I didn’t need much furniture (just a chaise)but I did buy all kinds of Swedish food. I’m the only person I know who went to a furniture store and spent more on food than furniture. The chaise took my hubby about ten minutes to put together. We’ve had it for several years and it’s still as sturdy as the day we got it.
posted by kani on 5-6-2008 at 4:16 pm
I am expecting my first baby and we bought all of the furniture for his room in the ATL store. About 5 pieces of furniture. My husband and I assembled all of it with minor frustrations. It came down to paying attention to what we were doing and reading the instuctions for assembly. We weren’t missing anything. I didn’t know the background of the store, and I find this article interesting.
posted by Denise on 5-6-2008 at 4:30 pm
Apparently, the true brilliance of IKEA is how they get you to ignore their dubious financial arrangements by forcing you to focus on putting together their furniture.
posted by Sophie on 5-6-2008 at 5:57 pm
Love love love IKEA.
With the previous 4 people: hate the layout
posted by Amanda on 5-6-2008 at 7:05 pm
I’m not too keen on most Ikea furniture because the style isn’t my thing, but I do buy some of their products, especially office-related furniture. Like Kevin, I’ve never had a missing piece. I’ve also never had broken pieces or problems assembling anything. In fact, when it comes to assemble-it-yourself products, I think Ikea is fantastic. Most companies use the wrong fasteners for the materials they design with. I love the fact that Ikea’s designers almost always come up with excellent fastener solutions.
Now if they could just broaden their style selection, I’d contribute a lot more to their charitable organization. Huh? Okay, so I am now tentatively unhappy about this huge organization not paying its fair share of taxes. Yes, I do recognize that Trex hasn’t provided even a single reference supporting his assertions, hence the “tentative” :-(
And FWIW, I don’t work for Ikea either.
posted by Kerry on 5-6-2008 at 9:52 pm
HATE THE LAYOUT! Looks virtually the same as cnn. i hated when they changed also! grrrrr.
posted by MJ on 5-7-2008 at 3:24 am
New layout is great. Keep it!!! :D
posted by Frep on 5-8-2008 at 9:51 am
They have a IKEA at Cyprus now, well cool.
posted by Paintworkz Web Design on 5-8-2008 at 10:26 am
Is IKEA the Worlds Largest Charity? | politikly.com…
\r\nYou read that correctly; IKEAs technically a charity. But before you write down the umlaut-riddl…
posted by politikly.com | politics and world news on 5-8-2008 at 10:58 am
I’ve never had a problem with missing pieces at IKEA either.
I do notice that a lot of people who put the stuff together fail to tighten things sufficiently. If you don’t tighten properly, then the furniture will wobble under weight, which will widen the holes around the pegs and bolts, which will weaken the whole thing, and eventually it will split or fall apart. Tighten everything properly and it generally lasts a long time.
The ownership structure info, if true, is disturbing. Despite the convenience of the store and its furniture, I’m not interested in supporting a company that fails to pay its share of taxes. If I’m paying mine, I want them to pay theirs.
posted by Miguel on 5-8-2008 at 11:23 am
I have also never had a problem putting together anything from IKEA, and my entire home was pretty much furnished through them…but as a Swede, i think it may be genetic…
posted by Matt on 5-8-2008 at 11:38 am
I’ve been buying stuff at IKEA for years (shelves, silverware, towels, desks, chairs….) and never had a missing part. And while it’s sometimes difficult to figure out part of the assembly, there’s no need to be a rocket scientist or “whiz kid” either.
Some of their cheapest pieces of furniture don’t last long, but I guess you get what you paid for.
I like the new layout, very clean.
posted by Philippe M on 5-8-2008 at 11:38 am
As a Swede I have to defend IKEA. They think different and I love it.
For example, they sell umbrellas at the cash register. The price goes DOWN if it’s raining outside. Common sense says that this is a bad move if you want to make money. Think again.
Check this link. tinyurl.com/ylomuu
posted by David on 5-8-2008 at 12:35 pm
IKEA has proven to be the leader in their field. Putting their products together is simple, fast and efficient. They usually include spare parts just as a precaution, though more often than not, the parts list is complete. Their instructions are suited for an international audience and prove to be coherent for most every country. If you can understand a simple picture, you can understand the instructions.
posted by IKEA customer on 5-8-2008 at 12:36 pm
I bought a towel at IKEA once and several parts of it were missing. The same with some forks. Go figure.
posted by DominusOminous on 5-8-2008 at 1:52 pm
Ok am I missing the point, or is everyone else?
Ikea is running one of the biggest financial scams on the planet, getting away with tens of millions of (insert favorite currency here) in unpaid taxes, and you idiots are concerned about whether the writer’s quip in the first paragraph against said Swedish furniture manufacturer is accurate!?
I guess large corporations are so insanely corrupt nowadays that this sort of behavior is expected? (I know that’s not really a question, I’m just shocked, at the world for allowing this practice, and at myself for being so shocked [hmm... recursive auto-shock]).
I’m not a major fan of government (well, none of the current governments at least. I’m sure government is a good idea on some level, just not the one we’re currently on.) but I at least believe that we should all pay our admission price, especially if you are a company/corporation and definitely if you’re a church.
So what’s the bigger sin? Mass tax evasion, or possibly dodgy furniture? I just can’t decide.
posted by Augur on 5-8-2008 at 3:25 pm
Here here, Aurgur. Stick to the point, people.
This seems to be another example of how corporations can so easily outgun legislators when it comes to dodging taxes.
posted by Felix on 5-8-2008 at 4:51 pm
The Economist wrote an exaustive article about this back in 06.
Do a google search for “Flat Pack Accounting” (article name) from May 2006.
FWIW – I’m convinced they are the best magazine out there :)
posted by Kevin Higgins on 5-8-2008 at 5:01 pm
It is fun to see people discuss how easy or difficult it is to put it together, or how much the new layout sucks, while they dont really discuss that ikea chose to avoid paying tax.
I think we all as taxpayers should do the same.
posted by markus on 5-9-2008 at 6:17 am
Jeepers, I’ve never screamed when constructing an Ikea article, from the Poang to the Magikar. Like notches on a belt, every one of their allen keys I’ve ever received is mounted on a long piece of local native timber to demonstrate just how many of their items i’ve painlessly put together.
I considered sewing them to the trademark blue bag like scout merit badges.. but that’s just too geeky for even this self-confessed Ikea nut.
posted by Michael on 5-9-2008 at 7:49 am
My mom is an ER nurse for Kaiser and the hospital is technically a charity (Kaiser Foundation) while the clinics are regular for-profit organizations.
posted by Sarah in CA (formerly just Sarah) on 1-23-2009 at 1:30 pm
When living in the far east, I built an entire houseful of IKEA furniture with absolutely no trouble. The instructions were clear and there was never a piece missing. If you have problems, the fault lies with your incompetence.
posted by Jan on 4-18-2009 at 1:47 pm