Alex. Brown foundation gives $11 million for city

Hospitals, universities, museums, opera, BSO, zoo among recipients

March 28, 2002|By Kate Shatzkin | Kate Shatzkin,SUN STAFF

The trustees of the Alex. Brown & Sons Charitable Foundation are giving away half their $21 million in assets in a sudden spending spree, hoping the profits of the venerable investment house will live on in Baltimore institutions even as the Alex. Brown name recedes.

The beneficiaries of $11 million in grants, seven of which are $1 million each, include museums, hospitals, universities and cultural institutions. In all, 34 organizations will receive more than $25,000 each.

With Alex. Brown subsumed by two mergers in the past five years - its parent, Deutsche Bank AG, will formally cease using the Alex. Brown name next week - the foundation's trustees said Alex. Brown's contributions should be spent in Baltimore.

"There always will be the risk long term that the endowment would end up in different hands," said Mayo A. Shattuck III, president of the foundation and former chairman of Alex. Brown.

Future stewards, he said, "could lose the attachment to the original intent. It was our view that this was a fair compromise - splitting the endowment in two."

The $1 million gifts will go to the Baltimore Zoo, the Baltimore Opera Company, the Baltimore Symphony Orchestra, the Baltimore Museum of Art, the Walters Art Museum, Johns Hopkins Hospital and Greater Baltimore Medical Center.

The gifts came as a surprise to recipients, who had been largely unaware of the foundation's plans.

"May I say, `Wow!'" said Roger Birkel, executive director of the Baltimore Zoo. "We are so proud to be part of that group. ... It's not really a gift to the zoo. It's a gift to the community."

Most corporations use their foundations as "pass-throughs," funding them and spending all of the contributions each year. Alex. Brown's foundation, started in the 1940s, originally worked that way, Shattuck said.

But Shattuck said that when he became president and chief operating officer of Alex. Brown in 1991, he wanted to create an endowment that would allow the foundation's wealth to grow for future giving.

The company began to contribute 2.5 percent of pretax profits to the foundation and invested what it did not distribute. By 1997, those contributions and a robust stock market had built an endowment of $28 million.

Then Alex. Brown merged with Bankers Trust, whose chairman wanted to fold the foundation into the larger company's foundation. Shattuck says he resisted and won.

Drop in contributions

But Bankers Trust never contributed to the Alex. Brown foundation. Deutsche Bank, which took over Bankers Trust in 1999, has matched some foundation gifts but never put its profits into the foundation.

The foundation celebrated the 200th anniversary of Alex. Brown in 2000 by giving $5.5 million to local nonprofit organizations, more than double the amount it usually gave. Those gifts, coupled with the lack of contributions from the company, meant the foundation's assets already had been dwindling.

Uncertainty in company

The company's turbulence since 1997 has led to the departure of most of the top executives of the old Alex. Brown. Two of the foundation's three trustees no longer work there and say they will leave the foundation by the end of the year.

One, Shattuck, resigned as chairman of Alex. Brown in September and is now president and chief executive of Constellation Energy Group Inc.

Thomas Schweizer Jr. retired as head of the Deutsche Banc Alex. Brown private client division three weeks ago, after 33 years with the company.

The third trustee, Margaret Preston, managing director and chief operating officer of private client asset management for Deutsche Bank in the Americas, is another longtime employee.

Loss of name

Deutsche Bank recently announced it would drop the Alex. Brown name, though it will still be used to refer to the private client investment division within the company.

There have been rumors over the past year that the Alex. Brown unit was for sale.

Shattuck, Preston and Schweizer say those events didn't influence the timing of their decision. But they said that whatever happens to the company, they want the money Alex. Brown contributed to charity to stay in its hometown.

Smaller grants promised

Meanwhile, they say the smaller, $10 million foundation will continue to operate for years to come, giving smaller grants than before to organizations that submit successful proposals.

The gifts announced yesterday, by contrast, were unsolicited and given to organizations that Alex. Brown employees had long been involved with, the trustees said.

They come with no strings attached, though the trustees have told the recipients they hope the names of Alex. Brown and some of its philanthropically inclined partners will be memorialized.

`Monumental day'

Michael Harrison, general director of the Baltimore Opera Company, said he will use the occasion of the gift to honor Charles S. Garland Jr., an Alex. Brown managing director and former board president of the opera who recruited Harrison to Baltimore. Garland died in 1990.

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