Robert Wood Johnson Foundation Business Information, Profile, and History

Company Perspectives:

The Robert Wood Johnson Foundation's mission is to improve the health and health care of all Americans. It concentrates its grantmaking in three areas: to assure that all Americans have access to basic health care at reasonable cost; to improve care and support for people with chronic health conditions; and to promote health and reduce the personal, social, and economic harm caused by substance abuse&mdashøbacco, alcohol, and illicit drugs.

History of Robert Wood Johnson Foundation

The Robert Wood Johnson Foundation is one of the largest private philanthropic organizations in the United States and the largest focusing specifically on health issues. Each year, the Foundation provides approximately 1,000 grants totaling in the hundreds of millions of dollars to hospitals and research institutions. At any given time some 2,300 groups across the country are being assisted with Foundation money. The Foundation's philosophy is straightforward: it awards grants for hands-on research and practice initiatives. The focus is on making affordable basic health care available to everyone, but it goes beyond that. Foundation-sponsored research covers such topics as how to treat chronic illness, how to prevent illness associated with substance abuse, and how to educate both the medical profession and the public about health care topics.

Since 1972, when the Foundation was established as a national organization, health care topics have become increasingly complex. In the 1970s it was believed that universal national health care in some form would be implemented over the next several years. At the beginning of the 21st century the debate over national health care was still contentious, and a comprehensive national program was still a dream. Other factors changed the health care picture through the 1980s and 1990s. The advent of AIDS, for example, had a dramatic impact on the social, economic, and political fabric vis-à-vis health care. The increasing elderly population would have a strong long-term impact. Moreover, people were living longer, which meant increased susceptibility to cancer, diabetes, Alzheimer's disease, and a host of other conditions. The Foundation believes that it serves people most effectively by continuing to focus both on health care and on health improvement.

General Johnson: A Life of Civic Duty

Although the Foundation as a national organization was established in 1972, its origins go back some four decades earlier. The best way to understand the Foundation's philosophy is to understand the man who created it--a man who spent his career combining his business acumen with his strong humanitarian beliefs.

Robert Wood Johnson was born in 1893 with what Waldemar Nielsen in his book The Golden Donors called 'a silver tongue depressor in his mouth.' His father and uncles had founded a small medical supply company in the 1880s. The company developed a way to mass produce sterile surgical dressings, and within a decade the company, Johnson & Johnson, was highly successful. Young Robert was educated by tutors and in private schools and was planning to attend college. Upon his father's sudden death in 1910, the 17-year-old boy decided to forego college and instead went to work at Johnson & Johnson's plant in New Brunswick, New Jersey.

He began as a mill hand and worked his way up, gradually learning all the jobs at the plant. By 1918 he was vice-president, and in 1932, he succeeded his uncle as president. Under his leadership, Johnson & Johnson became one of the most widely recognized companies in the world; by the late 1960s the company had sales of over $700 million in some 120 countries.

Johnson's success as a business leader was based in part on his intelligence and his competitive drive. Perhaps to a greater extent, however, it was based on his unwavering belief in the importance of public service. He became involved in local politics in Highland Park, New Jersey, and was elected mayor at the age of 27. (Later he would encourage his employees to participate in civic affairs and even established a 'Sound Government' program at Johnson & Johnson to promote this goal.) When the Great Depression hit in 1929, not only did Johnson manage to keep his work force, but he also raised their salaries. During World War II he served as vice-chairman of the War Production Board. (He attained the rank of brigadier general and thereafter was known as General Johnson.) He was a firm believer in promoting dignity and self-worth among his employees; he paid them good wages and encouraged them to voice their opinions about their work environment. A personally fastidious man (he required that corners in his factories be painted white so that dirt could be seen and promptly removed), he was an early pioneer in controlling corporate pollution. He built a model factory community in Gainesville, Georgia, in the 1920s that featured a clean work and living environment--no smokestacks or chemical runoff. It is hardly surprising that such a civic-minded man would choose to earmark his sizable fortune to helping others.

Foundation's Origins in the 1970s

The Robert Wood Johnson Foundation has existed as a national philanthropy since 1972, but its origins actually go back to 1936. General Johnson set up a foundation with the goal of providing support to a variety of humanitarian projects. One of the earliest of these was the establishment of a school of hospital administration at Northwestern University in Evanston, Illinois. As time went on, Johnson desired that his foundation achieve a broader scope. Toward the end of his life he set about plans to establish the foundation as a national organization to which he would bequeath the bulk of his sizable estate.

Despite--or in some cases perhaps because of--their good work, private philanthropic organizations have always been the focus of investigation by the government. Terrence Keenan, the Foundation's special program director, addressed the issue in a booklet published in 1992. He stated bluntly that members of Congress 'themselves forever chafing under (and not infrequently flayed by) the Constitution's demands for public accountability of public servants, is very uncomfortable with the foundation as a center of power and wealth which has no such accountability.'

Given Congress' attempts to regulate private foundations over the year, Keenan's words are hardly surprising. Since foundations were often created by wealthy and powerful families, the popular belief more often than not was that they were nothing more than elaborate schemes for exempting the rich and their corporations from paying taxes. Congress, no doubt influenced by constituents as well as by its own skepticism toward the wealthy, convened several committees to investigate foundation practices. For much of the 20th century, legislators sought to restrict private foundations. Sometimes this reached the point of absurdity; in 1952, during the height of anti-Communist hysteria in the United States, a Congressional committee was set up to investigate whether private foundations were promoting 'un-American' activities.

There were other concerns, however, that were more legitimate. During the 1960s, the House Select Committee on Small Business, under the leadership of Texas Congressman Wright Patman, investigated private foundations and discovered what appeared to be questionable business practices. Patman's findings led to further action by the government. A U.S. Treasury Department report issued in 1965 mirrored Patman's complaints: inadequate oversight in foundations allowed companies and wealthy families to use foundations as huge tax exemptions while providing little measurable charity.

The debate continued until 1969 when the Tax Reform Act was passed. Among the stipulations was a four percent net excise tax on foundation investment income, and a required annual payout of all net investment income (or a minimum of six percent of the endowment, whichever was greater) within one taxable year.

Not surprisingly, the legislation discouraged the launch of any new foundations and made life unpleasant for existing ones. In the ensuing years, modifications to the 1969 law were enacted; the excise tax was halved and payouts were reduced to a flat 5 percent. Nonetheless, foundations still faced other regulations, as well as the stereotype of being tax havens for the wealthy.

Johnson's belief in what his foundation could do--and what it should do--was so strong that he did not allow congressional activity in the 1960s to deter his mission. When he died in January 1968, his bequest to the foundation totaled some $300 million in Johnson & Johnson stock. (By the time Johnson's will was probated in 1971, those shares were worth $1.2 billion.) Johnson did not make any formal stipulations about the Foundation's mission in his will, but he had made his wishes known to the men who would become its trustees. Johnson chose these men to serve on the Foundation's board based on their business acumen and their sense of ethics. All of them were Johnson & Johnson executives--a move that had caused conflict in similar foundations. The General, however, was obviously as good a judge of character as he was a businessman.

Furthering the Mission of General Johnson

Gustav O. Lienhard, president of Johnson & Johnson, retired from that position to assume the chairmanship of the Foundation. Although he and the other trustees were conservative in their outlook, they were experienced and savvy enough to realize that a stodgy mainstream organization would never be able to meet the General's goals. Their goal was to make the Foundation 'productive,' and to that end Lienhard had the foresight to hire the well-respected and progressive head of the Johns Hopkins Medical School, Dr. David Rogers.

Rogers put together a staff of talented and progressive health care authorities, and they began to create a plan for shaping the Foundation's mission. Rogers and his staff worked well with the trustees and their mutual respect gave the Foundation a strong framework on which to build.

The first mission statement in 1972 stated that the Foundation's goal was 'the encouragement of institutions or individuals who are attempting to restructure the American health delivery system to make effective care more available to nonhospitalized patients.' Other foundations at the time were donating approximately $100 billion annually to health care, but most of that money was going into research and hospital construction. The Robert Wood Johnson Foundation decided to focus its energies on the actual delivery of health care to the patient--an area that it felt had been unwisely neglected. Specifically, the Foundation would concentrate on three aims: improving access to health care, improving health care services to enhance the quality of care, and developing methods to objectively analyze public health policy.

To this end, the Foundation decided to achieve its goals through the establishment of large-scale field trials of ideas it saw as innovative. The Foundation would fund not only the trials, but third-party objective evaluations. It would also collaborate with medical schools, hospitals, research institutions, government agencies, and other foundations as a means of furthering its goals. By having a national rather than a regional focus, the Foundation could share its knowledge and expertise with a wide range of health care agencies and institutions.

A good example is Clinical Scholars, one of the earliest and most successful Foundation programs. Started in 1973, it provided young physicians the opportunity to study such non-clinical topics as demography, economics, management, and similar fields at the graduate level for two years at major colleges and universities. Giving clinicians a grounding in these non-clinical subjects, the Foundation believed, made them more well-rounded and could improve their ability to deliver quality health care. The Foundation put some 800 men and women through this program from inception through the 1990s. Many of them went on to positions in major medical research institutions, government agencies, and major corporations in the health care field.

Among the early efforts were: a program to help teaching hospitals consolidate health services for high-risk teens and young adults (those vulnerable to substance abuse, teen-age pregnancy, and venereal disease); a training program for dental students focusing on care of handicapped patients; a rural infant care program that allowed medical schools and state health departments to collaborate to reduce infant mortality; and a program to establish emergency medical communications systems.

From the beginning, one element that distinguished the Foundation from similar organizations was that staff members had experience with health care in addition to whatever other skills they brought to the table. This was particularly useful, because staff could make informed decisions about grant proposals. As former Foundation president Leighton E. Cluff, M.D., explained in his book Helping Shape the Nation's Health Care System, 'This made possible staff review of proposals and programs from the perspectives of health economists, nurses, physicians, and experts in public health, health systems, health services research, finance and accounting, and health policy.'

Changing Needs in Health Care

When the Foundation was launched as a national organization, the biggest problem that appeared to plague health care in the United States was the need for greater access to health care. The cost of health care was also at issue, and many experts believed that universal health care in some form was only a matter of time. Because the Foundation's trustees and staff had an understanding of health care, they were able to conduct substantive self-evaluations to determine whether they needed to change their direction. In 1980, for example, the Foundation evaluated such changes in health care as the growth in outpatient services and modified its goals to reflect this and other changes. These goals included improving health care access to under-served populations; finding ways to make health care more affordable; and helping people get the most out of the health care they receive.

A larger such evaluation was conducted in 1986, and the following year the Foundation fashioned a revised set of beliefs and goals. By the mid-1980s, health care issues were quite different from what they had been in the 1970s. Costs were rising, and more people were finding themselves unable to afford even basic health care. Those who could not afford care but who had chronic conditions posed another problem, as did an increase in problems stemming from substance abuse. How to care for those suffering from mental illness was a growing concern, in part the result of de-institutionalization programs that gave many mentally ill individuals more freedom over their own lives. The appearance of AIDS and its epidemic spread was a huge change on the health care horizon. While the basic goals remained essentially the same, the Foundation sought programs and proposals from a broader base than the usual medical institutions and universities. It also began looking toward single-site programs. In the past, the Foundation had funded programs that ran at several sites across the country. Now it would also fund regional programs, which could address concerns in specific regions. Regional programs that were successful could later be replicated on a larger scale.

The scope and variety of programs implemented at the Foundation during the 1980s and 1990s were wide-ranging. Among the larger projects were Faith in Action, a program that helped provide volunteer services to the chronically ill to more than 1,100 interfaith coalitions across the country; Covering Kids, a health care access program for low-income uninsured children that complemented government and private-sector initiatives; A Matter of Degree, which worked to create community-campus partnerships at colleges with the goal of reducing substance abuse; and Chronic Care Initiatives in HMOs, which sought to improve the delivery of health care to chronically ill patients in managed care groups. Smaller programs focused on such issues as creating childhood immunization registries, discouraging smoking among teens and young adults, and palliative care for the elderly and terminally ill.

Strong leadership has always been important to the Foundation. When Gustav Lienhard stepped down in 1985 he was replaced as chairman by Robert Myers, who oversaw the 1987 initiatives and the 1989 expansion of the Foundation's headquarters building. He stepped down in 1990 and was replaced by Sidney Wentz, who guided the Foundation through the major health care changes of the 1990s. Wentz stepped down in 1999 and was replaced by Robert E. Campbell. Regarding the Foundation's presidency, when David Rogers resigned, he was succeeded by Leighton Cluff (who had served as executive vice-president). Upon Cluff's retirement in 1990, Stephen Schroeder, a physician who taught at the University of California-San Francisco, was chosen as his replacement. With sound management, clear goals, and a strong endowment (which increased from $2.6 billion in 1989 to $7.8 billion in 1998), the Foundation remained a strong and influential player in health care as it entered the new century.

Chronology

• Key Dates:

• 1910: Robert Wood Johnson begins career at Johnson & Johnson following his father's death.
• 1936: Johnson begins private philanthropic foundation to promote improved health care.
• 1968: Johnson dies, bequeathing bulk of his estate to the foundation.
• 1969: Congress passes Tax Reform Act that sets new rules for private foundations.
• 1972: Robert Wood Johnson Foundation established as a national foundation.
• 1976: Foundation moves from New Brunswick, New Jersey, to Princeton, New Jersey.
• 1985: Gustav Lienhard retires as chairman and is replaced by Robert Myers.
• 1987: Foundation revamps mission and goals to reflect changes in health care needs.
• 1989: Sidney Wentz replaces Robert Myers as chairman.
• 1999: Wentz retires and is replaced by Robert E. Campbell.