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BEN SULLIVAN Staff Reporter

In the world of California philanthropy, $3 billion to spend on discretionary health care projects would usually be considered a bundle.

But Mark Smith and Steven Uranga McKane, the respective CEOs of the California HealthCare Foundation and the California Endowment, argue that it's barely a drop in the bucket.

The two new non-profits are inheritors to the assets of Woodland Hills managed care giant Blue Cross of California, which converted to for-profit status in the middle of 1996.

By law, such conversions require the new company to establish one or more philanthropic entities equal in value to the old non-profit.

Though their endowments place them in the upper echelons of California charities the Foundation is the third largest in the state, the Endowment the seventh the groups' CEOs say they are guarding their money like misers.

"Everyone and their uncle" has already come to the foundations for grants, Uranga McKane said, "and in nearly all instances there are expectations that are unrealistic."

Uranga McKane's Endowment, located in Woodland Hills, received an initial $900 million from the Blue Cross conversion. Since it began doling out funds in September, it has dispersed $32 million through 147 grants.

Over the next three years it must spend at least another $150 million to meet requirements outlined by the California Attorney General's Office.

The Foundation in Oakland, which has a $2.1 billion kernel, is still developing its grants program, Smith said, and will begin disbursing money this spring.

But even then, he cautioned, the state shouldn't expect a flood of funding.

"Health care in California is a $100 billion a year industry. We could spend all of our assets in one year and still be just 3 percent of the action," Smith said.

In particular, he said, both organizations must guard against being seen as alternative funding sources for public projects.

"It's magical thinking (to believe) that it's okay to cut government spending because the private sector or charity will make up the difference," he said. "That's sophistry at worst and ignorance at best."

Smith's attitude has resonated to a point with others in the health care community. But, they also point out, $3 billion is still $3 billion.

"I don't think the foundation can just give money to the (L.A. County) Department of Health Services," said Vincent Gualdieri, immediate past president of the Los Angeles County Medical Association. "But they certainly have the resources to help find out why people are not being covered adequately" by existing infrastructure.

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