Lilly Surpasses Ford as Nation’s 2nd Largest Grant Maker

The Lilly Endowment’s investment gains in 2018 pushed it over the Ford Foundation to become the nation’s second largest foundation as measured by assets, according to an analysis of the two grant makers’ investment portfolios.

FoundationMark, a company that analyzes grant-maker investment performance, pegged Lilly’s assets at $15.1 billion and Ford’s at $13.2 billion. The data are from Lilly’s Form 990-PF that it filed with the Internal Revenue Service and a financial snapshot provided by Ford.

Lilly’s growth was fueled by the strong performance of Eli Lilly and Company stock last year, when the foundation’s assets grew from $11.7 billion to $15.1 billion. During the same period, the company’s stock price increased more than 30 percent.

Both Lilly and Ford declined requests for interviews.

The Gates Foundation is the nation’s largest grant maker, with nearly $47 billion in assets.

Narrow Strategy

Most of Lilly’s endowment is invested in the pharmaceutical company, but it is a separate entity. For more than a decade, the grant maker has sought to diversify its holdings. As of the end of 2018, Lilly had about $1.1 billion in other investments, the grant maker said in a statement.

In the 10 years that ended in 2018, Lilly’s endowment has nearly tripled, while Ford’s has grown by $2 billion, even while both philanthropies made billions of dollars in grants. In 2018, Ford made $725 million in grants, down from $839 million the previous year. With more money being added to its endowment through stock gains, Lilly increased its grant budget from $469.7 million to $543.4 million in 2018.

The endowment said its required payout in 2019, based on federal rules that foundations direct 5 percent of their assets to a charitable purpose, is $547 million.

Lilly expects to surpass that mark and increase grant making again in 2020, the foundation said in a statement.

Strong Performance

Based on Ford’s financial information, it has an annualized return of 6.6 percent, putting it in FoundationMark’s top tier of grant makers based on investment performance. “It’s not as if Ford has done a bad job” managing its investments, says John Seitz, FoundationMark’s founder, “Lilly just had a very good run on its stock.”

Lilly’s gain in assets in 2018 marks the second time in two years that Ford has been displaced from the number-two spot. In 2017, the Silicon Valley Community Foundation’s $13.5 billion in assets made it the nation’s second-largest grant maker. As a community foundation, it is subject to different rules than Ford, Lilly, and other private foundations. In 2018, Silicon Valley’s assets plunged $4.6 billion, the result of the large stake it had in cryptocurrency, which was hammered by the market.

Seitz cautioned that the Lilly Endowment’s growth is not an endorsement of allocating most of an endowment into a single investment vehicle. Lilly stock’s year-to-date gains were 6.8 percent when shares stopped trading on Monday, compared with the S&P 500 Index, which increased more than 26 percent.

Foundation investments, as measured by FoundationMark’s GIV Index, which tracks the investment performance of 45,000 foundations, are on track to return nearly 18 percent this year. Seitz notes that Ford has historically performed better than many of its peers, meaning the New York grant-making giant might regain its spot as the second largest foundation this year.

Said Seitz: “Lilly hasn’t had a particularly good year versus the equity markets, which have been very, very strong.”

Alex Daniels covers foundations, donor-advised funds, fundraising research, and tax issues for the Chronicle. He recently wrote about a $100 million grant from the Lego Foundation for play-based educational programs; the distribution of $1 billion to four research institutions ; and grant making that gives grantees more power in decision-making. Email Alex or follow him on Twitter .

Correction: A previous version of this article said that the amount the Lilly Endowment is required to use for charitable purposes is $557 million instead of $547 million.