Posted on 25th February 2010
Two new guides on ‘spending out’ published this week indicate time-limited grant-making could be an important strategy in the current climate.
The Association of Charitable Foundation (ACF) guide Spending Out: learning lessons from time limited grant-making and the Institute for Philanthropy (IfP) report Power of Now: Spend Out Trusts and Foundations’ both argue that the process of spending both endowment income and capital, with a view to using up all the assets of a trust over a defined period (known in the USA as ‘spend down’ or ‘limited lifespan’) is beginning to attract more attention.
David Emerson, chief executive of ACF, says: “The ACF guide is a response to a renewed emphasis on effective spending by foundations. In current times we require even more effective use of assets. Those ACF members who have been spending out all their assets have had to tie down in a realistic way the change their funds will help to create. And they have had to do so ideally without compromising their ability to be flexible and responsive to changing circumstances. In doing this they have gained experience that could be valuable to all foundations, and that’s the message we are spreading.”
The IfP report makes the point that interest and discussion has been spurred on “by the heightened visibility of individual philanthropists – notably Charles Feeney, Bill Gates, Warren Buffett, Paul Brainerd – who have all publicly announced their intention to forego a perpetual endowment in favour of a spend out model.”
In 2005 David Sainsbury declared his ambition to give away at least £1bn in his lifetime, and in doing so to spend out Gatsby’s funds.
The ACF 20-page booklet offers philanthropists, and permanent or shorter term funders who are concerned about their mission and effectiveness, insight and learnings on effective grant-making using the experiences of its member foundations who have chosen to spend all their assets within a limited time. It draws out the questions of purpose and focus asked by these limited-life foundations, revealing experiences and learnings developed between them.
Emerson adds: “The report is a considered exploration of the issues that surround spending out based on study and discussion with trusts that have worked through the process over the past three years.”
The IfP’s 53-page paper includes case studies with some of the UK’s leading foundations, and offers a range of statistics mapping the current profile of spend out organisations, looking at why they decide to spend out, and spend out strategies, based on anonymous online interviews with 13 foundations who have either spent out or are in the process of doing so.
“We believe that spending out is an option that should be looked at more closely, particularly in cases where foundations wish to achieve significant social impact in a short period of time,” says IfP’s Musa Okwonga.
Both publications are supported in their development and dissemination by The Diana, Princess of Wales Memorial Fund and The Tubney Charitable Trust, with the IfP also receiving support from Brian and Hana Smouha.
Both organisations also stress the purpose of their reports is not to advocate for or against spending out as a strategy, but to capture the issues and key questions that members have asked in preparing for it, and to spread this experience more widely, offering ideas and a structure for discussions and decision-making.
Spending Out: learning lessons from time limited grant-making, is available free to members of ACF and is £10 for non-members from the ACF website's Publications list.
Power of Now: Spend Out Trusts and Foundations, is available for free from the IfP website.
