Spend-down at the Avi Chai Foundation

Most of the time, donors make the decision to sunset their foundation while they’re still living. In an unusual step, trustees of the New York City-based Avi Chai Foundation took this path six years after the original wealth creator passed away.

Zalman Chaim Bernstein founded Avi Chai in 1984 with a two-fold mission: Jewish education and Jewish unity. The foundation has made grants in North America, Israel, and the former Soviet Union to support Jewish day schools, connect secular and religious Jews around a shared heritage, and promote Jewish thinking in the public sphere.

Bernstein never specifically requested a spend-down for the foundation. But he did communicate the desire informally to trustees, expressing concern about the Ford Foundation’s mission drift and the desire for his own philanthropy to avoid that fate. Bernstein passed away in 1999, but it wasn’t until around 2005 that the executive committee and the board of trustees made the decision to sunset. Initially, the date was set for January 2027 to honor what would have been Bernstein’s 100th birthday. Trustees later moved the date up, and the foundation concluded its general grantmaking at the end of 2019.

A distinctive characteristic

Avi Chai’s sunset strategy had one distinctive characteristic: Because the foundation decided to retain sufficient funds to make annual grants in perpetuity to support Beit Avi Chai, a cultural center in the heart of Jerusalem, the pressure to exhaust all funds wasn’t present.

“Our goal is to do everything as smartly as we can with the spend-down, and if we end up leaving a larger amount than planned, this will increase the funds available for Beit Avi Chai,” says Executive Director Yossi Prager.

But sunsetting did push Avi Chai to think strategically about how best to help other grantees for whom the foundation tended to be the sole or primary funder. Avi Chai reached out to partners to help grantees maintain their programs into the future, helped recipients improve their fundraising capacities, and encouraged grantees to plan for the future and merge with other nonprofits in some cases.

Bernstein’s steps to safeguard his intent

Several decisions Bernstein made protected his donor intent:

1. He picked his people carefully

Nearly all trustees knew Bernstein personally and worked with him on the board. Bernstein avoided naming professional grantmakers or family members other than his widow as trustees. Instead, he chose individuals who were philosophically aligned with him.

2. He trusted his people

Bernstein vested his trustees with genuine decision-making authority during his lifetime, while maintaining veto control. He never found it necessary to use his veto. Following his death, the trustees were already accustomed to leading—and equally accustomed to adhering to their founder’s intent.

Sunset as a path to seize opportunities

Prager believes that donors are wise to consider sunsetting, first to avoid mission drift in the future, but also because “you don’t want perpetuity to stand in the way of seizing opportunities when they come.” A spend-down can “encourage future trustees to seize the opportunity when it’s available.”