Let's Get Honest! Absolutely Uncommon Analysis of Family & Conciliation Courts' Operations, Practices, & History

This sprang un-mid-wifed (?) from the belly of another post,** where it’d grown submerged under that post’s main identity until ready to burst forth into a free-breathing, distinct publication from the other, as itself, and at a different street address (url) on the same blog.  I have been pregnant (and carried to term; they’re young adults now), so I do know what it feels like getting around the last few months: cumbersome. That’s how the other post was getting.

**the post (published 4/17/2017) which gestated (? incubated) this one:

Others talk so freely about conceiving, founding, launching and incubating various projects (or nonprofits) under some larger fiscal agent, or donor-advised-funds community foundations until they are “spun off” or “born,” I figure I can talk about having “given birth” to another post every now and then.   🙂  Sometimes, when I’m tangling too close with certain subject matter (here, the University of Pennsylvania and University of Southern California’s “Annenberg School of Communications” Trusts, not to mention the Annenberg Foundation itself) unpremeditated offspring are conceived.

So, this one being my “baby” I gave it a nice long name, in the  family (“FamilyCourtMatters)”tradition:

The first several paragraphs here overlap from the originating post, before I “get into it,” scrutinizing some of the Forms 990PF and relationships between various Annenberg projects and their main foundation. *** [see below next para. and link]

As previously explained (on the last post, above), this is a large family foundation (well, at least one) whose primary wealth came from ownership of publications/media field — the sale of “Triangle Publications,” by a second-generation business success, Walter H. Annenberg.

As much as I might want to elaborate more on this, after starting to do so here, I ‘re-allocated’ this into a spin-off post, which is now (a day later) complete and ready to go when this one is, under the name:

***And whose family style of philanthropy, prior generation and the new one (daughter Wallis), tends to put its name on the things it funds and endows — like entire schools within at least two universities, and to advertise about the amazing, large-scale things it has accomplished by the sheer scope and size of commitments.  No question this philanthropy is appreciated by the recipients, especially the art museums, but I do have a “show-us-the money” (financial reports) issue with the private-university-located entity which not only seeks to transform the US Public School system but also I gather to privately steer how, and in what direction, and to do this nonprofit and somewhat fiscally underground.

I also believe it’s time to start questioning the university homes (here, private universities) who help hide the cashflow involved while publicizing the program and project aspects, both this one, and other related ones.   

In this post, “AISR” stands for one of the advertised projects for which I’m having some trouble locating financial reports (showing gross receipts, program-related revenues and expenses (payments to others, including subcontractors), plus annual reporting of a balance sheet, showing where are its investments), despite how popularly and widely it is referenced both by the involved universities and some of the funded nonprofits, some of which are either themselves networked, or helped start one (i.e., “Coalition for Essential Schools.”

If there IS no such Form 990-filing entity by the legitimate name AISR (written out), thing, then I would question why a corporation by that name was ever set up, which, as I established in my last post, Rhode Island Corporations Division says does exist; it has a business entity and listed board of directors, is classified as a nonprofit, and a start date is listed.

“AISR” represents “The Annenberg Institute for School Reform at Brown University” which is in the USA’s smallest state: Rhode Island or as the Secretary of State/Corporations Division website says “Rhode Island and the Providence Plantations.”

Here’s a street sign for the AISR but who can find its tax return (EIN#)?  I see there is a corporate filing for it.  Donations to it are coming (mostly) direct to Brown University EIN#; Brown being a private nonprofit, files its own Form 990s:

Street Sign for AISR (partially obscured by foliage) from VictorianWeb

Ramifications: IF there is no proper EIN# (for example, if AISR is an UNregistered trademark of Brown University, or some other explanation), then what does that say about the famous Annenberg Foundation whose $500M to public education — and $50M of this to this institute named after the donors — is displayed on their website and recited faithfully in histories of the respective institutions?

If, by contrast (however) the secrecy and “catch-us-if-you-can” aspects of the cash flow TO the AISR is symptomatic of Brown University only, not the Annenberg Foundation whose claim is to have committed $50M gift to it months after its first $5M gift (and this in 1993), then PERHAPS the donee may be found by starting at the Annenberg Foundation end and working downwards as to the Public Challenge Grantees.

I cannot easily access EIN#s before this century, but early in this century did find a list of some of those grantees (but not named AISR and representing any EIN# outside of Brown U’s main #). Will show it below. This all will make more sense if you read the annotated images, not just the narratives around them.

Website “http://www.annenberginstitute.org/what-we-do/projects/children-and-youth-cabinet-providence” (read the fine print!)

What’s more, when a major foundation IS claiming to donate money which cannot be readily found on a financial report to an institute within a private university not subject to (or complying with requirements to) file — I figured perhaps it might be good to identify, in this situation, the OTHER “Challenge Grantees” specifically and see if, as a group, they are doing any better.  Perhaps also it is a symptom that something might be radically wrong with the entire picture; whether or not should be identified and whatever is wrong should be corrected. Where, for example, are the checks and balances?

CYC (found at AISR Brown University) Notice “Cradle to Career” is the goal.

At all points, when public schools major institutions are targeted for systemic change as sponsored by untrackable, or hard to follow private money, (projects of school districts across the country, who as specialized, special-purpose government entities, must maintain their pension funds, facilities management, maintenance, construction and acquisition at times (i.e. real estate), staff, administrative overhead, support staff, school security, books, computers and consumable classroom supplies, not to mention supply of properly qualified teachers, and security-screened for criminal backgrounds at all levels too — should we not already have familiarized ourselves with at least our own school districts’ financial statements too, how they are put together, and be able to tell when any unethical, immoral, or potential racketeering influence (RICO) might be operational?    And be talking about those financial statements with each other, as opposed to devouring the press and funded public relations material (only) about them?

If the school districts — and their projects, the schools —  are collectively a major “distressed asset” in which foundations wish to personally invest (or, have the public “divest” more and more) — shouldn’t we be able to see where they are dealing with the private contractors seeking to reform them in coordinated fashion based on theories from, for example, specific Harvard, Yale, Brown, Columbia University, Princeton or Ivy League models?  [This maroon font marks three paragraphs not on original post, in the “overlap” section].

From ANNENBERG FNDTN WEBSITE About Page 1989 – 1993 (School Reform) + 1958 School for Communciation at U of P (Screen Shot 2017-04-14 at 1.32PM (Goes with next image):

The School Reform challenge is featured on Annenberg Fndtn’s own summary of itself, along with establishing schools of communication in 3 institutions, and substantial contributions to art museums and endowed chairs at universities. It also gives a size reference for the initial funding of the foundation — sale of a media empire (Triangle) for, judging by this, $3.6 billion, presenting another major problem to be solved — federal taxes on capital gains! And, public image vis a vis the less well-endowed (i.e., the working poor and middle class).

The foundation still has a Pennsylvania Address, although its surviving Annenberg family members and some of the staff/contractors seem to be more in Southern California (Los Angeles, Beverly Hills, etc.).

Timeline FAQs from its “Who We Are” (after identifying as a family foundation).  Notice the years, please.

• 1989 The Annenberg Foundation begins operations on July 1 with $1.2 billion in assets. [see also annotated image to left]
• 1990 To focus attention on the needs of historically black colleges, the Annenberg Foundation makes a $50 million challenge gift in what becomes, at the time, the most successful fundraising drive ever by the United Negro College Fund.
• 1993 The Annenberg Foundation makes a $25 million grant to Harvard University. The grant will be used for scholarships, seminar programs and renovations to historic Memorial Hall, including the creation of a freshman dining facility named for the Ambassador’s son, Roger Annenberg.
• 1993 The Annenberg Foundation makes a historic commitment to public education with the $500 million Annenberg Challenge. The Annenberg Challenge is one of the largest gifts in philanthropic history and works to revive and inspire school reform efforts across the nation. Eighteen locally designed Challenge projects operated in 35 states,** funding 2,400 public schools that served more than 1.5 million students and 80,000 teachers. [[More on how it identifies (or doesn’t) these projects, below, look for the “**”]]
• 1993 The Annenberg Foundation grants $120 million to the University of Pennsylvania.## The grant endows the Annenberg School for Communication and creates the Annenberg Public Policy Center, which conducts research and convenes discussions on the critical intersection of media, communication and public policy.

“**” and “##” mark two footnotes I’m making to the organization’s summary page.  “##” is addressed first, and several paragraphs below that, and likely next to an image, “**.” Look for both the symbols and titles in those two colors to tell one from the other.

## Annenberg School of Communication Financial Relations with the University of Pennsylvania and the Annenbergs:  

This 1993 $120M endowment for the (pre-existing since 1958, per description above) Annenberg School for Communication at the University of Pennsylvania (“ASC at UofP” for convenience here) becomes interesting when eight years later, the UofP endows a trust whose income goes to the school, but is still controlled by Annenberg and their historic financial and legal managers from other foundations or trusts.

I found a 2002-funded Trust which was initially funded with $100M (even) FROM the University of Pennsylvania [currently held in the UofP’s “AIF” and possibly from it in the first place] which was from the start under the control of (a) a Dean or Director from the ASC at UofP, Annenberg Family Members (originally Leonore + Wallis; Leonore the mother died in 2009, her famous spouse Walter H. in 2002), some lawyers from (as the Form 990PFs show) from a Philadelphia Law firm Dilworth Paxson also known for handling other Annenberg financial and estate matters.  One of these men (Wm. J. Henrich) was previously successor to Triangle Publications when its owner (Ambassador Annenberg) stepped down in, I believe the NYT article showed, 1984.

Closer looks at some of the respective tax return details reveals operation practices and the larger strategy.

(Shown again below:   tinyurl.com/1984Nov16NYTHenrichSuccdsAnnbg.  Not too long after, Triangle Publications was sold?)

“AIF” is a term I found on the tax return, and as seen on a financial statement (at university site) must stand for Affiliated Investment Funds” managed by a third party, it says:

“AIF is Associated Investments Fund third-parties-managed, then 2’8B (excerpt from FY2001 UofP Financial Statemt)” (<==click for full-sized).

I will post more on this below; I’m still trying to understand it and wrap my head around how a university as large as the University of Pennsylvania, around since 1740 (!!), could be operating as a private nonprofit, and not as is seen in other states whose similarly-named universities ARE often state corporations or instrumentalities, or may have started as land-grants, but going by the name “University of Pennsylvania” similar to other states   Apparently.

This would mean that Annenberg has chosen two PRIVATE universities for Schools of Communications (here, and Univ. of Southern California) and private university Brown for its AISR.

The interesting feature to me here is that what I considered a state university, and would expect to be subject to “CAFR” filings, is apparently (judging by the size and description of “Trustees of the University of Pennsylvania) instead, just a humongous 501©3, that is, a private, nonprofit.  Each state may do its state-supported university systems in its own way, but that was a real surprise for me.  The ramifications?  It may not have to produce the type of detailed reports that other government entities have to.  For a contrast, I’m working on a separate post looking at the Commonwealth of Pennsylvania’s CAFRs, not that this topic hasn’t been covered on this blog (and a related one) in earlier years.

Take a look! You’ll have to ignore the wrong name supplied by the FoundationCenter, again; the EIN# represented belongs to the “Trustees of the University of Pennsylvania” which a small image from the IRS “Exempt Organization Select Check” search page also shows.  Or, just click on any oddly named organization in the table here to see the Form 990 attached to it.

Total results: 3. Search Again.

The IRS “Exempt Organizations Select” check search site verifies that contributions here are tax-deductible and who actually owns that EIN#:  “Trustees of the University of Philadelphia.”

$17 BILLION dollars of assets of course includes buildings, and liabilities to go with them.  BUT, a closer look shows it includes substantial investments and related companies (foreign and domestic).

Click to read Annotations and view full-sized (Sched E self-identification by U of P on its tax return)

The Annenberg Foundation “About Us” summary fails to mention that after it gave UofP $120M to endow the school named after the family and setting up another “Center” with the family name, eight years later, in 2002, the UofP then set up a trust controlled by ASC leadership and Annenberg family leadership, starting with $100M — and not too many years later, doubling in size, which income was to go to back to the University of Pennsylvania (i.e., the terms of the trust strictly controlled where its revenues went).  However, someone had to administer this, and over time I saw that the, or an independent subcontractor investment management firm (Bessemer) also had funds titled after itself in which the assets were invested, as well as being paid (as a subcontractors, plus separately, there would be also more “investment management fees”).

About Bessemer — this firm began when Phipps, who helped found Carnegie Steel, sold his share and (obviously) than had some investments to manage.  The investment company (1907 started) continued privately controlled, but by the 1970s began inviting in some of their kind (wealthy families, foundations, or trusts) to work with them.  https://en.wikipedia.org/wiki/Bessemer_Trust.  Still run by a Phipps descendant (as of this “Wiki”), it manages over $100 billion assets for its 2,300 clients, has offices all over the US in major cities, and the Cayman Islands, and London.  In 2001, this Bessemer Trust formed a partnership with someone from Morgan Stanley aimed at “middle market equity.” See next image:

Minimum investments to get involved in Bessemer Trust, if they want you, is $10M.

Guess what the 2001-formed partnership middle-market partnership specialized in?

“Lindsay Goldberg is an American private equity firm focused on leveraged buyout and growth capital investments in middle-market companies in such sectors as consumer products, commodity-based manufacturing, energy services, business services, financial services, energy transmission and waste disposal.^[2]

The firm, which is based in New York City, was founded in 2001 by Alan Goldberg, who had previously served as chairman and CEO of Morgan Stanley Private Equity (later Metalmark Capital) and Robert Lindsay, who played a central role in the Bessemer Trust private equity business, serving most recently as Managing General Partner since 1991. Goldberg and Lindsay had worked together in the 1980s at Morgan Stanley and were founding members of the private equity business in 1984.

The firm has raised approximately $13 billion since inception, across four funds. The firm raised $2 billion for its first fund in 2002.^[3] In 2006, the firm completed fundraising for its second fund with $3.1 billion of investor commitments.^[4][5] In 2008, Lindsay Goldberg commenced raising its third fund with a target of $4.0 billion. As of November 2015, $3.4 billion had been raised toward its fourth fund.^[6]“

Leveraged buyouts and growth capital.  Per this (brief) Wiki, there was also some press over a controversy regarding one of the projects, Duff Capital Advisors, which lasted about one year, period, 2008-2009.

Investment in Duff Capital Advisors[edit]

In 2009, Lindsay Goldberg received media coverage for controversies related to its investment of $500 million in seed capital in Duff Capital Advisors.^[8][9] Launched by former Morgan Stanley CFO Phil Duff, Duff Capital was led by financial services executive Eileen Murray, who served as its Co-Chief Executive Officer and President.^[10] Duff Capital Advisors started in March 2008 and shut down in May 2009 prior to moving into the 43,400 square feet of office space, complete with food court, showers, and other amenities, which the company had leased in an office park in Greenwich, Connecticut.^[11][12] Subsequent to the closure of Duff Capital Advisors, Phillip Duff formed Massif Partners, another hedge fund; however, Lindsay Goldberg declined to make an investment in this enterprise.^[13] Massif Partners went on to encounter similar challenges to Duff Capital.^[14]

(For timeline comparison, the alteration in the UofP / Annenberg School of Communications financial setup involved moving $100M into a trust “fbo” (for the benefit) of UofP in 2002 and another one “fbo” USC (University of Southern California), looks like the same amount or close to it, also about the same time.)  However, they weren’t involved with the partnership, just Bessemer Trusts.  BUT, later on, you can see the investments are in funds named “Bessemer” part of the time.  [I do not recall on which tax return, but remember seeing this.  Perhaps it was on the foundation proper and not one of the ASC Trusts…Anyone is free to review; I’ve provided the EIN#s…]

But here’s an image from a UoP tax return showing that EIN# as part of its overall “related entity” operations.  I’ll show the table for the same EIN# below.

Trustees of Univ of PN EIN# 231352685 FY2014 990 Excerpt showing ASC Trust as supporting entity.  Meanwhile, see also the corresponding entity’s filing (the ASC Trust at U of PENN) FY2014 Form 990 acknowledging the Univ of Pennsylvania as its own Schedule R Related Entity (and the only one, in fact):

** Annenberg Public Education Challenge (footnote to the Foundation’s summary page)

(**18 projects in 35 states by definition indicates crossing state jurisdiction lines, which helps break down accountability with the departments of education and school districts within each state involved.  But that’s nothing particularly new in the field of public/private partnerships…)

Question:  Where are the Foundation’s Forms and audited statements for year 2015? I can understand why 2016 may not be out yet — but why not 2015? (2015 return has not shown up yet on the FoundationCenter search, either) — this is the latest year showing as of now, April 2017.  They are two to three years behind in reporting to their own openly transparent website.

Above represents FY2014 because at this point their FYr.=Calendar Yr. That means FY2015 isn’t posted yet, at least here (also not on their website).

Just a word on the relationship with the University of Pennsylvania and Annenberg School for Communications (started in 1958) and its endowment (and new name, Center for Public Policy) — who funded whom, and who controls whom, gets a little complicated when I read an Annenberg Foundation 2002 return stating that the “[Ann’brg.] School for Communications” had converted into a private trust. I looked up the private trust and found its initial return (2002) which shows a $100M contribution TO this trust:

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