Maryland charity gets $1.75 billion delivery

Casey Foundation gains on UPS stock

November 11, 1999|By Eileen Ambrose | Eileen Ambrose,SUN STAFF

It took the Annie E. Casey Foundation half a century to reach $1.8 billion in assets. It took just one day to double that.

The Baltimore philanthropy was a major benefactor of United Parcel Service Inc.'s initial public offering yesterday, the largest ever by a U.S. company. As investors rushed to snatch up shares, they drove up the value of the foundation's 41.6 million UPS shares by $1.75 billion.

"I didn't even work very hard today," joked Douglas W. Nelson, the foundation's president, during the first day of UPS trading on Wall Street.

The Casey Foundation was created in 1948 by UPS founder, James Casey, who left most of his estate to the philanthropy when he died in 1983. He named the foundation after his mother, who was a single parent. Today, it's one of the largest philanthropic foundations in Maryland, focusing on helping needy children and families nationwide.

In recent years, many foundations, universities and nonprofits have benefited handsomely from the bull market, but few have seen such gains as the Casey Foundation in this latest initial stock offering.

Atlanta-based UPS offered 109.4 million shares, about a 9 percent stake, at an initial price of $50 a share. The stock reached a high of slightly more than $70 and was at $67.125 at the 4 p.m. close on the New York Stock Exchange. Final calculations raised the price to $68.25. UPS raised $5.47 billion for the day.

Eager anticipation

Wall Street has been salivating at the prospect of the the world's biggest package-delivery service going public.

Although it is not a hot high-tech company, UPS is expected to benefit as more consumers make purchases online. Yesterday, about 80.7 million UPS shares traded on U.S. exchanges, leading all other stocks.

Before the public offering, UPS stock -- valued at $26 per share -- accounted for about 56 percent of the value of the Casey Foundation's assets.

Now, the foundation's UPS stock, worth $2.8 billion after yesterday's close, comprises nearly 80 percent of the value of the foundation's assets. But the foundation's chief financial officer, Rama Ramanathan, emphasized it's a gain only on paper.

The foundation will wait several months to see where UPS' stock price settles after the IPO excitement before deciding how best to use its assets, Nelson said. "We are hoping it builds a bigger base underneath the work we want to do in the next 10 years," he said.

"It will take quite a while to just digest this and work on these plans," agreed Ramanathan.

"The programs that we have been spending on have never been based on our assets," Ramanathan added. "Our decisions are based on where we can make an impact."

Risks alleviated

Even before all the talk about UPS going public, the Casey Foundation made long-term grants, knowing that it ran the risk of having to dip into its principal to meet those commitments, Nelson said. The new trading of UPS stock now frees the foundation from that risk, and allows it to look for ways to serve children and families that it couldn't afford before, he said.

The foundation expects to give out $120 million this year. Its budget for next year, which hasn't yet been approved, calls for about $146 million in grants.

The IRS requires tax-exempt foundations to give away a certain amount each year, usually at least 5 percent of the value of their assets, to charities.

In recent years, the Casey Foundation has given away an average of 7 percent annually, Nelson said.

Among the foundation's major new initiatives, and its largest, is Making Connections, a decade-long partnership with 22 cities, including Baltimore, to improve conditions for children and families. The Casey Foundation expects to fund the program with $50 million to $60 million annually.

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