October 2, 2008 | Read Time: 4 minutes
The near-collapse of the insurer American International Group is reverberating through the foundation and charity world.
The biggest casualty may be the Starr Foundation, which was worth roughly $3-billion only a year ago, and is ranked No. 16 in the Foundation Center’s list of the largest foundations.
As of the end of 2006, the Starr Foundation held $2.8-billion worth of AIG stock — which accounted for more than 97 percent of its endowment, according to the foundation’s Form 990-PF informational tax return. AIG stock has fallen more than 90 percent in the past year, as bets it made to insure securities backed by mortgages have soured.
The foundation was created in 1955 by Cornelius Vander Starr, whose insurance companies combined with others to become what is now known as American International Group. Mr. Starr contributed less than $3-million to the foundation, and the AIG stock had generated tremendous investment returns before this year.
Florence A. Davis, the foundation’s president, says it has sold some AIG stock over the past two years, although she declined to provide specifics, or an estimate of the endowment’s current worth.
“It’s fair to say that we did take a hit,” Ms. Davis says. “But we are still a very large foundation and we have enough cash on hand, let alone other investments, to meet all of our future commitments to grantees.”
$2.5-Billion Awarded
The foundation has given $2.5-billion in its 53 years, mostly to medical and education causes. More than half of the money has gone to institutions and charities in New York City, where the foundation is based.
Ms. Davis said some foundation efforts that were in the planning stages — including projects related to childhood obesity and math and science education — would be “put on the back burner.”
The foundation has some large outstanding pledges. In the past two years, the Starr Foundation has given or pledged $50-million to Rockefeller University, and $25-million apiece to Harlem Children’s Zone, the World Trade Center Memorial Foundation, and Weill Cornell Medical College, which is based in New York.
Maurice R. Greenberg, who is credited with building AIG into an insurance giant over several decades, is chairman of the Starr Foundation, and Ms. Davis says he deserves much of the credit for building the foundation’s assets.
Mr. Greenberg, who was forced out of AIG in 2005, often contributes his own money to charities alongside Starr Foundation funds.
In 2006, for example, the Starr Foundation and Maurice and Corinne Greenberg each committed $25-million to Yale University, for a $50-million effort to advance the university’s collaborations with China.
Major Losses
AIG stock made up 94 percent of the $25.7-million in assets in the Maurice R. and Corinne P. Greenberg Foundation as of September 30, 2007, according to the foundation’s most recent Form 990-PF.
But Mr. Greenberg’s capacity for giving, until recently, was much greater.
“Mr. Greenberg has lost $2.5-billion over the last year, and that money would have gone to charity,” says Jessica Anderson, a spokeswoman for Mr. Greenberg. “One of the biggest losers in this is medical research and education.”
Another spokesman for Mr. Greenberg said he and his foundation would fulfill all current pledges.
The Hebrew Home at Riverdale, in New York, has received more than $5-million from Mr. Greenberg and the Starr Foundation over the past 20 years — more than the home has received from any other donor, according to its president, Daniel A. Reingold. This past spring, Starr paid half of its $1.5-million pledge to help start a new center to prevent abuse of older people and to treat people who have suffered such abuse; the remaining $750,000 is expected in 2009.
“Obviously we have the same concerns that other nonprofits have about not only individual gifts, but also about whether their principal has been hit so badly that they’ll have to significantly reduce their giving,” Mr. Reingold says.
But he has no doubts that Mr. Greenberg will make good on the pledge for the abuse center — even if the money ultimately comes from him rather than the Starr Foundation.”This is an old-school gentleman,” Mr. Reingold says. “When he gives you his word and shakes his hand on it, it’s going to happen.”
The Freeman Foundation, established in 1994 through a bequest from Mansfield Freeman, a cofounder of AIG, held 69 percent of its $1.14-billion endowment in AIG stock as of the end of 2006. An employee of the Stowe, Vt., foundation, who asked that her name not be used, said no one was available to comment on how the stock’s decline would affect the foundation’s grant making.
College for Every Student, formerly known as the Foundation for Excellent Schools, has received regular support from the Freeman Foundation in recent years, including a $150,000 grant in 2006. The group aims to raise college aspirations for low-income youth.
Karen Judge, director of development for the charity, which is in Cornwall, Vt., says the organization is still receiving funds from Freeman. “We haven’t heard anything to indicate otherwise,” she says.
Freeman is one of just 40 significant financial supporters of the charity, Ms. Judge says. She does not expect the foundation’s troubles to impact her organization, but she notes that the larger crisis on Wall Street may lead to a broader decline in support for the charity.
“With all that’s going on, who knows how this is going to play out?” Ms. Judge says.
