Packard Pours $1.6-Billion Into Humanities Institute

Last year, the David and Lucile Packard Foundation vaulted into the top tier of the nation’s wealthiest foundations. Now it has provided nearly $1.6-billion to lift another Packard foundation into the ranks of the 25 wealthiest philanthropies in the country.

This month, the foundation announced that it had transferred 11 per cent of its assets to endow the Packard Humanities Institute, which was created in 1987 by David Woodley Packard, son of David and Lucile Packard.

The Packard Foundation, which last year made $14-million in grants to humanities projects, said that because of the transfer, it would no longer support such efforts. It is instead leaving that kind of grant making up to the humanities institute. Susan Packard Orr, chairman of the foundation board, said she and the other trustees felt it was better to give the money to a non-profit organization that had a strong understanding of the needs of the humanities field than to build up such expertise within the foundation.

The decision to spin off a portion of the assets comes at a time when many foundations that have grown quickly because of the strong stock market are looking for ways to give out large sums in the most effective way possible. Other foundations have been mulling moves similar to Packard’s, while still others are thinking about considerably different approaches.

Even after it transferred a big chunk of its assets to the humanities institute, the Packard Foundation remains the nation’s largest philanthropy, with an endowment of $13.1-billion as of July 20. The foundation has grown by about $4-billion in the past six months because of the rising value of its holdings in Hewlett-Packard Company stock.

The Packard Humanities Institute was established as an operating foundation — which runs its own programs — to promote history, literature, and music. A beneficiary of the Packard Foundation since its creation, it has financed numerous technology-related projects, including the creation of CD-ROM’s of comprehensive collections of Greek and Latin texts.

After receiving $30-million in general operating support from the Packard Foundation last year, the institute recently expanded into financing projects in archaeology, film preservation, renovation of historic theaters, and education — especially reading and literacy. It also supports efforts to promote democracy and human rights in former Communist countries — and to preserve cultural monuments in those nations.

In anticipation of the transfer, the Packard Humanities Institute asked for — and has received — permission from the Internal Revenue Service to be classified as a private foundation instead of an operating foundation. It will therefore be required to give away a minimum of 5 per cent of its assets.

Previously the institute had spent about $1-million a year on its programs; it now plans to give away $30-million this year and $75-million in 2000, mostly in grants, with a small portion going for its own programs.

Those grants have the potential to transform humanities grant making. The total amount given to humanities programs by 1,000 of the nation’s biggest foundations was just $50-million in 1997, according to the Foundation Center. And the National Endowment for the Humanities has a budget of $110.7-million this year.

Packard’s transfer to the institute was made up of $75-million in cash and 14 million shares of Hewlett-Packard Company stock valued at just over $107 per share at the time of the transfer. The transfer does not count toward the federal requirement that foundations give away, on average, at least 5 per cent of their investment assets each year. Because of its rapidly rising endowment the Packard Foundation expects to award more than $440-million in grants this year to meet that payout requirement.

The transfer of assets not only creates a new billion-dollar foundation, but also brings with it a significant change for the Packard Foundation itself: Mr. Packard, 58, has stepped down from its Board of Trustees after having served on it since its creation in 1964. He also recently stepped down from the Hewlett-Packard Company board because he said he wanted to spend more time on his philanthropy.

All four of David and Lucile Packard’s children became trustees of the Packard Foundation when they were in their 20s. And since their father’s death in 1996, they have played a greater role in its operations. (Lucile Packard died in 1987.)

But David Woodley Packard, a former professor of ancient Greek, has long been much more interested in the humanities than in many of the other areas supported by the foundation.

His devotion to the arts has been especially apparent in his efforts to help the Stanford Theatre, which shows films made in the 1920s to the 1950s. The theater is located in Palo Alto, Cal. — not far from Los Altos, where both the Packard foundation and the humanities institute have their headquarters. In 1987, he persuaded his father to give $8-million to create the Stanford Theatre Foundation, which renovated the theater and continues to run it today. Mr. Packard is president of the Stanford Theatre Foundation and remains very involved in running the theater.

“The audience is just committed to him — they love him. He always introduces the film like a good showman would, welcomes people, and he knows them by name,” said David Francis, chief of the Motion Picture, Broadcasting, and Recorded Sound Division of the Library of Congress.

While he is gregarious in such settings, Mr. Packard keeps a low profile and rarely talks to the press, and he declined to be interviewed by The Chronicle.

Some have speculated that the transfer of money to the institute was a result of a squabble between Mr. Packard and his three sisters. However, Ms. Orr, his sister, said that “it’s an obvious mistake to interpret this as strife among siblings.”

She points out that she will continue to serve on the humanities institute’s board, which also includes other former Packard Foundation trustees. She called the transfer of resources to the institute “a great vote of confidence in David and in his vision and his capability.”

The Packard move will be closely watched by other foundations, especially those looking for new ways to make grants more effectively at a time when their assets are soaring.

The Robert Wood Johnson Foundation, in Princeton, N.J., considered dividing its now $8.6-billion endowment into two entities last year as it worried that its growth was harming its grant making. But instead it decentralized its grant making by creating two separate units: one to oversee grant making that affects the provision of medical care, and another that concentrates on improving the overall health of Americans (The Chronicle, December 3).

Steven Schroeder, president of the foundation, said it is too early to tell if the change has made the foundation more effective, but that “we’re moving forward and hope it will reflect in better performance.”

On the other hand, some foundations have gone in a very different direction from Packard and Robert Wood Johnson.

The Rockefeller Brothers Foundation last month merged with the Charles E. Culpeper Foundation. The new entity is worth about $670-million. Officials of both foundations said the merger was a way to create a more effective institution that would spend less on administrative costs and therefore have more money available to give to charities.

Says Dr. Schroeder: “I suspect there may be a lot more experimentation with form coming to the fore because of rapidly rising assets. And since it’s so hard to measure the performance of philanthropy it will be hard to point to one correct model that everyone’s going to follow.”