Overview

Two foundations, both of which spent down without being explicitly required to do so by the donors, adopted a very narrow focus for their grantmaking.

The idea of spending down a foundation's assets, rather than establishing it to exist in perpetuity, dates back at least to the 1920s and 1930s, when Julius Rosenwald, who made his fortune building Sears, devoted the lion's share of his philanthropic resources to building schools for black students in the South, and was publicly vehement in his opposition to permanent endowments. More recently, several large foundations have spent down, concentrating their resources in particular areas. The Lucille P. Markey Charitable Trust, which funded basic medical research, closed in 1998, spending over $500 million. (Its final report, published by the Council on Foundations, provides a detailed roadmap for the practical issues of spend down.) The John M. Olin Foundation, which closed in 2005 after having spent $370 million, is a remarkable example of extremely focused and successful work aimed at providing support for conservative viewpoints and policies through academic programs and think tanks. The donor, John M. Olin, who set the foundation on this path in 1973 and died in 1982, specified that his foundation be spent down during the lifetime of his trusted associates, to avoid mission drift.

The Aaron Diamond Foundation, spurred by Aaron Diamond's widow, Irene, was designed to spend down in 10 years. Its best-known legacy was the creation of the Aaron Diamond AIDS Research Center, where major breakthroughs in AIDS treatment were developed. The Diamond Foundation went out of business in 1996, having expended more than $ 200 million on AIDS research as well as other focus areas, including education, human rights and the arts. A successor organization, the Irene Diamond Fund, was created to continue Mrs. Diamond's philanthropy; Irene Diamond died in 2003. The Diamond Fund is now itself in the process of spending down.

The Whitaker Foundation was somewhat unusual in that the donor, Uncas Whitaker, founder of AMP, an electrical connector company, only recommended, but did not insist, that his foundation be spent down within 40 years of his death. Nor did he specify an area of concentration for the funds. The governing committee, who were family members and trusted associates, chose biomedical engineering as an area that reflected Whitaker's personal interests. They started their work giving research grants in the field, a promising but scattered and underfunded area, which at the time had been largely overlooked by the National Science Foundation and the National Institutes of Health. In 1988, the Foundation started a program that gave awards of up to $5 million to support graduate and postgraduate biomedical engineering at universities and medical schools. Miles Gibbons, who had been Uncas Whitaker's attorney, and who headed the Foundation until his retirement in 2000, says that while interested faculty and students were at the universities, deans and provosts tended to resist forming new departments. "With our advisors, we came up with an amount that was large enough to entice universities to create those departments, and was sufficient to support young faculty and graduate students, and to some extent underwrite the costs of renovating or creating lab space."

In 1991, after a decade and a half, the committee felt that biomedical engineering was at a turning point, and that a large, immediate investment could make a significant difference. They decided that the Foundation would devote all of its assets to fostering education in biomedical engineering, spending down to do so. As outlined in the Foundation's final report, the awards included funds for "research, education programs, curriculum development, fellowships, internships, textbooks, conferences, meetings, leadership development, faculty hiring, classroom and laboratory construction and renovation, building construction, industrial collaborations, government collaborations, professional societies, and finally, international grants and scholarships." The booming stock market enabled the Foundation to make some very large awards, as high as $15 million, which brought some of the most prestigious universities into the fold. At the time of the decision to spend down, the trustees expected to be able to put $600 million into the field; the number ultimately exceeded $800 million.

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  Resources

• Executive Summary
• Full Report
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  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

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