Time-limiting foundations, or “sunsetting” them, is an idea that has grown in popularity during the past few decades. Are you focused on problems that will become more acute in the future? Or maybe you are committed to nonprofits that will require decades to mature? At a basic level, you might realize that giving away all your wealth while living is too exhausting a task. In these cases, limited-life giving could be a good choice.
Sunsetting has additional benefits:
• You can handpick the board that will succeed you, reducing (but not entirely eliminating) the likelihood of mission drift
• You can have an outsized impact through your giving
• You get to experience the joy of giving in the here and now with the assurance that your intent will be safeguarded later on
If you choose to sunset your foundation, here are the steps you must take and decision points you will face:
• Decide on an optimal timeframe for sunsetting. Bill and Melinda Gates, for example, chose to sunset their foundation within 20 years of their deaths.
• Decide how to navigate spend-down in a way that achieves your objectives and avoids leaving programs hanging. The Earhart Foundation provides one example: It left its grant portfolio largely unchanged during spend-down, identified ten top-performing grantees and targeted them for special closure grants, and maintained existing staff throughout the closure process by instituting incentives (including financial ones).
• Decide how to best handle the closure process itself. How will you handle archival materials and legal documents, disburse residual assets, etc.?
Three advantages of time-limiting your philanthropy
Five questions to ask before sunsetting your foundation
Spend-down at the Avi Chai Foundation
Spend-down at the Earhart Foundation
How spend-down can work for ideological giving: The John M. Olin Foundation