Giving Compass' Take:

• Rockefeller Philanthropy Advisors and NORC (National Opinion Research Center) at the University of Chicago have found that more foundations are opting for limited life spans. 

• What are the implications of foundation spending with more organizations opting out of perpetuity?

• Read about why the choice of spend down is good for philanthropy. 

Among the many trends in giving we have seen advancing over the last decade is a shift toward entertaining shorter time frames for the philanthropic spending of personal fortunes. Now, a new report from Rockefeller Philanthropy Advisors suggests the number of time-limited foundations, sometimes referred to as “spend-down foundations,” is gaining on those organized to give in perpetuity.

The rationales behind spending down are as varied as the founders of the foundations that advocate it. Spending now, they say, not only helps current beneficiaries, but many others down the road. For example, philanthropist Chuck Feeney, who has led Atlantic Philanthropies as a spend-down foundation, emphasizes, “If you give while living, the money goes to work quickly and everyone gets to see the action and the results.” That’s true in theory, of course, but the value of this position depends upon the aims and methods of the donor.

This latest study from Rockefeller Philanthropy Advisors and NORC (National Opinion Research Center) at the University of Chicago examines far fewer foundations than Ostrower and in far less detail. Nevertheless, the authors’ findings suggest a marked increase in foundations with limited lifespans. By their reckoning, which comes from a survey of 150 foundations across four continents, the decade has seen a significant increase in the number of limited-life foundations, with most of those starting out with that intention. Fewer foundations have converted from perpetuity to limited life. Although foundations with a perpetuity timeline still comprise 70 percent of all foundations, of the newly established foundation.

Read the full article about foundations operating in perpetuity by Ruth McCambridge at Nonprofit Quarterly.