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Charitable Trusts Report Shows Growth

The IRS Statistics of Income Bulletin summarized the results of all split-interest trust returns filed during the year 2000. Charitable remainder annuity trusts, unitrusts, lead trusts and pooled income funds are all required to file split-interest information returns. The returns showed a total of $94 billion in total assets. The return statistics are summarized as follows:

Year 2000 Charitable Trusts

	Trust Type	Percent of Total	Number	Average Size	Average Payout
	Annuity Trust	20.0%	22,669	$465,272	10.1%
	PIF	1.4%	1,634	$970,000	7.4%
	Lead Trust	4.0%	4,570	$2,364,969	6.96%
	Unitrust	74.5%	84,201	$1,050,609	6.92%

The charitable remainder unitrust continues to be the most popular of the split-interest agreements with the annuity trust following a distant second. Lead trusts are smaller in number but are much larger in value. The total lead trust distributions for 2000 were over $700 million. It is possible by 2003 or 2004 that lead trust distributions may approach $1 billion per year.
Taken from GiftLaw

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The Gifted Who Keeps on Giving

About 12 years ago, Zell Kravinsky was a thirty-something Renaissance scholar and poet, lecturing at the University of Pennsylvania. Then he started doing a little investing, putting money into parking lots, warehouses and a shopping center near the Philadelphia campus. Next thing you know, old Zell's a millionaire.

Funny thing about him, though. He never really wanted to be a millionaire. Seems he'd always fancied himself as a philanthropist. Last October, he decided to donate $6.2 million to the CDC Foundation, which supports the work of the Centers for Disease Control and Prevention. It was the largest individual contribution to the foundation in its seven-year history.

Kravinsky told CNN that he wanted the donation to help fight an insect-carried parasitic disease that kills thousands of poor Latin Americans living in huts. He figured that that was a better use of his money than "a bunch of high-tech toys that I'm not really interested in."

Still, money isn't the solution to every problem. So yesterday, Kravinsky, a 48-year-old white real estate investor living in Jenkintown, Pa., donated a kidney. With the specification that it be given to a low-income black person whom he didn't even know.

"It's the moral thing to do," he said, because that segment of the population has "the greatest need."

"Two hospitals turned me down when I said I wanted to donate it to a stranger," Kravinsky said. "I had to convince them why I was doing it: because it is logically and morally compelling to save someone's life if you can."

The Associated Press reported last night that Kravinsky and the anonymous woman were both resting comfortably following surgery.

He might be missing a kidney. But he still has plenty of heart.
Dan Majors Pittsburgh post gazette 7/23/03

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Giving a Full 5%

Charitable foundations do much good work, but they can also be as unaccountable as the federal bureaucracies they often resemble. A useful effort is under way on Capitol Hill to compel foundations to do more of what they were ostensibly set up to do -- give to charity.

Representatives Roy Blunt (R., Missouri) and Harold Ford (D., Tennessee) are pushing legislation to curb a common abuse at many of the biggest charities: counting dollars spent on executive salaries, travel and lavish offices and other administrative costs as charitable spending. The bill is scheduled to be marked up by Ways and Means September 4.

This is Congress's ground to plow because foundations are exempt from most federal taxes. In return they are required to pay out 5% of their assets annually to charitable causes. But many foundations now evade this obligation by including spending on themselves as part of that 5%. The National Committee for Responsive Philanthropy (NCRP) calculated that the giant Ford Foundation included 70% ($98 million) of its administrative costs to reach its mandated payout in 2001 -- the last year IRS statistics are available. The Annie E. Casey Foundation included 89.9% ($36.4 million) and the Fannie Mae Foundation 94% ($103 million).

The overhead loophole gives foundations an incentive to hire more staff and pay big-dollar salaries. The San Jose Mercury News recently reported that San Francisco's Irving Foundation paid a former president $717,000 in salary, retirement and other perks. And last year Texas authorities sued the Dallas-based Carl B. and Florence E. King Foundation after learning that the $2.6 million paid out in executive salaries was twice what the foundation gave to charity.

The foundations would have a concern if the proposed change forced them to spend themselves out of existence. But the top 290 foundations earned an annual 7.62% return on their investments from 1972 through 1996. That's a large enough umbrella to cover their own overhead.

This is not to suggest that any of these outfits are crooked or not dedicated to good works. We know foundations are perfectly capable of spending more than 5% because many already do. Even in this economy, Casey expects to spend about 7% of its assets this year, although not all of that spending can be included in its charitable filing with the IRS. The Ford Foundation spent 7.3% in 2001 and 6% last year.

Foundations are an ever larger part of American life, and as such shouldn't be exempt from public scrutiny. The Blunt-Ford proposal is a modest attempt to hold foundations to their charitable mandate, and along the way free up billions of more dollars for philanthropic ends.
Taken from a letter by JJ MacNab www.deathandtaxes.com

A related story - A Mercury News survey of twenty-eight foundations in California revealed that a majority, including California's largest foundation, the David and Lucile Packard Foundation in Los Altos, do not pay their board members. The thirteen foundations that did compensate their trustees and directors paid fees ranging from $5,000 to $66,500 to 132 individuals, totaling approximately $2.8 million. While those fees currently can be counted toward the amount that private non-operating foundations are required by law to pay out each year, legislation now before the House would exclude such costs from the payout calculation. Many who support the legislation believe that foundation trustees should not profit from their service, especially at a time when some foundations are cutting their grantmaking budgets.
From Philanthropy News Digest 7/29/03