A Note on Spend-Down Foundations

July 18, 2012

On June 6-7, 2012, the Center hosted a meeting in Washington D.C. for representatives of foundations that are in the process of spending down their assets.
The meeting grew out of work that Center faculty chair Joel Fleishman, and philanthropy consultant Tony Proscio, have been doing to chart the multiyear spend-down processes of the AVI CHAI Foundation (Fleishman) and the Atlantic Philanthropies (Proscio). Fleishman’s and Proscio’s series of annual reports on spend-down at the two foundations join a growing list of documents concerning a phenomenon that is increasing in importance and ubiquity. CSPCS has, in recent months, assembled an archive on spend-down activities.
We opened with a dinner and welcome that included a talk by Vincent McGee, who served as executive director of the Aaron Diamond Foundation from the mid-1980s to the mid-1990s, when it spent down all of its funds.
The next day we expected the group (of 15) to break into several smaller groups to discuss issues such as personnel, program refinement and close-out, grantee relationships, family dynamics, and finance and portfolio concerns.
To our surprise, the introductory portion of the meeting turned into a detailed and engrossing conversation in which participants reprogrammed the agenda on the fly. We extended the whole-group discussion by incorporating individual case studies and the frequently apparent overlap in hard-nut strategic issues despite the variety of foundation situations. We allowed ourselves the time to hear each individual’s spend-down story: how the decision to spend down came about, where the foundation is now in the process, and what the challenges are in the near and long term.
We all had underestimated just how much time the spend-down process takes (and participants would need). As Tony Proscio observed, “All perpetual foundations are alike in their perpetuity, but each limited-life foundation is limited in its own way.”
We are now thinking through ways to keep the process going productively. Though there’s no formal affinity group for spend-down foundations, we are aware that there has been an informal “working group” of spend-downs (including several that attended our get-together) and that the number of foundations engaged with the subject is growing. We invite suggestions from readers of this little report and will investigate whether a more formal and elaborate set of “next steps” is warranted.

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Rip Rapson
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The Kresge Foundation