OCTOBER 01, 2020

Is sunsetting the best way to prevent a charitable endowment from drifting away from donor intent? It definitely tops the list, but it’s not the only option. Wise givers have set up their foundations to exist in perpetuity with safeguards in place to protect donor intent. In other words, perpetuity can be done right.

The Duke Endowment is one such example. James Buchanan Duke made his fortune in tobacco and hydroelectric generation in the late nineteenth and early twentieth centuries. He established a foundation in 1924 with $40 million focused on such causes as hospitals, orphan care, and higher education (most notably Duke University) in North and South Carolina. 

Since J.B. Duke’s death in 1925, the Duke Endowment has distributed more than $1.4 billion. All its grants fall into the same categories—and largely abide by the same percentages—the creator established nearly 100 years ago.

Here is how the endowment has kept in line with donor intent.

1. J.B. Duke included, in writing, his reasons for supporting causes

“I have included orphans in an effort to help those who are most unable to help themselves,” he wrote in one instance. In another he expressed his hope that “adequate and convenient hospitals are assured … with especial reference to those who are unable to defray such expenses of their own.” 

2. J.B. Duke chose his people carefully

He entrusted the governance of his philanthropy to his closest personal and business associates, left clear guidelines for the selection of future trustees, and provided for their compensation as a way to bind them—both morally and financially—to the performance of their duties as defined in the indenture.

3. The Duke Endowment indenture is read aloud at one meeting a year

The Duke Endowment trustees continue to meet ten times annually, as J.B. Duke stipulated. And at one meeting each year, they read the full text of the indenture aloud. The donor’s voice and values remain a constant guide in their decisions.

4. Built-in flexibility

A century of economic and social change has challenged the trustees and staff to make new meaning of some of their founder’s specific instructions. But J.B. Duke was wise enough to see the need for future flexibility: He included in his indenture of trust a provision for his trustees’ “uncontrolled discretion” in re-directing funds “for the benefit of any such like charitable, religious or educational purpose within the State of North Carolina and/or the State of South Carolina.”

Early grantmaking to orphanages, for example, has evolved into support for foster care, adoption, and programs for children at risk of abuse and neglect. The donor’s concern for the health of Carolinians—which once meant only capital grants for hospitals—today means funding to bring health care to the underserved through home visits and rural clinics.

At the end of the day, J. B. Duke’s original intent still guides the endowment in making these adaptations.