$1-Billion Growth in Assets Reported at ‘Conversion’ Health Funds

By NICOLE LEWIS

Foundations formed when nonprofit hospitals and other health-care

providers converted to businesses saw their assets grow last year to more than $16.3-billion, nearly $1-billion more than the previous year, says a new report.

Most of the foundations focus on a wide range of health issues, including aging, medical education, and child immunization. Because of the federal requirement that private foundations pay out an average of 5 percent of their assets annually, the foundations have the potential to distribute more than $800-million for health-related programs this year, according to a report issued by Grantmakers In Health, a Washington group that works with health foundations. That would account for a large portion of the nearly $2-billion that the Foundation Center estimated was spent on all health-related grants in 1999.

The new report is based on data from 129 foundations, up from 122 last year. One grant maker on last year’s survey, Arlington Health Foundation, of Arlington, Va., no longer exists and was removed from the list. The foundation was dissolved after a joint venture between Arlington Hospital and another health organization ended. The assets of the foundation were transferred to the Arlington Hospital Association, which will use the money to support the hospital’s services and equipment.

Two foundations, Welborn Baptist Foundation and Welborn Foundation, of Evansville, Ind., have merged to form Welborn Foundations, and another foundation has been split into three entities, the Sisters of Charity Foundations of Cleveland; of Canton (Ohio); and of South Carolina.

This year’s report for the first time included information on the tax-exempt status of each fund. About 46 percent of the organizations are public charities (which raise money from various sources), 42 percent are private foundations, and the rest are social-welfare organizations.

Nearly three-quarters of the foundations have been created since 1994, as nonprofit hospitals, health-care systems, and health-insurance plans were sold to, or merged with, for-profit companies or other nonprofit groups. Many states require that some or all of the assets of such organizations continue to be used for charitable purposes, usually relating to the original charity’s mission.

While the foundations together hold significant assets, the money is not spread evenly around the country, since many of the funds give only locally. Thirty-two states and the District of Columbia have health foundations. However, 57 percent of those foundations are located in just eight states, with the greatest number — 17 each — in both California and Ohio.

The largest such fund, the California Endowment, had $3.4-billion in assets in 2000. The smallest, Andalusia (Ala.) Health Services, had $2.3-million. The median asset level was $69.3-million, meaning that half held less than that and half held more.

Copies of the report are available for $30 from Grantmakers in Health, 1100 Connecticut Avenue, N.W., Suite 1200, Washington, D.C. 20036; (202) 452-8331. A free copy of the report is also posted on the group’s Web site, http://gih.org.

ASSETS OF HEALTH-CARE “CONVERSION” FOUNDATIONS