Crumbling Foundations?

"The Ford Foundation," Critic Dwight Macdonald once said, "is a large body of money completely surrounded by people who want some." With the boom market of the '50s and '60s, the giant foundation lavishly poured out funds for higher education, hospitals and medical schools, and acquired an activist image under President McGeorge Bundy by attacking social problems of race and poverty.

Last week Bundy faced the fact that the boom is over. With inflation and sagging stock and bond markets cutting heavily into the foundation's total assets ($2 billion, down from $3 billion a year ago), he announced that Ford is considering cutting new grants by as much as 50%. That was bad news for all of the foundation's beneficiaries, but educators are particularly distressed; they feel that schools are more vulnerable to the slashes than the institutions that Bundy has stressed in recent years --those devoted to social change. Furthermore, Bundy hinted that the foundation might even decide to dissolve itself. But by week's end Ford's 18 trustees (including Bundy) agreed that dissolution was out of the question.

Whether or not the Bundy announcement was a ploy to extract concessions from Washington, a small one came quickly. The House Ways and Means Committee voted to reduce, from 6% of assets to 4%, the amount that foundations must pay out annually in grants if their assets fall below a certain amount. Another committee motion, to reduce the excise tax that foundations pay on earnings, was narrowly defeated but will probably be brought up again. More important, the Bundy action can be construed as a blunt message to Washington: do something about the falling stock market and the inflation that ate up $400 million of the Ford Foundation's purchasing power in 1973 or be prepared to pick up the slack if the foundation cuts back or goes under.

Panic Button. Though Bundy's talk of dissolution may have been overdramatic, his comments focused wide attention on the plight of philanthropic organizations: at a time when their gifts are more urgently needed, they have less to give. Before the stock-market slide, good times lured many foundations into the habit of dipping into capital for important projects. Over the past two years, Ford has given away about $494 million--well over twice its income.

All foundations are hurting. Assets of the Robert Wood Johnson Foundation (the nation's second largest after Ford) have fallen from $1.3 billion in 1973 to $1.01 billion and the Rockefeller Foundation's assets have dropped from $830 million to $626 million.

In the Ford Foundation announcement, Board Chairman Alexander Heard cautioned that "we ought to guard against pushing the panic button too hard or too soon." Yet there are those who think that Ford is already pressing it too hard. In what seemed to be a gentle reproof, Dr. John Knowles, president of the Rockefeller Foundation, commented: "Organizations such as ours have a magnificent opportunity in times of depression or turmoil to stand firm."

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