Five steps to safeguard your donor intent in perpetuity

Many donors concerned with preserving their intent choose to give while living or sunset, but it is still possible to operate your foundation in perpetuity—with no end date in mind—and protect donor intent. In fact, perpetuity carries some advantages.

One of the most significant is the ease with which you can offer long-term support for clearly defined geographic regions, issues, or institutions. The perpetual Daniels Fund is a prime example. “If you pick things like our donor [Bill Daniels] did—aging, early childhood, K-12 education—those are not ever going to be solved or go away,” notes Linda Childears, the Fund’s former CEO.

What’s more, as Duke University professor Joel Fleishman points out, perpetual foundations have made possible “the birth and nurturing” of many major national charities built over decades of support.

If you determine that perpetuity is the right choice for your foundation, consider these steps to help protect your intent:

1. Create ironclad documentation

Incorporate carefully worded mission statements and other donor intent documents into your foundation’s articles of incorporation and bylaws and require a significant majority vote to alter those documents. For example, the Hilton Foundation added the following clause to its articles of incorporation in 2014: “The corporation shall make distributions and conduct activities in accordance with the philosophy of Conrad N. Hilton, which philosophy includes [his] religious, ethical, business, and conservative beliefs.” Make supplementary materials like oral histories and videos of the donor available to trustees as well.

2. Create a statement of donor intent

If such documents are not available, follow the example of the Foellinger and Weinberg Foundations and create a contemporary donor-intent statement based on personal knowledge of the donor and on letters, speeches, or other writings that provide insight into the donor’s values, principles, and key interests. Have the donor-intent statement read out loud at least once a year at a board meeting, as the Duke Endowment does.

3. Have trustees sign a donor-intent pledge

Implement the requirement used at the Daniels Fund that trustees sign a statement acknowledging the donor’s intent and their commitment to honor it. After reviewing a detailed set of documents describing the life, values, character, and intentions of the founder, Daniels Fund directors are asked to ratify the following:

Signing this document affirms your commitment to preserve Bill Daniels’ donor intent and his personal style of conducting business (as described in this document). You agree to set aside your personal views or preferences when acting on behalf of the Daniels Fund. It is the Board’s responsibility to ensure that the Daniels Fund most effectively fulfills Bill Daniels’ intentions and remains true to his ideals. You also acknowledge that you have read this document and understand its importance in guiding the efforts of the Daniels Fund.

4. Require periodic audits

Follow the Templeton Foundation practice of scheduling regular independent donor-intent audits of your grantmaking. Every five years, the foundation undergoes an external audit to measure how well it is adhering to its founder’s wishes. The board of trustees selects three organizations that work in focus areas identified by John Templeton. Each organization then chooses an individual from its ranks to be an auditor.

5. Mandate outside help

Working with your attorney, give outside parties legal standing to act against your board if it strays from its mission. This could include, for example, a public charity with which you work closely. The Roe Foundation took this approach. Its wealth creator, Thomas Roe, gave standing to two organizations to challenge his foundation in court if it runs contrary to his stated donor intent at any point in the future.