The stock market's spectacular four-year bull market has had an unanticipated side effect: foundation leaders are working harder to give money away, columnist Ellyn E. Spragins reports in the March 22 edition of Newsweek magazine.

Calling the new cash-flow problem one of "overendowment," Spragins says many leaders of the nation's largest foundations have been scrambling to keep up with how much cash they must give away to meet the 5 percent payout required under Internal Revenue Service regulations.

"Giving money away is harder than some people feel it is," Cole Wilbur, president of the David and Lucile Packard Foundation, told Spragins.

The problem is more serious than it may sound because foundation leaders generally are quite careful about studying potential recipients. Groups must fit with the foundation's mission and often promise some kind of measurable return for the support.

Still, the money is pouring in. The Lilly Endowments' portfolio grew by $12 billion during the last four years. This means the foundation had to average $8 million in donations a week last year.

The Robert W. Woodruff Foundation in Atlanta recorded asset gains of 37.4 percent over three years, beating average market gains.

The huge gains - combined with careful recipient review - means foundations are now more likely to give bigger grants to a smaller number of groups than distributing money to a larger number of recipients, Spragins reports.

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