Packard Foundation Announces Cuts in Grant Making

The David and Lucile Packard Foundation, whose assets have dropped sharply in recent years, last week announced that it would give away $200-million in 2003 -- $50-million less than last year, when the foundation slashed its grant-making budget from $500-million in 2001.

The foundation also announced that it was eliminating its arts grant making program, and sharply reducing grants to help charities operate more effectively.

In addition, it has trimmed its spending on environmental programs, population-control projects, and programs that serve children and families.

The Packard Foundation, whose assets reached a high of $17-billion in 2000, are now worth $5-billion -- largely the result of a slump in the value of Hewlett-Packard stock, which makes up most of its portfolio. In September, the foundation's financial problems caused it to lay off 60 of its 160 employees.

Even though the foundation's fortunes have dropped rapidly, it is still very large, ranking among the 15 wealthiest foundations in the country.

Richard T. Schlosberg III, the foundation's president, said that, in deciding how to reconfigure Packard's grant-making programs to deal with the downturn in the foundation's finances, he and the foundation's board members had decided it did not make sense to keep financing so many different types of projects -- and giving small amounts to each grantee.

Instead, Mr. Schlosberg said, he hoped that the foundation would be able to give at least some of the charities it supports the money they need to fully carry out their programs.

Among the changes announced last week:

• Eliminating the arts grant-making program, which last year awarded $4-million. The foundation will continue to provide $3.5-million in arts grants through its program to support organizations in Pueblo, Colo., where David Packard was born, and organizations in the four-county area surrounding the foundation's headquarters in Los Altos, Calif. The budget for the local grant-making program has not yet been determined.

• Scaling back organizational-effectiveness grants to $3-million in 2003. Last year such grants accounted for $10-million in Packard spending. In 2001, the foundation gave $19-million in such grants, down from $29-million in 2000. The foundation also said it will no longer support research on how nonprofit organizations can be made more effective.

• Combining its separate conservation and science programs into one grant-making program. Last year the foundation gave $47-million for conservation work and $53-million for science, including $12.5-million for the Packard Fellows program, which supports scientists early in their careers, and $31-million to the Monterey Bay Aquarium Research Institute. The foundation says that the fellows and aquarium programs will receive roughly the same amount this year as they did in 2002, leaving approximately $40-million for other grants.

• Reducing spending on programs to stablize the size of the world's population. Grants for projects in Mexico, Myanmar, and Sudan will no longer be made. The foundation also ended support for a project called the Population-Environment Initiative and another dedicated to youth programs in the United States. Spending on population-control programs will total $30-million, compared with $44-million in 2002.

• Concentrating grants from the Children, Families, and Communities program in three areas: making sure preschool programs are available to all youngsters in California, promoting health insurance for children, and establishing after-school programs. The foundation will spend $18-million on those efforts, compared with last year's grants of $26-million under the broader program. Among the projects that the foundation will no longer support are those that deal with welfare-policy changes, food policy, health-care quality, family support, and child protection.

In addition to the changes it is making in its programs, the Packard Foundation is also in the midst of changing its investment strategy. George Vera, the foundation's chief financial officer, said that the foundation had sold $200-million worth of Hewlett-Packard stock since June and will continue selling until the foundation holds only half of its assets in the company's stock.

The foundation's new diversification policy, Mr. Vera said, will result in less volatility for the foundation's grant-making budget.