Where do its millions go? Less to ads and grants, more to aggressive investments, big salaries … and the CEO’s house.
Jump to full article: Youth Today , 2009-10-05
Author: Nancy Lewis
Intro: The American Legacy Foundation is a rare example of a public charity being born with a silver spoon. Even before it began operating in 1999, the foundation was bequeathed more than $1 billion from the settlement of a massive lawsuit brought by the attorneys general of 46 states against the country's major tobacco companies. . . .
For the first few years, it seemed a great success. The foundation rolled out hard-hitting and ubiquitous advertising, known as "the truth" campaign. . . .
Then the magic stopped working so well. Since 2003, teen smoking rates have hovered around 22 percent, even as adult smoking has continued to dwindle (to under 20 percent now). After the final really big tobacco payment of $307.9 million came that year (under the Master Settlement), "the truth" campaign continued on a much smaller scale.
But despite spending less on those ads, awarding fewer grants for anti-smoking programs and seeing all the tobacco company contributions end last year, the foundation itself grew wealthier. As expenditures for its primary missions fell, two budget items kept growing: investment fees and salary costs, especially for top executives. . . .
While most nonprofits invest to protect their funds, the Legacy Foundation has pursued an aggressive investment strategy that includes hedge funds, foreign stocks (sometimes accompanied by currency exchange losses), interest rate swaps, two office buildings in downtown Washington and other investments.
Some observers say Legacy is trying too hard to perpetuate itself and the cause would be better served if it spent more of its endowment, which stood at $1.156 billion at the end of fiscal 2008.
The American Legacy Foundation says President Cheryl Healton's salary of $570,000 in 2008 (plus benefits) is about the same as the median for others in large philanthropic endeavors. . . .
(For a more complete rundown of the foundation's annual budget and spending, see the pie charts on these pages.)
. . .
The foundation is phasing out its grant program for small innovative programs, for anti-smoking programs in rural areas and among minority groups, and for research. It has spent about $150 million on these grants during its existence.
As for media strategies: Despite embracing social media such as Facebook and YouTube, the ubiquity of the foundation's ads has faded. None has gone viral on the Web. The foundation has attracted fewer than 200 Facebook fans.
Meanwhile, tobacco companies lay out about $41 million a day for advertising.
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