Giving While Living

To be or not to be? That seems to be the question for a growing number of family foundations, a new report from the Foundation Center and the Council on Foundations finds. Based on survey responses from more than a thousand foundations, the report, Perpetuity or Limited Lifespan: How Do Family Foundations Decide? (46 pages, PDF), found that while perpetuity is the norm for most family foundations, a relatively small number plan to have a limited lifespan (12 percent), while a larger segment (25 percent) are undecided -- either because they haven't discussed the issue or due to uncertainty about the family's future involvement in the foundation.

(Image courtesy of Northern California Grantmakers)

"Uncertain" isn't a word one would use to describe John Hunting, the Steelcase Furniture heir who created the Beldon Fund in 1982. In 1998, Hunting, a committed environmentalist, endowed the foundation with $100 million from the sale of his stock in Steelcase, which had gone public the year before, and made the decision to spend out its assets over the next ten years. In his late 60s at the time, Hunting gave four reasons for spending out: foundations should have a limited lifespan; mounting environmental problems couldn't wait; the so-called intergenerational transfer of wealth would replenish the philanthropic "well"; and he wanted to enjoy the results of his philanthropy in his lifetime.

Hunting hired Bill Roberts, a former executive with the Environmental Defense Fund, to be the fund's executive director (Roberts was succeeded in that position by Anita Nager in 2001), and over the next decade they used the fund's resources to build public and policy support for environmental protection, spending between $10 million and $15 million a year.

As a still-vital Hunting explained when he and Nager dropped by the offices of PND last week, the goal from the outset was to focus the fund's relatively modest resources over a short period of time so as to maximize the fund's impact. When asked whether he and his colleagues had succeeded in that goal, Hunting didn't hesitate: "Absolutely." (We'll be posting a transcript of our conversation with John and Anita in a week or so.)

The Beldon Fund made its last grants in June 2008 and officially closed its doors at the end of May. Over the last month or so, Hunting and Nager have been making the rounds to talk about what they learned from their spend-out experience. They're also promoting a new Web site and publication, Giving While Living: The Beldon Fund Spend-Out Story (28 pages, PDF), that provide comprehensive information on Beldon's program/investment strategies, operations, and outcomes. Both are excellent.

As the Foundation Center report mentioned above makes clear, most philanthropists are still uncomfortable with the idea of a limited lifespan foundation. On the other hand, more and more donors are looking to achieve significant impact with their philanthropic resources -- and if they can do so in a limited time frame, all the better. Hunting and his colleagues have some thoughts on that score:

1. Learn quickly. Having a sunset date means that there's limited time to learn from mistakes and adjust course.

2. Use evaluation to refine strategy. Develop programmatic benchmarks of success and use external evaluations with anonymous feedback to assess progress. An evaluation that looks at the overall impact of the program strategies, rather than just individual grants, will indicate if you're on the right track or need to make changes.

3. Keep a tight focus. It's better to start with a few areas where you are likely to make a difference than to take on too many issues and then have to pare down.

4. Be bold. Develop or adopt innovative strategies geared to being change within a limited time frame.

5. Manage risk. Taking chances can lead to breakthrough solutions, but not all bets pay off. Learn from those that don't work and move on.

6. Look for synergy across program areas. Develop a strategy early on to connect, where possible, the work of major programs in order to achieve greater scale and deeper impact.

7. Ensure budget flexibility. Allocate assets to allow flexibility to respond to unanticipated funding opportunities or critical needs in the field.

8. Build the field. Hire staff members who can bring other funders to the work.

9. Use all the foundation's resources -- not just money. Capitalize on staff's issue expertise, funder connections, and ability to serve as a sounding board for problems and ideas.

You'll find more of the same -- including specific tips about spending out, promoting collaboration among grantees, building a field of practice, engaging other funders, and responsible exiting practices -- on the new Beldon Fund site.

-- Mitch Nauffts

Comments

[Dolly M. Garlo, RN, JD, PCC]

This is a fabulous example of a twist on the traditional form of legacy. In our work at CreatingLegacy.com we have found that people truly want to make a difference and be more actively involved in doing it - rather than just leaving assets in an estate plan for others to administer after they've left the planet. Your summary of John Hunting's reasons so very articulately bears that out: to be able to enjoy the results of giving back during this lifetime and to more effectively get results for pressing concerns he cares about.
There are big things to be done in this world and there is a great sense of fulfillment associated with being able to impact things for the better no matter what level of wealth one has to contribute. How to accomplish that seems to be the biggest question - one that is my great pleasure to help people answer and then witness how they contribute their time, effort, energy and joy as well as money. Thanks for this example and the great resource!