[Review] Putting Wealth to Work: Philanthropy for Today or Investing for Tomorrow?

At some point in their lives, high-net-worth individuals with philanthropic inclinations must answer an age-old question: Do I commit all (or most of) my resources to charitable causes in my lifetime, or should I create a giving vehicle that exists in perpetuity?

In Putting Wealth to Work: Philanthropy for Today or Investing for Tomorrow?, social sector veteran Joel L. Fleishman, director of the Center for Strategic Philanthropy and Civil Society at Duke University, examines the two sides of the question, finding strengths — and weaknesses — in both approaches and ultimately concluding that the correct answer is not either/or but both/and. In arriving at that conclusion, he also provides readers with an overview of modern American philanthropy, including the fairly recent advent of the Giving Pledge and the growing popularity of funder collaboratives; a brief history of limited-life foundations (i.e., foundations that have decided to "spend down" their corpus by a specific date); and a framework for critically evaluating this ever-green conundrum.

In the book (a follow-up to his well-received The Foundation: A Great American Secret; How Private Wealth Is Changing the World), Fleishman carefully deconstructs the arguments commonly made by "anti-perpetuity" critics and in the process does his best to separate fact from fiction. For example, anti-perpetuity critics often cite Henry Ford II's resignation from the board of the Ford Foundation in 1976 as evidence that foundations created to exist in perpetuity inevitably depart from their founding donor's intent. Fleishman, however, debunks the "myth" that Ford "should be regarded as the poster child for departure from donor intent," arguing that "no donor intent had been embodied in the legal instrument that created the…[f]oundation." He goes on to attribute the persistence of the myth to the conservative-leaning Philanthropy Roundtable, which has "kept alive a questionable interpretation of Henry Ford II's role in, [and] resignation from, the Ford Foundation," as well as other similarly inclined think tanks for "imputing departure from donor intent specifically to liberal foundations." The reality, writes Fleishman, is that "thousands of foundations that were founded by now-deceased donors do not appear to have wavered to any significant degree in trying to fulfill the intention of their founders."

While Fleishman spends a good chunk of the book outlining the various rationales for "giving while living" and highlighting the impressive work of such limited-life foundations as Atlantic Philanthropies (which he served as president from 1993 to 2001) and the Bill & Melinda Gates Foundation (which will sunset twenty years after the deaths of the Gateses), his affinity clearly is for foundations established in perpetuity and the "indispensable role" they have played in "collecting, testing, and refining the knowledge relevant to their respective missions, preserving and enhancing the utility of that knowledge, and passing it along to future generations." Moreover, in his view, certain activities — "countercyclical initiatives aimed at correcting or diminishing the individual, social, or cultural effects produced by the now hyperactive malfunctioning…of our free market economy" — cannot be solved in a compressed timeframe, if they can be "solved" at all. Yes, limited-life foundations can make investments that create or accelerate change in the short run, but by definition they overlook a key ingredient: time. It takes time for visionary leaders and good nonprofits to find their footing and scale their efforts; time for the problems of tomorrow to emerge; time for major social change to happen.

Which doesn't mean that limited-life are without value. Indeed, when "needs are fiercely urgent" and require "a fierce…successful drive for a solution," it is extraordinary what they can achieve. At the height of the AIDS epidemic in the 1980s, for instance, the Aaron Diamond Foundation stepped in and invested "its last $200 million" in AIDS research. As those who lived through those terrible times well remember, the foundation's support for the pioneering activities of the Aaron Diamond AIDS Research Center was directly responsible for the antiretroviral drugs that "ended the death sentence for people infected with HIV" and saved the lives of millions.

Seasoned veteran that he is, Fleishman immerses his readers in case studies, expert perspectives, and an even-handed consideration of both sides of the argument, so that by the end of the book they are likely to conclude that giving is a very personal affair for which there is no one-size-fits-all model. Rather, donors need to base their decisions on an honest assessment of their financial resources, the nature of the problem(s) they would like to address, and their goals. That said, Fleishman makes it clear that attacks on perpetual foundations that accuse them of always and inevitably deviating from their donor's intent must stop: such attacks are counterproductive and, in the final analysis, benefit no one. Instead, foundations — in all their variety and particularity — should be recognized, celebrated, and supported "as the primary engines of peaceful social change in America" and a gift to democracy that should not be taken lightly.

Nick Opinsky is a development assistant at Foundation Center. For more great reviews, visit the Off the Shelf section in PND.