It’s almost as if the Lilly Endowment can’t write the checks fast enough these days or with enough zeros at the end.
In recent weeks, the Indianapolis-based philanthropy has been unveiling a flurry of gifts at the $100 million level or higher. That includes an eye-popping $250 million, the single-largest grant awarded in the endowment’s 86-year history. The grant to the Indiana Economic Development Corp. will support community development projects.
Such nine-figure donations—known in the industry as “mega-gifts”—were once rare but are increasingly common as the stock market sets new records and many philanthropies, including the Lilly Endowment, one of the largest philanthropic foundations in the U.S., get richer.
Other recent large Lilly Endowment gifts were $100 million to the United Negro College Fund for scholarships and endowments at historically Black colleges and universities and $100 million to Purdue University (in the form of two $50 million grants) to support a new business school and a universitywide computing and artificial intelligence initiative.
All three gifts were announced last month by the recipients, although Lilly Endowment spokeswoman Judith Cebula said the grants were actually approved last year.
“The endowment is pleased to have the opportunity to make more grants and larger grants at this time because of the increase in the value of its investment assets,” she said. (The famously guarded endowment declined to make a senior leader available for an interview.)
Indeed, the endowment’s assets have ballooned from $40.8 billion at the end of 2022 to more than $70 billion early this month, based on an IBJ review of government filings and the skyrocketing stock performance of the endowment’s namesake, Indianapolis-based drugmaker Eli Lilly and Co.
The bulk of Lilly Endowment’s assets consists of stock in the drugmaker, a practice begun when J.K. Lilly, son of company founder Col. Eli Lilly, set up the endowment in 1937, along with his sons, through gifts of stock in their business.
The first donations of 17,500 Lilly family shares were originally valued at $262,500, according to the endowment’s website. Several non-family members contributed an additional 210,000 shares, valued at $1.1 million. And the endowment was included in the estate plan of Ruth Lilly, the daughter of J.K. Jr, resulting in gifts from her, beginning in 2003, totaling more than $200 million.
The endowment has steadily been selling shares of Lilly stock in recent years to pay for grants. Last month alone, it sold at least 435,000 shares, raising more than $278 million, according to government filings.
Yet it is still the drugmaker’s largest stockholder, with 99.3 million shares, or 10.4% of Lilly’s outstanding shares, as of Feb. 1. The next largest shareholders are all large financial organizations: Vanguard Group (7.4% of outstanding shares), Blackrock Group (6.9%) and PNC Financial (5.5%).
Lilly stock climbed 59% in 2023, making it the most valuable health care company in the world, due to investor excitement over new and upcoming products for diabetes, weight loss and Alzheimer’s disease.
What is pushing the endowment’s current shower of large gifts is a federal law that requires private foundations to make charitable donations equal to or more than 5% of their assets during a given year.
As the Lilly Endowment’s assets grow by high double-digit percentages, it must make more and larger gifts to keep up with the federal requirement.
The exact amount, the endowment said, is determined by a complex calculation involving an averaging of asset values throughout a given year. The grants must be paid over a two-year period, including the year of the calculation and the following 12 months.
Some philanthropy experts say they are taking notice of the size and number of Lilly Endowment mega-gifts but are not surprised.
“The magnitude of these gifts always catches people’s attention,” said Amir Pasic, dean of the Indiana University Lilly Family School of Philanthropy, which was established in 1987 with initial funding from the Lilly Endowment. “But we’ve seen that these large gifts happen periodically.”
In the past 12 months, large foundations have made numerous mega-gifts to universities, hospitals and other not-for-profits. That includes $120 million from the T. Boone Pickens Foundation to Oklahoma State University, $110 million from the Timashev Family Foundation to Ohio State University and $100 million from the Rales Foundation to the Foundation to Combat Antisemitism, according to the Chronicle of Philanthropy, an industry news and research site.
What makes the Lilly Endowment different from most, however, is that it gives priority “to efforts that improve the quality of life in Indianapolis and throughout Indiana,” especially for community development and elementary and secondary education.
Since its founding nearly nine decades ago, the Lilly Endowment has disbursed $13.7 billion to more than 10,000 charitable organizations, most of them in Indiana. In 2022, it paid grants totaling $1.3 billion. (The endowment does not plan to file its 2023 annual report until May or June, Cebula said.)
“It is amazing to have those assets being deployed into our community and across the country,” said Bryan Orander, president of Indianapolis-based Charitable Advisors, which helps not-for-profits in job searches. “But it’s not easy to grant such large amounts of money in a way that stays on mission and partners with organizations who can effectively use the funds.”
Others agree that the Lilly Endowment’s strategy of mostly supporting Indiana groups is a boon for the state.
“I think it’s great news for Indiana, and they’ll continue to invest in the strength of Indiana communities and their economic underpinnings,” said IU’s Pasic. “I think that’s something that’s remarkable.”
The endowment also has a religious bent and focuses many of its grants on “efforts to deepen and enrich the religious lives of American Christians, principally by funding efforts to support and enhance the vitality and leadership of faith communities where Christians gather regularly to worship, share their lives and participate in God’s mission in the world,” according to the organization’s website.
And despite the flurry of recent headlines, the Lilly Endowment says its practice of making mega-gifts is nothing new.
Other nine-figure gifts in recent years from the Lilly Endowment include $100 million to the National Urban League in 2020 and $104.9 million to the Indiana University Foundation in 2000.
The endowment noted that it has approved more than 25 gifts of $40 million or more in the past 25 years, including $44 million to the IU Jacobs School of Music, $60 million to the IU School of Medicine, $71 million to the Indianapolis Department of Parks and Recreation and $82 million to the Indiana United Ways.
“The endowment’s current and announced grants and grant programs reflect a wide range of considerations and factors,” Cebula said. “Obviously, when the value of the endowment’s assets is relatively high, the endowment is able to approve more grants and larger grants for efforts addressing the plethora of needs and opportunities that align with the causes that the endowment was created to support.”