OCTOBER 03, 2020

A spend-down approach to your philanthropy could create a golden opportunity to have a significant impact during a short period of time. That was certainly the case with the John M. Olin Foundation, one of the most influential philanthropies in advancing conservative ideas during the last quarter of the twentieth century. 

Rather than hold back financial resources and dole them out at 5 percent each year, the Olin Foundation made a deliberate decision to concentrate its efforts during a compact period of time. Although the foundation’s assets never totaled more than $150 million, its spending during the 1980s and 1990s exceeded that of many larger foundations. In his 2017 book, Putting Wealth to Work, Duke University professor Joel Fleishman calls Olin “a textbook example of the potential of philanthropy to achieve significant results.”

Born in 1892 in Alton, Illinois, John Olin earned his wealth by expanding the family gunpowder mill into a major business specializing in chemical production and other areas. After creating a foundation in 1953, Olin operated it for several years like many perpetual philanthropies, making annual grants to Olin’s alma mater of Cornell University and other causes.

An ideological turn

Alert to Vietnam-era disturbances on many campuses, including Cornell, Olin shifted his focus in the early 1970s to the defense of free enterprise and limited government. “I would like to use this fortune to help preserve the system which made its accumulation possible in only two lifetimes, my father’s and mine,” he said.

To lead this endeavor, Olin recruited like-minded board members and appointed former U.S. Treasury Secretary William Simon as foundation president.

The example of Julius Rosenwald, coupled with Henry Ford II’s resignation from the Ford Foundation in 1976, prompted Olin to make another crucial decision: to sunset his foundation within 25 years of his death. Protecting donor intent was one factor, as was Olin’s fear of increased government regulation of private foundations following the 1968 Tax Act. Another was Olin’s desire to use his funds in concentrated doses to achieve high-yield results in a short period of time.

‘Outsized impact’

As the foundation’s last president, Jim Piereson, points out, its focused mission and ingenuity allowed it to have an “oversized impact” during its time. During the late 1980s and early 1990s, the Olin Foundation spent $20 million per year, while a typical foundation of Olin’s size operating in perpetuity would have capped its annual spending at about a third of that.

A remarkable bull run in stocks between 1982 and 2000 extended Olin’s reach. “We were able to turn out 12 to 18 percent returns consistently, so that helped us spend a lot and keep going,” Piereson notes. And America’s intellectual climate between the late 1970s and the foundation’s close in 2005 also presented a unique opportunity to create and fund organizations and individuals who were able to advance conservative intellectual life. 

Olin Foundation leaders were also unusually savvy in identifying individuals and groups with potential to influence social trends. Grantees included Allan Bloom, Milton Friedman, the American Enterprise Institute, the Federalist Society, the Heritage Foundation, the Hoover Institution, the Manhattan Institute, and academic centers at major American universities that fostered conservative thought, including law and economics centers at prominent law schools. Experienced foundation observers—regardless of their personal politics—recognize Olin’s accomplishments.