Foundations see holdings swell in booming market Increased asset base enables larger grants, greater commitments; Wary eye on Wall Street

THE BALTIMORE SUN

The stock market boom that has fattened most everyone's IRA accounts has swelled the assets of Maryland's philanthropic foundations, giving them millions more dollars to distribute to schools, hospitals, and community and environmental groups.

The state's two largest private funds -- the Harry and Jeanette Weinberg Foundation and the Annie E. Casey Foundation -- have seen their holdings swell by hundreds of millions of dollars to well over $1 billion each in the past few years, and the value of their annual grants more than double to beyond $50 million each.

Others have seen their worth increase by 50 percent or more, according to public filings compiled by the Maryland attorney general's office. Most of that growth has come through stock market gains.

"It's been remarkable," said Timothy D. Armbruster, president of the Morris Goldseker Foundation, which grew from $49.5 million at the end of 1991 to $73.4 million at the end of 1996.

Last year, the foundation grew again, to $87.1 million, he said.

"When I first came to Baltimore [in 1979], our assets were about $10 million," Armbruster said.

Although many area foundation managers say they are making larger grants to nonprofits they have traditionally funded, others say their increased asset base is enabling them to make more long-term commitments and attempt to affect greater deep-seated change.

And while most say they have no trouble finding worthy causes, at least one foundation, established to aid students in rural Cecil County, acknowledges it is having trouble identifying enough recipients to allow it to meet federal rules on payouts. Those rules require foundations to give away roughly 5 percent of their assets each year, although they are allowed to average gifts out over a period of years.

Even as their assets have grown, area foundation managers are casting a wary eye on the stock market, aware that the pace of growth can't continue forever.

They have company in counterparts around the country. In 1996, the assets of U.S. foundations totaled $267.6 billion, a 65 percent jump over 1991, according to annual reports by the New York-based Foundation Center. Grants reached $13.8 billion, up 50 percent, the center said.

Individual grant recipients are reaping the benefits of the gains.

One is the Johns Hopkins University and Medical Institutions, a magnet for foundations nationally and locally.

In fiscal 1991, Hopkins received $29 million in foundation support; in fiscal 1997, ending last June, they got $42 million, according to Robert Lindgren, vice president of development.

Noting that Hopkins is in the midst of a major fund-raising campaign, Lindgren quipped, "It's been a brilliant decision to hold the campaign during the stock market run-up."

But many who are monitoring the receiving end of philanthropy say the increase in foundation giving, while welcome, has not begun to alleviate the need.

For all their visibility, foundation gifts are dwarfed 10-to-1 by individual charitable contributions, they say. And, nonprofits are being called on to do more as government has the means and will to do less.

"It's definitely positive, but it certainly doesn't solve all the financial problems nonprofits are facing," Peter Berns, executive director of the Maryland Association of Nonprofits, said of the growth in foundation assets.

Potential for creation

Indeed, some say the most lasting impact of the booming economy on local philanthropy may not be in the increases in grant-making by existing foundations, but in the potential for creation of new ones by successful high-tech entrepreneurial companies and their stockholders.

"The biggest thing that the booming economy will do is create wealth," said Betsy Nelson, executive director of the Association of Baltimore Area Grantmakers. "Our challenge is to encourage those individuals [who have made money] to participate."

One such new gift-giver is the Sylvan Learning Foundation, set up a year ago with more than 250,000 shares of stock from the Inner Harbor East-based Sylvan Learning Systems, a rapidly growing testing and tutoring company. Its value grew from $7 million initially to $11 million by March.

In its first 12 months of operation, the foundation -- created to support education and training programs -- gave grants totaling about $250,000 to such groups as the Learning Bank and the Fund for Educational Excellence, said company spokeswoman Vickie Glazar.

Shortage of recipients

Columbus W. Thorn Jr. was interested in supporting education, too -- but with a much narrower focus. An owner of a boatyard on the Northeast River, Thorn left his money in trust with instructions that it be used for interest-free loans to needy and worthy Cecil County students who wanted to go to college.

When Elkton lawyer Charles L. Scott Sr. and his wife began managing the Thorn Foundation in 1982, not long after its founder's death, it was worth $2 million. By 1996, the foundation had grown to $11 million, nearly 70 percent of it in blue-chip quality stocks such as Exxon, General Electric and Procter & Gamble, records show.

But its 1996 grants total only $270,250 -- an amount Scott acknowledges is far below the IRS' 5 percent threshold.

"We're lending money to 112 students," he said. "We feel that we've been kind of maxed out at that level. We can't find more than 112 students in Cecil County that want to borrow money."

Scott said he might move to modify the foundation's charter to go from making loans to giving grants, or to expand its reach beyond Cecil County.

A shortage of worthy recipients is not a problem faced by some of the larger, better-known foundations, whose missions are more broadly drawn.

"If I had the U.S. Treasury, I wouldn't have a hard time spending it," said Bernard Siegel, president of the Weinberg Foundation, which dispenses grants worldwide from its Owings Mills headquarters.

At the end of 1996, it reported assets of $1.2 billion, up from $762.8 million in 1991.

Siegel said the assets will grow again "very substantially a couple of hundred million" for the latest tax year with the closing out of the estate of Harry Weinberg, a real estate mogul who grew up in Baltimore and died in 1990.

That, plus additional market growth, should allow the foundation to increase its gifts beyond the $56.9 million it gave in 1996, up from $22 million in 1991. "Fifty-six million doesn't scratch the surface of need," Siegel said.

Similarly, the Abell Foundation finds more worthy projects than it can fund, despite an increase in its grants to $8.8 million in 1996, up from $5.6 million in 1991.

"Every month brings tough choices," said Abell Foundation President Robert C. Embry Jr.

Abell's goal had been to "keep the power of the assets constant," Embry said -- that is, to grow enough to cover administrative costs, inflation and the required 5 percent payout. "We have exceeded that."

Indeed, the foundation, formed in the 1950s by the family company that formerly owned The Sun, was worth $114 million in 1986, when the newspaper was sold to the Times Mirror Co. It grew to $143.2 million in 1991 and to $225.5 million in 1996; it's now at about $280 million, he said.

The growth has not led Abell to change its strategy, which Embry described as "trying to demonstrate things and leverage money."

But it has led to more grants -- and larger ones. In 1991, Abell funded 106 projects, 15 of them at levels of $100,000 or more. By 1996, it gave 146 grants, 27 of them at $100,000 or more.

Other major foundations say that the substantial growth in assets has given them the flexibility to expand existing programs they consider effective at the same time they seek new ones.

Consider the Annie E. Casey Foundation, which focuses on children's issues nationwide from its Baltimore headquarters.

At the end of 1996, its assets stood at $1.2 billion, up $600 million in six years. Its stock holdings take nine single-spaced typewritten pages to list, with the largest holding 25.7 million shares of United Parcel Service, worth three-quarters of $1 billion.

Ways to express mission

UPS founder Jim Casey, who started the foundation a half-century ago, left it most of his estate in 1983. But the foundation has diversified its portfolio to include large holdings of companies such as computer networker Cisco and credit card giant MBNA Corp.

"It has not only allowed us to provide more support to things that we believe in, it's also allowed the foundation to look for additional ways to express its mission," said Casey president Douglas W. Nelson.

As an example, Nelson cites a planned Neighborhood Transformation Initiative, a multi-year project to spur economic development and improve human services in poor communities in a dozen cities. Projected commitment: $40 million a year for a decade or more.

"We're able to do that without radically redeploying commitments to ongoing programs," he said.

That's also the case at the Baltimore-based Goldseker Foundation, which has had a traditional focus on education, human services and neighborhood development. Last year, it awarded grants totaling $2.5 million.

"This [additional money] allows us to be more active on long-term economic and community development issues," said Armbruster, the foundation president.

In the past year, for example, the foundation approved a three-year $400,000 grant to the Greater Homewood Community Corp. to help develop a comprehensive plan for several North Baltimore neighborhoods and gave $100,000 to the Mount Vernon Cultural District, a nascent organization established to enhance the site of some of the city's leading cultural organizations.

"Despite the fact that we don't have a program in the arts, we look at it as strengthening the community," Armbruster said.

The increase in assets has given the newly merged France-Merrick Foundation, named for the founder and former president of the Equitable Trust Co., the "capacity to expand the scope and breadth of our giving," said executive director Robert W. Schaefer.

He cites its grants to the Summit School, an independent school in Anne Arundel County for children with learning disabilities, and Sotterly Mansion, a historic site in Southern Maryland.

"We thought we'd do very well if we got to $200 million by the year 2000. We have reached that and surpassed it," Schaefer said.

Foundations of wealth

The following are some of the state's major philanthropic foundations that have experienced substantial growth in their assets over the past several years.

Foundation -- Annie E. Casey

1991 Value (in millions of $) -- $666.8

1991 Grants (in millions of $) -- $23.7

1996 Value (in millions of $) -- $1,250.4

1996 Grants (in millions of $) -- $71.3

Major local recipients, 1996 -- Empower Balto. Management Corp., $650,000; Univ. of Md., $550,000; Enterprise foundation, $324,000

Foundation -- Harry & Jeanette Weinberg

1991 Value (in millions of $) -- $762.8

1991 Grants (in millions of $) -- $22.0

1996 Value (in millions of $) -- $1,224.8

1996 Grants (in millions of $) -- $56.9

Major local recipients, 1996 -- Major local recipients, 1996 -- Associated Jewish Community Federation, $2 million; Union Memorial Hospital, $502,000; St. Ambrose Housing Aid Center, $375,000

Foundation -- Abell

1991 Value (in millions of $) -- $143.2

1991 Grants (in millions of $) -- $5.6

1996 Value (in millions of $) -- $225.5

1996 Grants (in millions of $) -- $8.8

Major local recipients, 1996 -- Johns Hopkins Medical Institutions, $1 million; Balto. Curriculum Project, $761,912; Ingenuity Project, $365,883

Foundation -- France-Merrick

1991 Value (in millions of $) -- $116.4

1991 Grants (in millions of $) -- $5.1

1996 Value (in millions of $) -- $186.9

1996 Grants (in millions of $) -- $8.4

Major local recipients, 1996 -- Johns Hopkins School of Nursing, $900,000; Maryland Historical Society, $505,500; Chesapeake Bay Foundation, $500,000

Foundation -- Jacob & Hilda Blaustein

1991 Value (in millions of $) -- $73.0

1991 Grants (in millions of $) -- $3.5

1996 Value (in millions of $) -- $110.7

1996 Grants (in millions of $) -- $3.8 Major local recipients, 1996 -- Associated Jewish Community Federation, $633,334; Johns Hopkins University, $522,500; Park School, $250,000

Foundation -- Morris Goldseker

1991 Value (in millions of $) -- $49.5

1991 Grants (in millions of $) -- $1.5

1996 Value (in millions of $) -- $73.4

1996 Grants (in millions of $) -- $2.0

Major local recipients, 1996 -- Associated Jewish Community Federation, $183,500; Balto. Community Foundation, Johns Hopkins Univ., Morgan State, $133,500 each

Foundation -- Town Creek

1991 Value (in millions of $) -- $25.6

1991 Grants (in millions of $) -- $1.2

1996 Value (in millions of $) -- -- $41.0

1996 Grants (in millions of $) -- -- $1.3

Major local recipients, 1996 -- Chesapeake Bay Foundation, $75,000; Eastern Shore Land Conservancy, $15,000; Md. Public Broadcasting, $10,000

Foundation -- Joseph Meyerhoff

1991 Value (in millions of $) -- $26.3

1991 Grants (in millions of $) -- $1.0

1996 Value (in millions of $) -- $40.5

1996 Grants (in millions of $) -- $1.6

Major local recipients, 1996 -- BSO, $125,000; Jewish Museum of Maryland, $51,000; Fund for Educational Excellence, $50,000

Foundation -- Rollins-Luetkemeyer

1991 Value (in millions of $) -- $11.0

1991 Grants (in millions of $) -- $.4

1996 Value (in millions of $) -- $30.4

1996 Grants (in millions of $) -- $1.3

Major local recipients, 1996 -- McDonogh School, $634,134; Roland Park Place, $350,000; Church Home and Hospital, $100,000

Foundation -- William G. Baker Jr.

1991 Value (in millions of $) -- $18.0

1991 Grants (in millions of $) -- $.8

1996 Value (in millions of $) -- $25.5

1996 Grants (in millions of $) -- $1.5

Major local recipients, 1996 -- Baltimore Community Foundation, $550,000; United Way, $40,000; BSO, $30,000

SOURCE: Maryland attorney general's office, Index of Private Foundation Reports, 1991 and 1996

Pub Date: 6/09/98

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