A recent study by the Bridgespan Group reveals that only 5% of the total assets of America’s largest 50 foundations were held by spend-downs, compared to 24% in 2010. This means that nearly one-quarter of the assets of the 50 largest foundations in the US will be spent within the lifetime of their founders/donors.
What is driving this change in philanthropic strategy? A generation ago, foundations were seen as legacies by founders intended to perpetuate good and philanthropic intentions and, perhaps, to instill a philanthropic legacy among family heirs. This may well be giving way to a new philosophy, embodied by next generation foundation philanthropists like Charles Feeney (Atlantic Philanthropies), Warren Buffet and Bill and Melinda Gates where the donor sees the Foundation as a strategic mechanism for meaningful philanthropy. This is leading toward gifts — more accurately, philanthropic investments — that are likely to bring about more immediate and meaningful change.
Another reason for change is that the peer landscape has changed among the largest foundations. One third of the largest foundations where founded within my working life time of 26 years. Many were created as a by-product of new tax laws in the 1990s which encouraged young entrepreneurs to create foundations as a means to shelter income and lo and behold, many of those entrepreneurs have applied their acumen and aversion to risk to making a difference for the charitable sector.
We are now raising foundation money at a time where risk and reward are more prominent factors in giving and where a new generation of foundation donors are adopting strategic approaches to their philanthropy. Read Veronica Dagher’s excellent Wall Street article here
Does opportunity abound or will these changes favor the few? Is your charity seeing stronger and better results? Please add your thougths!