When billionaire Steven M. Rales put $1.5 billion worth of his company’s shares into his foundation in 2021, it seemed like a significant boon for the sector.
His contribution rocketed the Indian Paintbrush Foundation into the philanthropic elite, elevating the already-large operation into the company of the top 75 foundations in the nation, with an endowment, which, at $2.2 billion, ranks above legacy funders like the Alfred P. Sloan Foundation and the Heinz Endowments. Grantmaking also rose six-fold in 2022, reaching $80 million.
Mega philanthropy seemed like a natural next step for Rales, the Danaher Corporation cofounder who is a part-owner of the NBA’s Indiana Pacers and the NFL’s Washington Commanders, has an Oscar on his shelf for producing a Wes Anderson short and is considered one of the country’s top art collectors. In short, he’s a member of the ultra-rich, with a fortune now estimated at $11 billion.
Yet it’s unclear how much Rales’ Washington, D.C.-based foundation has actually put into the hands of working charities since that massive donation, let alone which groups have benefited, if any. More than 78% of its grants went to a donor-advised fund in 2021 and 2022, and it’s unclear if that money has been distributed, and if so, to whom. Instead, Indian Paintbrush and its benefactor became in those years yet another case study in a trend toward secrecy among a growing number of foundations of the 0.01%.
Nevertheless, the philanthropy may yet serve as a different kind of example. A foundation spokesperson said the operation made “substantially” more grants in 2023, and none of them went to DAFs, nor does it anticipate making other such awards in the future.
A three-decade-old foundation with many names
Incorporated in 1994, the Indian Paintbrush Foundation has been known under a laundry list of names, including the Rock Creek Foundation, Sartori Foundation and (the nearly identical) Satori Foundation, according to OpenCorporates. Most recently, it was known as the Blue Dot Foundation.
The foundation switched to its current name in 2021, according to its IRS filings, the same year that its fortunes changed. Rales and his brother, Mitchell, each dropped $1.5 billion into their foundations in June 2021, all of it in shares of Danaher. The pair, who also retired from the company’s board that year, jointly founded the conglomerate, which initially focused on industrial production, but now works in healthcare and other areas.
Incidentally, the foundation is not the only Indian Paintbrush in Rales’ life. He owns a film production and financing company, best known for producing and financing Wes Anderson’s films, that was formed in 2006 under that name. Rales even has an IMDB page cataloging his company-related producing credits. Despite sharing a name, the foundation has not backed any film-related nonprofits, at least recently.
Majority of recent giving has gone to a DAF
As a matter of fact, it’s hard to tell what Rales’ foundation has recently backed, period. The foundation sent 78 cents out of every dollar it granted between 2021 and 2022 to a donor-advised fund, a total of $73 million. Such transfers count toward a foundation’s 5% minimum payout requirement, yet DAFs have no minimum annual distribution requirement and thus can hold transferred funds indefinitely.
In such cases, they are also effectively black boxes. While DAFs can have many useful applications, individual accounts are not required to disclose their grants, unlike foundations. Thus it is impossible to independently verify whether money sent to a DAF — by any philanthropy that does not provide a list of such grants — has reached active nonprofits and, if so, who has benefitted.
Count Indian Paintbrush as one more example of multibillion-dollar foundations that have been sending the bulk of their grant dollars to a DAF, a popular practice among the philanthropies of a growing subset of billionaires. Google cofounder Larry Page, hedge fund manager and GOP megadonor Paul Singer and Nvidia CEO Jensen Huang are among the big names making use of what critics call the “DAF loophole,” which allows foundations to avoid the legal requirement of disclosing grantees.
For Rales’ foundation, sending all its donations to a DAF is a fairly new development. For years before that game-changing 2021 donation, Indian Paintbrush disclosed all its grants each year, with major checks going to universities, hospitals and medical research organizations, typically in California and New York.
It’s also a practice that has reportedly ended. The foundation’s 2023 IRS filing “will show direct contributions to charitable organizations substantially in excess of 2022 total contributions — and no contributions to any donor-advised fund. Furthermore, no contributions to DAF’s are expected in future years,” said a foundation spokesperson in a statement.
It’s unclear why the operation took that brief turn away from transparency (or why it has decided to cease granting to DAFs). Yet it fits with the 73-year-old Rales’ reputation.
Whether in their business dealings or private lives, Rales and his brother have long been known for what Forbes called a “proclivity for secrecy,” and the Washington Post termed an “allergy to media attention.”
That attitude seems to extend to their philanthropy, to date. The foundation has no website or listed staff. One past seven-figure grantee said the grant agreement required non-disclosure. Nevertheless, the public record does contain some clues about where the money from this relatively new philanthropic giant may be going.
Who’s cashing Rales’ checks?
In the years immediately preceding Rales’ $1.5 billion donation, the Indian Paintbrush Foundation, gave the bulk of its awards to one institution: the University of California San Francisco, which received $10 million between 2017 and 2020.
Other major awardees during those years included Columbia University ($2 million), the Silver Springs, Maryland-based Children’s Hospital Foundation ($1 million) and the Pancreatic Cancer Action Network ($1 million). Prior to that, the foundation generally granted only around $1 million annually.
Since that $1.5 billion contribution, 78% of the foundation’s funding has gone to a DAF, but the foundation’s few direct grants give some insight into its founder’s priorities. Major awards since then include $10 million grants to DePauw University (where Rales earned his bachelor’s degree in 1973) and the Santa Barbara Cottage Hospital Foundation, a teaching hospital and trauma center. Rales reportedly lives in Santa Barbara, California.
Six-figure awards have gone to the liberal arts university Washington College, a Santa Barbara homeless shelter called Transition House and Mount Desert 365, a Maine housing and economic development group founded by Rales and his brother, Mitchell.
Higher ed funding seems to be a family passion. Rales’ parents’ foundation, the Norman and Ruth Rales Foundation, on whose board he sits along with his two brothers, donated $110 million to Carnegie Mellon last year to create a fellowship program named for the family. The award was reportedly sparked by Mitchell and Steven’s challenges in hiring for their company.
There are also clues out there about other awards by Indian Paintbrush, possibly through the DAF. For example, the foundation was listed as a contributor of more than $250,000 (but under $1 million) to a building campaign in the 2022 annual report of the Schwarzman Animal Medical Center.
Where other Rales dollars go
While there is limited information about where most of Rales’ foundation’s recent grants have landed, many details have been reported about what he’s spent to become an owner of two major league teams.
Last year, not only did Rales spend $525.5 million to purchase a 15% share of the Indiana Pacers, bringing his ownership stake to 20% — he was also part of a successful group bid to purchase the NFL Washington Commanders for $6.05 billion.
His art spending is also well known. ARTnews ranked him as one of the world’s top 200 collectors. His brother, Mitchell — who sent $1.9 billion of his own in 2021 to Glenstone Foundation, which funds a Maryland sculpture park and museum near where he and his wife live — also earned a spot on the list.
Steven Rales has also been an active political donor, if at a modest level, given his means. He’s sent four-figure checks to a range of moderate Democratic politicians, such as Senators Mark Warner (Virginia), Jon Ossoff (Georgia) and Mark Kelley (Arizona), Amy Klobuchar (Minnesota), as well as five-figure donations to state Democratic parties, according to Open Secrets. One of the only Republicans he’s recently donated to in recent years is former Wyoming representative Liz Cheney.
Who’s calling the shots at the foundation?
The Indian Paintbrush Foundation, according to its latest IRS filing, has just one director: Steven Rales, who also serves as its chairman and president, though he officially spends just one hour a week on his foundation work.
No staff are listed, but there are three other officers, none of whom receive compensation, according to the 990s. LinkedIn indicates all three hold positions in Equity Group Holdings LLC, which appears to be the billionaire’s family office.
Joseph O. Bunting, III, who is president of the LLC, served as co-vice president of the foundation alongside Queenie H. Chung, who is also with the LLC, according to LinkedIn. Teresa L.C. Baldwin serves as secretary and treasurer.
Black box firm, black box philanthropy?
Rales’ turn to the privacy of a DAF in recent years fits with how he and his brother have run their business. For years, profiles in places like Forbes and the Washington Post have reported that the secrecy surrounding the brothers’ business dealings is renowned.
“It’s a black box of sorts, like Goldman Sachs,” one industry analyst told the Post in 2015.
Given that history, it’s a surprise that Rales only recently opted for black box philanthropy. And it’s a pleasant surprise that the foundation says it has now ceased such grantmaking, allowing philanthropy watchers and nonprofits to see who is benefiting from its growing grantmaking portfolio. We’ll see if Rales’ many ultra-rich peers who favor such secrecy follow his example.
