When asked to name a philanthropist, Chuck Feeney’s name does not often come up. But the American billionaire who made his money from the duty free industry has been in the news for giving away his $8 billion fortune. He set out on this task in 1984 and through his Atlantic Philanthropies Foundation became the champion of ‘giving while living’ and a role model of what are called ‘spend down’ or ‘time-limited’ Foundations, where all funds are given away within a specified time-frame. (The alternative approach is when Foundations operate in perpetuity – with no end point - and the usual model is to create an endowment and then give away the return on the investment.)
There have been a few spend down Foundations in the UK such as the Tubney Trust (closed 2012) and the Peter Moores Foundation (closed 2014). It is an approach that is growing in popularity. Rockefeller Philanthropy Advisors and Campden Wealth survey of 201 ultra-high-net-worth private and family philanthropists from 28 countries, found that 64% who use the spend down model adopted their time-limited approaches after 2000.
One of the key drivers in the rise of spend down funds is the desire to respond now to address urgent needs, with the aim that it prevents the situation getting worse in the future. In the current circumstances (with a global pandemic, Black Lives Matter and the climate emergency) there are calls for philanthropy to spend money now. As Ellen Friedman of the Compton Foundation put it in a recent interview: “If you're a foundation whose interests are world peace, climate change, gender justice, how can we choose perpetuity over action now?”
There are other benefits too. As Chuck Feeney himself said “you’ll get a lot more satisfaction than if you wait until you’re dead. Besides, it’s a lot more fun.” You can also have control over your giving strategy without leaving it to future generations or staff to try and interpret the wishes of a founding donor or a restrictive, out of date trust deed. Lastly, having an end date creates and maintains momentum and often leads to a clear focus on what can be achieved in the time available. It certainly guards against one criticism of perpetual Foundations that they are more interested in organisational survival and preserving their assets than on their mission.
The main criticism of time-limited giving is that it does not have sufficient time to bring about the needed system change. Peter Laugharn of the Conrad N. Hilton Foundation states “Part of the reason the global community finds itself in the midst of a pandemic and unable to provide even the basics of public health is because too many solution-seekers—including governments, multi-laterals, NGOs and philanthropists—go for what’s easiest to implement and measure, and then move on.” When it comes to health, and poverty, and climate change, there is a need to take a long view building knowledge, expertise and relationships with those on the front line. It is a strength of giving in perpetuity that philanthropists and Foundations are in it for the long haul and so are able to tackle intractable social problems.
Despite the rise in interest in giving while living, perpetual foundations are the most common model - with twice as many respondents in the Rockefeller Philanthropy Advisors and Campden Wealth survey taking the in-perpetuity model (62%) than the time-limited one (32%). Those taking this long-term approach could argue that spending down is selling the family silver. It is inherently optimistic that change is possible within a short period, and that the future will be rosier than the present. Giving in perpetuity means believing the current situation is not as bad as it could get and so there is a need to keep money back to help in the future.
So what strategy to choose – spending down or giving in perpetuity? As with so many philanthropic dilemmas the answer is … it depends. Having a mixed philanthropic ecosystem with people and foundations working in short focussed bursts and over generations may be our best way of getting the most impact from philanthropic funds. The energy, focus and optimism of tackling one issue within 20 or so years can galvanise action, but it may miss having a lasting impact. Taking a long-term view to learn and build relationships could leave an important legacy for future generations, but it could also create inertia and giving could become an end in itself. What matters is making a deliberate and considered choice, and in the case of perpetual Foundations, to regularly review the strategic timescale. There is room for both approaches. It depends on ideas about time, legacy and the nature of problems, and, if we listen to Chuck Feeney, the importance of having fun.
Resources - referenced
The Billionaire Who Wasn’t – by Conor O’ Clery (page 382)
Photo credit
“Everything must go in firesale Britain." by practicalowl is licensed under CC BY-NC 2.0