The Wallace-Reader's Digest Funds, the sixth-largest charity in New York state and one of the wealthiest private foundations in the country, has relinquished control of $1.7 billion in endowments to thirteen organizations, including the Metropolitan Museum of Art, the New York Times reports.
The move settles a probe by the New York attorney general's office into the funds' complex organizational structure, which, since the early 1980s, had placed control of the endowments, all of which were heavily in Reader's Digest stock, in the hands of seven Wallace supporting organizations. Restrictions placed on the supporting organizations impeded the charities in question from selling the stock, which experienced a precipitous slide in value in the mid-1990s.
"There was a sense," said New York Attorney General Eliot L. Spitzer, who inherited the investigation into the funds' structure from his predecessor, Dennis C. Vacco, "that there wasn't as much independence as the beneficiary entities wanted. We've overcome that and given them the opportunity to chart their own course."
In addition to the Met, which will gain control of $424 million, the charities benefitting from the agreement include the Wildlife Conservation Society ($191 million); Memorial Sloan-Kettering Cancer Center ($100 million); Macalster College in St. Paul, Minnesota ($303 million); the Colonial Williamsburg Foundation ($155 million); Lincoln Center's ballet, music, theater, and two opera companies ($312 million); and two conservation groups, Scenic Hudson and the Open Space Institute ($115 million each).
When the transfer is complete, the thirteen recipients will control approximately 19 percent of Reader's Digest non-voting stock, which recently closed at $27.51, down more than 50 percent from its high of $55.62 in January 1993.
"Were delighted," said Metropolitan Museum of Art president David E. McKinney, who noted that, because the museum already controlled the part of the portfolio not in Digest stock, it wasn't "new" money. As for what might have been if his organization had had more control over the stock as it lost value, Mr. McKinney pointed out that "it's hard to say there's any unhappiness with someone who has been so good to the museum...."