Having seen their holdings rise dramatically with the sale of Rohm & Haas Co., Haas family heirs have reorganized their trusts and shifted $1.25 billion to charitable foundations, it was announced yesterday.

Of that figure, $747 million is to go to the William Penn Foundation, long the family's local charitable arm. The new money brings the William Penn endowment to $1.9 billion, a 67 percent increase. The William Penn Foundation specifically benefits the Philadelphia region.

An additional $502 million has been set aside for a new entity, the Wyncote Foundation, "to support the charitable interests of the members of the Haas family," according to the Haas trusts. Maureen Garrity, a spokeswoman for the Haas trusts, said the foundation's direction was still to be determined. The four sons of John C. Haas will serve on the foundation's board.

The shift in funds was attributed to the elder Haas, the 91-year-old son of Otto Haas, the cofounder of the Rohm & Haas company, the source of both the family's riches and its ability to be one of Philadelphia's greatest sources of philanthropy.

Otto Haas and his wife, Phoebe, created two family and four charitable trusts, now controlled by their heirs. The $1.25 billion shifted to the foundations came from those trusts.

The trusts held millions of shares of Rohm & Haas, which jumped in value earlier this year when the firm was bought by Dow Chemical Co. The four charitable trusts were estimated to be worth $2.7 billion after the sale.

Garrity said the family decided to revisit the structure of the trusts after the sale with an eye toward "modernizing" them.

It was through that process that the decision was made to shift more money to William Penn and to finance a new fund all together.

The movement of the money is significant because charitable foundations are required by law to distribute 5 percent of their assets annually. And the money can be used only for charity.

The Haas charitable trusts are required by their bylaws to distribute a portion - less than 5 percent - of "income" generated by the endowments. In a bad economic year, then, no distributions might be required. The bylaws also eventually dissolve the trusts, freeing remaining funds from any charitable restrictions.

The money given to the William Penn Foundation guarantees it will support local charities, an important regional concern after last summer's announcement that the Annenberg Foundation, long a major local benefactor, was moving to Los Angeles.

"My parents established this foundation in response to social problems following World War II," John C. Haas said in a statement. "The entire Haas family is incredibly proud of the effort they set in motion, and of the value, strength, and importance the foundation has come to represent in the region."

Haas directed that $747 million given to William Penn "be used in perpetuity for the advance of the Greater Philadelphia region," according to the foundation.

"This is great news to end the year," said Bradford Smith, president of the Foundation Center, a national research organization that tracks foundations and philanthropy. "It is great for the Philadelphia region. It is great for philanthropy."

Feather Houstoun, president of the William Penn Foundation, called the influx of funds "wonderful" but cautioned it would not automatically trigger a corresponding jump in grant-giving.

In recent years, she said, the Haas trusts have given roughly $25 million annually to the foundation to award as grants. The $747 million from the trusts is meant to ensure that the foundation can generate those annual grants itself, without further largesse from the trusts.

Still, Houstoun estimated William Penn would be able generate an additional $15 million or more a year as a result of the larger endowment.

Last year, William Penn distributed $63 million.

"Over time, we will be able to increase the size of the grant-making of the organization," she said. "That will be worked out over the next year or two. We are going to be very careful about what happens next."

The William Penn Foundation was founded by Otto and Phoebe Haas in 1945. Its board is chaired by David Haas, son of John C. Haas and grandson of Otto Haas. David Haas is part of a local investors group that is seeking to acquire Philadelphia Newspapers L.L.C., which owns The Inquirer, the Philadelphia Daily News, and Philly.com.

With an endowment of $1.9 billion, William Penn would rank among the top 30 foundations in the country. The Bill & Melinda Gates Foundation is the largest, with about $39 billion. The Annenberg Foundation has about $2.5 billion, Pew Charitable Trusts about $4 billion.

Top Foundations by Assets

1. Bill & Melinda Gates Foundation: $39 billion

2. Ford Foundation: $11 billion

3. J. Paul Getty Trust: $10.8 billion

4. Robert Wood Johnson Foundation: $10.7 billion

5. W.K. Kellogg Foundation: $8 billion

6. William and Flora Hewlett Foundation: $6.2 billion

7. Lilly Endowment Inc.: $5.7 billion

8. John D. and Catherine T. MacArthur Foundation:

$5 billion

9. California Endowment: $4.6 billion

10. David and Lucile Packard Foundation: $4.6 billion

19. Annenberg Foundation: $2.5 billion

35. John Templeton Foundation (Radnor, Pa.):

$1.5 billion

49. Heinz Endowments: $1.2 billion

57. William Penn Foundation: $1.1 billion *

* The William Penn Foundation would rank 29th with the $747 million increase in its endowment announced yesterday.

Pew Charitable Trusts are not on the list because they are technically not a foundation. They have about

$4 billion in assets.

Source: The Foundation Center. Figures available as of November 2009.

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Contact staff writer Christopher K. Hepp at 215-854-2208 or chepp@phillynews.com.