Casey Foundation savors luck serenely

Sudden doubling of stock assets sets off no spending spree

November 13, 1999|By Kate Shatzkin | Kate Shatzkin,SUN STAFF

If the coffers suddenly doubled at your workplace, chances are you would be jumping up and down with glee. Then you'd start spending on your favorite projects.

But at Baltimore's Annie E. Casey Foundation, where a $1.8 billion endowment grew on paper to $3.6 billion overnight this week thanks to the initial public offering of United Parcel Service stock, it was business as usual.

The foundation's airy lobby and atrium on St. Paul Street, bathed in warm earth tones, fairly glowed with goodwill. Its offices were quiet, vacated by staffers who more often than not are traveling the country to carry out the foundation's mission of improving life for disadvantaged children.

The last decimal points were being dotted on the $150 million budget for 2000 -- a figure reached before the stock offering -- and no one seemed especially eager to abandon those numbers and begin anew.

At Casey,created by UPS founder James Casey a half-century ago, the lack of immediate excitement is not especially surprising. President Douglas W. Nelson is fond of saying that while outsiders see Casey's resources as vast, its assets before the stock offering would have run the New York City school system for only four weeks.

It's an organization also known for relentlessly taking the long view -- a philosophy that contrasts sharply with the of-the-moment market that has so enriched the foundation.

"This foundation has never been a foundation that just responds in the moment," said Donna Stark, director of the foundation's Children and Family Fellowship program. "We're reflective, we're thoughtful and open to possibilities.

"My sense is, in response to the gift of this wonderful IPO, we will go through a process of listening to others."

Funding decisions reflect that philosophy, said Casey Vice President Ralph Smith. They're based on how closely a program or grant adheres to the foundation's mission, not on how many dollars are available.

In addition to its grants, Casey also spends $25 million to $30 million annually on Casey Family Services, a program that provides foster care and adoption services to families in Baltimore and several New England states.

"Not a single person has asked us to reconsider any of the [budget] decisions we made," said Smith, "because they know those decisions were made on the basis of the merits, and not on the money."

By law, foundations must give away at least 5 percent of the value of their assets each year, a requirement that for a different foundation could necessitate a rush of grant making.

But Casey has been exceeding that baseline for several years, giving away about 7 percent of its assets.

Because the Internal Revenue Service allows foundations to count excess giving toward the amount they need to spend in the next few years, Casey has time to see where the UPS stock settles without immediately expanding its grants, said chief financial officer Rama Ramanathan.

The foundation's latest and biggest project has less to do with money than with getting community leaders in 22 cities to unite to strengthen the most vulnerable families in the neighborhoods where they live. Casey has committed about $50 million a year to the effort, called the Neighborhood Transformation/Family Development Initiative, for the next 10 years.

But Casey staffers recognize that no amount of money can guarantee that key leaders in communities will embrace their issue.

"There is much more excitement outside of this building about this IPO than in this building," said Miriam Shark, a senior associate who helps coordinate the massive program. "Yeah, we have a little money to put on the table. But making grants is a tactic for doing the work. Everybody here is about the work."

Quietly, staffers also realize their new wealth -- which should boost Casey markedly from its 23rd-place finish in last year's rankings of private foundation by assets -- also brings new risks, as other foundations reliant on many shares of a single corporate stock have seen.

The W. K. Kellogg Foundation, for example, dropped $2 billion in assets between 1997 and 1998 when its company stock tumbled, though it has since regained ground.

Casey's bulge in assets has created anticipation beyond its confines -- among the scores of nonprofit organizations vying for a piece of the foundation's pie.

But so far, those groups have maintained a respectful distance.

"I don't think you're going to see a mass pounding of the pavement at their door by any group," said Larry Walton, president of the United Way of Central Maryland, which recently received a $300,000 Casey grant to start a new Millennium Fund.

"No one is going to have to twist their arm to get the money. This is a case where one of the good guys won."

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