PEW-1992-How a foundation re invented itself

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How A Foundation Reinvented Itself The Children Of Sun Oil's Founder, Heirs To Great Wealth, Could Have Financed A Dynasty. What They Chose Instead Was Quiet, Conservative Generosity. They Likely Wouldn't Recognize The Pew Foundation Today.

Posted: April 27, 1992

J. Howard Pew, who built Sun Oil Co. from a family business into a global conglomerate, was a generous man. But he had iron-clad ideas about who did and who did not deserve his money.

He spurred his family to use its great wealth to create the ultimate charity, the Pew Charitable Trusts. Through it, the Pews gave anonymous gifts to thousands of organizations, primarily in the Philadelphia area. Often they insisted that their role never be revealed.

Charity also became a means of furthering J. Howard Pew's right-wing causes and Christian fundamentalist beliefs. Institutions that didn't meet his test as right-thinking had no chance of getting Pew grants.

Princeton Theological Seminary, for instance, "had too many communists" on the faculty, J. Howard once confided to colleagues.

Likewise too leftist were most Ivy League colleges, as well as any program having to do with government or social welfare.

Pew couldn't find any seminary conservative enough to fit his fundamentalist outlook, so he built his own. In 1970 he bought a 100-acre former Carmelite monastery near Boston and created the Gordon-Conwell Theological Seminary to turn out the type of ministers he sought. He built much of the campus and promised yearly checks to keep it operating.

Today, the Pew Charitable Trusts give millions of dollars to Princeton University and other Ivy League colleges. They have cut off the annual funding to the Gordon-Conwell seminary. And they join in partnerships with the very kind of government-supported programs that J. Howard Pew despised.

Instead of quiet anonymity, Pew's professional managers are seeking a national identity and name recognition for Pew comparable to those of America's other great foundations.

Pew has undergone many shifts: from right-wing to moderate, from a local to national focus, from helping people directly to funding research into the causes of some of society's more intractable problems.

In the process, the people who run Pew have been trying, to mixed reviews, to define a new identity.

After nearly four years of tumultuous change, Pew officials say they have built a new philanthropy, almost from the ground up. They say they now have a strong, stable staff that can administer the kind of big national programs they want.

It is an effort that has come at great cost. During the first two years under president Thomas W. Langfitt, almost the entire senior management - 17 of 20 executives - was forced out or encouraged to leave.

Two of the five Pew family members on the board resigned - one under

pressure for meddling in staff matters, another in protest of the foundation's increasingly liberal leanings.

Although Pew family members still serve on the board, family influence is waning. More and more control over the giant foundation is now in the hands of its hired staff.


When J. Howard Pew and his brother and sisters were alive, the vision for their philanthropy was passionately clear: They financed causes in which they believed deeply, and gave the rest to people and groups in need, primarily in the Philadelphia area.

Now, the philosophy is more difficult to discern.

In an interview, Langfitt was asked what the foundation's goals are. He strained for an answer for several minutes before saying, "The broad goal is to benefit society."

Then Langfitt called for his secretary to bring in a letter that appeared in the 1986 annual report. He read aloud five statements he had outlined then:

"(1) Empowerment of the individual - the right and the ability of the individual to achieve and express his or her full potential. . . .

"(2) Preservation of our American heritage through our educational, cultural, political and religious institutions. . . .

"(3) Free enterprise, a limited form of government. . . .

"(4) The practice and application of the Judeo-Christian values. . . .

"(5) Assistance to those in need, particularly the disadvantaged and elderly."

In a separate interview, Rebecca W. Rimel, Pew's executive director, also hesitated when asked to define the goals. Most needed now, she said, were image, visibility and national impact.

She described with frustration how, several years ago, she had telephoned an official at the Rockefeller Foundation. "I realized that the man on the other end of the phone didn't have a clue as to who we were."

It's a story she tells often, vowing that things will be different.

"In the next two or three years, I want people, when they say the Pew Charitable Trusts, to know what we stand for," she said. "I really feel there is a question of who we are and what we're about. . . .

"We don't have that public profile right now. I would like it to be a foundation that takes a thoughtful response and approach to dealing with some of society's toughest problems."

People in the foundation world who have watched the upheaval are somewhat skeptical about where the changes are leading.

Capital Research Center, a Washington organization that serves as a watchdog on philanthropies, wrote in its newsletter that the Pew Trusts' published goals - the ones that Langfitt had read aloud - "have only added an element of confusion. . . . Such boilerplate is sure to offend no one, while actually standing for very little."

Martin Morse Wooster, a writer for Reason magazine, has chronicled how the Pew Trusts have abandoned the founders' conservative interests. "The people who run the Pew Trusts now are ashamed of the founders," he said.

He describes their current grant-making as bland and middle-of-the-road: ''Corporate good-think."

Pew's efforts to expand its influence beyond Philadelphia have been praised by some in the foundation world. Waldemar A. Nielsen, a historian of foundations, said that Pew "is not a little private possession of a particular town." He applauded the foundation's ambition to "play a much, much larger, more beneficial role on the national scene than in the past."

But even he bemoans the fact that Pew has joined a trend toward scattershot grant-making. "It is showing signs of the same tendency towards proliferation of programs that a number of other foundations have been infected with. It tends to turn them into large department stores of philanthropy."

Others say that in focusing on large grants to big institutions, Pew officials risk losing touch with the organizations they once supported. "The danger is that they will miss opportunities that don't cost much with grass- roots organizations that need $10,000 or $15,000. A university can eat up a $200,000 grant without noticing," said Pablo Eisenberg, co-chairman of the Washington-based Center for Responsive Philanthropy.

He said the tendency of foundations as they grow is to stop taking risks on

innovative projects and instead to focus on large research grants that generally "go to big Ivy League schools that are all part of the Old Boy network."

Elmer Young, a Pew vice president who retired in 1988, said he feared that Pew's big initiatives foster an " 'I gave at the office attitude' - you give a big sum to someone and say, 'Here, you work it out. Then they can say, 'Get away from us' to the small organizations."

Graham S. Finney, former chairman of the Philadelphia Planning Commission and president of a consulting firm that advises foundations, said the Pew Trusts were "definitely trying to play in the big leagues. Gone is the sense of quiet charity."

For the first time in the foundation's history, the Pew family does not hold a majority of seats on the nine-member board. Only four board members are Pews.

As the third and fourth generations of Pews have come of age, no strong family leader has emerged. Pews no longer run Sun Oil - now the Sun Co. - and family influence at the trusts is waning, despite family members' repeated vows that Pew would never become a staff-driven foundation like Ford or Rockefeller.

When the four founders of the trusts were alive, "we had a strong sense of family ties," said R. Anderson Pew, 55, a nephew of J. Howard and the last remaining Pew to work at Sun. He is president of Helios Capital Corp., a venture capital subsidiary.

He said the family gets together infrequently, even for holidays, funerals and weddings. "There is no pharaoh, no acknowledged leader of the family, who throws lightning bolts from Mount Olympus," said Andy Pew. "Leadership in our family is now a matter of convenience."

The great Pew wealth also has dissipated. Much of it was left to charity, and the rest has been carved up by taxes and poor investments. And it has been diluted among increasing numbers of descendants: Once there were four heirs to the Sun Oil Co. fortune; now there are more than 400.

In 1971, the Pews were ranked by Forbes magazine as one of the half-dozen wealthiest families in America. Now they don't even rate a mention in the annual listing of the nation's 100 wealthiest.

The combined Pew family now accounts for about 10.7 percent of the Sun Co.' s stock - worth about $358 million at current market values.

Except for Andy Pew, chairman of the foundation's grants committee, the family board members mostly come into Philadelphia only for quarterly board meetings.

Joseph N. Pew III (irreverently called Joe Three-Eye), 68, grandson of the Sun Oil founder, is the oldest living family member and has been on the board since its creation in 1948. He is Stanford-educated, shy and quiet, and has never been known to be employed. Board members go on annual retreats to his Warwick Furnace Farm in Chester County. His two sons are also board members.

One son, J. Howard II (Howdie), 44, lives in the family compound in Marriotts Cove, Nova Scotia. He does not work but has cultivated interests in conservation and the environment. He has prodded the trusts into creating a grant program in those fields.

The other son, Dr. Joseph IV (Joe Eye-Vee), 45, lives in Reading, where he maintains a general medical practice that includes low-income patients.

None of the three would agree to be interviewed. Joseph N. Pew III said he would be "too busy fishing."

Joseph Newton Pew, the founder of Sun Oil Co., died a multimillionaire in 1912. But it was his second oldest son, J. Howard, who took over the company at age 30 and directed it through its greatest period of growth.

Like his father, J. Howard was tall and stiff, with aggressively bushy eyebrows. His manner was so severe that it caused one U.S. senator to remark, ''He not only talks like an affidavit, he looks like one."

He and his younger brother, Joseph, were denounced during the 1940s as ''big angels of the radical right." They dominated Republican politics in Pennsylvania and campaigned nationally against Franklin Delano Roosevelt. Joseph appeared on the cover of Time magazine - as the nation's leading FDR- hater.

Their two sisters, Ethel Pew and Mabel Pew Myrin, were more shy and retiring. During their lives they gave generously to local hospitals, to Bryn

Mawr College, Ethel's alma mater, and to various other interests.

For millionaires, the four lived relatively modestly on Philadelphia's Main Line.

By 1948, the four Sun Oil heirs were in their 60s and 70s, an age when they had to decide how to dispose of their great wealth. The two sisters had no children; the brothers had six children between them, some of them adopted.

They opted for good works rather than family dynasty, creating seven individual trust funds, which are now known collectively as the Pew Charitable Trusts. To establish the first trust, each gave $15 million worth of Sun Oil Co. stock - assets that then yielded an annual $880,000 for grants.

Grant selection was a matter done over morning teacups at J. Howard's downtown office at 1608 Walnut St. A staff of three dispensed the grants.

Creation of the seven trusts was not solely for altruistic reasons: It ensured continued family control of Sun Oil Co. By donating 45 percent of outstanding company stock, the Pews avoided paying inheritance taxes while maintaining voting control of the stock - an arrangement later prohibited.

The Pew Trusts grew mightily with the deaths of the founders. J. Howard left all of his estate, valued at about $100 million at his death in 1971, to his Freedom Trust and a few other causes; Joseph N. left $30 million out of his $36 million estate to the trusts in 1963; Mabel left $84 million of her $88 million estate to the trusts in 1972; and Ethel, the last to die, at the age of 95 in 1979, left $59 million of her $61 million to the charity.

For his J. Howard Pew Freedom Trust, the second largest of the seven, J. Howard left guidelines for grants that included a diatribe against ''Socialism, welfare-state-ism, Marxism, Fascism and any other like forms of government intervention."

Except for these instructions and some other explicitly stated beneficiaries, the Pew philanthropy became a general, do-good charity that operated with a sense of noblesse oblige in helping cultural organizations and the less fortunate.

For decades, the foundation lacked even any rudimentary controls or follow- up on grants - it simply wrote checks for organizations to spend as they pleased.

And things continued that way, more or less, for 30 years.

As the founders faded from the scene, Sun Oil Co. sent over executives to run the trusts.

First came Robert G. Dunlop, who succeeded J. Howard Pew as president of Sun Oil in 1947 and who became chairman of the trusts' grant committee, where he rigorously upheld the family's wishes.

Then, in 1972, Sun executive Robert I. Smith was sent to the charitable trusts as an administrator; he became president five years later. Smith broadened the scope of Pew funding; grants started going to Ivy League colleges, major research centers and mainstream social agencies.

Under Smith, the foundation published an annual report in 1979, disclosing for the first time how it was spending its money.

Not all of these changes were voluntary. Revisions of the tax laws forced Pew and other charities to disclose their grants for the first time.

The tax act of 1969, enacted in response to public outrage at the rich creating charitable foundations as tax dodges, also required foundations to spend an amount equal to 5 percent of their assets every year.

By the late 1970s, the Pew Trusts' tax-exempt funds were multiplying exponentially, as the value of oil stocks had begun to soar. What had started out as a yearly grant budget of $880,000 was now becoming a great mass of

accumulating money that was assuming a life of its own.

In order to meet the new federal requirements, the Pew Trusts had to rapidly find more and more things to fund, in Philadelphia and beyond.

To manage all that money, the trusts had their own private bank. Created in 1956, the Glenmede Trust Co. manages the charity's assets, as well as the Pews' private family fortunes.

Today, it is one of the largest trust banks in Pennsylvania and the 53d largest in the United States. It accepts other clients, provided they have at least $1 million in assets.

The Glenmede Corp. is the parent entity over both the bank and the philanthropy. An odd, interlocking relationship between the bank and the foundation has ensured family dominance on the charity's board and insulated it from outside influence.

Board members of the Pew Charitable Trusts are chosen by directors of the Glenmede Corp. - a very clubby group. To become a director of Glenmede, a candidate must buy out the shares of a departing director. Admission is thus very exclusive, very expensive - and very profitable, since corporation board members get a yearly share of the bank's profits.

How profitable? That's private; Glenmede members don't have to report to anybody.

By 1986, Robert Smith was getting kudos in the foundation world for transforming the Pew Trusts. However, his job included overseeing the bank, where he was being criticized for not paying enough attention to bank business. He was abruptly fired.

Smith was replaced in 1987 by a board member who, with the family's encouragement, took control of the Pew Trusts and still has it - Thomas W. Langfitt.

Langfitt, now 65, a tall, silver-haired neurosurgeon, was vice president for health affairs at the University of Pennsylvania and had become more and more influential on the Pew board for his expertise in health matters.

His appointment as board president surprised some people, especially at Penn, where experiments in his research lab had sparked a national controversy.

In 1985, animal-rights activists presented evidence that the lab was improperly killing baboons to study human head trauma, which was Langfitt's specialty. Following a federal investigation, Langfitt was reprimanded by Penn and the lab's $1 million National Institutes of Health grant was suspended.

As Pew president, Langfitt began a purge of the senior staff. Within two years, the executive director, three of the four vice presidents and 13 of 15 program officers had been replaced.

The only vice president to survive was Rebecca Rimel. In 1988, at 37, she was promoted to executive director, a move that became highly controversial.

Rimel had been a nurse and an expert on head trauma when she met Langfitt almost a decade earlier at a conference at the University of Virginia, where she was an assistant professor in the department of neurosurgery. In 1982, Rimel received a $287,000 Pew grant to research minor head injuries in high school football players, although by then research into specific medical conditions was outside the foundation's grant guidelines.

Langfitt recruited her to the Pew Trusts in 1983. Her rapid rise - from program officer for health to vice president to executive director within five years - caused grumbling among her colleagues and was noted nationally in trade publications.

Despite her serious credentials, Rimel was considered by some co-workers all Southern charm on the outside and all flinty ambition on the inside. She was dubbed "The Steel Magnolia" by one foundation periodical, the Chronicle of Philanthropy.

According to a series of interviews with participants who asked not to be named, board member Ethel Benson "Peppi" Wister, granddaughter of Joseph N. Pew Jr., heard staff complaints about Rimel's impending promotion and in April 1988 invited a staff member to lunch to discuss it. Wister told the staffer that Rimel was to be promoted and no other candidate was being seriously considered - comments that quickly circulated throughout the staff.

Wister had already argued with Langfitt and other board members about recent personnel decisions - she opposed the removal of Robert Smith and was against an early retirement for another senior manager. Now, her indiscreet comments created a furor on the board.

The staff member that Wister had spoken to was fired; Wister was reprimanded by board members for betraying boardroom secrets and was asked to resign from the Pew grants committee.

Although she remains on the board of the Glenmede Corp., she now has nothing to do with the charity. She declined to be interviewed.

Increasingly, the Pews have relied on the advice of staff, consultants and other experts to formulate policy.

More than 95 percent of grants approved by the board are staff-recommended. But board members insist on going over each one, line by line, a time- consuming process that limits the number of grants they can give. The process at most major foundations is for boards to approve multimillion-dollar initiatives, leaving the details to the staff.

The Pew board reviews about 100 grant applications at each quarterly meeting, which limits the number of grants to about 400 a year. This has not changed over the last decade, despite a near-tripling of the annual grant budget - from $65 million in 1980 to $170 million today.

To dispose of all that money, grants have, almost of necessity, become bigger and bigger. That has led to fewer and fewer grants of $5,000 or less to small organizations.

Unlike other foundations that have invited community representatives onto their boards, Pew's has been restricted to family members or friends who hold like views.

"The Pews are so insulated that there just isn't a sense of their connectedness with the community," said Dr. William Reynolds, director of the Overbrook School for the Blind, a Pew grant recipient.

He contrasted the Pews with the Haas family, who founded the Rohm & Haas Co. and the William Penn Foundation, the second largest in Philadelphia. For years, John C. Haas, chairman of William Penn, has been involved with boys

clubs, often leading groups himself. "How many Pews are working with boys

clubs?" Reynolds asked.

After Rimel's appointment in 1988, there followed a prolonged period of upheaval while a new staff was being recruited.

Six new program directors and 11 associates were hired after a lengthy search that extended more than a year. Each new director, in turn, spent another year preparing a "white paper" that studied past grant patterns and recommended new directions.

As a result, according to the organizations that relied on Pew funding, the foundation was stalled in chaos.

Under the new management, appointments with Pew staff had to be made months in advance and even reaching them by telephone was difficult, grant recipients said. Staff turnover has been so great that there is little institutional memory - projects started under one staff member are continued under others.

Langfitt and Rimel said they were determined to bring in a different breed of staff, recruiting people with already established reputations in specialized fields. All the new program directors are from out of state. Many come from the kind of liberal or big government programs that J. Howard Pew abhorred.

Education program director Robert Schwartz was special assistant for education to Massachusetts Gov. Michael Dukakis; environmental program director Joshua Richert is a former activist with United Farm Workers president Cesar Chavez; and health and human services director Dr. Tom Vernon directed the Colorado Department of Health.

The effort to professionalize the staff was accompanied by an increase in salary for the top executives. Langfitt's compensation last year, $564,214, was the highest of any foundation head in the country. His income reflects his dual role as president of the charity and chief executive officer of the bank.

Rimel's salary last year was $195,862.

As they were transforming the foundation, its increasingly liberal bent brought on another crisis on the board.

Until December 1990, John G. "Jack" Pew Jr., now 60, an appeals lawyer in Dallas, was one of the five family members on the board. He held the ''Texas seat" that traditionally had been reserved for the branch of the family sent there when oil was first struck at the Spindletop fields in 1901.

Quiet and conservative in his views, Jack was the board member who was closest philosophically to the trust founders. And he did not see eye-to-eye with Tom Langfitt.

Increasingly, grants for more liberal institutions were being proposed, and funding for J. Howard's treasured conservative causes was being phased out. Jack Pew objected. But more and more, he was outvoted.

Finally, he resigned. Publicly he gave no reason, although he was heard to remark to colleagues, "I just don't like the way those people do business."

The other strong voice on the board for conservatism, former Sun chairman RobertDunlop, now 82, also is less and less a factor.

The vacant seat was filled in December by William C. Richardson, president of Johns Hopkins University - the first appointee to the board who is not a Pew or a family friend.

Visitors to the Pew foundation rarely see its inner workings. They are met in the lobby on the 17th-floor of the new IBM building at 21st and Market Streets and ushered into aqua and peach greeting rooms, where the staff meets the outside world.

The rarefied foundation world is in many ways unreal. The work itself, of seeing supplicants and deciding who should get money, becomes what one official described as a narcotic. "It's power and prestige."

Seldom is an unflattering word spoken.

Too many people want too much from Pew.

"Everybody wants to see you," said Michael Rubinger, associate executive director. "Is it because you're terrific and wonderful? Hell, no. It's

because you control a lot of money, or at least they think you do."

A standard joke in the field of philanthropy is that once you go to work for a foundation, you'll never have a bad lunch or know who your friends are.

Outwardly, the turmoil of the last few years at Pew is over.

"The transition period is over now. We're together," Langfitt said. ''We're extremely proud of what we've accomplished in the last five years. We've been making extreme progress. I would put ourselves up against any foundation in the nation in terms of innovation."

Rimel agreed. "Now I really think that Pew is looked at not only as a significant player, but our programs are respected and the caliber of the staff is respected," she said.

Pew is not yet a household name, like Ford or Rockefeller. But its quest for national recognition is succeeding.

More and more, Pew staff are included among the movers and shakers at foundation conferences and meetings. In December, Town and Country magazine awarded Pew its annual "Generous American Award for 1991." And this month Pew was honored by the Council on Foundations for its 1990 annual report - which cost $210,800.

Criticism by Philadelphians, who knew and depended on Pew the most, can easily be discounted by Pew executives as sour grapes by people losing their funding. Those still receiving grants are reluctant to speak out.

One executive director of a major Philadelphia cultural organization, for instance, was very bitter in his complaints about how the Pew Trusts weren't supporting local institutions. "But on the record," he said, "all I want to say is that I think they are fabulous."

And Pew's new constituency, national and dispersed, has no historical expectations or basis for evaluating the foundation's work.

Philadelphians watch and wonder.

Dennis J. Clark, former executive director of the Fels Foundation in Philadelphia, said he had yet to detect a new direction.

"As far as I can see, they've been staggering around for a dozen years with this vast enormous money bag on their back," Clark said. "They still have not been able to come up with a definitive or developmental outlook."