Transparency Talk

Category: "Legal Issues" (8 posts)

Donor-Advised Funds Debate Intensifies with Proposed California Legislation
September 30, 2019

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Jeanne Bell

Jeanne Bell, MNA is the Director of Practice Advancement at The Nonprofit Quarterly (NPQ) and she directs NPQ's Advancing Practice program to advance critical conversations about nonprofit management and leadership.

This post also appears in The Nonprofit Quarterly.

Before I report on the legislation that has been proposed to regulate donor-advised funds (DAFs) in California, I want to remind readers that this kind of state legislation not only can go viral but can also presage federal lawmaking on the given issues. Therefore, even though this bill addresses the DAF industry only in California, it has the potential to create a wedge in policymaking on a more national basis.

A video of the August 29th Candid forum upon which this article is based can be viewed below. That said, given the increasingly heated national discourse about donor-advised funds, the California legislation co-sponsored by CalNonprofits, NextGen California, and philanthropist Kat Taylor, herself a DAF holder, is perhaps surprisingly modest next to the far more extensive concerns and proposals being offered by national critics.

 

 

In its current form, AB-1712 focuses only on DAF transparency and would “require the Attorney General (AG) to adopt rules and regulations that require DAF Sponsors to disclose information about the individual funds or accounts they maintain to help the AG ascertain whether those funds are being properly administered.” In this case, “properly administered” includes that the DAF sponsor has “a publicly available policy that governs DAFs that are inactive, dormant, or do not make distributions during a specified period of time that does not exceed 36 months.”

As NPQ first reported in March of this year, Assembly Bill 1712 was introduced by Buffy Wicks of California’s 15th Assembly District, which encompasses the cities of Berkeley, Emeryville, Richmond, and parts of the City of Oakland in the East Bay. As seen above, Candid hosted a debate about AB-1712 last month in San Francisco with CalNonprofits CEO Jan Masaoka, who favors the legislation, and Daniel Baldwin of the Community Foundation for Monterey County and Nageeb Sumar, Vice President of Philanthropic Strategies at Fidelity Charitable, neither of whom support it as currently proposed.

Here, we stop for a little more context-setting. Philanthropy in general has long been resistant to changes in its regulation, and the resistance often is what Scott Harshbarger at one point called “ragging the puck”—that is, keeping the puck in play until the legislative clock runs down. In the case of DAF sponsors, this generally seems to take the form of responding to every challenge on transparency and payout with a statement about how essentially good they are (an argument more often used by community foundations) and how sad they are for being “under attack,” or, alternately, how fast they are growing/how much they are managing and granting in philanthropic funds—never mind that it is precisely this point that begs the need for greater scrutiny.

At this stage, AB-1712 is what’s called a “two-year bill”; it is still open to amendment and will have to move through the Assembly by early 2020 or die. The bill’s sponsors are in active conversation with stakeholders, including community foundation executives, though the degree of that cooperation was contested during the debate. Baldwin claimed the bill’s original language “demonized DAFs” and that he was unaware of recent language changes, while Masaoka insisted the sponsors had been in dialogue with community foundations along the way.

Jockeying for the Frame

It was immediately apparent that the debaters were jockeying for more than a winning position on whether AB-1712 is worthy legislation; instead, they were trying to frame an overall take on DAFs themselves. The discussion was often less about the specifics of the legislation and more about the desired positioning of the two leading DAF sponsor types: community foundations on the one hand, and national entities like Fidelity Charitable, which are independent charities created by and affiliated with for-profit investment firms, on the other. Baldwin and Sumar were each working hard to distinguish the worthiness of their respective organizational types. Baldwin, who in addition to being CEO of a community foundation is active in public policy work for the League of California Community Foundations, framed community foundations as local experts connecting donors to real community needs. When challenged by Masaoka about the donor-centrism of his positioning on DAFs, he claimed that his community foundation was above all else about “promoting grantmaking.” Sumar, on the other hand, underscored the scale and innovation of the Fidelity Charitable model, noting that he had previously worked at the Bill and Melinda Gates Foundation, which is now smaller than Fidelity. Several times he said that Fidelity aims to give an “Amazon-like experience” to donors’ philanthropy; they have, he said, a new app that allows people to do transactions on their phones, and they took in $70 million in cryptocurrency gifts to DAFs last year.

Which Data Do We Need?

Baldwin and Sumar showered us with data, citing it near constantly in their arguments.

  • From Sumar on the “geography of giving”: 42 percent of their DAF grants stay in the city of their origin, and 50 percent of their DAF grants stay in their state of origin.
  • From Baldwin’s poll of 31 members of the League of California Community Foundations: Together, they hold 7,200 DAFs, 5,500 of which are not endowed, meaning the full funds are available for grantmaking. They hold roughly $9 billion in these funds and granted $2 billion for the last year reported.

The irony is that Masaoka’s argument for AB-1712 is that none of this self-reported data is the data we would need to determine whether and what kind of regulation of this multi-billion-dollar industry is appropriate to protect the taxpayer from bad actors.

Of most significance, the data they offer is not reported fund by fund, but rather in aggregate, allowing for impressive percentages in grants made, for instance, but obfuscating the dormant or questionably invested cases in these large portfolios.

Best Practice vs. Regulation

In the end, this debate was a very plain one. It’s a debate over whether an industry of this size with this much untaxed money in play should set its own standards or be regulated. In arguing for internal standard-setting,

Baldwin and Sumar made all the cases one would expect. They both suggested that reporting by fund would be an administrative burden to them as sponsors and a turnoff to DAF donors who enjoy the flexibility and relative anonymity of this vehicle. Baldwin pointed to the National Standards for US Community Foundations, through which he and his colleague organizations get certified. It’s important to note that the Council on Foundations describes these standards thusly: “The National Standards for US Community Foundations® is an accreditation program created by community foundations for community foundations. They are peer-driven, voluntary, and self-regulatory.” And Sumar noted that Fidelity Charitable does in fact have a five-percent DAFs payout policy, which is a voluntary policy choice on its part.

But of course, as Masaoka countered, regulation is not for the good actors; it is for the current or potential bad ones: “Best practices should go hand-in-hand with regulation; they aren’t a substitute for it.” And attention to DAFs, it seems, will only increase as their holdings grow. Masaoka said a copycat bill to AB-1712 is in the works in Minnesota, and the National Association of State Charity Officials (NASCO) has expressed concern as well.

“It behooves the nonprofit sector,” Masaoka argued, “to stay in the lead and not [just] let this happen to us.”

--Jeanne Bell

Shedding Light on DAFs: Pros & Cons of New Legislation
August 26, 2019

The transparency of donor-advised funds has been the subject of much scrutiny, debate, and now in California, pending legislation. Become informed about the proposed legislation and both sides of the debate in an upcoming program offered by Candid West in San Francisco this Thursday, August 29th. You can also participate remotely via livestream.

The California Association of Nonprofits recently helped introduce California bill AB 1712, which would mandate greater transparency around donor-advised funds (DAFs) through annual reporting requirements, promoting best practices, and requiring minimum annual distributions. Opponents, however, say it violates the privacy of the individual fund donors, as well as fund advisors who make grant recommendations.

Come join us and co-sponsor, Northern California Grantmakers, for an in-depth discussion of the pros and cons of this bill between interested parties, including Cal Nonprofits, Fidelity Charitable and the League of California Community Foundations. It’s an issue of critical concern to the social sector. Contributions to DAFs rose 16.5% from 2016 to 2017, and grants from donor-advised funds to qualified charities increased nearly 20% during the same period.

Register or learn more here.

Trump Foundation to Dissolve Under Judicial Supervision
December 20, 2018

This article originally appeared in Foundation Center's Philanthropy News Digest.
 
GlassPockets continues to track and report all that is publicly knowable about the charitable giving of key members of the Trump Administration. To learn more, visit Eye on the Trump Administration.

TrumpNew York State attorney general Barbara D. Underwood has announced that, following a court decision in favor of the attorney general's office, the Donald J. Trump Foundation has signed a stipulation agreeing to dissolve under judicial supervision and with the oversight of the AG's Charities Bureau, with proposed recipients of the foundation's remaining assets subject to review and approval by the AG. 

In November, the New York Supreme Court decided to allow Underwood's suit — which also seeks restitution and penalties and to bar President Trump and his three eldest children from serving on the boards of other New York charities — to proceed. The suit remains ongoing despite the dissolution.

According to Foundation Center data, between 2006 and 2016 the Donald J. Trump Foundation awarded 286 grants totaling $6.6 million to 196 nonprofit organizations.

The Washington Post reports that the foundation's remaining $1.75 million in assets will be distributed to other charities. Assets under the foundation's control topped out at $3.2 million in 2009, while in recent years its largest gifts came from World Wrestling Entertainment mogul Vince McMahon and his wife, Linda, who currently heads the Small Business Administration, not Trump himself. The largest gift by the foundation appears to have been made in 1989, when it awarded $264,231 to the Central Park Conservancy to restore a foundation outside the Trump-owned Plaza Hotel; that same year — the year that Trump's oldest son turned eleven — the foundation awarded its smallest gift, $7, to enroll an unnamed boy in the Boy Scouts.

"Our petition detailed a shocking pattern of illegality involving the Trump Foundation — including unlawful coordination with the Trump presidential campaign, repeated and willful self-dealing, and much more," Underwood said in a statement. "This amounted to the Trump Foundation functioning as little more than a checkbook to serve Mr. Trump's business and political interests."

 
 
--Philanthropy News Digest

The IRS just made an important change related to transparency
July 19, 2018

This post originally appeared in Philanthropy News Digest July 19, 2018.

The U.S. Department of the Treasury has announced that the Internal Revenue Service will no longer require 501(c) organizations other than 501(c)(3)s to file personally identifiable information about donors on their Form 990s.

While the procedure does not affect the statutory reporting requirements that apply to tax-exempt groups organized under section 501(c)(3) or section 527, it will exempt associations, labor unions, social welfare organizations, and other groups from having to file Schedule B information with their 990s — though organizations must still collect that information and make it available to the IRS upon request.

According to Treasury department officials, the information was not necessary for the government to enforce tax laws, and the change itself will better protect private taxpayer information. "Americans shouldn't be required to send the IRS information that it doesn't need to effectively enforce our tax laws, and the IRS simply does not need tax returns with donor names and addresses to do its job in this area," said U.S. Treasury Secretary Steven T. Mnuchin. "The IRS's new policy for certain tax-exempt organizations will make our tax system simpler and less susceptible to abuse."

However, Philip Hackney, an associate professor at the University of Pittsburgh School of Law and former IRS attorney, told the NonProfit Times that, from a tax-exemption perspective, the Schedule B requirement was crucial to the agency's federally mandated oversight of the nonprofit sector. No longer requiring the information "does harm to our democracy and harm to the IRS's ability to oversee the tax law generally," he said. And because the IRS is willingly giving up important data related to where money is flowing in a tax-exempt manner from wealthy individuals, Hackney added, "[i]t makes it [easier] for wealthy interests to influence our political system covertly."

IRS Releases 990 Forms as Machine-Readable Data
June 16, 2016

Editor's Note: Last month, Transparency Talk featured a blog post by Foundation Center president, Brad Smith on the coming of open 990 data and its implications for philanthropy. Read here for additional perspective on the news story below that the IRS has now formally started its release of 990 Forms, including 990-PFs, as machine-readable, open data.

Irs-logo-250 Amazon Web Services has announced that the Internal Revenue Service has made more than a million electronic 990 tax forms available as machine-readable data through its Amazon Simple Storage Service.

Released Wednesday, the public data set includes certain Forms 990 filed by nonprofit organizations with the IRS since 2011, Forms 990-EZ filed by smaller nonprofits, and Forms 990-PF filed by private foundations. The data from each 990 is provided in an XML file that includes the main 990 form, other filed forms and schedules, and any information detailing how the document was filed; some non-disclosable information is excluded.

The release of 990 filings as machine-readable data by the IRS, which plans to add new 990 data on a monthly basis, will make it easier for anyone to search the forms digitally for information about an organization's finances, trustees, lobbying activities, and salaries. Even when nonprofits or foundations filed them electronically, the IRS previously had stripped the forms of confidential information, converted them to TIFF (image) files, and released them as PDF documents. But in response to a lawsuit filed by open-records activist Carl Malamud in 2015, a federal judge ordered the IRS to release machine-readable Forms 990 from nine nonprofits. The IRS's Advisory Committee on Tax Exempt and Government Entities subsequently called for the agency to require nonprofits to file their financial data electronically, and the agency announced that it would begin releasing electronic versions of the forms this year.

This post originally appeared on Philanthropy News Digest.

Foundation Transparency: Game Over?
May 23, 2016

(Brad Smith is president of Foundation Center).

This post is part of a Transparency Talk series, presented in partnership with the Conrad N. Hilton Foundation, examining the importance of the 990-PF, the informational tax form that foundations must annually file. The series will explore the implications of the open 990; how journalists and researchers use the 990-PF to understand philanthropy; and its role, limitations, and potential as a communications tool.

BradfordKSmithThe tranquil world of America's foundations is about to be shaken, but if you read the Center for Effective Philanthropy's (CEP) new study -- Sharing What Matters, Foundation Transparency -- you would never know it.

Don't get me wrong. That study, like everything CEP produces, is carefully researched, insightful and thoroughly professional. But it misses the single biggest change in foundation transparency in decades: the imminent release by the Internal Revenue Service of foundation 990-PF (and 990) tax returns as machine-readable open data.

Clara Miller, President of the Heron Foundation, writes eloquently in her manifesto, Building a Foundation for the 21St Century: "…the private foundation model was designed to be protective and separate, much like a terrarium."

Terrarium photo 2Terrariums, of course, are highly "curated" environments over which their creators have complete control. The CEP study, proves that point, to the extent that much of the study consists of interviews with foundation leaders and reviews of their websites as if transparency were a kind of optional endeavor in which foundations may choose to participate, if at all, and to what degree.

To be fair, CEP also interviewed the grantees of various foundations (sometimes referred to as "partners"), which helps convey the reality that foundations have stakeholders beyond their four walls. However, the terrarium metaphor is about to become far more relevant as the release of 990 tax returns as open data will literally make it possible for anyone to look right through those glass walls to the curated foundation world within.

What Is Open Data?

It is safe to say that most foundation leaders and a fair majority of their staff do not understand what open data really is. Open data is free, yes, but more importantly it is digital and machine-readable. This means it can be consumed in enormous volumes at lightning speed, directly by computers.

"The release of 990 tax returns as open data will literally make it possible for anyone to look right through those glass walls to the curated foundation world within."

Once consumed, open data can be tagged, sorted, indexed and searched using statistical methods to make obvious comparisons while discovering previously undetected correlations. Anyone with a computer, some coding skills and a hard drive or cloud storage can access open data. In today's world, a lot of people meet those requirements, and they are free to do whatever they please with your information once it is, as open data enthusiasts like to say, "in the wild."

Today, much government data is completely open. Go to data.gov or its equivalent in many countries around the world and see for yourself.

The theory behind open data, increasingly born out in practice, is that making information available leads to significant innovation for the public good while the demand for and use of such data also improves its accuracy and quality over time. And some open data is just fun: one of my personal favorites is the White House visitors list!

What is the Internal Revenue Service Releasing?

Irs-logo-250Thanks to the Aspen Institute's leadership of a joint effort - funded by foundations and including Foundation Center, GuideStar, the National Center for Charitable Statistics, the Johns Hopkins Center for Civil Society Studies, and others - the IRS has started to make some 1,000,000 Form 990s and 40,000 Form 990PF available as machine-readable open data.

Previously, all Form 990s had been released as image (TIFF) files, essentially a picture, making it both time-consuming and expensive to extract useful data from them. Credit where credit is due; a kick in the butt in the form of a lawsuit from open data crusader Carl Malamud helped speed the process along.

The current test phase includes only those tax returns that were digitally filed by nonprofits and community foundations (990s) and private foundations (990PFs). Over time, the IRS will phase in a mandatory digital filing requirement for all Form 990s, and the intent is to release them all as open data. In other words, that which is born digital will be opened up to the public in digital form. Because of variations in the 990 forms, getting the information from them into a database will still require some technical expertise, but will be far more feasible and faster than ever before.

"Over time, the IRS will phase in a mandatory digital filing requirement for all Form 990s, and the intent is to release them all as open data."

The Good

The work of organizations like Foundation Center-- who have built expensive infrastructure in order to turn years of 990 tax returns into information that can be used by nonprofits looking for funding, researchers trying to understand the role of foundations and foundations, themselves, seeking to benchmark themselves against peers—will be transformed.

Work will shift away from the mechanics of capturing and processing the data to higher level analysis and visualization to stimulate the generation and sharing of new insights and knowledge. This will fuel greater collaboration between peer organizations, innovation, the merging of previous disparate bodies of data, better philanthropy, and a stronger social sector.

The (Potentially) Bad

The world of foundations and nonprofits is highly segmented, idiosyncratic and difficult to understand and interpret. GuideStar and Foundation Center know this.

But many of the new entrants who are attracted by the advent of open 990 data will not. They will most likely come in two forms: start-ups claiming their new tools will revolutionize the business of giving, and established, private sector companies, seeking new market opportunities. Neither of these is intrinsically bad and could lead to some degree of positive disruption and true innovation.

The negative potential could be two-fold. Funders will inevitably be intrigued by the start-ups, their genius and their newness and divert funding towards them. Foundations are free to take risks and that is one of their virtues. But while needs grow, funding for the data and information infrastructure of philanthropy is limited, technology literacy among foundations relatively low, and many of these start-ups will prove to be shooting stars (anybody remember Jumo?).

"Once the 990 data is 'in the wild,' conclusions may be drawn that foundations find uncomfortable if not unfair."

The second category of new entrants is far more complex and will come in the form of for-profit data analytics companies. Some of these have business models and immensely sophisticated black box technologies that rely heavily on government contracts for defense and national security. They will be lured by the promise of lucrative contracts from big foundations and mega-nonprofits and the opportunity to demonstrate social responsibility by doing good in the world.

But these for-profit analytics companies will quickly discover that there is only one Gates Foundation among the 87,000 private foundations and only a handful of richly-resourced nonprofits among the 1.3 million on the IRS registers. And those who choose to contract the services of "Big Analytics" will need to consider the potential reputational consequences of aligning their "brands" with the companies behind them.

Sound defensive? Not at all: Foundation Center welcomes the competition, has been building for it since 2010, and knows the challenge can only make us and the social sector better.

The Ugly

Once the 990 data is "in the wild," it is possible if not probable, conclusions will be drawn that foundations find uncomfortable if not unfair. Those who are new to the field and relatively uninformed (or uninterested) in its complexity, may make claims about executive compensation based on comparisons of foundations of wildly disparate size and scope.

The same could be done with overhead rates, payout, or any other figure or calculation that can be made based on information found in the 990-PF. Some foundations already chafe when responsible sector advocates like the National Committee for Responsive Philanthropy (NCRP) use Foundation Center data to rank foundations according to their Criteria for Philanthropy at Its Best. Imagine claims coming over the transom from individuals and organizations whose core values do not include a belief in the practice of philanthropy and a normative vision for how it could be better.

"Another potential consequence lies at the intersection of the open 990 data and the growth of impact investing."

Another potential consequence lies at the intersection of the open 990 data and the growth of impact investing. This was the spirit in which Clara Miller introduced her terrarium analogy to highlight what she sees as the artificial disconnect between the controlled, strategic, and curated world constructed by the grants side of foundations and the sometimes contradictory forces at work in the larger economy in which their assets are invested.

Foundations like Heron are striving to put 100% of their assets toward mission, while others like Rockefeller Brothers Fund are divesting their investment portfolios from fossil fuels and re-investing those assets in ways that further the goals of their climate change grantmaking, rather than exacerbate the problem.

A recent (and as of yet unpublished) Foundation Center survey found that 60% of foundations were not engaged in impact investing and had no plans to do so. That is their choice, but open 990 data may well put them in a position of having to publicly explain it.

For example, using Foundation Center databases, I searched across several hundred thousand foundation 990-PF tax returns and found 37 foundations that held Corrections Corporation of America stock in their investment portfolios. These foundations may well believe, as the majority of foundations insist, that the purpose of the investment arm of the foundation is to generate the highest sustainable return possible in order to fund the mission through grants. But if a foundation holding that stock is striving to work on juvenile justice or improve the lives of black men and boys, an investigative reporter or activist might well ask why they are investing in a corporation that runs private, for-profit prisons

It's 10:00pm, Do You Know Where Your 990 Is?

With the game over for foundation transparency, the big takeaway is to know your 990-PF (or 990 for community foundations). Suddenly, it will be transformed from a bureaucratic compliance document into one of your foundation's key communications vehicles.

"Regardless of how each of us may feel about the greater transparency required of foundations, it is increasingly inevitable."

Right about now, you may be thinking: "What about the website re-design we spent all that money on, with our new logo, carefully crafted initiative names, and compelling photos??" It's still important, and you can follow the lead of those foundations guided by the online transparency criteria found on Foundation Center's Glasspockets website.

But for the sector as a whole, while fewer than 10% of all foundations have websites, they all file 990 tax returns. As the IRS open data release unfolds and mandatory digital filing kicks in, the 990-PF will become one of the primary sources of information by which your individual foundation will be known and compared to others.

I recently asked a group of foundation CEOs whether they ever had an in-depth discussion about their 990-PFs among their board members and was met with blank stares. In a world of digital transparency, this will have to change. As 990s become a data source and communications vehicle, the information on them will need to be clear, accurate and above all, a faithful representation of how each individual foundation makes use of the precious tax exemption it has been granted to serve the public good.

A few simple tips for starters:

  • Take advantage of Section 15 (block 2) to talk about your priorities, grant process, limitations, and restrictions.
  • In Section 15 (block 3) write the correct, legal name for each grantee organization and add its EIN or BRIDGE ID
  • In the same section, write clear and compelling descriptions for the purpose of each grant (more than you might think, people look at foundations by what they fund).
  • Make sure all numbers on the form add up correctly (you'd be surprised!).

Regardless of how each of us may feel about the greater transparency required of foundations, it is increasingly inevitable. Philanthropy is essential to American society and a positive source for good in a challenging world.

As the terrarium walls insulating individual foundations fall, we will surely face a few moments of anxiety and discomfort. But greater transparency, fueled by open IRS data, can only make us more conscientious stewards of our resources, more effective decision-makers, and better collaborators on our way to achieving greater and greater impact in the world.

Game over? It's just beginning!

-- Brad Smith

Glasspockets Find: Learn Foundation Law Pools Resources to Offer Legal Training to Private Foundations
September 3, 2013

(Rebecca Herman is Special Projects Associate for Glasspockets at the Foundation Center-San Francisco.)

Remember all those group projects in school that were supposed to help us work together as a team? The main lesson we learned from the process was that group assignments are never easy. In the grown-up world of philanthropy, “collaboration,” “resource-sharing,” and “knowledge-building” are buzzwords that frequently show up in our benchmarks for success. Foundations often ask nonprofits if they can pool resources and share information with their colleagues, and we all know this can be just as difficult as when we were teenagers.

GrantCraft Advocacy GuideThankfully, there are online tools to facilitate both collaboration and transparency, thereby increasing our efficiency and reducing duplication of effort. Wouldn’t you like to know if someone else has already tackled any complex issues your organization is facing? The Learn Foundation Law website is an example of teamwork by a group of foundations who have created training materials on legal issues in the field of philanthropy. The legal staff at the David and Lucile Packard Foundation, Bill & Melinda Gates Foundation, The William and Flora Hewlett Foundation and Gordon and Betty Moore Foundation created Learn Foundation Law in 2010 as an online instructional resource, so that any foundation can jump-start their legal education.

The website is also a wonderful instance of foundations being more open about seldom-discussed issues in philanthropy. Course topics include legal rules for private foundations on advocacy, lobbying, and anti-bribery/anti-corruption. You can find a commentary on the content of Learn Foundation Law’s online training materials on the blog of the National Committee for Responsive Philanthropy.

For more information about advocacy funding in particular, check out this guide on GrantCraft, the Foundation Center’s own online resource and knowledge center for grantmakers. There is even a GrantCraft guide about funder collaboratives! At Glasspockets, we advocate for transparency in philanthropy, and we see one of the benefits of greater openness is to make it easier for the field as a whole to earn an A+ in collaboration.

-- Rebecca Herman

Glasspockets Find: Bronfman Philanthropies Chooses Transparency for Its Sunset Years
July 22, 2011

The Andrea and Charles Bronfman Philanthropies The Andrea and Charles Bronfman Philanthropies (ACBP) has announced the steps it has taken and will continue to take as it prepares to close in 2016.

In 2001, Charles Bronfman and his wife, Andrea--who passed away in 2006--chose 2016 as the year by which ACBP would, as Charles Bronfman and ACBP President Jeffrey Solomon write in an open letter on the foundation's web site, "accomplish the goal of ensuring that the missions of the organizations that ACBP has incubated wouldAs with any good investment, there is a time to invest and a time to exit. - Charles Bronfman and Jeffrey Solomon continue." "There has been little written about the dynamics, challenges, and choices that need to be addressed [when a foundation sunsets]," write Bronfman and Solomon in the letter. "[F]or those reasons, we will transparently document our process as it unfolds. We will also take responsibility for stimulating a wider and deeper conversation among donors and professionals in the philanthropic community about the philosophic, strategic, and day-to-day considerations that are involved, and our learning and experiences along the way."

Bronfman and Solomon go on to say that they have discussed ACBP's transition plans with grantees, including the support that will be available to them during the process, and that the foundation will continue to provide them with advice and back-office assistance on a regular basis. In addition, the foundation has retained outside advisors to help ensure that the missions of the incubated organizations will be preserved going forward; that the organizations will be in a position to not only survive but thrive; and that the people involved will be treated with sensitivity throughout the transition.

In April 2009, the Foundation Center released Perpetuity or Limited Lifespan: How Do Family Foundations Decide? The first large-scale examination of foundation lifespan planning, the study benchmarked the intentions, practices, and attitudes of nearly 1,100 active family foundations in 2008. With 90 percent of family foundations created since 1980, the report found that, while existing in perpetuity continued to be the norm, more than a third were either uncertain about their lifespan or planned to limit their lifespan.

By sharing experiences as they sunset in an honest and open manner, foundations like the Andrea and Charles Bronfman Philanthropies can--and will--make an invaluable contribution to the field, providing guidance and important insights to many family foundations as they navigate their own transitions in leadership and service.

Please share your thoughts and comments!

-- Mark Foley

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About Transparency Talk

  • 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."

    The views expressed in this blog do not necessarily reflect the views of the Foundation Center.

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