When it comes to doling out the wealth of families in the capital region, the Hartford Foundation for Public Giving holds almost all the marbles.
Out of some $800 million in private charitable foundation money in Hartford, the Foundation for Public Giving controls roughly $735 million. It’s an arrangement that many of the family foundations prefer, because it leaves the job of sorting through charitable requests to someone else. But the concentration of power has some experts issuing warnings.
Nationally, independent and family foundations were largely responsible for double-digit growth in foundation giving in 2006, according to a survey released last week by the Foundation Center, a New York-based nonprofit that compiles data on the nation’s 71,000 grantmaking foundations.
The survey found that corporate foundation giving grew 6 percent as compared with 10.3 percent by independent and family foundations, which account for nearly nine out of ten foundations.
The growth can be attributed to several factors, including a rise in stock values, an increase in the establishment of all types of foundations since 2000, and higher levels of individual giving in recent years.
“Neither stock market performance, a single wealthy donor, nor one type of foundation alone drives current trends,” said Sara Engelhardt, president of the Foundation Center.
In the Greater Hartford region, individuals and families continue to provide the donor base for the state’s largest community foundation, the Hartford Foundation for Public Giving. The same holds true for the United Way of the Capitol Region, said the organization’s President and CEO Susan Dunn.
Yet Joel Fleishman, a professor of law and policy at Duke University who has studied foundations for 25 years, said enormous wealth is in the hands of a small number of unelected foundation leaders with broad investment discretion. That, he asserted, centralizes power over charitable giving to a very few — although the money backing that power may have been collected from many.
Another paradox, Fleishman maintains, is that foundations are largely unregulated, yet must be somewhat transparent in order to inspire the trust of the community and of its wealthy donors.
Virgil Blondet, vice president of financing and administration for the Hartford Foundation disagrees.
“We have to report to the IRS. We have to report to the state attorney general,” Blondet said. “And we have to report to probate court because many of the assets we are entrusted with is in the trust form. … We have to report to a lot of people.”
Rick Porter, also a vice president at the Hartford Foundation, points out that donors, not regulators, require a very real type of accountability.
“As a community foundation, we function differently from family or private or corporate foundations,” he said. “We have to always be out there generating confidence from the folks in our region and maintain a reputation in our community for fairness, good stewardess, and having an impact in the community in order to get new donors.”
Spending Formula
The Hartford Foundation manages $735 million, mostly donated by individuals or family foundations. The organization follows a spending formula that determines how much money can be given away annually. Established about 15 years ago, spending is limited to 5 percent of the 20-quarter trailing total asset average. A floor and ceiling is also factored into the equation; a minimum of 4.25 percent of the foundation’s total assets can be distributed and a maximum of 5.75 percent of the assets can be allocated.
Before that spending policy, the foundation gave away all of its investment revenues. But foundation board members were concerned that the value of the fund would not hold up over time, Blondet explained.
Changing its spending formula helped grow the foundation’s assets. Since the foundation filed its 2005 tax return, its total net assets grew from $646 million to $735 million, a 13.7 percent increase.
Although the foundation’s total net assets have grown, actual giving has been reduced under the new spending policy. According to its 2005 tax return, the most recent available, the Hartford Foundation earned about $15.8 million in interest and dividends, and another $33 million from the sale of securities, totaling about $50 million in revenue.
Under the old policy, Hartford Foundation would have distributed $50 million. Instead, under the current policy, the organization gave away $24.3 million, which went to more than 650 regional nonprofits and nearly $1 million in scholarships to 450 students in 2006, approximately 4 percent of the organization’s assets, Porter said.
Privately Managed
Although most of the region’s foundations are managed by the Hartford Foundation, some families prefer to manage their foundations personally.
Take Rhoda and David Chase, who contributed nearly $3 million to their own foundation, and then gave away $3.2 million to 135 charitable organizations, according to their 2004 IRS records, the most recent available. Their largest gifts went to the University of Connecticut Foundation, UConn Law School, New Britain Museum of American Art, and to the Connecticut Science Center, which was made through his daughter’s family foundation, the Cheryl Chase and Stuart Bear Family Foundation.
Together, Cheryl Chase and her parents donated $1.2 million to the science center. The decision to donate to the science center was easy. As a board member, Chase is enthusiastic about the project.
But for the other 68 charities and organizations to which she gave $608,000 to in 2003, she personally reads every letter asking for a donation.
Scrutinizing the requests is necessary, she said. “Some letters are scams. It is disheartening,” Chase added.
As a result, she is more skeptical and carefully conducts due diligence on each request.
But the donations are more than giving away dollars to Chase. She keeps all the letters she receives and occasionally re-reads them as a reminder that giving is the right thing to do.
“We do it from our heart and somewhat intellectually,” she said.
In fact, Chase doesn’t find managing the foundation burdensome. The family does not compensate any Chase Enterprise employees — or themselves — for managing their investments or for distributing their gifts or donations.
According to tax records, Chase invested about $2 million in 91 different companies, which generated about $324,000 in dividends and interest. Part of the revenue reflects the sale of an investment. In addition, she also contributed $569,000 to the foundation.
