OCTOBER 03, 2020

Giving while living and limited-life philanthropy are choices many donors make out of grave concerns about the future. But these choices also reflect optimism about future wealth creation—that succeeding generations will be equipped to address the pressing problems of their day.

In deciding to have his foundation sunset, early twentieth-century donor Julius Rosenwald was responding not only to critical contemporary needs, but also to his belief that “[c]oming generations can be relied upon to provide for their own needs as they arise … Wisdom, kindness of heart, and good will are not going to die with this generation.”

Even so, donors who choose this route must deal with some thorny decisions, including answering these five questions:

  1. What timeframe is optimal for a sunset?
  2. How will you navigate the off-ramp to achieve objectives and avoid leaving the programs you’ve funded hanging?
  3. How will your foundation best communicate with and support grantees who will lose funding after the sunset date?
  4. How will you retain crucial employees in your organization long enough to get the job done without doing serious damage to their future professional prospects?
  5. How will you handle the closure process itself (archiving materials and legal documents, disbursing residual assets, etc.)?

There is no one-size-fits-all answer to these questions, but limited-life foundations are beginning to communicate more with each other and with the larger philanthropic community about “lessons learned” in the sunsetting process.

Meanwhile, sunsetting presents the strongest defenses for donor intent. As Frances Sykes of the Pascale Sykes Foundation puts it, “If you want to make an impact, spend down. If you are concerned about your foundation being a burden, or about controlling your philanthropy from the grave, spend down. If you are concerned about funds being spent on family retreats instead of going to grantees, spend down. If you are concerned about donor intent, spend down.”