Lumina Foundation's Creation Myth and What We Need to Know About Foundations More Generally

It's a facts-weirder-than-fiction scenario: Lumina Foundation wasn't birthed out of god's head; it didn't fly to earth in a Douglas C-68. Rather, in the year 2000 A.D., Sallie Mae bought the nation's largest student loan guarantor from its umbrella company, USA Group, which in turn founded Lumina on the proceeds.

Those proceeds amounted to "$400 million in cash and $370 million in [Sallie Mae] stock for the operating assets," according to a sleek 115-page PDF file on the foundation's site titled, "From the Ground Up: An Early History of the Lumina Foundation." It's full of insight into the foundation's preferences and idiosyncrisies. Ever wonder, for example, why Lumina doesn't give grants to individuals? It's not some arbitrary decision.

Earlier in its history, the foundation needed to figure out what to do with the above-mentioned 7.2 million shares in Sallie Mae. One part of their board argued in favor of keeping the shares. If SLM Holdings, Mae's umbrella company, did well over the next few years, the foundation stood to profit significantly by selling those holdings later. Other board members felt more urgently "sensitive to the perception that the Foundation was linked to the student loan industry," and thought it best to get rid of the holdings promptly.

This second perspective prevailed and Lumina ultimately offloaded the shares in February of 2001.

In a recent report, the Center for Effective Philanthropy has argued that foundation transparency means more than just making 990 filings available. Grantmakers must be "clear, open, and honest about more substantive information" regarding how they make decisions, among other things.

"From the Ground Up" is a gesture of this type. Grantmaking organizations are, after all, complicated historical, fiscal entities run by human beings in accordance with a wide palette of motivations. While foundation websites grow ever more eager to talk about what they do, information about why they do it remains scant, scattered and hard to get. So, thank you, Lumina for that early history.