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Giving Compass' Take:
• Ginny Esposito from The Center for Family Philanthropy discusses the organization's recent benchmark survey that found many families deciding to spend down and why that's a healthy development.
• Achieving more good in a set amount of time seems to be a better strategy than managing grants indefinitely. And while every family org is different, all should consider the question of perpetuity.
For much of the 20th century, the vast majority of U.S. foundations operated under the idea that they would be in business forever.
But as a new generation of family philanthropists take over — and families contemplate just how long forever actually lasts and reflect on the present needs in their communities — a growing number are deciding that they would rather grant their assets during a set period of time than manage their endowments in perpetuity.
With the release of the National Center for Family Philanthropy’s first-ever benchmark survey on family foundations, we’re finding out just how many families are making the choice to spend down rather than operate in perpetuity.
Nearly 20 percent of the newest family foundations have already chosen to operate with a limited life, the survey found. By comparison, only three percent of those founded before 1970 have made this decision.
If that trend continues, the percentage of family foundations operating as spend down will likely grow substantially in the future.
Perhaps even more significantly, more than 60 percent of family foundations in the country indicated that they have not yet made a decision around lifespan, or that they revisit the question of perpetuity from time-to-time.
The choice between spend-down and perpetuity ultimately should be based on what is best for the family and its philanthropic goals.
But the fact that the choice exists — and is being talked about — is a very healthy development. Choice provides flexibility and offers the ability for families to be able to achieve the most possible good with their philanthropic investments.
Read the full article about why spending down is good for philanthropy by Ginny Esposito from the National Center for Family Philanthropy, via LinkedIn.