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Sunday, Aug 14, 2022

Bill Gross Sets Up $380M Foundation

Bill Gross is back, at least in philanthropy.

The co-founder of Newport Beach-based Pacific Investment Management Co. and the one-time bond king of the decade has established a new foundation, the William, Jeff and Jennifer Gross Family Foundation.

The Laguna Beach charity replaces the William and Sue Gross Family Foundation, which he ran with his former wife, Susan.

The pair had a well-publicized divorce last year.

The new foundation’s first gift was a $1.1 million donation to support the Orange County Teachers of the Year awards for the next three to four years. Gross, who has been a sponsor of the program since 1992, has donated $3.4 million in prior years.

“When I got divorced, there was concern whether the support would continue,” Gross told the Business Journal last week. “I decided nothing had changed. I wanted the trustees to have confidence that the program will continue for several years.”

The foundation has $380 million in assets, and must annually donate at least 5%, or nearly $20 million, Gross said.

This annual amount will most likely be split among local and international charities, Gross said.

A $10 million local donation would immediately place it at the top of the Business Journal’s annual list of the 45 largest private foundations, which are ranked by OC giving.

On this year’s list, the largest donor to local charities was Laguna Beach’s Marisla Foundation, which gave an estimated $7.7 million.

The Gross foundation will also be the second largest by assets on the list of private foundations, trailing only the $587.9 million of the Arnold and Mabel Beckman Foundation in Irvine.

Gross’ foundation is about four times bigger than the PIMCO Foundation, which reported $97 million in assets last year.

Three-Way Split

The foundation recently distributed $20 million, Gross said, adding that the allocation is split in thirds among himself, his son Jeff and his daughter Jennifer.

About half went to international groups, including Doctors Without Borders.

Jeff’s donations this year included millions to Children’s Hospital of Orange County and to Newport Beach’s private Harbor Day School.

Jennifer tends to donate to global charities, especially for Africa, Bill Gross said. In 2015, she co-founded the Blue Chip Foundation to work with the United Nations on sustainable development and eradicating poverty.

Gross said he’s donated to about eight charities in Laguna Beach, particularly for homeless shelters.

He has high regard for teachers, calling them an esteemed part of society.

“I always joke on the golf course that in terms of professions, for me, teachers, doctors and artists are at the top of the list. Investment managers and lawyers are at the bottom,” he laughed.

About 60 teachers are honored annually, with recipients receiving $900 to $15,000 each.

“It certainly has brought a lot of smiles to the recipients’ faces over the years. I think the rewarding thing for me and them is many of them put their money right back into the classrooms, buying extra supplies. That to me was quite striking. Not only the purpose of the award, but the ultimate destination.”

The Bond King

Gross co-founded PIMCO in 1971 as a unit of Pacific Life Insurance. It was eventually spun out and then bought by Allianz, a German insurance company.

He thrice won Morningstar’s prestigious bond manager of the year award. He guided PIMCO through the 2008 financial crisis when his Total Return Fund gained 4.8% compared to a 38% loss for the S&P 500 Index. PIMCO’s assets soared to as much as $2 trillion. Morningstar named him Bond Manager of the Decade.

However, performance suffered in 2013 and he left the firm a year later in an acrimonious split with the company.

The two sides settled in 2017 when PIMCO paid Gross an estimated $81 million, most of which is in the new foundation.

Since 2014, he’s been managing a bond fund for Janus Henderson and keeping an office in Newport Center, a few doors away from PIMCO. This year, his fund has lagged its benchmarks and assets have dropped in half to $1 billion.

The 74-year-old said he doesn’t plan to retire because he enjoys investing and appearing daily at the office by 7 a.m.

“This year hasn’t been a particularly good one,” he said. Investing “is what I like to do. It keeps me active and it hopefully benefits shareholders.”

He directs the investments at his foundation. While the recent declines in the stock market have created concerns among others, Gross said he bought shares of companies like Fedex Corp. and Apple Inc. His goal is to make at least 5% return annually so the foundation doesn’t have to draw down its assets, he said.

The foundation picked up $10 million this year from the sale of one of his five lots of stamps, he said.

Gross, who is a well-known stamp collector, intends to sell all five of his lots of stamps in the coming years.

All for Charity

In prior years, the William and Sue Gross Family Foundation was known for giving away about $800 million, including $40 million to create the school of nursing at the University of California-Irvine, and $38 million to Doctors Without Borders.

After the divorce, Sue, who received about half of Gross’ wealth, set up her own foundation.

Gross said at this time he isn’t planning another large donation.

He still plans to donate his worth, which he estimated is about $1.5 billion.

“I have a will—the stipulation is for majority of the funds be donated to the foundation. I’m hoping that’s a long time away. I’m working out every day. Playing golf a few times a week.”

“I want to make sure all my success at PIMCO goes back into the world.”

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Peter J. Brennan
Peter J. Brennan
Peter J. Brennan has been a journalist for 40 years. He spent a decade in Latin America covering wars, narcotic traffickers, earthquakes, and business. His resume includes 15 years at Bloomberg News where his headlines and articles sometimes moved the market caps of companies he covered by hundreds of millions of dollars. His articles have been published worldwide, including the New York Times and the Washington Post; he's appeared on CNN, CBC, BBC, and Bloomberg TV. He was awarded a Kiplinger Fellowship at The Ohio State University.

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