Most leaders of limited-life foundations say the opportunity to achieve greater impact is the key driver for the decision to spend down, a report from the Center for Effective Philanthropy finds.
Based on interviews with leaders of eleven limited-life foundations, the report, A Date Certain: Lessons From Limited Life Foundations (50 pages, PDF), highlights the practitioners' perspectives in nine key areas — why spend down, investing, staffing, grantmaking and strategy, what the foundation owes to grantees, collaboration, communications, evaluation, and archiving knowledge. Funded by the S.D. Bechtel, Jr. Foundation, which plans to spend down by 2020, the study found that often a donor's expressed desire to see greater impact during his or her lifetime was a key driver behind the decision to spend down and that, once the decision was made, many leaders felt a sense of focus and urgency to be strategic.
For some, however, aligning the foundation's investment practices with its spend-down plans proved challenging in areas such as spending at the planned rate, balancing risk and return with market volatility, and investing for impact within a short timeframe. In response to some or all of those challenges, a number of foundations, including the AVI CHAI Foundation, narrowed their grantmaking focus, while a few focused on their responsibility to "do no harm" to grantees as they exited a field. To help grantees prepare for the loss of a key funding source, most foundation leaders gave priority to communicating their spend-down decisions and timelines in a transparent, direct, and timely manner.
The study also found that while some limited life foundations, including ClearWay Minnesota, increased their emphasis on evaluation after the decision to spend down was made, foundations such as the Andrea and Charles Bronfman Philanthropies, focused their evaluation efforts on specific programs or grants, while others, including the Whitman Institute and Brainerd and Robina foundations, have yet to decide whether to conduct a large-scale evaluation in the final stages of the spend-down process. Moreover, while most of the foundation leaders interviewed expressed a desire to preserve their foundations' accumulated knowledge, the report was unable to identify a definitive point in the process when foundations decide to solidify their plan for archiving knowledge, nor a common approach to archiving their knowledge.
"When it comes to the people most affected by a foundation's spend-down process — staff and grantees — foundation leaders are careful in considering the choices they make and the repercussions of those choices," the report, which is accompanied by case studies of three sunsetting foundations, concludes. "They are deliberate in making decisions about whether and how to staff up, whom to hire, and how to support staff as their foundations close their doors. They are thinking about how best to support nonprofits through the process of losing a funder, mindful of the damage that could come with an abrupt end to funding. They are considering how to ensure that work that matters to them continues after their foundations have spent down."