Perpetuity, continued

April 18, 2014

At the recent panel in New York City on the rationale for perpetual foundations, one member of the audience taking careful notes was Bruce Trachtenberg (you can see Bruce’s summary of the session here).  A foundation veteran who for many years led the Communications Network, the trade association for foundation communication officers, Bruce has a knack for viewing issues from unexpected angles. So it was no surprise when he came away from the perpetuity discussion with a take somewhat different from everyone else’s.

 

He sums it up in a blog post on the Communications Network’s web site. In brief, he asks why every foundation that plans to operate in perpetuity shouldn’t have “some obligation to explain why.” (He means a moral obligation, of course, not legal.)

 

The question turns current practice on its head. These days, it’s the time-limited foundations that seem constantly pressed to explain why they have chosen  to sunset. Case in point: The last Foundation Impact Research Group (FIRG) of the semester here at the Sanford School featured two trustees of the John Merck Fund, Olivia H. Farr and George Hatch, explaining why their foundation has chosen to close in less than a decade. (A video of the session is here.) They explained that the time limit allows them to work more intensively on their focus areas (developmental disabilities, clean energy, environmental health, and regional food systems) and that it injects an element of urgency and self-scrutiny that they feel would otherwise be lacking.

 

Their careful elaboration of their decision, the factors that led to it, and the way it affects their work was more thorough than one usually hears. But in one respect it was fairly typical of statements from time-limited philanthropies: It was a conscious defense of doing something contrary to the norm.

 

I’m intrigued by Bruce’s question: Why shouldn’t the norm be just as painstakingly dissected and defended?

 

At the moment, all the trendy discussion is about time limits. There’s good reason for that — the great majority of limited-life foundations are creatures of the last few decades. They’re doing something relatively new and, as yet, not widely understood. But there is no reason why the choice for perpetuity should be treated as merely obvious and self-evident, a kind of default position that can leave it seeming unimaginative and passé.

 

Consciously or not, every foundation makes a choice between the two approaches. And perpetual foundations continue making it, year after year. Everyone would benefit — not least the boards of the perpetual institutions themselves — from hearing a detailed justification for preserving a permanent endowment, articulated just as forcefully as the John Merck Fund’s case for the opposite choice.

 

[Photograph: Flickr user Rasmus Andersson]

 

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