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December 17, 2013

The popularity of time-limited philanthropy, which appears to be growing, runs especially high among two groups of foundation leaders. The first is living donors, many of whom want to see their money put to use in their lifetimes or soon thereafter. The second group consists of the descendants, typically in the second or third generation, of the founders of a family foundation.

As we noted in an earlier post, the generations that come after the creation of a family foundation sometimes discover that they are no longer able to agree on the best uses of the institution’s resources or on the best way to follow their ancestor’s intent. As the number of heirs multiplies and their lives and interests inevitably diverge, the idea of bringing the enterprise to an honorable end — perhaps by creating a final legacy the founders would have been proud of — may take on a powerful appeal.

That is, in very broad and simplified terms, the story of the Irwin Sweeney Miller Foundation, a $25 million family foundation based in Columbus, Indiana (population 45,000). Founded by Nettie Sweeney Miller and her two children (one of whom was the CEO of Columbus-based Cummins Engine Co.), along with a sister and a family friend, the foundation devoted a significant part of its annual giving, throughout the founders’ lifetimes, to improving Columbus. There was nothing in the foundation’s charter suggesting a limited life.

But after the founders had passed on, their heirs’ ties to Columbus — and to some extent, to one another — grew weaker. They weren’t sure they would derive much pleasure from working together on philanthropy, and few of them had any lingering connection to their parents’ and grandparents’ hometown. Rather than soldiering on, they drew the foundation’s grantmaking to an orderly and respectful conclusion and invested the foundation’s remaining assets, some $11 million, in a signature real-estate development in downtown Columbus that had historic ties to the family and the founders. It was, as one family member described it, “a credible opportunity to do a lot of good. And we really didn’t want to keep having to make decisions together.”

The Irwin Sweeney Miller Foundation story is the subject of an engaging and important new report by foundation consultant Alice Buhl, co-sponsored by Duke’s Center for Strategic Philanthropy and Civil Society and the National Center for Family Philanthropy. The study is important for at least two reasons.

First, the literature on time-limited foundations — not just their reasons for choosing to sunset, but how they do it and the challenges and obstacles they encounter along the way — is still thin. A frank, contemporaneous review of one foundation’s experience in spending down is a welcome and necessary addition to a still-embryonic field of research. Here at Duke, we are doing our best to contribute more to that literature (among other things, with studies of the Atlantic Philanthropies and the AVI CHAI Foundation). But there are many more avenues still to be explored.

The second reason Alice’s report is significant is that the explosion of new wealth and philanthropy in recent decades is sure to lead, sometime in this century, to a number of foundations being governed by second- and third-generation descendants. Whether or not they share any of the family dynamics of the Irwin Sweeney Miller heirs, many of them are likely to face other reasons for wanting to consider a sunset. An example of a successful winding down — including a bold, final legacy effort that honored the founders and their philanthropic mission — will at least offer one model for how to conclude well and be proud of the result.

Tony Proscio