Obama Foundation Can Have Board Members Back its Construction Loans
Changes to a $250 million credit line allow directors to personally guarantee the non-profit's debt
The Barack Obama Foundation, created to finance and build a presidential library for the former commander-in-chief, arranged for its Wall Street-heavy board of directors to potentially help shoulder the project’s $850 million price tag.
The directors, many of whom hail from the money management industry, would be able to personally guarantee the foundation’s borrowings under changes made earlier this year to its $250 million credit line. The revisions, outlined in a July regulatory filing that hasn’t been previously reported, would help the foundation borrow larger amounts through the credit line.
Many of the directors have already made big contributions to the foundation. As of September 2021, according to the organization’s website, Connie and Steve Ballmer, the former head of Microsoft Corp., along with private foundations set up by Glenn Hutchins, Penny Pritzker and Sean Parker, the co-founder of Napster, had each given at least $25 million. Similarly, at least eight of the foundation’s directors are on a list of backers who made cash donations of $1 million or more in 2024.
The loan guarantees represent an alternative way of supporting the foundation without laying out any cash — unless the non-profit defaults when it comes time to repay borrowings. As of December 31, the foundation had barely used the credit line since it was set up in 2020, and it may be that the changes allowing loan guarantees are simply a precautionary measure.
“As with all large capital projects, The Obama Foundation has taken prudent steps to ensure that we have maximum financial flexibility to deliver our project,’’ Emily Bittner, a foundation spokesperson, said in an emailed statement. “2024 was our second highest fundraising year, and we continue to set a strong pace in 2025.”
Photo by History in HD on Unsplash
Telephone calls and emails sent to 11 of the foundation’s directors received no response. As a result, it’s unclear whether any of the directors have actually guaranteed loans on behalf of the foundation.
The foundation started up in 2014, when three Obama supporters — Martin Nesbitt, J. Kevin Poorman, and Julianna Smoot — announced that the organization would develop and implement plans for his presidential library. Smoot and Nesbitt, the co-founder of a private equity firm called the Vistria Group, had both worked for Obama’s presidential campaigns. Poorman previously served as the president and chief executive officer of PSP Partners, a private investment firm founded by Pritzker, a fellow director and an heir to the founder of the Hyatt Hotels chain.
While non-profits often stock their boards with luminaries who can lend credibility to their mission and attract donations from other big name philanthropists, it’s rare for these trustees to back the charitable enterprise’s liabilities, a person who provides financing to non-profits said.
The Obama Presidential Center, located on Chicago’s South Side, has already drawn scrutiny as one of the most expensive presidential libraries ever built. While initial estimates for the project’s price tag varied between $300 million to $350 million, the Chicago Tribune reported in September that the latest figure is now about $850 million.
“Massive” Cost Overruns
Republican party members have seized on the expense increases as an opportunity to castigate Obama, diversity initiatives and Democrats in general. President Donald Trump, during a May meeting in the Oval Office with Canadian Prime Minister Mark Carney, took a shot at the presidential center, billing it as a “disaster,’’ adding that the project has had ``massive’’ cost overruns.
(Trump’s plan to replace the East Wing of the White House with a ballroom is no stranger to inflated expenses. Originally estimated at $200 million by the administration at the end of July, the figure has since jumped 50% to $300 million, according to an October report from the Associated Press.)
The Obama foundation’s 2024 financial statements suggest its finances may have been getting tight as last year came to a close. Increased construction spending combined with operating costs during the past several years has outpaced the amount of money that the organization took in from donations and grants.
As a result, the Obama foundation began 2025 with $265 million available to meet its cash needs for the year, down from $355 million in 2024, according to the financial statements. On the spending side, it had $234 million of remaining commitments at the end of last year under construction contracts, not to mention ongoing expenses such as salaries, rent, and keeping the lights on. The foundation has said it wants to complete construction this year.
The foundation received the $250 million credit line from PNC Bank and Northern Trust Co. in May 2020, but didn’t actually draw any loans through 2023, as donor gifts more than covered construction costs and operating expenses. In fact, the foundation in 2022 cut the maximum loan amount to $150 million, a step that reduces fees that the bankers levy on unused borrowing capacity.
Last year, the foundation borrowed a nominal $1 million and paid it back before 2024 came to a close, the financial statements show. But the foundation also increased the credit line back up to $250 million, suggesting that its financial officers saw the potential need for larger loans looming on the horizon.
Even with the increase in capacity, the foundation still faced a potential problem. While it can borrow as much as $250 million in theory, the actual amount of loans it can obtain is tied to the amount of collateral it can provide to the bankers. And under the original loan agreement, it could only borrow against donor pledges that met certain criteria.
The July filing shows that PNC and Northern Trust expanded the types of collateral that the foundation can pledge to obtain financing. The two key additions to the list: financial assets and the director guarantees.
The foundation can now secure borrowings under the credit agreements with a wide variety of financial assets, ranging from certificates of deposit or savings accounts at PNC to Treasuries, mortgage-backed securities, stocks that trade for at least $5 per share, mutual funds, and master limited partnerships that trade on an exchange, according to the regulatory filing.
In addition, foundation directors who meet certain criteria (the details weren’t disclosed) will be able to make signed pledges for payments equaling the amount of a loan that the foundation draws through the credit line, according to the regulatory filing. These pledges would essentially serve as collateral for the foundation’s borrowings, according to the document.