Understanding private foundations’ strategies and challenges of achieving fiscal security to further their mission is key to this subset of institutional investors. In the United States, private foundations are required by the Internal Revenue Code section 501(c)(3) to pay out a minimum of 5 percent of their investment assets in order to avoid paying taxes. This mandatory payout rate defines the target rate of returns for foundation investors and directly drives their investment strategies.
The size of private foundations vary greatly. The National Center for Charitable Statistics estimates that only less than 10 percent of private foundations manage more than $10 million.
Recently, Trusted Insight profiled the 10 largest private foundations. In part two of 20 Largest Private Foundations In America, we profile 10 prominent multi-billion-dollar charitable organizations established by some of America’s most storied families -- the Rockefellers, the Mellons, the Waltons and more.
The Silicon Valley Community Foundation was established in 2007 by its founding CEO, Emmett D. Carson. It is the world’s largest community foundation and has distributed $4.3 billion in grants to improve the lives of individuals, both locally and internationally.
Bert Feuss has been the senior vice president of investments at the Silicon Valley Community Foundation since 2007. He and his staff work closely with the foundation’s investment committee, advisors and investment managers to invest and protect assets across various portfolios. Global public equities account for 52 percent of the portfolio. Roughly equal distributions of cash, global bonds and alternative assets constitute the remainder of the $7.1 billion in assets, according to its 2015 financial statement.
The Andrew W. Mellon Foundation
Founder: Andrew Mellon and Paul Mellon
Chief Investment Officer: John E. Hull
AUM: 6.18 billion (as of Dec. 31, 2015)
The Andrew W. Mellon Foundation was established in 1969 by Alisa Mellon Bruce and Paul Mellon, Andrew Mellon’s children. This New York City foundation’s mission is to strengthen, promote and defend the humanities and arts that support human well-being. By 2015, the foundation distributed more than $6.1 billion in grants.
John E. Hull has been the financial vice president and chief investment officer at the Andrew W. Mellon Foundation since 2002. The foundation’s portfolio has more than 66 percent of assets allocated to alternative investments, with another 17 percent invested in commingled funds, according to its 2015 audited financial statement.
John D. and Catherine T. MacArthur Foundation
Founder: John D. and Catherine T. MacArthur
Chief Investment Officer: Susan E. Manske
AUM: 6 billion (as of Dec. 31, 2015)
The MacArthur foundation was established in 1970 by John D. and Catherine T. MacArthur. The Chicago-based private foundation operates in 50 countries; has offices in Chicago, India, Mexico and Nigeria; and addresses social challenges such as over-incarceration, global climate change, nuclear risk and increasing financial capital for the social sector.
Susan Manske has been the vice president and chief investment officer at the MacArthur foundation since 2003. The foundation’s $6 billion portfolio consists of roughly 65 percent public equity and debt and 35 percent private equity, fixed income, real estate and real assets, according to its 2015 financial statement.
The Pew Charitable Trusts
Founder: Joseph N. Pew Jr.
AUM: 5.89 billion (as of June 30, 2015)
The Pew Charitable Trust was established in 1948 by Joseph N. Pew Jr. This private foundation strives to protect the environment, encourage responsive government, support scientific research and improve civic life.
The Trusts rely on an investment committee to manage its investable assets. More than 68 percent of which are allocated to government and corporate obligations, while another 26 percent is split among mutual funds and domestic public equities, according to its 2015 financial statement.
The Leona M. and Harry B. Helmsley Charitable Trust
Founder: Leona M. and Harry B. Helmsley
Chief Investment Officer: Rosalind M. Hewsenian
AUM: $5.598 billion (as of March 31, 2015)
The Leona M. and Harry B. Helmsley Charitable Trust was established in 2008 by Leona and Harry Helmsley. The private foundation intends to donate millions to a wide array of causes, with a primary focused on health-related issues. During their first year of operation, the foundation distributed $50 million in grants among medical research and health-related institutions.
Rosalind M. Hewsenian was appointed chief investment officer at The Helmsley Charitable Trust in 2010. The foundation has roughly 40 percent of its assets allocated to commingled funds and nearly 19 percent to hedge funds, according to its 2015 tax filings.
The Rockefeller Foundation
Founder: John D. Rockefeller and his son, John D. Rockefeller Jr.
Chief Investment Officer: Donna Dean
AUM: 4.24 billion
The Rockefeller Foundation was established in 1913 by John D. Rockefeller and his son, John D. Rockefeller Jr. This private foundation has a sole and profound mission of promoting the wellbeing of humanity throughout the world, benefitting the most impoverished and vulnerable individuals.
Donna Dean joined the Rockefeller Foundation in 1995, and is chief investment officer. The foundation’s $4.24 billion portfolio is invested across asset classes, including public equities, bonds, venture capital and private equity, according to 2015 tax filings.
The Kresge Foundation was established in 1924 by Sebastian Spering Kresge with an initial gift of $1.6 million to support arts and culture, education, environment, health, human services and community development through grantmaking and social investment. The Kresge Foundation distributes between $120-150 million in grants yearly to U.S. non-profit organizations.
Since 2005, Robert J. Manilla has served as vice president and chief investment officer at the foundation. The portfolio allocates about a quarter of its assets to private equity strategies, another 24 percent to foreign public equity and smaller allocations to U.S. stocks, hedge funds, fixed income, natural resources and real estate, according to its 2015 financial report.
The California Endowment
Founder: Robert K. Ross
Chief Investment Officer: Ruth Wernig
AUM: 3.32 billion (as of Mar. 31, 2016)
The California Endowment was established in 1996 to increase accessibility to affordable and quality health care for individuals and communities that need it the most.
Ruth Wernig is the chief investment officer at the California Endowment, having been appointed in 2010. More than 35 percent of the portfolio is allocated to public equities, nearly 23 percent is invested in hedge fund strategies and another 18 percent is dedicated to venture capital and buyout funds, according to its 2016 financial statement.
The Duke Endowment
Founder: James Buchanan Duke
Chief Investment Officer: Neal Triplett
AUM: 3.27 billion (as of Dec. 31, 2015)
The Duke Endowment, a 501(c)(3), was established in 1924 by James B. Duke with gifts totaling $67 million from his estate. This Charlotte-based private foundation aims to help strengthen communities in North Carolina and South Carolina through nurturing children, promoting health and educating communities. The endowment has awarded $3.6 billion in grants to support higher education, health care, child care and rural churches.
Neal Triplett has been with the Duke Management Company since 1999, and has served as the the president and chief investment officer at Dumac, Inc. since 2007. Assets of the endowment are managed by Dumac, Inc., the investment arm of Duke University. The endowment allocates more than 26 percent of assets to private markets and another 23 percent to hedged strategies, according to its 2015 financial statement.
The Walton Family Foundation
Founder: Sam and Helen Walton
Chief Investment Officer: Melissa Cheong [Zoma Capital]
AUM: $3.14 billion (as of Dec. 31, 2015)
The Walton Family Foundation was established in 1992 by Sam and Helen Walton. This Arkansas-based private foundation is dedicated to supporting k-12 education, environment conservation and their home region.
Melissa Cheong is the current chief investment officer for Zoma Capital, the private family office of Ben and Lucy Ana Walton, which manages the foundation’s capital. The foundation is largely invested in public markets, including Walmart stock, according to 2015 tax filings.