Spend Down
In response to the critical challenges facing California’s communities, the Board of Directors made the decision to spend down the majority of the S. D. Bechtel, Jr. Foundation’s assets by 2016, with targeted investments in capacity building continuing through 2020. By building the capacity of nonprofit organizations and strengthening the fields of STEM Education, Environment, Character Development & Citizenship, and Health, the Foundation seeks to catalyze projects and partnerships that will endure beyond the Foundation itself. The Foundation also seeks to inspire future generations of philanthropists to invest in innovative solutions to overcome urgent challenges. Since making the decision to spend down in 2008, the Foundation has intentionally engaged nonprofit organizations and key stakeholders in planning to ensure that investments and partnerships in the short term will continue to create benefits in the long term.
Grantmaking during the spend-down period will continue to support the core operations of effective nonprofit organizations, and will also include a focus on capacity building to strengthen leadership and increase impact.
Annual Grantmaking
The S. D. Bechtel, Jr. Foundation is operated in partnership with the Stephen Bechtel Fund, a private foundation that provides additional funds for grantmaking. The two entities are together referred to as “the Foundation.” In 2010, the Foundation awarded grants totaling $56 million, and the grants budget for 2011 is $98 million.
Annual Grantmaking
2010 Grantmaking by Program Area
$ Millions
Investments
Investment Policy
As a consequence of the decision by the Board of Directors to spend down the Foundation over the next five to nine years, the assets of the Foundation will be distributed to nonprofit organizations over this time frame. Therefore, a strategic goal is to reduce risk and enhance liquidity in the investment portfolio over time. The primary investment objective of the Foundation in terms of return is to protect the principal value of the total portfolio. A secondary objective is to attain a total real (inflation-adjusted) return that is at least positive in “normal” market conditions.
Assets will generally be diversified to ensure that adverse results from one or more assets or asset classes will not jeopardize the ability to meet the Foundation’s objectives. The asset allocation reflects an expected shift over time to a portfolio that is more liquid with less market risk to facilitate the expected spend down over an estimated eight years.
| Asset Class | Target | Range | Direction over Time |
|---|---|---|---|
| Large-Cap Equity | 15% | 10–20% | Decreasing |
| Small/Mid-Cap Equity | 5% | 0–10% | Decreasing |
| International Equity | 10% | 5–15% | Decreasing |
| Fixed Income | 25% | 15–30% | Increasing |
| Opportunistic | 3% | 0–10% | Stable |
| Hedged Equity | 10% | 5–15% | Stable |
| Absolute Return | 10% | 5–15% | Stable |
| Private Equity | 10% | 0–15% | Decreasing |
| Real Assets | 2% | 0–5% | Decreasing |
| Cash | 10% | 5–20% | Stable |
| Total | 100% |
The Stephen Bechtel Fund is a pass-through foundation, and as such, does not have an endowment or investments.
Federal Tax Returns
The Foundation and Fund file federal tax returns annually, typically in November, on Form 990-PF. In addition the Foundation files Form 990-T as a consequence of some of its investments. These tax returns include financial data, including the fair market value of all assets, an analysis of revenue and expenses and a complete listing of grants paid. Annual tax returns will be posted after filing with the IRS. The Foundation does not produce annual reports.