A shift in attitude and geographical power has today’s foundation leaders giving . . .

He is the very model of the modern self-made millionaire. Standing on the front steps of his Brentwood manse, overseeing construction of the new garden that will bloom where once his next-door neighbor’s house stood, he is tanned and fit and, at 56, young to possess such wealth from his own earnings.

But Richard Atlas is one of many who reaped the benefits of the go-go ‘80s and survived the leaner years that followed. For 25 years, he rose through the ranks of Goldman Sachs, an East Coast-based investment banking house, making his money by telling others what to do with theirs. He and others like him have become a modern archetype--the investment banker, reviled and envied, a new American icon.

Lately, Atlas has come to stand for another emerging character in the moneyed class: the new philanthropist. “Venture philanthropists,” this young breed is often called, or “entrepreneurial philanthropists,” denoting not only where the money came from, but also how it is distributed--often through private foundations with well-defined mandates and a bottom-line approach to giving.

Neither of those terms appeals to Atlas, who says he prefers “investment model” to describe his charitable decision-making. He refers to the organizations he supports as his portfolio of grantees. His foundation has a relatively narrow mandate--to serve low-income children, from prenatal care through kindergarten-age, living in Los Angeles County. He actively seeks out worthy programs with the help of a consultant rather than waiting for grant proposals to roll in, and he believes that grass-roots development toward self-sufficient nonprofits is the most effective way to make change.

“Philanthropy should be an investment, not charity, to create social wealth,” he says. “You need to find linkages between strategies and outstanding performance.”

‘It Was Good Business and Good Citizenship’

Although Atlas did not begin his charitable career with this sense of focus, his ideology is, to a certain extent, a result of how he entered the philanthropic world. When he became a partner at Goldman Sachs at the end of 1984, he was offered the option of starting his own foundation. He could transfer appreciated stock from his private investment funds tax-free and use the firm’s legal, accounting and administrative resources to distribute it to charity.

“It was good business and good citizenship,” he says, and he took full advantage, contributing the maximum allowed annually to what is now the Atlas Family Fund.

When he retired from the firm five years ago, he says, he already had decided that, along with spending more time with his family--his wife, two daughters, and now two grandchildren--he would devote himself to the foundation. In a completely different way.

“I began to rethink my philanthropy,” he says. “I decided we needed a mission statement and a strategy. At the end of the year, we would compile a list of our contributions, and there was never any theme; it was just a hodgepodge of donations prompted by requests by friends. It was completely inconsistent with the advice I had been giving my clients about investing.”

He also has been greatly affected by a conversation with Robert Haas, of the Haas Foundation in San Francisco. The two had attended Harvard Business School together, and when Atlas called Haas to solicit a donation for their alma mater, he was surprised at the relatively small amount Haas was willing to contribute.

“I asked him how he arrived at that figure,” Atlas says, “and he explained to me that his philanthropy was based on constituencies that did not have a natural community of support--AIDS programs, cultural programs in low-income communities.”

Until that point, Atlas’ own contributions, he says, were to long-standing cultural institutions--the Music Center, the county museum.

“I realized that most of the programs I was supporting benefited middle- and upper-middle-class people. What Bob said really stuck with me.”

Atlas’ wife, Lezlie, is a child development specialist. Together they concluded that the map of one’s life is set during early childhood, so it became the focus of their giving.

This was not a sentimental decision by any means.

“We thought about where we would get the most leverage from our resources, which are not unlimited,” Atlas says, “where you get the most bang for your buck, as it were. Intervention at an early age isn’t as costly as during later years, and it is more effective.”

For the last five years, the Atlas foundation has made annual grants of about $20,000 to $50,000 to 14 or so local organizations where the grants have helped make gains in child care and early education: for example, the Thai Development Community Center, the Dolores Mission Women’s Cooperative Child Care Center, the Neighborhood Youth Assn. and the Early Childhood Center Foundation.

“I think we could safely go up to 20 [organizations],” he says. “Beyond that you cannot maintain the relationships that are essential to good grant-making. I look at some of the more traditional larger foundations, and they have so few program officers that there’s no way they can maintain any kind of contact with their grantees. But wealth, any kind of wealth, including social wealth, is created by focus.” Once the wealth is made, the way people protect it, he says, is by diversifying investments, which is why most large foundations tend to fund programs representing a variety of social need. “We have a more high-return strategy,” Atlas says.

It’s talk such as this that makes some of the more traditional members of the philanthropic community cringe, reflecting, as it does, the younger, more hands-on generation of givers. The line between hands-on and pushy has always been thin, and tension between generations in any industry is to be expected. But the aspect of philanthropy that is often forgotten by those outside its inner circles is that it represents not only money, but also power. The power to change a community, to influence local and national policies, to reverberate internationally. And as the assets of the community increase, so does its power.

New, Spectacular

Wealth in the West

What Atlas and his peers represent more than anything is a shift in that power. Where once the Fords and the Rockefellers and the Astors ruled, benevolently but supremely, from their East Coast and Midwest bastions, the proliferation of new and spectacularly wealthy foundations has swung the nexus of influence westward. Not only is Richard Atlas an example of the new philanthropy; he’s an example of the new Californian philanthropy.

“There is a sense that California is different,” says James Ferris, professor at USC’s School of Policy, Planning and Development and head of its new Nonprofit Studies Center. “That the new foundations are not weighted down by histories. So many of the new foundations here are starting out so huge, which gives them a lot of room to take more chances, to be more strategic in their grant-making.”

“Los Angeles tends to experience things sooner and bigger than other areas,” says Wendy Schine, vice president and program director for the Joseph Drown Assn., a Century City organization dedicated to improving education, health and safety in underprivileged neighborhoods. “Although the older, larger organizations are still in the East, the explosion is out here, and we do think differently.”

Nationally, the number of foundations has doubled in less than 20 years, and nowhere is that more apparent than on the West Coast. According to figures compiled by the Southern California Assn. for Philanthropy, the California Community Foundation and the Community Foundation Silicon Valley, there now are 1,406 foundations in the state, with combined assets of almost $45 billion.

The southern counties (Los Angeles, Orange, Ventura, Santa Barbara, Riverside, San Bernardino and San Diego) lead in number--744 to the north’s 421--though each area has about $22.2 billion in combined assets.

The Bay Area, however, leads significantly in total grant-making--$1.19 billion to L.A.’s $796.4 million. That difference can be attributed, in part, to the nature of L.A.’s largest foundation, the Getty Trust, which spends much of its money operating its museum in addition to giving grants. There also have been growing pains experienced by the California Endowment, formed by the recent conversion of Blue Cross of California to a for-profit company, which saw its assets skyrocket to $2.3 billion after much wrangling in court. It has grown so fast, in fact, that its grant-making is just beginning to catch up.

If that sounds like a lot of money, it is. But a foundation’s annual grants are by no means as large as its assets. The IRS requires foundations to pay out a minimum of 5% of its assets each year, a number that can change depending on the nature of the foundation--the Getty Trust, for example, does not give out anywhere near 5% of its assets in grants annually, but it also supports that museum on the hill that we all can visit free of charge.

In fact, the 5% requirement is being hotly debated. Those who would favor a higher minimum payout argue that the country is now losing more revenue through the foundations’ tax-free status than it is gaining through charity. Those who believe in the 5% (although some might allow for 6%) contend that a foundation, particularly one solely supported by a single endowment, must protect itself against fluctuations in the stock market to survive through good times and bad.

But more compelling, and significant, is the discussion over the role of foundations in the philanthropic community. Although they make less than 10% of total contributions to the nonprofit sector, they have a unique function in the charitable ecosystem. Because they have private money, and therefore more discretionary than federal or state funds, foundations are in a better position, theoretically, to take risks.

The Rockefeller Foundation, for example, was instrumental in funding innovative agricultural programs that now feed much of the world’s impoverished populations; Los Angeles foundations, including the David Geffen Foundation, were among the first to respond in a strategic way to the AIDS crisis. And foundations traditionally have stepped in when federal funds are cut, making life-saving grants to programs and individuals in the arts.

Propitious Timing

for New Foundations

In Los Angeles, the emergence of new private foundations could not come at a better time, when large corporate funders are becoming scarce. But the new model of giving used by Atlas and others has sparked concerned conversation about whether this new money will go to the same places as the old.

“The new wealth is still emerging, so it’s difficult to characterize,” says Myoko Oshima, president of Southern California Assn. of Philanthropists. “But certainly everyone is trying to be more strategic in giving.”

Unlike some who fear that the more narrow focus of the new money will leave some smaller nonprofits in the lurch, Oshima does not see the future as an either/or situation.

“There is more pressure on nonprofits than before to find their niche and to be innovative,” she says. “But then there are more people turning to the nonprofit sector because they are moved to be more a part of the community. Giving is made more diverse because there are more types of people doing the giving. “

For Richard Atlas, it is that diversity, in people and in thought, that makes his second career as a philanthropist challenging.

“I believe in my way of doing things because it works for me,” he says. “I want other people to know there is a different way to do things. I sit on the board of the [California] Endowment, and the people I meet there come from all different fields. And that is what makes their work so exciting and enervating. The new ways of thinking.”

Mary McNamara can be reached at mary.mcnamara@latimes.com.

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Prominent Benefactors

The top 12 foundations in California and their assets:

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Sources: Southern California Assn. for Philanthropy; Community Foundation Silicon Valley