 |
||||||||
 |
||||||||
|
||||||||
|
Foundation sets radical goal: Giving away all its money
By MARY JACOBY
© St. Petersburg Times, ARLINGTON, Va. -- In the often cautious world of philanthropy, the Whitaker Foundation is doing something radical. This charitable fund for biomedical engineering is on course to give away its entire endowment by 2006. The suburban Washington foundation, whose assets reached a peak of $450-million in 1997, is firing all its resources at one immediate target: the creation of new university departments and programs to help solidify the once fledgling field of biomedical engineering. Large private foundations typically spend only about 5 percent of their assets each year, the minimum required by law. And they often approach grantmaking as a conservative investor would the stock market, putting a little money in a lot of different "stocks" such as the arts, education or heath care. The Whitaker Foundation, by contrast, is giving away more than double the legal minimum each year. Its trustees, including the two daughters of founder Uncas Whitaker, an electronics industry mogul who died in 1975, decided nine years ago to spend all the foundation's money in one area, betting on a big payoff for society. The results so far have been significant. The kind of research that led to the heart pacemaker, magnetic resonance imaging (MRI) and the CAT scan is now taught in 89 academic departments and programs in the nation's universities, up from 42 in 1992, when Whitaker trustees embarked on their grantmaking spree. "They have had enormous impact," said Murray Sachs, head of the biomedical engineering department at Johns Hopkins University in Baltimore, the recipient of more than $22-million in Whitaker funds. "The field would have blossomed, but nothing like it has, and so quickly." Because one of the most pressing concerns in philanthropy today is whether an individual or organization's charitable donations are making a difference, Whitaker might seem to offer a model for other foundations. Yet of the more than 60,000 private foundations in the United States, only about 15 are known to be pursuing a spend-down strategy. In the history of U.S. philanthropy, only about nine foundations are known to have actually spent themselves out of existence, according to a report by the Council on Foundations, a Washington trade and lobbying group. They include the Julius Rosenwald Fund, which closed in the 1940s because its founder, a president of Sears & Roebuck, believed that he had a responsibility to address immediate social needs. The $90-million John M. Olin Foundation, a leading funder of conservative and free-market organizations, will shut down in a few years because its deceased founder did not want it to end up funding causes he believed to be inimical to capitalism. And the $1.4-billion Donald W. Reynolds in Las Vegas will close within 50 years at the direction of the trustees. Spending-down is an extreme action that no one argues fits every foundation's mission. But it does illuminate a major fault line in philanthropy between advocates and opponents of increased foundation spending. The debate has made for strange ideological bedfellows. Conservatives who believe private-sector activism is superior to big government are urging foundations to become more effective by making larger and more focused grants. They are joined by liberal gadflies who believe foundations should be spending more to address immediate social problems like poverty and racial discrimination, in part because government doesn't do enough. In the middle are what might be called "establishment" foundations -- the large, pedigreed liberal-leaning family foundations like Ford, Pew, Rockefeller, MacArthur and Carnegie whose work carries great weight in the non-profit world. Most such foundations are no longer controlled by family of the founders. Instead, they are staffed by professionals from the non-profit world, often former academics who may feel no obligation to steer the foundation in a direction consistent with the interests of the founder. The result, depending on your point of view, can either be liberation from the narrow views of the founder or a lack of focus. "Most large foundations want to create initiatives to change governmental structures, to push back hunger and ignorance and save the environment," said John Walters, president of the Washington-based Philanthropy Roundtable, a conservative group that urges foundations to spend more. He said philanthropy is more effective when it focuses not on grand social designs but on specific obtainable goals. On the other side of the debate is the Council on Foundations. "The strength of organized philanthropy is its diversity," said Dorothy Ridings, council president. The council strongly supports a 5 percent spending rate. Many foundations were set up by donors to exist in perpetuity, and trustees must honor those wishes, Ridings said. That might not be possible if they are forced to give more than 5 percent during economic downturns. "They realize that problems are always going to be with us. And they want to participate in helping to address those issues whatever they may be," Ridings said. But a competing report commissioned by the liberal National Network of Grantmakers found that with the steep run-up in foundation assets during the 1990s bull market, a 6 percent payout rate was sustainable. In 1999, more than 50,000 private and community foundations controlling nearly $450-billion in assets spent $23-billion, according to the Foundation Center, a research organization. That was only 11.5 percent of the around $200-billion given to charity from all sources, including individuals and churches. But special attention is paid to foundations because, with their staff and expertise, they can have a much greater impact in the non-profit world than, say, an individual giving to the United Way. But to do so, foundations have to settle upon a goal and strategy, said Mark Kramer, chairman of the Center for Effective Philanthropy in Boston. "The question is whether the foundation is creating value, doing more than an individual donor would do." When Uncas Whitaker died in 1975, he bequeathed stock in the company he founded, AMP Inc., a maker of electronic connecting devices, to his foundation. His widow and two daughters were left to give away his fortune. They felt they had a responsibility to spend the money in a manner he would approve, said Ruth Whitaker Holmes, 68, one of the daughters. In his later years, Uncas Whitaker had health problems and became interested in medical research. An engineer by training, "he realized medical researchers needed the hard sciences of engineering if they were going to progress," said Holmes, who lives in Naples, Fla., and Massachusetts. So they settled on funding the emerging field of bioengineering. The discipline combines engineering, medicine, physics and computer science, a hybrid that did not fit the usual funding models for medical researchers. "Back in 1976, biomedical engineering was one of those fields that everybody said, 'What?' " Holmes said. "It was very difficult for researchers to get money from" the National Institutes of Health or the National Science Foundation. Today, bioengineering is mainstream, as heart disease patient Vice President Dick Cheney shows. In the past year Cheney has had an angiogram to open a blocked artery, a wire-mesh device called a stent implanted to keep the artery open, and a pacemaker installed -- all bioengineering advances. Last year, then-President Clinton signed into law a bill creating an Institute for Biomedical Imaging and Bioengineering at the NIH, legislation that Whitaker officials helped to shape. "It means bioengineering has arrived," said Kevin O'Connor, director of the Whitaker-funded American Institute for Medical and Biological Engineering, a professional organization. "It gives us clout." Of course, foundations that give aggressively to charity may not be around to advertise the names of their founders to future generations. "If you're thinking legacy, you don't want your endowment to be spent down because you will be forgotten," said Dwight Burlingame, a professor at the Center on Philanthropy at Indiana University. Perhaps that explains why the children of Uncas Whitaker have done so much to jump-start bioengineering. "My father was not an egoist. He never wanted his name spread around. He hated it," Holmes said. "In fact, while he was alive, he gave everything anonymously."
 © 2006 • All Rights Reserved • St. Petersburg Times
490 First Avenue South • St. Petersburg, FL 33701 • 727-893-8111 
|
From the Times wire desk
From the AP |
