With the value of its holdings in American International Group plunging 93 percent over the past year, the New York City-based Starr Foundation, which is financed largely by AIG stock and run by company insiders and former executives, has been forced to reduce its grantmaking and either defer or cancel many new initiatives, Bloomberg.com reports.
Created in 1955 by Cornelius Vander Starr, founder of the company that became AIG, Starr is the sixteenth-largest foundation in the United States, with assets of $3.3 billion as of December 2006. The foundation, which focuses on education, health care, and social services, awarded $209 million in grants that year.
According to Florence Davis, president of the foundation and former vice president and general counsel of AIG, Starr stipulated in his will that the foundation hold onto its AIG stake — which totaled 39.1 million shares worth about $2.8 billion at the end of 2006 — for as long as possible. But as the stock price began to slip in recent years, the foundation sold about 30 million shares of AIG stock between January 2006 and May 2008, or about two-thirds of its holdings. As of May 7, the foundation held 15.5 million shares of AIG stock.
Davis said that while new proposals will be put on hold, the foundation will honor its existing commitments. "You will see smaller grants from us," she said. "We have to rethink some of our initiatives. This will postpone them if it doesn't derail them entirely."