Century Foundation's Wall Street Connections Can't Halt 39% Drop in Assets
As guests dined on tea-smoked quail at a party in Washington last month, Lieutenant General Douglas Lute, President Barack Obama’s coordinator for Afghanistan policy, stood to offer praise for a new report.
“All of us, and certainly those of us in the administration, should take this glossy little book home and look at it carefully,” Lute said of the study advocating talks with the Taliban published by the Century Foundation, the New York-based policy institute hosting the event.
It was a bright moment for a think tank that has lost money, prestige and its president. Century, founded in 1919 by bargain-basement retail pioneer Edward Filene, and an early proponent of social security and stock-market regulation, has seen net assets fall 39 percent to $38 million last June from $61.7 million in 2000. Over that period, it cut annual spending to $3.8 million from $5.9 million.
The foundation, where economist John Kenneth Galbraith and physicist J. Robert Oppenheimer once served as trustees, has been eclipsed by more aggressive peers. Its current board, studded with Wall Street figures, spent more than three years considering a proposal to merge with the Washington-based Center for American Progress, a plan it rejected last October. It has put Century’s four-fireplace Upper East Side townhouse on the market for $30 million and is looking to replace Richard C. Leone, 70, who’s retiring after 22 years.
“Would I like for the Century Foundation to be more influential and blah-blah-blah?” said Bradley Abelow, a former head of operations at Goldman Sachs Group Inc. (GS) and a member of the foundation’s finance committee. “Sure. Would I like to be 6-foot-5 and blonde? Maybe. I’d like everything I do to be more impactful and be more successful.”
The trustees, including Abelow, now president and chief operating officer of futures and options broker MF Global Holdings Ltd. (MF), and Lewis Kaden, a Citigroup Inc. (C) vice chairman who is Century’s treasurer, have dipped into the endowment to cover foundation expenses. Tax filings for fiscal years ending June 30, 2000, to June 30, 2010, show that the foundation spent $10.6 million more than its revenue.
“At our bottom, if we had not drawn more money out of the endowment, we would have basically had to stop all of our activities,” said Alan Brinkley, 61, chairman of Century’s board and a professor of history at Columbia University in New York. “We just wouldn’t have been able to sustain our staff and sustain our activities at all.”
Century’s investments are handled by Leone, a former president of the New York Mercantile Exchange and managing director at Dillon Read & Co., who said the arrangement has saved the foundation millions of dollars in money-management fees. Kaden, the Citigroup vice chairman, is “there for advice,” Brinkley said. Kaden declined to comment.
“When Dick is faced with a question, he calls,” said Abelow.
Even with its Wall Street connections, Century has done almost no fundraising outside of receiving support from institutions such as the Rockefeller Brothers Fund.
“That wasn’t part of the job description when I took it, and that wasn’t part of what the board does,” said Leone, who plans to step down as Century’s president when a replacement is found. “Indeed, it was said that I wouldn’t have to do that.”
Leone defended the group’s financial management in a March 16 interview. Wearing a tie that featured the title of Shakespeare’s “The Tempest” and was decorated with blood-like splotches, he said he regrets only “the way the country has moved,” not anything about his tenure.
“The endowment is only there to be spent,” said Leone, who during his presidency also served as the unpaid chairman of the Port Authority of New York and New Jersey and head of New Jersey Governor Jon Corzine’s transition team. “It’s not like something Scrooge McDuck has in a bin somewhere to go swim around in. It’s there to be used.”
Century paid Leone $290,567 for the year ending in June and a total of $3.4 million for the past 11 years, the foundation’s tax filings show.
Since its founding by Filene, who had started Filene’s Basement to sell extra merchandise from his father’s Boston department store, Century has been a fount of “progressive, well-reasoned, well-researched ideas,” as late board chairman Theodore Sorensen put it. He and former Century trustee Arthur Schlesinger Jr. were advisers to President John F. Kennedy.
‘Group of Argonauts’
The foundation, originally the Cooperative League and then the Twentieth Century Fund, was a “broker of ideas” whose views on issues such as U.S. debt and labor relations were conveyed to President Franklin D. Roosevelt, wrote historian James Allen Smith. Adolf A. Berle, a Century trustee and member of Roosevelt’s Brain Trust, called his colleagues at the foundation a “group of argonauts” who fought to “relieve present evils.”
In recent decades, the foundation has had less impact. Leone says that when he took over in 1989 Century wasn’t “producing much.” In Leone’s first years, Century continued to be a place that published books, “and that was pretty much it,” Brinkley said. More recently, the foundation has supported fewer long publications, sponsored more events and developed material for its website, he said.
“He wanted to make this a different kind of place,” Brinkley said of Leone.
“If you look at their agenda, they’re all over the map, and not with a lot of depth,” said James McGann, director of the Think Tanks and Civil Societies Program at the University of Pennsylvania.
Century wasn’t included in a ranking of the top 50 U.S. think tanks compiled by the program last year. The foundation was listed in a 2008 compendium called “The Practical Progressive.” That book’s editor, Erica Payne, said in an interview that Century’s “prestige has diminished” and that its “senior management team and the board does not seem particularly focused on being relevant.”
David Callahan, co-founder of Demos, a research and advocacy group in New York that has contributed to Century, said that while Leone was “a visionary” about the need for progressive think tanks, the “endowment took a hit at the same time that other places were scaling up.”
“If two mansions get built on either side of you, you’re no longer the biggest house on the block,” said Callahan, a former Century fellow and author of “Fortunes of Change: The Rise of the Liberal Rich and the Remaking of America.”
‘Not My Wish’
Century’s board has weighed winding down the foundation.
“We didn’t have enough money to have as big an impact as we’d like to have on the public dialogue,” said Richard Ravitch, a former New York lieutenant governor. The head of the finance committee before Kaden, he advocated that the foundation spend itself out of existence. Filene himself had written that it was “not my wish” to have Century live on in perpetuity.
The board didn’t approve the plan.
“I was there for that decision,” said Morton Halperin, a former Century senior vice president and now senior adviser to billionaire George Soros’s Open Society Foundations. “Nobody wants to go out of business, so it was a very easy decision.”
Instead, the board decided to “draw more from the endowment than most institutions think is appropriate,” Brinkley said. Leone said the group has long been able to “walk the fine line between spending at a high rate and staying in business,” and doesn’t want it “self-obsessed” with survival.
At first, the plan worked. While Century’s net assets declined 13 percent to $53.7 million in June 2007 from $61.7 million in 2000, the fair market value of those assets increased. That’s because the value of its townhouse rose to $25.1 million from $6.1 million, as reported on tax returns.
“We did pretty well,” Brinkley said.
That didn’t last. Over the next three years, during the financial crisis, net assets fell another 29 percent, to $38 million by June 2010 from $53.7 million, filings show. This time the value of the townhouse didn’t increase enough to offset the losses. Christy DeBoe Hicks, a spokeswoman for Century, said in an e-mail that the group’s net assets “have since appreciated to approximately $41 million.”
Abelow, who like Leone is a former treasurer of New Jersey, said there wasn’t any panic on the Century board.
“Why should there be?” he said. “The value of the assets goes down because of the world around us.”
Foundations that Leone and Brinkley described as Century’s peers didn’t suffer as much, according to tax filings available from the New York Attorney General’s office and the Foundation Center, a nonprofit research group. Net assets and spending were higher in 2009 than they were in 2006 at the Brookings Institution, Demos, the Economic Policy Institute and the Center on Budget and Policy Priorities.
Century considered merging with the Center for American Progress as far back as 2006, according to John Podesta, who started the policy organization in 2003. Podesta, a Century board member and former chief of staff for President Bill Clinton, said he admires the work of Century fellows such as Richard Kahlenberg, whose writing on education he called “amazingly good.”
Brinkley said he favored the merger because it would boost resources and productivity. He also said he was “uneasy” that the foundation would become “a small part of a very big organization.”
Jessica Tuchman Mathews, president of the Carnegie Endowment for International Peace, who said she left Century’s board about a year ago, found the ambivalence frustrating.
“The possibility of the merger, and the long, long, long drawn-out discussion of it, shielded the board from seeing the urgency of making difficult, painful decisions that needed to be made one way or another,” she said in an interview.
Harvey Sloane, a board member since 1974 and a former mayor of Louisville, Kentucky, said in an e-mail that a requirement of unanimity for major decisions made the merger talks “particularly challenging.” He also said he was “more than satisfied” with the job Leone has done.
Other board members include Kathleen Sullivan, a partner at Quinn Emanuel Urquhart & Sullivan LLP in New York who has represented American International Group Inc. and Morgan Stanley; Alicia Munnell, a professor at the Carroll School of Management at Boston College and a former research director at the Federal Reserve Bank of Boston and Matina Horner, a former president of Radcliffe College and a member of a BlackRock Inc. board that oversees mutual funds.
Horner said that Century has done a “terrific job” adapting to a new age. Munnell declined to comment, and Sullivan didn’t respond to two e-mails.
The talks with the Center for American Progress came to a head during the board’s meeting in October, according to Brinkley and Leone. After a speech in favor of the merger by Brinkley, the first trustee who spoke opposed the plan, which needed unanimous support, according to Leone.
“At that point, it was clear it was not going to go forward,” Leone said.
That year assets and spending reached their lowest in at least 11 years, according to tax filings available on the website of the Massachusetts Attorney General’s office. During that span, in which the foundation brought in an average of $841,000 a year, the board remained “ambivalent” about fundraising, Brinkley said.
‘Finally Got Tired’
“That’s not something that Century has set out to do,” Abelow said. “Should we do that? I don’t know what the answer is. It’s very hard to step into that in the current fundraising environment.”
Once Leone announced his departure to colleagues last September, the board felt it shouldn’t undertake any big shifts, Brinkley said. When the option of throwing fundraisers had come up previously, it was “hard for us to gauge how successful fundraising could be,” he said, because “we have a board that doesn’t include major donors.”
Alan Sagner, who also served as chairman of the Port Authority and is an honorary Century trustee, tried to raise money for the Century Institute, a summer program at Williams College in Williamstown, Massachusetts. The institute taught students from around the country about “progressive ideals, policy and politics,” according to the foundation’s description of the program. While Sagner helped bring in donors, including Goldman Sachs, “people were more interested in contributing to political campaigns,” he said. The program ended in 2003.
“I finally got tired of spending $100,000,” Sagner said.
Having an endowment, which most of its peers lack, makes it hard to attract donors because of the assumption that the foundation would spend its own money if the work were important, said Halperin, the former senior vice president.
‘In 100 Years’
The board and its next president will need to talk about Century’s future and what issues to focus on, Abelow said.
“Does that mean we don’t cover health care?” he said. “That we don’t talk about education? That we give up our foreign policy work? Those are the kind of hard conversations that we’ll have to have.”
At the March 22 dinner in Washington, Afghanistan study co- chairs Lakhdar Brahimi, a former United Nations special representative, and Thomas R. Pickering, a former U.S. undersecretary of state, spoke about their proposal to negotiate with the Taliban.
“Every institution is thinking about how to be relevant,” Steven Clemons, master of ceremonies for the event and a senior fellow at Washington-based policy institute New America Foundation, said after the dinner. “This is a sign that it could be rewiring itself.”
Even if it does, Century won’t live forever, Leone said.
“You do the work you can do as effectively as you can, while you can,” he said. “I don’t think there’s anybody on the board who thinks in 100 years it’s very important that this be here.”
To contact the reporter on this story: Max Abelson in New York at firstname.lastname@example.org.
To contact the editor responsible for this story: David Scheer at email@example.com.
Bloomberg moderates all comments. Comments that are abusive or off-topic will not be posted to the site. Excessively long comments may be moderated as well. Bloomberg cannot facilitate requests to remove comments or explain individual moderation decisions.