The battering that endowments suffered during the stock market collapse of 2008-09 combined with the administrative burdens of running a foundation and generational differences in charitable giving have all contributed to an increase in the number of limited-lifespan foundations, the New York Times reports.
In its latest annual report, Atlantic Philanthropies, which plans to spend down its assets and close by 2020, profiles other foundations and philanthropists who have announced their intention to spend down their endowments, including Bill and Melinda Gates, whose foundation plans to close within fifty years after the last of its current trustees dies. Other examples include Tim Gill, the founder of desktop-publishing pioneer Quark, Inc. and his Denver-based Gill Foundation, which will sunset twenty years after his death, and John Hunting, who shuttered the Beldon Fund last year, in accordance with a plan he devised in 1998 to spend out the foundation's assets within a decade.
According to Richard L. Fox, an attorney with the Dilworth Paxson firm in Philadelphia and author of Charitable Giving: Taxation, Planning, and Strategies, most families interested in setting up a foundation are looking for something permanent. Indeed, in a 2009 report, Perpetuity or Limited Lifespan: How Do Family Foundations Decide? (46 pages, PDF), the Foundation Center and the Council on Foundations found that 12 percent of family foundations planned to spend down after a specified period of time, while 25 percent were undecided. The report also found that of those foundations which had decided to limit their lifespan, most had arrived at the decision in 2007 or 2008.
Regardless of an individual's or family's reasons for spending out an endowment, the net effect is to put more philanthropic dollars into circulation sooner. For the Seattle-based Quixote Foundation, which works in areas such as the environment, election integrity, and media reform, the decision to spend down was part of a strategic plan developed after the death of its founder, Stuart Hanisch, in 2002. "All of these seemed to need more effort," said Quixote Foundation president Erik Hanisch, who added that setting a deadline helped focus the foundation's efforts to shape future policies. "There was a sense of urgency."