A version of this article appears in the Fall 2013 issue of Philanthropy magazine.
A growing number of foundations and philanthropists have declared their intention to give away most or all of their resources within a defined time frame. In the world of philanthropy, they’re known as spend-downs.
Fifty years ago, only 5 percent of the total assets of America’s largest 50 foundations were held by organizations in the process of spending themselves out of existence. That compares to 24 percent in 2010. And these foundation statistics do not include the large sums that many spend-down philanthropists donate as individuals rather than through foundations.
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- The philanthropists pathway: How Charles Bronfman raised funds for Birthright
- The proven programs pathway: Why Josh Bekenstein boosts giving to growing organizations
The decision to spend down appeals to donors for many reasons, but one stands out: results. Many donors believe that going big over a short period of time will afford them greater influence. And the declared deadline provides discipline in achieving those results.
As the number of sunsetting foundations grows, so too do lessons on how to do it well. Those lessons have value for all foundations, because even among those planning to continue in perpetuity, no grant, strategy, or program lasts forever.
Based on Bridgespan’s experience in philanthropy advising, we have charted six pathways that spend-down foundations and philanthropists have used to magnify their influence: (1) investing in the people who will become the field’s future leaders, (2) building the capacity of powerful institutions and networks to continue making progress, (3) influencing other philanthropists, (4) funding proven programs that create lasting results, (5) supporting pioneering research to develop new solutions, and (6) changing government policies.
Choosing the right pathway is a complex decision. With each pathway, we describe how philanthropists came to their own choices and offer tips on how to align your own giving with the path that best accommodates your goals.