Charitable Giving Goes West

For years, New York has been the home of many of the country’s best-endowed foundations. Now, according to a new study released Wednesday, philanthropy is moving west.

The shift is fueled partly by the creation of such high-tech behemoths as the $23-billion Bill and Melinda Gates Foundation--the nation’s largest--and by new California philanthropies, such as the Gordon and Betty Moore Foundation.

The new study was conducted jointly by the USC Center on Philanthropy and the Foundation Center in New York.

California had $68.3 billion in foundation assets in 1999, the last year tabulated by the study. In addition to the new foundations, the trend is driven by an increase in the endowments of existing charities, such as the David and Lucile Packard Foundation of Los Altos.

Only New York has greater assets--$81.7 billion in 1999--managed by such established philanthropies as the Rockefeller Foundation, the Ford Foundation and the Carnegie Foundation, researchers said.

“Philanthropy follows where wealth is created,” said James Ferris, the director of the USC Center on Philanthropy. “California emerged as an important force on the national scene.”

Regionally, the Northeast still leads the nation, with $146 billion in foundation assets.

But the West is now second, with $107.1 billion in charitable assets in 1999, according to the study. It surpasses, for the first time, much older foundations in the Midwest and South, the study authors said.

“California has been a key part of this growth,” said Steven Lawrence, director of research at the Foundation Center. “Foundations in California have experienced tremendous growth. When you consider how the assets have grown, it’s really remarkable.”

The study does not reflect the tremendous outpouring of donations to charities since the Sept. 11 attacks on the World Trade Center and the Pentagon.

“I don’t know that it’s going to change the long-term picture for foundation philanthropy,” Lawrence said. “I think the economy is a much bigger factor.”

The growth of philanthropy has mirrored some of California’s economic hot spots.

The number of foundations in metropolitan San Jose--home to Silicon Valley--nearly doubled, from 104 to 198, in the 1990s. The amount of assets went from $1.3 billion in 1992 to $16.6 billion in 1999, Lawrence said.

But Los Angeles County added the most California foundations--300--during the 1990s, and assets increased from $13.1 billion to $27.2 billion, Lawrence said. San Francisco added the second-largest number of foundations, 115. Assets went from $5.7 billion to $15.8 billion.

“The study shows the growth is concentrated in two areas in the state--the San Francisco Bay Area and coastal Southern California--ad they are engines of great economic growth and wealth creation,” Ferris said. “That’s where we see foundations.”

In 2000, Lawrence said, California foundations gave away $3.4 billion in grants. But the state received a total of $3.6 billion in grants, he said.

Health--followed by education--was the top funding priority among California funders in 1999, a trend driven strongly by California’s health care foundations, such as the California Endowment and the California Wellness Foundation, Lawrence said.

Major beneficiaries included public health, with the Packard Foundation supporting family planning, and other foundations providing grants for reproductive issues both at home and abroad, researchers said.

“There was tremendous growth in international giving by California foundations,” Lawrence said. “That meant increased funding for reproductive planning abroad and to international organizations based in the U.S.”

An economic slowdown could brake the growth in California foundations in the short term, but “long-term prospects for growth remain strong,” Lawrence said.

Nationwide, experts say, $41 trillion to $135 trillion is expected to change hands through inheritances in the next 50 years, and some of that money is expected to go to philanthropy.

Some recent California gifts have been staggering. The San Francisco-based Gordon and Betty Moore Foundation, founded in 2000 by the billionaire co-founder of Intel Corp., recently announced a $600-million gift to Caltech.

This week the foundation pledged $261 million to a Washington-based conservation group, Conservation International, which will use the funds to identify and protect concentrations of biodiversity around the globe. It is the largest gift ever to a private environmental group.

Yet safety-net charities, which serve low-income people, have been hurting for funds since the Sept. 11 tragedy, and food banks and homeless shelters are calling for donations.

Some critics say wealthy Californians--particularly in Los Angeles County--have failed to reach deep enough into assets they could easily afford to give to charity.

The San Francisco-based New Tithing Group, a nonprofit philanthropic research organization, estimates that wealthy Angelenos could afford to give as much as $6 billion more each year to charity.

“If well-off people in Los Angeles looked more carefully at their financial situation and the tax benefits of charitable giving, many would conclude they could give significantly more than they have been giving and still be in a very secure financial situation,” said Tim Stone, executive president of the New Tithing Group.