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Read All About It: “Foundation Plans to Stay In Business Forever!”
April 30, 2014

(Bruce Trachtenberg was executive director of the Communications Network  from 2006-2013. He currently serves as an advisor to the Network. This post originally appeared on the Communications Network blog.)

6a00e54efc2f808833014e8887ecc4970d-800wiI recently sat in on a Philanthropy New York panel discussion that asked a very simple question, “Why do foundations choose to go on forever?”

That question, which was prompted by attention being paid to the recent uptick in the number of foundations that intend to spend themselves out of business, got me thinking.

When a foundation makes the decision to close down, that’s considered news. But what about foundations that plan to keep going forever, don’t they have some obligation to publicly explain why?

Again, take the case of foundations spending down, and the considerable effort expended to make sure others know the thinking behind the decision.

When a foundation makes the decision to close down, that’s considered news. But what about foundations that plan to keep going forever, don’t they have some obligation to publicly explain why?

For example, the Atlantic Philanthropies, a “limited life foundation” planning to distribute its entire endowment and close its doors by 2020, states on its website:

In keeping with the founder’s Giving While Living philosophy, we believe in making large investments to capitalise on significant opportunities to solve urgent problems now, so they are less likely to become larger, more entrenched and more expensive challenges later.

Another example is the Quixote Foundation, which also plans to go out of business in the next few years, by “spending up”–an event which, they also describe as something to celebrate:

Current events point to a landmark chance to make the most of our assets, and we can’t wait. Between now and 2017, Quixote Foundation will spend all of its money into progressive work, using the entire endowment.

But what about foundations that plan to keep going and going and going? How much time or attention, if any, do they devote to publicly discussing their reasons for doing so?

In the Philanthropy New York session, the rationale panelists gave for their foundations choosing perpetuity over limited life seemed to rest on a belief that they can do more good over the long haul than in the immediate. Or as Jane O’Connell, president,Altman Foundation, said, “Spending down provides quick fix, but we’ve decided to stay at the table for hopefully the next 100 years.”

Regardless of the reason foundations opt for perpetuity, by sharing their reasons publicly they can also further understanding of the role of philanthropy in society and the good it aims to do, whether now or later.

Also, if staying in business forever is a question that gets revisited every so often–one expert suggests it’s a conversation trustees have at least once a decade–again, the fact the conversation took place seems like something to disclose.

What do you think? Do foundations need to explain why they plan to be around forever?

-- Bruce Trachtenberg

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  • Transparency Talk, the Glasspockets blog, is a platform for candid and constructive conversation about foundation transparency and accountability. In this space, Foundation Center highlights strategies, findings, and best practices on the web and in foundations–illuminating the importance of having "glass pockets."

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