Eli Lilly and Company"s business travails represent bad news for Indianapolis on a number of levels, not the least of which apply to this community"s not-for-profit sector. For years the city has relied on the largesse of the Lilly Endowment, one the world"s most well-endowed philanthropic institutions. The Endowment routinely helps underwrite a wide variety of services and activities that other communities often must subsidize with tax dollars. Since the Endowment"s generosity is based on the value of its substantial holding of Lilly Company stock, the size and number of its grants are directly linked to the company"s well-being. In 2001, the Endowment approved grants totaling over $600 million in Marion County. It is estimated that this figure will be cut by a third in the coming year. Recent speculation about a possible takeover or merger involving the pharmaceutical company has inevitably spawned fears about how this sort of corporate change might affect the Endowment"s future in Indianapolis. While no one can truly predict what the future might bring, it appears that a takeover or merger need not have a damaging effect on the Endowment"s impact here. The Endowment and its governance are fully independent of Lilly Co. Thus a change of ownership at the pharmaceutical company would change the name of the Endowment"s stock but, in and of itself, not necessarily occasion any change in the Endowment"s focus or governing philosophy - its own board would have to do that. It is notable that the Endowment is the largest single holder of Eli Lilly stock. Following the Tax Reform Act of 1969, federal law mandated that no philanthropic organization can control more than 20 percent of a company"s stock. The Endowment currently holds 14.1 percent of Lilly Co. stock. This means that the Endowment board would become a key player in any takeover bid; could, indeed, be placed in the position of having to vote on the future of the very company that created it. But to view this situation solely from a business standpoint would be to miss the singular nature of what might be called the Lilly sense of place. While the Endowment is among the largest philanthropic institutions, its commitment to its home town and home state set it apart. Where a Rockefeller, MacArthur, Pew or Gates has tended to focus on national and even international situations and issues, the Lilly Endowment has made the lion"s share of its contributions on its home ground. As is stated in its Annual Report: "The Lilly family"s foremost priority was to help the people of their city and state build a better life." The Endowment approved grants totaling less than $200 million outside Indiana in 2001. Endowment watchers consistently speak of the Lilly board"s time-honored commitment to Indianapolis, Ind. - and to the Lilly business. According to some observers, this commitment runs so deep that the board, many of whom have close ties to the business, would rather see its portfolio of Lilly stock weather tough times than consider selling. Others, though, have speculated that this kind of loyalty may be a generational trait that, in the future, might become more pragmatic. The fact, for example, that the Endowment"s existence is tied entirely to the stock valuation of one company flies in the face of conventional fiduciary wisdom whose first commandment is this: diversify. Where the money goes Few nonprofit institutions of any size in Indianapolis operate without financial support from the Lilly Endowment. Following is a partial listing of local organizations and the amount of operating support approved for them in 2001. American Cabaret Theatre $125,000 Arts Council of Indianapolis $250,000 Central Indiana Corporate Partnership Foundation $5,000,000 Coalition for Homeless Intervention and Prevention $250,000 Eiteljorg Museum $1,147,500 Hudson Institute $400,000 Indiana Association for Community Economic Development $100,000 Indiana Black Expo $500,000 Indiana Youth Institute $4,785,615 Indiana Grantmakers Alliance $250,000 Indiana Opera Society $123,750 Indiana Repertory Theatre $300,000 Indiana Sports Corp. $500,000 Indiana Symphony Society $1,237,500 Indianapolis Art Center $200,000 Indianapolis Ballet Theatre $910,000 Indianapolis Museum of Art $500,000 Indianapolis Zoological Society $1,116,720 International Center $300,000 Madame Walker Urban Life Center $300,000

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