Giving

When Foundations' Days Are Numbered

Philanthropies Prepare Groups for End as They Spend Down

By Amy Schiller

(Page 2 of 3)

The reasons cited by the directors of both Avi Chai and ACBP align closely with those listed by the National Center for Family Philanthropy as common motives for spending down, which frequently center on the founding donor’s desire to oversee the use of his or her philanthropic dollars. These include “a desire to control their own giving,” “fear of burdening future generations not interested in grant-making” and a “guarantee that their mission will be honored.” According to Yossi Prager, executive director of Avi Chai: “Spending down is an intensely personal decision. So much has to do with how the philanthropist wants to engage his or her own family.” Indeed, the Bronfmans decided to sunset based on conversations with their children; they recognized that their descendants would have different philanthropic interests and should be free to make their own decisions, apart from their parents’ preferences.

Although the immediate heirs may not share the values or priorities of the founding donors, a foundation’s decision to withdraw from the philanthropic scene tends to rest on the belief that other funders will replace them. “The argument that sunsetters make is that this generation of wealth creators ought to solve this generation’s problems and let the next generation solve the problems it faces,” said Joel Fleishman, a national expert on foundations and consultant to Avi Chai on its spend-down process.

This point is underscored by the fact that many foundations don’t adequately lay the groundwork for a next generation of excellence, opting to finance programs instead of organizations. Fleishman said that foundations might initiate a successful program and then pass the responsibility to other funders, whether governmental or philanthropic. Foundations “tend to want the biggest bang for their buck by giving program grants, without realizing those programs have to be administered competently by a nonprofit,” he added.

However, spending down may provide foundations with the opportunity to support a not-for-profit’s infrastructure rather than giving flashy, program-specific grants.

According to Fleishman, the most urgent priority for Avi Chai was shifting its focus “from the trees to the forest,” that is, making fewer grants to individual programs and more to ensure that the priorities of Jewish literacy and peoplehood would be attractive to future funders. As part of that aim organizations currently executing Avi Chai’s mission — primarily schools and camps — would be provided with the human capital and materials to successfully engage those potential donors.

Similarly, ACBP began its spend-down countdown with its grantees’ sustainability in mind. Any organizations that had received general annual support, such as Carnegie Hall, were informed in 2010 that they could expect only three more years of support based on the sunsetting timeline. According to Solomon, “The most common response we got was ‘Thank you for telling us so early.’”