The names of philanthropists like Charles and Andrea Bronfman may not be remembered by millions of beneficiaries 100 years from now. Unlike Rockefeller, Carnegie and Ford, whose reputations live on through generations of ongoing philanthropic largesse, the Andrea and Charles Bronfman Philanthropies (ACBP) is part of a trend of spend-down foundations.
Spending down means that, rather than preserving most of its assets, a foundation accelerates its annual spending to grant the entirety of its endowment by a predetermined date. According to research at Duke University’s Sanford School of Public Policy, 34 existing major foundations are projected to complete their spend-downs by 2020, representing nearly half of all spend-down foundations in the history of philanthropy. The Avi Chai Foundation, a major funder of Jewish education and literacy, is also in the process of sunsetting.
In the case of ACBP, the deadline is 2016, at which point the foundation’s entire endowment — reported as $18.4 million in its 2010 990 tax form, the most recent available data — will have been spent. Most of the funds will go towards ACPB-incubated projects such as Reboot, a leadership development program for young Jews, and Slingshot, a funder and publisher of a guide to innovative Jewish nonprofits. “In 2001, we chose our closing date because we thought 15 years sounded like a long time,” said Jeffrey Solomon, president of ACBP, “but it’s felt like 15 minutes.” According to research from Harvard’s Kennedy School, most foundations stick to the IRS-required minimum annual payout of 5% of their endowments’ value. However, ACBP and Avi Chai are part of a growing and highly strategic group of funders — including the Bill and Melinda Gates Foundation and Atlantic Philanthropies — that plan to spend their philanthropic dollars more aggressively and eventually close their doors.
Avi Chai has radically concentrated its funding over the past three years, reducing its number of grantees by nearly half, from 148 in 2008 to 75 in 2010. The initial spend-down deadline was 2027, based on the desire of its founding donor, Zalman Bernstein, to have the foundation’s money spent by people he knew, who shared his values. Following the financial crisis of 2008, the foundation’s endowment lost 20 percent of its value, and the trustees decided to accept an earlier deadline in order to maintain their spending level, now approximately $40 million per year.