A Quiet Family Fund Creates a Loud Buzz

The Walton Family Foundation has the deep pockets of a philanthropy big-leaguer but the public profile of a much smaller institution.

Second only to the Bill & Melinda Gates Foundation in its spending to overhaul schools, the Bentonville, Ark., grant maker has long shunned publicity. The 23-year-old foundation, which also gives big sums to environmental issues, published its first annual report in 2007 and rarely grants interviews.

But at a philanthropy conference last year and in an interview with The Chronicle, Carrie Walton Penner, a trustee and granddaughter of Sam Walton, founder of Wal-Mart and co-founder with his wife, Helen, of the philanthropy, spoke about the fund’s approach to grant making.

Ms. Penner, who is one of 11 board members (all family members) to lead the foundation, described how the grant maker has been taking a more advocacy-oriented approach to education in recent years—and how its footprint on environmental causes is growing, too.

The Walton Family Foundation gave out $378-million in 2009, the most recent year for which data are available. Of that amount, $134-million went to education and $55-million to freshwater and marine conservation, its two environmental concerns.

The Walton fund also makes grants to nonprofits that seek to improve life in Arkansas and the Mississippi Delta and gave $100-million to the Walton Family Charitable Support Foundation, a separate fund that supports colleges and university scholarships.

The family foundation has a staff of 30 and, as of last year, an endowment of $2.2-billion. (Its assets could grow if it received money from the estate of Helen Walton, who died in 2007. That year, Forbes estimated her net worth at $16.4-billion. A foundation spokesman declined to discuss Ms. Walton’s estate.)

Choice in Education

The Walton philanthropy’s biggest push has focused on changing the education system. Its leaders have long been driven by the belief that giving low-income parents a choice of where they send their children to school is key to improving U.S. education. The foundation has backed charter schools and vouchers and, in recent years, has been putting more money into research on such efforts and projects that persuade parents and policy makers to adopt its education strategies. (See article, below).

About five years ago, the Walton foundation expanded its giving to back environmental causes. It seemed a natural decision because many Waltons were supporting environmental groups on their own, says Ms. Penner.

“We all grew up floating down lakes and spending a lot of time outside,” she says.

After inviting a broad range of environmental experts to talk about their work, the family settled on two grant-making priorities—conserving marine life globally and preserving freshwater in the Colorado and Mississippi river basins. Board members chose those priorities over climate change and other global issues because they felt they could make a bigger difference. They were also convinced that Wal-Mart, which has no official relationship with the foundation, was doing more to fight climate change by reducing its carbon footprint than a private foundation could.

Says Ms. Penner of climate change: “There was a lot of focus on it and it’s a tough one to get your arms around.”

Family members also deepened their understanding of environmental challenges by visiting projects. Sylvia Earle, explorer-in-residence at the National Geographic Society and a former staff member at Conservation International who worked with the family, describes diving in Baja California and the Galapagos with several family members. “They literally take the plunge and get wet.”

Maintaining the Fish Supply

Experts say the Walton foundation has chosen environmental concerns that have had trouble attracting private money.

It is by far the biggest backer of an effort by Conservation International and other environmental charities to encourage local people, governments, and businesses in Indonesia and the Eastern tropical region of the Pacific to protect ocean life. In the United States, the Walton foundation is the largest private donor to efforts by a group of charities to restore the Mississippi River Delta’s disappearing wetlands.

Ms. Earle says oceans have traditionally received less attention and money than efforts to save animals and the earth, but they are starting to draw more attention, in part thanks to the Waltons’ giving.

The foundation is sometimes drawn to market-based solutions. For example, it is helping the Environmental Defense Fund develop catch-share programs, which allocate to fishermen a certain share of fish and eliminate their financial incentive to catch more than their share.

Ms. Penner says that the trustees also look for programs that empower people, an analogy that takes a literal turn when talking about fishing.

“Instead of handing out fish, we’re growing the pool of fish,” she says. “We’re trying to find an impact not by handing out anything but by assisting.”

Lagging in Disclosure

While the Walton fund has a much smaller staff than most of its peers, grantees say the foundation seems much more like a professional grant maker than a family-run operation.

“Originally our founder would get John Walton on the phone and he’d talk to him and they’d make a decision together,” says Derrell Bradford, executive director of Excellent Education for Everyone, in Newark, N.J., referring to Ms. Penner’s uncle, who led the fund’s education work until his death five years ago. “It’s not like that anymore.”

Grantees say the foundation is focusing more and more on measuring the results of its work.

“It’s becoming increasingly important to them,” says Keith Lawrence, seascapes director at Conservation International’s global marine division.

Some describe the fund as fairly hands-off. Others, however, say foundation employees work closely with them on shaping and carrying out their projects.

“They are very intentional,” says Peter C. Groff, president of the National Alliance for Public Charter Schools. Susan Kaderka, regional executive director of the South Central Regional Center of the National Wildlife Federation, says: “They are pretty involved, in a good way.”

Nonprofit leaders say they are unsure if it would help their causes if Walton’s leaders were vocal, like Bill and Melinda Gates and Eli Broad have been about their vision for a better education system.

“There are obvious benefits to having that kind of advocacy and public support,” says Frederick M. Hess, an education scholar at the American Enterprise Institute. But he adds that it can also fuel concerns about billionaires’ influence over the public agenda.

Some philanthropy watchdogs, however, criticize the fund’s approach. Aaron Dorfman, executive director of the National Committee for Responsive Philanthropy, in Washington, notes that the fund doesn’t share on its Web site information on its employees, board members, conflict-of-interest policies, or commitment to diversity.

“They were late to adopt even the most basic method of transparency used by foundations, the annual report,” he says. “They still lag far behind the field in virtually all measures of transparency.”

The foundation, however, disputes that claim, saying it demonstrates transparency by providing annual reports and descriptions of all its grants online. 

Board Relationships

A board with 11 family members could produce friction. But Ms. Penner says trustees avoid disagreements because they work with a consultant and tiptoe into new program areas.

For two years, the foundation made some small, experimental grants in the environment, an approach it takes when considering a new program area. Supporting a new issue isn’t out of the question, Ms. Penner says, although nothing is on the horizon now.

“We have a good process for communicating,” she says. “At the end of the day, these issues that we’re trying to address and the changes we’re trying to be part of helping to come to fruition are bigger than any one of us.”