Hilton gives fortune to charity (not Paris)
The 80-year-old billionaire intends to leave his money to a charitable group founded by his father - sorry, Paris and Nicky.
NEW YORK (Fortune) -- The Hilton family patriarch, Barron Hilton, will pass on the $1.2 billion windfall from the sale of Hilton Hotels Corporation - not to his famous progeny, but to his family's philanthropic foundation, Fortune has learned.
Barron Hilton's donation will effectively double the size of the Conrad N. Hilton Foundation, named after Barron's father, the man who built Hilton Hotels from scratch and great-grandfather of celebutantes Paris and Nicky Hilton. In a statement e-mailed to Fortune, Barron Hilton wrote: "My personal net worth today, including created trusts, is approximately $2.3 billion, and what ever value it is upon my passing, it is my intent to contribute 97% of my estate to the Conrad N. Hilton Foundation, following in my father's footsteps."
Hilton, who is 80 years old, has had an infusion of cash from two recent private equity deals. In July, Blackstone (BX) announced it was purchasing Hilton hotels for $26 billion, or $47.50 a share. Barron held roughly 5% of the shares. He also owns a stake in Harrah's Entertainment (HET, Fortune 500), which is in the process of being bought by Apollo and Texas Pacific Group for $15 billion. That deal will reportedly net him $300 million when the sale is complete.
To put the gift in perspective, Hilton's $1.2 billion pledge should be the second-largest publicly announced donation of 2007, behind Leona Helmsley, another hotel magnate, who gave $4 billion to a foundation under her family's name.
Until now, the question of what Barron Hilton would do with all this money was unresolved, though many assumed he would give it away rather than bulk up his descendants' trust funds. Barron's son, Steve, also president and CEO of the Hilton Foundation, says his father had been talking about doing this for a while. Barron Hilton was CEO of Hilton Hotels for three decades starting in 1966.
Although Barron Hilton still acted as co-chairman of the company until the Blackstone sale, the company hasn't been run by a Hilton since 1996, when Stephen Bollenbach stepped into the top role. The Hilton Foundation, with assets now of about $1.1 billion, directs more than 50% of its grants to international causes. Since 1990, for instance, it has committed $62 million to building clean sources of water in Africa. A devout Catholic, Conrad Hilton wrote in his will that the foundation's directors should "shelter little children with the umbrella of your charity."
With all this new funding, Steve Hilton says there will be a major expansion down the road. According to the most recent information compiled by the Foundation Center of the top 100 U.S. philanthropic foundations by asset size, the Hilton Foundation is the 61st largest now. Upon Barron Hilton's death, it will likely move into the top 25. Steve Hilton says that the size of the staff will increase from 19 currently to 100 when Barron Hilton's estate goes in effect.