Donors who choose to give while living and time-limit what remains

Although allocating all your charitable dollars during your lifetime is becoming popular, it doesn’t appeal to all donors. Some are focused on problems that will become more acute in the future, or they are committed to helping launch nonprofits that will require decades to reach maturity. Others may simply not have the energy to distribute all their wealth while living. If these factors apply to you, then establishing a grantmaking entity that will survive you for a limited span of time may be the right choice.

Time-limiting foundations, or “sunsetting them,” has grown in appeal in recent decades, led by the types of donor examples included below. Indeed, as it grows in popularity, more spend-down foundations are publicizing their experiences and leaving behind their “roadmaps” for others to follow. Although the precise number of time-limited foundations is unknown, an analysis by the Bridgespan Group revealed that “only 5 percent of the total assets held by America’s largest 50 foundations were in spend-down in the early 1960s, compared to 24 percent in 2010.”

“Twenty-five years ago, sunsetting was a dramatic, unusual thing to do,” says Tom Riley of the Connelly Foundation. “Today, it’s increasingly seen as a best practice. The more sophisticated you become about charitable giving, the more you know the history of charitable giving, the more you experience the many instances of donor intent gone awry, the more sunsetting makes sense.”

The Gates Foundation

Sunsetting foundations come in all sizes and focus on many issues. Bill and Melinda Gates describe themselves as “impatient optimists” when it comes to their philanthropy. There is a sense of urgency in their decision to put their charitable dollars to immediate use on today’s needs. They initially planned for the Gates Foundation to close its doors 50 years after both of their deaths, but later shortened the timeframe to 20 years. Giving away their wealth “is the most fulfilling thing we’ve ever done,” said Bill Gates during a 2014 TED talk; the couple has pledged that 95 percent of it will go to the Gates Foundation.

The Aaron Diamond Foundation

In one of the better-known early examples of spend-down, the Aaron Diamond Foundation spent itself out of existence by 1996. The foundation was funded in 1985 after the death of real-estate developer Aaron Diamond two years prior. Aaron and his wife, Irene, had decided to allocate all their resources over the course of one decade to have the greatest possible impact—in this case, on the AIDS epidemic. Their foundation became the largest private supporter of AIDS research in the U.S., devoting $220 million to the New York City-based Aaron Diamond AIDS Research Center. The scientific work done there ended up saving millions of lives. 

The Marcus Foundation

Bernie Marcus, a co-founder of Home Depot, established his foundation with the stipulation that it sunset 30 years after his death, but has recently reduced that period to 20 years. He has purposefully created an age differential on his board so that most members will still be there at the foundation’s close. He has also created ironclad parameters around how his money should be allocated.

In an interview with the Bridgespan Group, he spoke plainly about a time earlier in his life when he successfully solicited a foundation board for a nonprofit’s capital campaign. New to philanthropy, he asked one of the board members how they made their decisions. The donor had left no instructions, the trustee told him, so “we give where we want to give, and even favor organizations the donor would have disliked.” For Marcus, the impact was immediate and powerful and led to his determination to avoid the risks of perpetuity in his own foundation.

The Lenfest Foundation

When Gerry Lenfest made a fortune from the sale of his cable company to AT&T in 1999, he determined to contribute his wealth as quickly and intelligently as possible. The result was more than $1.3 billion in giving during his lifetime (he died in 2018), much of it to causes and organizations in the Philadelphia area. “I don’t want to die with a lot of wealth,” he told Philanthropy magazine in 2014. “I don’t believe in wealth going on in perpetuity. There are occasions when it’s turned out to be well done, but they are few in my opinion.” The Lenfest Foundation will sunset in the next decade. 

The T.W. Lewis Foundation

Tom Lewis, a donor from Tempe, Arizona, is also following the idea of giving while living. He and his wife Jan are using their “wealth, wisdom, work, and witness to try and make a difference while alive.” As Lewis says, “Philanthropy is enjoyable for us. A lot of the gifts we’ve made lead to interesting, meaningful experiences. It’s become a kind of new identity for us, a new purpose.” Lewis intends to have his foundation sunset 10 to 20 years after death.

The Simon Foundation

The William E. Simon Foundation, a family foundation based in New York City, helps inner-city youth and families access education and community services that foster personal success and self-reliance. Its founder, former Treasury Secretary William Simon, also served as president of the John M. Olin Foundation and as a trustee of The John Templeton Foundation. Emulating John Olin, Simon stipulated that his foundation sunset within several decades of his death. Originally scheduled to close its doors by 2029, the foundation is now likely to sunset in 2023 or 2024 because of its board’s decision to spend more aggressively in its final years.