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  • Scaife Series: database and related stories

  •   Scaife's Foundations

    Washington Post Staff
    Sunday, May 2, 1999; Page A23

    Richard Mellon Scaife's philanthropy has come from family trusts set up by his mother, four foundations and his own checkbook. The trusts expired in the 1980s. The four foundations and their assets at the end of 1997 are:

    The Sarah Scaife Foundation, $302 million

    The Allegheny Foundation, $39 million

    The Carthage Foundation, $24 million

    The Scaife Family Foundation, $170 million

    The last of these is now controlled by Scaife's two children, David and Jenny, though it shares staff with the others and gives to many of the same causes. Scaife controls the other three. All four have boards of directors that meet several times a year to pass on grant recommendations presented by members of the small staff in Pittsburgh. Members of the boards said deference is shown to Scaife's personal desires, but he does not have the authority to make grants without board approval.

    Scaife also makes personal contributions, but little is known about them. Scaife's lawyer, H. Yale Gutnick, would say only that in 1997, Scaife personally gave $7 million to charitable causes. He has contributed many millions to the Carthage Foundation, which donates those gifts to nonprofits, mostly conservative groups. The history of Scaife's money is testimony to the powers of compound interest and the stock market. The market value of the assets he inherited in the 1960s was considerably lower than the market value of the assets at the end of 1997 listed above though he also has given away more than $600 million in the interim.

    The tax law required Scaife to become a philanthropist. The foundations he inherited had to give away 5 percent of their assets every year. Sarah Scaife's trusts, set up under provisions of the tax law that have since been repealed, were required to give away all the income they generated.

    Scaife's mother and later Scaife himself got huge tax deductions to establish their trusts and foundations. He can deduct the amount of each gift he makes from his taxable income, which given the billion dollars or so in his personal fortune is presumably substantial.

    Such deductions are classified by the Treasury as "tax expenditures" the equivalent of government spending. Charity is a "tax-favored activity" in the jargon of tax lawyers it is subsidized by all taxpayers.

    Altogether the world of tax-free philanthropy is enormous. In 1997, American foundations gave away about $82 billion, and individual Americans took tax deductions for charitable contributions of $101.4 billion, according to the IRS.

    © Copyright 1999 The Washington Post Company

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