Foundations see holdings swell in booming market Increased asset base enables larger grants, greater commitments

Wary eye on Wall Street

June 09, 1998|By Eric Siegel | Eric Siegel,SUN STAFF

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.

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