Giving Away Father's $9 Billion Isn't Easy -- Packard's Wishes A Challenge For Heirs

LOS ALTOS, Calif. - David Packard, the Silicon Valley pioneer, was 74 years old and bedridden after surgery when he wrote an eight-page letter to his children. He wanted them to understand how his vast fortune should someday be distributed to charitable causes.

Packard wrote that letter a decade ago and died in 1996. But his four children are still struggling to determine exactly how best to fulfill the wishes of the man who co-founded Hewlett-Packard.

The stakes are huge. The David & Lucile Packard Foundation now has an endowment of about $9 billion, most of it still in H-P stock. Its assets exceed those of the Rockefeller, Getty or Mellon foundations.

What did Packard want done with the money? In the letter, he endorsed his well-known interests in conservation, science and the arts. But he reserved his passion for a more controversial issue. Global birth rates were rising so fast, he asserted, that they could lead to "utter chaos for humanity." The foundation's highest priority, he declared, must be to reduce worldwide population growth.

Whether that meant supporting family-planning clinics or abortion rights, he wrote, trustees should have the courage to proceed.

Now his four grown children face some of the toughest challenges of their lives. They must beef up the foundation's management in a hurry, yet retain overall control. They must translate their father's wishes into a coherent program, yet steer through controversies over abortion, women's rights and the propriety of outsiders trying to influence Third World nations.

Their father's world

What's more, three sisters and a brother must patch over their differences. For most of their adult lives, the Packard children have gone their separate ways. They seldom socialize together; most lead quiet, prosperous lives in careers far removed from their father's legendary role as a creator of Silicon Valley. Now they are being swept back into David Packard's world.

Other wealthy people are watching closely. David Rockefeller has flown here to advise the family. So has Warren Buffett, a 67-year-old financier, who regards the Packards' transition as a leading indicator of the challenges that his heirs will face when dealing with his $21 billion fortune.

Such scrutiny is fine, says Susan Packard Orr, 47, the foundation's chairwoman and the third of Packard's children. She notes that billionaires are a fast-growing species (Forbes magazine counted 170 of them last year), and that many tycoons haven't decided how their money should be spent after they die. "I hope we can serve as a model," she says.

Safe-sex clinics

Already, Packard population initiatives are rippling through the U.S., Mexico, India and a dozen other countries. The foundation is underwriting everything from safe-sex clinics to media campaigns that inform women about "emergency contraception" pills.

Bigger things lie ahead. This year, the foundation plans to spend $35 million on population programs, more than any other private foundation tracked by the United Nations. Next year, that will double, to $70 million.

It isn't easy keeping such a huge charity on course. The Packard children "are deliberate, thoughtful people," says Susan Berresford, president of the Ford Foundation. "They're asking all the right questions. . . . But they're going to have to work out their own model."

The Packard siblings acknowledge that being in charge of $9 billion has sometimes seemed like a burden. Their father liked big challenges, big budgets and big opportunities. The children prefer less conspicuous lives.

No one in the family expected such quandaries when the foundation was formed in 1964. Budgets were tiny; meetings were held around the family's dining-room table. The matriarch, Lucile Packard, picked most beneficiaries herself. Grants were in line with what any prosperous family might donate: a thousand dollars for a symphony, a little more for a needy children's charity.

In those years, David Packard poured his energies into business, ranching and politics. A 6-foot-5 bull of a man, he was closely associated with every step of Hewlett-Packard's growth, not just because his name was on the door, but because he loved to mingle with engineers at the workbench, watching new products take shape. Packard went to Washington as deputy secretary of defense in the Nixon administration, then returned to California in 1971 to redouble his focus on the business. On weekends, his idea of relaxation involved driving a bulldozer to carve dirt roads around his apricot farm near San Jose.

For the Packard children, growing up in such a long shadow was bittersweet. A caring but demanding man, he pushed his children hard, wanting them to absorb his passions for electronics, business and the outdoors. All his children admire his accomplishments. Yet none pursued a career at H-P, and each labored to develop different identities.

Classics scholar

The oldest child, David Woodley Packard, became a scholar of ancient Greek. He grew interested in classic films and urged his father to underwrite restoration of a movie theater in Palo Alto, Calif., that would show Fred Astaire and Humphrey Bogart movies. The elder Packard eventually contributed $8 million.

The three daughters also wanted breathing room. Nancy, the oldest, became a professional photographer after training as a marine biologist. The youngest daughter, Julie, is director of the Monterey Bay Aquarium.

Only Packard's middle daughter, Susan, opted for a career close to her father's work. In the mid-1980s, she set up a software company, Technology Resources Assistance Center, in Palo Alto, providing management tools to nonprofit organizations. The company has only 10 employees but is well-regarded in its niche.

Each child was asked, from age 21, to be a foundation trustee. That brought family unity, but also friction. Packard's Republican politics didn't sit well with his liberal daughters. At one point, the children asked their father to conduct all his charitable giving through the foundation. He agreed, but quietly wrote personal checks to Stanford University's conservative Hoover Institution, hoping his daughters wouldn't find out.

Stock surges

In the last 15 years of his life, Packard's philanthropic horizons widened greatly. Thanks to repeated surges in H-P's stock, the foundation's grants increased tenfold during the 1980s. Some projects attracted headlines in their own right. Packard spent $40 million to create the Monterey Bay Aquarium; a marine research center followed a few years later. Family money also financed a children's hospital at Stanford University, named after Packard's wife, who died in 1987.

In 1988 Packard invited Robin Duke, a New York businesswoman prominent in social circles and abortion-rights causes, to join the foundation board and become its unofficial leader on population initiatives. At meetings, the two would spar, amiably, over politics. But they shared a deep interest in population control. Mostly at Duke's urgings, foundation leaders revamped a tiny population program aimed largely at California and Mexico and turned it into a multimillion-dollar initiative active on three continents.

As Packard's health declined, advisers asked if he wanted to draft a formal charter for the foundation. He rebuffed each request and thought his letter to his children was sufficient, says personal attorney Frank Roberts.

The letter isn't considered legally binding, Roberts says. Still, he says, Packard was "confident that successive trustees would follow the things he enunciated, but would exercise their judgment if circumstances changed." One reason he trusted the board to go along with his wishes: His children hold about half the seats; the rest are filled by Duke and old friends or colleagues.

In March 1996, Packard died of pneumonia at age 83. Trustees had known for years that almost all of Packard's 9 percent stake in H-P would be entrusted to the foundation. Even so, "we were caught a little unaware" by how much money was involved, says trustee Dean Morton. (Packard wisely kept the foundation assets in company stock. The foundation created by his co-founder, William Hewlett, diversified its portfolio, resulting in much slower asset growth.)

In June 1996, Orr became the foundation's chairwoman. Low-key and methodical, she got the job because her father thought she could best keep family members focused together. Other siblings might have bolder ideas or be more comfortable in the spotlight. But "Susan has the right balance to deal with her brother and sisters," Duke says.

The new era started slowly. Orr wanted to make the foundation more democratic. Yet each sibling had favorite projects, and Orr feared the foundation could splinter into fiefs. So she scheduled budgeting exercises, as well as fact-finding talks with other big foundations.

To her older brother, this flurry of meetings has been excruciating at times. "I'm suspicious about too much process," says 57-year-old David Woodley Packard. "I'd rather do the best we can, without huge committees and facilitators."

Other board members, however, have sided largely with Orr. "With our growth in assets, it's appropriate that we take a fresh look at everything," says her sister Julie.

The foundation eventually will be required to make grants of 5 percent of its assets annually - or at its current size, more than $1 million a day. That makes it possible to help almost any cause to some degree. Children's health, Native-American colleges and the late Packard's birthplace of Pueblo, Colo., all get money. All told, the foundation got 2,000 grant applications last year and funded about one-quarter of them. Yet, as foundation leaders observe, overly diffuse grant-making doesn't have much impact.

Slowly, the Packard children are focusing on bolder missions. They have taken a modest land-conservation program that traditionally spent about $3 million a year and transformed it into a giant initiative that will spend $175 million in California over the next five years, protecting sensitive land in partnership with private owners or helping to form new parks and recreation areas.

The Packards also are doubling their "genius awards," similar to those given by Chicago's MacArthur Foundation. Since 1988, the Packard Foundation has awarded five-year, $500,000 grants to 20 young scientists each year, with almost no strings attached. Researchers have used the money to study everything from ice cores in Greenland to the neuroscience of flies. Packard's children now plan to widen the program to cover about 36 projects, with grants of $625,000 or more.

Most of all, the foundation is pouring money into population control. It bankrolled 109 projects last year, becoming a crucial backer of groups such as Planned Parenthood, Population Action International and the Alan Guttmacher Institute.

Abortion training

Often, Packard underwrites initiatives that other donors won't touch. While Packard was alive, the foundation gave money to a project in Colombia to treat septic shock in women who had abortions. Last year, the foundation spent nearly $240,000 to support abortion training in Ethiopia and Uganda. An additional $100,000 went for distribution of oral contraceptives in Vietnam.

The foundation also is spending $500,000 to promote the use of emergency contraceptives, used soon after intercourse, in Washington state. "If this works well, it could be a model for other states," says Martha Campbell, a Packard population specialist.

The board realizes such projects are "controversial to some people," says 45-year-old Julie Packard. The foundation has been denounced several times in anti-abortion newsletters. But she says her family won't be swayed. "There's an enormous need for family planning and a very short time window," she says.

In recent years, fertility rates have fallen faster than expected in Europe, East Asia and Latin America. That has led some to wonder whether the overpopulation menace may prove to be a mirage. But Packard administrators say they still see plenty to do. Birth rates remain high in Africa and India, says Sarah Clark, the foundation's population chief. "And countries such as Thailand that have lowered their fertility rates did so because they were showcases of family planning," she says.

Why David Packard became so worried about overpopulation isn't altogether clear. He traveled widely but never came back from India or China shocked about the squalor. As a population activist in his final years, Packard's interest was largely theoretical. He talked about birth-rate trends, his children say; he didn't personally counsel teenagers or visit family-planning clinics.

Close friends offer a few clues. In the early 1970s, he became friendly with Robert McNamara, the former defense secretary and a population-control advocate in his own right. Furthermore, Packard worried that overcrowded countries would never participate in the advances that delighted him so much in the U.S.

"My father felt that all the progress we had made toward a better society was going to be destroyed if there were too many people," says his son, David. He feels a filial duty to carry out his father's wishes, despite some reservations about abortion. "If my father met us later," he says, "he would expect a very good explanation if we didn't do something here."

For the Packard children, serving as stewards to the fortune is redefining their own lives in ways that make them both proud and wistful. Just a few years ago, it seemed they had finally won the autonomy they craved. Now, says Colburn Wilbur, the foundation's longtime executive director, "they have to be Dave and Lucile's children again."

At times, that responsibility can be staggering. Reminiscing about his father one evening, David blurts out: "I wish he'd started spending the money sooner. I wish he hadn't left four kids to struggle with it."

Yet in another meeting, he is enthused about what $9 billion can do. He would like to embark on new projects, such as helping the Library of Congress create a digital archive or improving the ways that children are taught to read. "There's always the risk that we do something foolish," he says. "But if we have the courage to follow our instincts, perhaps we can make a difference."

Reprinted with permission of The Wall Street Journal copyright 1998 Dow Jones & Co. Inc. All rights reserved.

------------------ Top 10 foundations ------------------



Name Assets 1997)


Lilly $12.7 billion 140%


Ford $ 9.4 billion 25%


Packard $ 8.9 billion 271%


W.K. Kellogg $ 8.3 billion 41%


R.W. Johnson $ 6.7 billion 26%


Pew Charitable Trusts $ 4.5 billion 18%


R.W. Woodruff $ 3.7 billion 61%


MacArthur $ 3.4 billion 3%


Rockefeller $ 3.2 billion 28%


A.W. Mellon $ 2.8 billion 12%


Note: Asset growth includes new contributions and portfolio appreciation. Source: Chronicle of Philanthropy.