Duke Sanford School of Public Policy

It wasn’t too long ago that very few philanthropic foundations were designed, or would come to decide, to spend down their endowments and go out of business.

The one great exception was the Julius Rosenwald Fund, whose eponymous founder made his fortune as part owner of Sears, Roebuck and Company. In contrast to his contemporaries John D. Rockefeller and Andrew Carnegie, Rosenwald believed that foundations should be limited in their life spans. Established in 1917, the Rosenwald Fund invested in education, health and medical services, and race relations, among other areas. Its best-known initiative was a program of matching grants to create more than 5,000 “Rosenwald Schools,” mostly in the rural South, for African-Americans. By 1948, when the Rosenwald Fund closed its doors, it had disbursed more than $22 million and touched the lives of tens of thousands Americans. Some of its schoolhouses are still in use today.

In the more than sixty years since the Rosenwald Fund sunsetted, the prominent foundations that have spent down can be counted on the fingers of two hands:

• The General Education Board (1903-1961)
• The Aaron Diamond Foundation (1955-1996)
• The Vincent Astor Foundation (1959 -1997)
• The Lucille P. Markey Charitable Trust (1983-1997)
• The John M. Olin Foundation (1953-2005)
• The Whitaker Foundation (1975-2006)
• The Mary Flagler Cary Charitable Trust (1968-2009)
• The Beldon Fund (1982-2009)

Over the past twenty years the number of foundations that have announced their intentions to spend down over a time specified or to be specified in the future—including the largest in the world, the Bill and Melinda Gates Foundation—has increased noticeably. It’s difficult to say whether this increase can be attributed to the hands-on, do-it-yourself imperative that informed the business practices, and now the philanthropic practices, of donors who made their fortunes in the tech sector and other industries; to wealth-creators’ lack of confidence that their successor heirs, trustees, program staff, or other wealth-distributors will remain faithful to the philanthropic goals, ideals, and priorities that animate the wealth-creators themselves; to the sense that the challenges (such as climate change, resource depletion, poverty, deficiencies in educational practices, the urgency of particular diseases) that face the current generation are exceptional in their urgency; or to some combination of those and other causes. But all of those factors have been frequently cited by foundation founders as reasons for their decisions to stipulate limited lives for their foundations.

What’s certain is that tens of billions of dollars will be spent by limited-life foundations in the coming decades, and that very little is reliably known about the processes of philanthropic spend-down.

Philanthropy observer and writer Tony Proscio and I have been commissioned by three foundations to document, assess, and report on their spend-down experiences. We’ll be reporting on the unique opportunities, as well as the pitfalls, that going out of business presents—what works and what doesn’t.

Tony and I hope to share these reports not only with the foundations that commissioned them but with the public at large, in the expectation that other foundations— those that are in the process of spending down, as well as those that are just thinking about sunsetting—may benefit from what we learn. is now posted on the Center’s website as well as on the website of the AVI CHAI Foundation. AVI CHAI Trustees initiated this series of reports as a service to the entire foundation and nonprofit community. Having begun their own spend-down process in earnest at a time, more than six years ago, when there was little preexisting knowledge to guide them, they understood viscerally the need and the potential usefulness of a publication of this kind.

The first of these reports, titled "First Annual Report to The AVI CHAI Foundation on the Progress of its Decision to Spend Down," is now posted on the Center’s website as well as on the website of the AVI CHAI Foundation. AVI CHAI Trustees initiated this series of reports as a service to the entire foundation and nonprofit community. Having begun their own spend-down process in earnest at a time, more than six years ago, when there was little preexisting knowledge to guide them, they understood viscerally the need and the potential usefulness of a publication of this kind.

Tony and I join the AVI CHAI Trustees in hoping that you find the report interesting and informative, and we welcome your comments and suggestions as we proceed to work on future annual spend-down reports for AVI CHAI and other foundations.