Spend down and limited lifespan pushed the foundation's board and staff to focus on capacity building (for the organizations and the sectors), encouraging collaboration among grantees, and enlisting other funder engagement in Beldon's ways of working. To do this, Beldon decided to establish itself as a knowledgeable leader in its funding area, and it hired seasoned professionals, people who were already leaders in the field, as staff members and consultants. Beldon staff and consultants spend about one-third of their time on activities other than grantmaking, including sharing strategies and ideas with other grantmakers. For example, the environmental health area now has a consortium of more than a dozen funders who work together on projects. Through consultants and direct support, Beldon has also worked with grantees to help them develop a more diverse funding base, with less reliance on foundations - a key investment given Beldon's pending departure from the field.

With a limited time to get its work done, Beldon incorporated an evaluation process that would enable the foundation to make mid-course corrections, as necessary. "We chose to do assessments of our overall funding strategy rather than focused evaluations of individual grantees," Roberts says. By assessing the performance of a cluster of investments, Beldon was able to flag issues that needed attention as well as refine its goals for the programs. For example, an evaluation of its program in environmental health noted that the grantees were doing good work in isolation, but the overall result was less than the sum of its parts. Beldon changed its funding strategy in a way that encouraged those groups to collaborate, bringing "coherence and greater impact to the program as a whole."

With financial management services oriented towards foundations that exist in perpetuity, Beldon had to work with its financial professionals to develop an investment strategy that would account for the unusual but purposeful decline of its endowment. At the same time, the blend of assets and income had to be spread over the 10-year lifetime in a way that maximized the foundation's programmatic impact. Roberts characterizes the resulting planning model as a "3-D chess game." One of its principal characteristics is an extremely conservative investment strategy that assumes a 5.25% return on investments, much lower than the usual foundation goal of 8% or 9%.

In retrospect, Roberts feels that 10 years left a very tight time frame to implement and complete a spend down plan. "To get a clear, focused, staffed strategy humming in less than two years is optimistic. Then you're on the street, looking for grants to make, explaining the strategy, which can take another year or two. All pistons don't fire until year three or four. Then you make a mid-course correction in year five or six, so now you have maybe three years where you're at full tilt-`the sweet spot.' At year eight, you've got to think about phasing down." Roberts describes Beldon's grantmaking model as a "mountain," in which spending started off slow, then ramped up to peak capacity during the "sweet spot" years. "You have to get your financial planners to build that mountain," he says.

Another important lesson of Beldon's experience is relevant to any foundation, no matter its lifespan. Says Roberts, "The biggest impediment is that financial and budgeting mechanisms for foundations are not set up for flexibility. Even at Beldon, where I'm not tied to a 5% payout or hamstrung by a fixed investment strategy, there are few useful forecasting and planning tools that allow you to tailor spending to meet program goals. Foundations generally default to level spending plans because it's a lot easier than inventing more programmatically flexible spending schemes. We need to think of the grants budget as a number that will fluctuate, and create a system of investments, grants, and spending that will go in a wave pattern over a period of years." Beldon's John Hunting bemoans the timidity of foundation trustees and their interpretation of five percent as a spending ceiling. "Flexible payout should guide the perpetual funder as well as the donor who chooses to spend down," he says. "With more imagination and courage, today's donors can more effectively help solve today's problems."

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  Resources

• Executive Summary
• Full Report
• Order Print Copies

  Report Contents

• Introduction
• Focus: The Whitaker Foundation and the Helen F. Whitaker Fund
• The Learning Curve: The Beldon Fund
• Retooling for Spend Down: The Atlantic Philanthropies
• Giving While Living: The Richard and Rhoda Goldman Fund and the Lewis B. and Dorothy Cullman Foundation
• Quick Spend Down: The Haigh-Scatena Foundation
• Raising the Payout: Evelyn and Walter Haas, Jr. Fund
• Giving 5.5%: The Lynde and Harry Bradley Foundation
• More than Investment Returns: The Needmor Fund
• Ramping Up: The HKH Foundation
• Using All the Models: Endswell Foundation / Renewal Partners
• A Different Strategy: Omidyar Network
• Conclusion
• Selected Bibliography
• Resources
• List of Profiled Foundations
• Acknowledgements

  Upcoming Events

• November 29
  10am - Noon
  NCG Family Philanthropy Exchange and the Stanford Center on Philanthropy and Civil Society are hosting a discussion of Beyond Five Percent: The New Foundation Pay out Menu. This funders only event is free for members.
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  “Beyond 5%”

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• Quixote Foundation

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