Steven M. Hilton, President/CEO, Conrad N. Hilton Foundation

July 3, 2007
Steven M. Hilton, President/CEO, Conrad N. Hilton Foundation

Conrad Hilton, whose name became synonymous with luxury hotels, hospitality, and philanthropy in the middle decades of the twentieth century, was born on Christmas Day 1887 in New Mexico, the second of seven children of a Norwegian-immigrant father and a first-generation German-American mother. Growing up, Hilton was greatly influenced by his parents and by the Roman Catholic sisters who lived in and served the local community. He bought his first hotel, a forty-room hostelry in Cisco, Texas, in 1919, and first gave his name to a hotel in Dallas in 1925. In 1946, he founded the Hilton Hotels Corporation, which became the nation's first coast-to-coast hotel chain and today claims more than 2,800 hotels in eighty countries and territories, including the Waldorf Astoria in New York, the Palmer House in Chicago, and the Hilton Hawaiian Village on Waikiki Beach.

Hilton established the Conrad N. Hilton Foundation in Los Angeles in 1944, and the foundation remained relatively small until his death in 1979 at the age of 91. Hilton not only left virtually his entire estate to his charity, he also left it with a powerful directive to help the most vulnerable people in the world, regardless of race, religion, or geography. Hilton chose an international mission, he said, because he built his fortune on both domestic and international hotels.

Steven M. Hilton, the current president and CEO of the Conrad N. Hilton Foundation, is only two generations removed from its founder, and can recall memorable family holidays with his grandfather when he was a child growing up the 1950s. Hilton joined the foundation in 1983, became vice president in charge of programs (responsible, among other things, for the foundation's grantmaking activities) in 1989, was appointed president in 1998, and was named CEO in 2005. In addition, he serves on the boards of both the foundation and the Conrad N. Hilton Fund for Sisters, a separate nonprofit organization with assets of almost $1 billion that devotes 90 percent of its grantmaking dollars to the international human services work of Catholic sisters.

Given the size of the Hilton Foundation — which, with more than $1 billion in assets, ranks fifty-eighth on the Foundation Center's list of the top hundred U.S. foundations; the combined assets of the foundation, the Hilton Fund, and other related entities total $3.1 billion — it's easy to forget that this large organization remains a family foundation. Six Hiltons — Steve, his father Barron, his uncle Eric, his brother William, his sister Hawley, and his cousin Conrad — sit on the foundation's board of directors, and the foundation's staff numbers just seventeen — in keeping with Conrad Hilton's admonishment to "beware of organized, professional charities with high-salaried executives and a heavy ratio of expense."

Recently, Philanthropy News Digest spoke with Steve Hilton about the foundation's grantmaking approach, the evolution of its programming, its focus on international grantmaking, and the genesis of the Conrad N. Hilton Humanitarian Prize, the largest humanitarian award in the world.

Philanthropy News Digest: How would you describe the philosophy of the Hilton Foundation?

Steve Hilton: Our philosophy is to follow Conrad Hilton's wishes, starting with directions he left in his will and with guidelines he gave to the board of directors, to alleviate human suffering. To implement that broad vision, we chose program areas that were, again, based on Conrad Hilton's last will, which talks about children and helping the Catholic sisters. We also tried to identify areas that had been overlooked or received less funding than others, and then we looked further to find out how to best implement his vision and make a real difference. We also consider whether we can leverage a project with other donors or NGO partners so that the sum of the parts will be greater than our individual effort.

PND: Has the foundation followed that approach from the beginning?

SH: No, during my grandfather's lifetime, most of our grants were small and directed primarily to Catholic social service activities and Catholic schools, hospitals, and orphanages. When Conrad Hilton died in 1979 and his estate was transferred to the foundation, we suddenly had a much larger amount of money to work with. So we brought on more staff, and around 1980 we began the gradual shift away from awarding small grants to what my predecessor, Don Hubbs, called the major project approach. At the time, roughly 10 percent to 20 percent of our grants were international.

PND: Can you tell us about the foundation's current programs and what percentage of your grantmaking budget is devoted to each?

SH: In terms of the larger areas we now fund, the Catholic sisters receive 26 percent, which they manage and disburse; international water development, 18 percent; worldwide blindness prevention and treatment, 12 percent; homeless issues for families and the mentally ill, 6 percent; and hotel management and a project with Early Head Start, 4 percent each. The remainder of our grantmaking budget covers a wide range of other programs, as well as projects of special interest to the board.

PND: The majority of your funding supports the work of the Catholic sisters. Was your grandfather an active Catholic, or did he simply admire the sisters' work?

"...[Conrad Hilton's] faith was very much alive in his life, and his philosophy and charitable giving were very much faith-centered...."

SH: Both. He was a devout Catholic who went to church every Sunday. His faith was very much alive in his life, and his philosophy and charitable giving were very much faith-centered. As a young boy, he met some sisters who taught him the catechism, and as a result he developed a life-long affinity and affection for them. He also respected the selflessness of their work. In fact, many of his closest friends later in life were Catholic sisters, some of whom he sent a handwritten letter every week, even at the height of his career.

PND: Members of the Hilton family comprise the majority of the foundation's board. How has the family influenced the foundation's grantmaking?

SH: In earlier decades, the family wasn't very involved. The grants were small and the bulk went to Catholic schools, churches, hospitals, and missions in Africa. But after a while, the family became more involved in grantmaking — not so much by driving major programmatic shifts, but in supporting individual projects or organizations they believed in. For example, in 1969 my uncle Eric promoted the creation of Conrad N. Hilton College, a hotel management and hospitality training school in Houston; then my father, Barron, got very involved with City of Hope, a hospital here in California that treats cancer patients. And I encouraged the board to enter what is now a productive partnership with Early Head Start to train teachers and families to assist children with disabilities. I was also involved with the foundation's homelessness initiative.

PND: Is it coincidence that your current programs reflect some of the most entrenched problems in society?

SH: The world is complex, with a lot of challenges and problems. But I do believe that given the foundation's mandate to alleviate human suffering throughout the world, we are making a difference. For example, the sisters are on the frontlines in the most remote areas of the world, combating horrendous problems and working in some of the worst situations you could imagine — whether running a shelter for abused women, a home for AIDS orphans, or a small health clinic in a remote village.

"...By working to provide clean water and sanitation, we are responding to one of the world's most critical needs...."

In addition, by working to provide clean water and sanitation, we are responding to one of the world's most critical needs. Every year, three to six million people, mostly children, die because they don't have access to clean water, and most of those deaths are preventable. So putting a water well in a village in Africa and teaching sanitation and hygiene provides an immediate change in the health and well-being of the people in that community. And once you put the well in and teach local people how to maintain and repair it, it becomes sustainable.

In terms of making a difference in the United States, we became involved with domestic violence prevention in the early 1980s and worked in that area for nearly twenty years. Back then, most people didn't talk about the problem, and very few, if any, foundations were doing anything to address it. So, working with the National Council of Juvenile and Family Court Judges, we funded the creation of a model code on domestic and family violence that has been adopted in part or in full by all fifty states and some countries. The foundation also funded the creation of education and model training programs for healthcare providers, clergy, and policy makers, committing a total of $9.5 million from 1984 to 2000.

Since 1992, we have worked on the issue of homelessness, a serious problem that actually does have a solution — namely, supportive housing. Phase one of our effort involved a program in New York City — which among big cities in the United States has led the way in terms of responding to the needs and problems of the homeless — and we partnered with a few other foundations, including the Ford Foundation. Phase two of the program targeted six cities around the country, including New York, and in phase three we're focusing exclusively on Los Angeles, where our primary grantee is the Corporation for Supportive Housing. Its role is to provide technical assistance, training, and advocacy for housing and social service providers; CSH also manages a loan fund for local nonprofits working in this area.

The Hilton/Early Head Start Training Programis a public/private partnership with the U.S. Department of Health & Human Services that began in 1997, when the federal government was targeting infants and children up to the age of three. What was missing was an Early Head Start/Migrant and Seasonal Head Start programs for the special needs of infants and toddlers with disabilities, so through Sonoma State University in California, our grant funded the development of training programs for staff of Early Head Start schools and centers nationwide and for family members of children with disabilities. Initially, we put up two-thirds of the money — a little more than $11 million over five years — and Head Start put up the other third. But in the second phase, which cost $17 million over five years to implement, Head Start put up two-thirds of the funding, and we put up a third. Head Start felt that what we were doing was so important to what it was doing, it was willing to invest that much in the initiative. That's leverage.

PND: You've indicated that the foundation's primary way of operating is to commit to large projects long-term and partner with another organization that's already doing good work in that area. Do potential partners approach you, or do you find them?

SH: Typically, we find them. Like many larger foundations, we work with outside consultants who are experts in the areas that interest us. They help us understand the full range of the issue we're exploring — who's out there doing the work and whether there's a particular niche where the Hilton Foundation can make a real impact. In our discussions with consultants, the same names invariably come up again and again, which, if nothing else, tells you that a certain organization is well-respected among those who have the greatest knowledge of a particular area. Then, once we have identified one or several organizations, we do due diligence on their finances and board structure. We also want to know the backgrounds of their key managers and their levels of education and experience, and we like to see any evaluation of the organization's work. All of that is followed by direct conversations with the organization, and then we sit down to devise a strategy.

PND: How do you evaluate the success, or lack of success, of your investments?

"...Evaluation is one of the weaker links in the nonprofit world because it's so difficult to do...."

SH: Evaluation is one of the weaker links in the nonprofit world because it's so difficult to do. At the Hilton Foundation, there are three types of evaluation: The first is the grantee's self report, where they tell us, "This is what we did, this is who we served, this is how many people we served." That's helpful, but it's also fairly subjective, since it's done by the organization. The second type of evaluation is the site visit, where we look at what's actually happening in the field and try to get a better understanding of whether this group is really doing what it says it's doing. But even that only goes so far because you're seeing and hearing what the group wants you to see and hear. So while site visits don't give you all the insights you need or would like to have, they're extremely important. And the third and more formal type of evaluation involves hiring an outside professional who knows the field and can do a more rigorous analysis. We do all three, depending on the size of the grant. The larger the grant, the more likely we'll do an outside evaluation.

PND: Does the foundation use evaluation to decide whether it should continue its support for a project or an organization?

SH: In most cases, if you do your homework up front and partner with strong, capable organizations, there's a good chance you'll get good results from the evaluation. I would say, however, that at the end of five years, you need to decide whether or not to continue funding a project. If you decide to continue, any changes you make should be a matter of fine-tuning.

PND: In the past fiscal year, more than half the foundation's giving went to international organizations and projects. Is that the continuation of a trend? And if so, what's driving it?

SH: The current balance in our giving between national and international giving has evolved over time. Because the needs outside this country are so much greater, and a dollar goes so much further, we have chosen to give a greater percentage of funds internationally. This year, 55 percent of our giving went to international causes — the first time that's ever happened — and I think it will continue to grow.

PND: Given your experience, what would you tell other foundations that want to get involved in international giving but don't know how to go about it?

"...If a foundation wishes to touch the lives of those with the greatest need, I strongly recommend they consider helping organizations doing humanitarian work outside the United States...."

SH: Some foundations choose to support programs that address problems in their city or state, and that's great. However, if a foundation wishes to touch the lives of those with the greatest need, I strongly recommend they consider helping organizations doing humanitarian work outside the United States. In many countries, there is little or no government support for the needy such as we have in our country. Not only will philanthropic dollars go much further, the investment has enormous potential to make a real difference in the lives of people who struggle with the kind of poverty and disease that most of us in the United States can only begin to imagine. The simplest way to get started is to find a reputable American nonprofit such as World Vision, Catholic Relief Services, CARE, or Save the Children that is working internationally and partner with that organization.

PND: Do you believe more foundations will — or should — support international projects in coming years?

SH: I believe the trend we've seen — of an increasing number of charitable gifts by Americans to causes outside the United States — will continue. Part of this trend has been fueled by the Gates Foundation — and, indirectly, by Warren Buffett's gift to the foundation — and by the greater visibility of international causes resulting from the efforts of Bill and Melinda Gates, Bono, and a new generation of "philanthropoids" from the world of high tech. All of this activity has led to far greater media attention on issues of global poverty, public health, and environmental degradation, including global warming.

PND: What was the genesis of the Hilton Humanitarian Prize? And why did the foundation decide to increase the award from $1 million to $1.5 million in 2005?

SH: Jim Galbraith, a foundation board member, approached my dad in the mid-1980s and suggested that awarding a humanitarian prize could be a unique way to advance the work of an organization that is doing exemplary work. After a lengthy review of other prizes and the costs involved with sponsoring such a prize, including hiring staff and consultants to help out with site visits, our directors established the Conrad N. Hilton Humanitarian Prize with a $1 million award. Our first humanitarian prize was awarded in 1996. On its tenth anniversary, we decided to increase the dollar amount of the prize to $1.5 million for two reasons: First, the needs of the world are so great and we had the funds available, so it made sense to do so; and second, we felt we needed to increase the amount by 50 percent just to keep up with inflation. At this point, it remains the largest humanitarian prize in the world.

PND: You've been involved in philanthropy for almost twenty-five years. How have you seen the field change during that time?

SH: One of the big changes is the significant shift to venture philanthropy and the blurring of the lines between nonprofits and for-profits. Also, giving is more hip now. When I first started, somebody might ask me, "What do you do?" and I'd tell them I worked at a private foundation. "Oh, you're in construction?" "No," I'd say, "I give money to charity." There'd be a pause, and then, "You don't do that full time, do you?" But now everybody is aware of high-profile philanthropists/activists like Bono, Oprah Winfrey, Angelina Jolie, and Bill and Melinda Gates.

As for other changes, when I first started working at the Hilton Foundation, most of the larger foundations had large staffs and different departments such as health, education, and arts, and they would give relatively smaller grants in relationship to their size. Today, more of these foundations are giving significantly larger grants and spreading the commitment out over multiple years.

PND: What do you see as the greatest challenge facing foundations in the twenty-first century?

"...We look to work with two or three organizations, each strong in a particular area, and combine their strengths for the common good...."

SH: The challenge is always to be passionate and focused, and to stay with an issue long enough to make a difference. Aside from that, it's more a question of how to approach giving. We use a method everybody talks about but you don't see a lot of — namely, meaningful collaboration. By that, I mean we look to work with two or three organizations, each strong in a particular area, and combine their strengths for the common good. Take water as an example. One company might be really good at finding and drilling for water, while another is outstanding at teaching hygiene to villagers or in schools. When they work together, they are much more powerful than either one would be by itself. As a foundation, if you can encourage that type of synergy, you have a really good chance of leveraging your dollars and creating greater benefit for more people.

In personal terms, the greatest challenge for me is figuring out how to manage this foundation in a way that energizes us as an organization, encourages us to be more entrepreneurial, and keeps us from getting locked in a bureaucratic mindset — which can happen easily. That's the kind of spirit Conrad Hilton brought to his life and his business, and we want to keep it alive at his foundation.

PND: We started our conversation by talking about your grandfather, so let's conclude it by looking at the next generation of Hiltons. Of the twenty-three members of your family, twelve are fourth generation. Are they ready to step up to the plate as philanthropists?

SH: In April, we launched a program called Generations in Giving to provide the younger generation of Hiltons with both discretionary and matching funds to use for their own philanthropy. I thought it was an important initiative and would honor the wonderful philanthropic legacy Conrad Hilton created and that my father is continuing — he has said he also intends to leave his estate to the foundation. This legacy of generosity from both my father and my grandfather has given me a great sense of joy by allowing me to help others. I want to encourage that spirit in other family members.

The other reason it's important is because of our policy that requires a majority of the foundation's board to be comprised of Hilton family members. I feel a great responsibility to ensure that those who follow me and my generation in leading this foundation are prepared to take on what I see as both an opportunity and a privilege — and to do it in a way that adds value to what we've already been able to accomplish. If I had a message to share with other family foundations, it's that being able to use some of the monies the family has earned to give back in a way that makes the world a better place is an incredible privilege — not to mention something that can enrich family members' lives emotionally and psychologically. Personally, I feel incredibly blessed and fortunate to do what I'm doing, and I consider it a great honor to carry on what my grandfather started.

PND: Well, thank you, Steve.

SH: My pleasure.

PND staff writer Alice Garrard spoke with Steve Hilton in May. For more information on the Newsmakers series, contact Mitch Nauffts at mfn@foundationcenter.org.