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Waltons spread wealth of philanthropic spirit

Many foundations in state share Wal-Mart bond

JEFF PORTER

ARKANSAS DEMOCRAT-GAZETTE

Call it the Walton connection.
In just a year, Arkansas' 261 private foundations gave out $179 million. They held more than $2 billion worth of assets. Both numbers are more than a third higher than the year before.
Well over half of that money comes either directly or indirectly from the Waltons, the family that controls Wal-Mart Stores Inc. and runs the state's largest private grant-making foundation.
Nonprofit private foundations, unlike most tax-exempt organizations, make grants instead of asking for money. They derive their money from single sources -- typically, a family or a corporation. Not all philanthropy comes from private foundations; in fact, most gifts simply come from individuals. But the private foundations are easy to track: Their tax returns, filed on Form 990-PF, are public records, listing their grants and the sources of their income. The latest numbers available are generally from 1998 or 1999, and foundations report to the Internal Revenue Service at different times as their fiscal years differ.
The Walton Family Foundation of Bentonville is the state's biggest private foundation in terms of both assets and grants. Wal-Mart founder Sam Walton created it in 1987, and it's now worth $988 million, giving out $66.5 million in 1999. The great majority of its assets are invested in the family-run Walton Enterprises, a limited partnership that also holds about 38 percent of Wal-Mart stock. The Wal-Mart Foundation, a separate entity run by the corporation itself, is generous with its money, too, giving out $65.5 million.
But Wal-Mart's success is generating other philanthropy, too.
Take the Windgate Charitable Foundation of Siloam Springs: In 1978, Wal-Mart bought out Hutcheson Shoe Co. of Fort Smith. Now-retired Bill Hutcheson Jr. became a vice president for Wal-Mart. His mother, Dorothea Hutcheson of Fort Smith, endowed the Windgate foundation in 1993 with a donation of Wal-Mart stock. She died in 1996, and her estate continued giving stock and cash. For 1999, the foundation reported $151 million worth of assets and $4 million in grants.
The Hutcheson family still makes up the foundation board, which decides on grants. In 1999, those grants included about $2 million for John Brown University in Siloam Springs and more than $500,000 for the Arrowmont School of Arts and Crafts of Gatlinburg, Tenn.
The John Brown grants financed the Center for Marriage and Family Studies. The center's fourfold purpose: prepare future marriage and family therapists through a graduate-degree program; conduct programs that serve the university's faculty and staff, as well as churches and religious groups; provide counseling for students about dating and marriage; and serve as a clearinghouse in Christian marriage and family studies.
Windgate director John Brown III -- former president of the university and now a state senator -- says the fact that those who have benefited from Wal-Mart are sharing the wealth isn't unusual.
“It's probably tied significantly to the type of people that Sam Walton recruited for his company,” he says.
It's clear, Brown says, that the Waltons know that with wealth comes a chance to improve even more lives. “It's one of the wonderful byproducts,” he says.
In the pre-Wal-Mart days, Willard Walker of Springdale was the first manager of Sam Walton's Five and Dime store. Now the Willard and Pat Walker Charitable Foundation holds $83 million worth of Wal-Mart stock.
In 1999, the Walkers decided on $10 million worth of grants, including more than $3 million to John Brown University and $400,000 to Springdale public schools. Last year, the Walkers gave the University of the Ozarks in Clarksville $7 million to construct a 34,108-square-foot building for teachers' education and communications programs.
Last April, Willard Walker helped break ground for the university's Pat and Willard Walker Student Center.
“Our philosophy is that it's payback time,” Pat Walker says.
Springdale schools Superintendent Jimmy Rollins says the Walker grant helped build a structure that will allow athletes in outdoor sports to practice inside when needed. It's set to be completed this year.
Rollins has known the Walkers for about 20 years. “It warms their heart and spirit to serve other people,” he says.
Arkansas' Walton connection is a microcosm of what's happening nationally, according to Dorothy Ridings, president of the Council on Foundations, an association of 1,900 foundations and corporations that will make grants of about $16 billion this year.
Software giant Microsoft Corp. co-founder Bill Gates created the Bill and Melinda Gates Foundation, which has $5 billion worth of assets and gave away $113 million in the last year reported. But Microsoft's success goes beyond Gates' own philanthropy.
“A number of the Microsoft millionaires have become extremely active in philanthropy,” Ridings says.
And while the Gateses and the Waltons are well-known, she says, many less visible foundations have been created through the success of smaller businesses and investments.
Steve Lawrence, research director of the Foundation Center in New York, says a “flush economy” is responsible for the growth of foundations, which have more than doubled since 1975.
And he calls the fact that more and more families are establishing foundations not through someone's will but through a living donor “an exciting new trend.” The Walker and Windgate foundations are just two examples.
Some families, though, have a longer history of largess.
The Winthrop Rockefeller Foundation and the Winthrop Rockefeller Trust -- separate organizations, both based in Little Rock -- can trace their roots back to 1956, when Winthrop Rockefeller created the Rockwin Fund. Rockefeller, who served as Arkansas' governor from 1967 to 1971, died in 1973. His estate founded the trust, which in turn increased the assets of the Rockwin Fund, which became the foundation in 1974.
The Charles A. Frueauff Foundation began in 1950, a stipulation of the successful New York lawyer's will. It's now in Little Rock, run by the daughter-in-law of Frueauff's nephew.
Timber magnates Esther Ross and her daughter, Jane Ross, created the Ross Foundation of Arkadelphia in 1966. Some 50,000 acres of timberland constitute its livelihood; it reported $1.7 million worth of income from the investment in 1999. Its assets totaled $49 million and its grants $769,312, including $500,000 for Henderson State University, also in Arkadelphia.
The foundation is still assessing its losses from the recent ice storms that damaged the timber crop across south Arkansas, according to Joe Nix, the foundation's grants manager.
Such large foundations are not typical. Almost three out of four private foundations in Arkansas have assets of less than $1 million. Just 6 percent hold assets of more than $10 million. Most give grants in their own area.
“There's a whole list of reasons why people give,” says Virginia Esposito, president of the National Center for Family Philanthropy in Washington. “It's the passion and commitment of the people in their communities.”

This article was published on Sunday, January 7, 2001

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