Skip to main content

More Than a Third of Family Foundations Uncertain About Lifespan or Expect to Spend Down, Report Finds

Resource type: News

Philanthropy News Digest |

Original Source

While existing in perpetuity continues to be the norm for the majority of family foundations, 25 percent say they are currently undecided about their lifespan options, while 12 percent plan to limit their lifespan, a new report released jointly by the Foundation Center and the Council on Foundations finds.

The first large-scale study of the lifespan plans of family foundations, the report, Perpetuity or Limited Lifespan: How Do Family Foundations Decide? (46 pages, PDF), benchmarks the intentions, practices, and attitudes of nearly eleven hundred active family foundations and sheds light on their future behavior as this large and still young segment of philanthropy matures. Of the roughly forty thousand family foundations tracked by the Foundation Center, nine out of ten have been created since 1980.

Funded in part by the Aspen Institute, with additional support from the Wallace Foundation, the survey was conducted in June 2008, prior to the onset of the worst phase of the financial crisis. According to the survey, the foundations most likely to opt for a limited lifespan are small groups established since 1980 that do not employ staff and whose founder is still alive, although the percentage that expect to spend down remains modest. Indeed, foundations with a living founder are three times more likely to expect to spend down than those whose founder is deceased and almost twice as likely to be undecided.

The survey also found that when the decision to spend down is made at the foundation’s inception, the leading factors are the desire of the founders to have a greater impact during their lifetimes and to be involved in how the money is spent. When the decision to spend down is made later, the most frequently cited reasons are a shift in the founder’s attitudes, family issues, and/or a belief that subsequent generations will create their own philanthropies. The leading reasons for deciding to establish foundations that exist in perpetuity are the desire to have both long-term impact on the community and family engagement across generations.

“As these young foundations face transitions in leadership from the first to the second generation, questions about sustainability, family capacity or commitment, donor intent, and foundation impact may lead them to consider their options,” said Foundation Center president Bradford K. Smith. “This study provides a first look at what drives the behavior of these foundations, which are at the epicenter of one of the largest waves of generational wealth transfer in U.S. history.”

More Than a Third of Family Foundations Are Either Uncertain About Lifespan or Expect to Spend Down, New Foundation Center Report Shows.” Foundation Center Press Release 4/30/09.