Pfaffinger Foundation’s Future Clouded by Merger

The little-known Pfaffinger Foundation was created in 1936 to provide financial assistance to current and former employees of Times Mirror Co. So now it faces something of a crisis: What happens when there are no more Times Mirror employees?

“We are trying to figure that out,” said the foundation’s chairman, Stephen C. Meier. “We don’t know yet.”

Times Mirror is scheduled to be merged into Chicago-based Tribune Co. sometime in the next few months, raising the issue of whether terms of the Pfaffinger trust will be reinterpreted. Meier said the foundation directors have hired an attorney to deal with the transition.

Philanthropy professionals said the terms of the foundation--with assets of $90 million-- present an unusual quandary. Independent foundations whose beneficiaries are the employees of discrete corporations are “uncommon,” if not unique, said Stacy Palmer, editor of the Chronicle of Philanthropy, so the question of what happens when those employees are absorbed into other companies rarely arises.

Experts said that among the Pfaffinger board’s options are to limit the beneficiaries to employees of Times Mirror operations or broaden the pool to all Tribune employees. Another option--without violating the terms of the trust--is to make grants largely to local charitable institutions.

Already, members of the Chandler family, the long-term controlling shareholders of Times Mirror, have expressed interest in the fund’s future.

“We would like some direction in the affairs,” said Warren B. Williamson, chairman of the Chandler Trusts, in an interview. “We would like to follow in the shoes of Mr. Pfaffinger in how the money is spent for the benefit of the Times Mirror employees.”

But Williamson denied speculation within Times Mirror that the family hopes to take control of the foundation to somehow appropriate its federal and state tax exemptions.

How the family could exercise “direction” in the Pfaffinger’s affairs is unclear, although it is possible that several vacancies will open shortly on the nine-member board, and family members could stand for election by the remaining directors.

All the directors are currently officers of Times Mirror or its subsidiaries.

Asked whether the Chandler family intends to seek membership on the board, Williamson said, “I don’t think we’ve gotten to that point yet.” He acknowledged that the family does not exercise any control over the foundation now, but added: “Now that Tribune is here, we want to see Times Mirror employees taken care of.”

The foundation was created in 1936 by Francis X. Pfaffinger, then Times Mirror’s chief financial officer, apparently out of personal assets. By last year, when it paid assistance grants to 673 recipients, its asset base had grown to nearly $90 million--a relatively modest size among California charities.

In 1998, the latest year for which financial data is available, the foundation paid out about $2.6 million in grants, including $2.16 million to individuals and $455,000 to a roster of Southern California philanthropies. That was less than the 5% of its asset base that would have allowed it to qualify for a full federal tax exemption. It paid a 2% excise tax on its investment income.