New Structures for Giving

Such donors and foundations have had to find different ways to structure their giving, coming up with models that turn the traditional philanthropic paradigm on its head. Perhaps the most dramatic recent example was Warren Buffett's decision to give $30 billion to the Gates Foundation, rather than start his own. Buffett reasoned that Gates already had a system for giving away large amounts of money, in areas that suited his own philanthropic interests. One twist is that the Buffett money does not go into the Gates corpus; it will be given over a period of years, and spent as it is given - rather like the biggest donor-advised fund ever. The Gates Foundation followed up on the Buffett gift with its own surprising announcement - that it would sunset 50 years after the death of its last founding trustee.

Such unusual foundation structures may include a limited lifespan. The Whitaker Foundation, established after the death of the donor, chose to spend down its assets entirely within a specified number of years. Foundations like the Beldon Fund and Atlantic Philanthropies, both set up by living donors, may establish a term for spend down that may or may not be longer than the life of the donor. Others, like the Richard and Rhoda Goldman Fund and the Lewis B. and Dorothy Cullman Foundation, have sunset provisions, planning to go out of business in a definite number of years following the death of the donor or family members.

Foundations that are not intending to spend down may adopt payout rates higher than 5%, believing that greater expenditures are necessary to fulfill their missions. The Bradley Foundation, for example, pays out at a rate of 5.5% in grants only (not including administrative costs), and has maintained the purchasing power of its endowment. The Evelyn and Walter Haas, Jr. Fund has increased its payout rate to a minimum of 5% in grants only in order to address pressing issues, with the understanding that, depending on investment returns, a smaller corpus may be passed on to the next generation of family trustees.

Some foundations establish flexible payout rates, which vary from year to year depending on opportunities. The HKH Foundation, for example, increased its giving by one-third before the 2004 elections, a moment that it felt was propitious for increasing civic engagement. The Needmor Fund maintains a 6% payout rate as a base, but actually gives a great deal more because a network of involved family members provides additional annual support that is earmarked for current grantmaking.

Unusual structures in foundation operations go beyond changes in lifespan and payout. Some foundations have chosen to fulfill their missions through activities other than grantmaking, including running their own charitable initiatives and investing in for-profit enterprises with social goals. The Haigh-Scatena Foundation's sole employee, its executive director, spent half his time consulting with the foundation's grantees. The Omidyar Network invests in both non-profit and for-profit enterprises, and includes an online networking component. The Endswell Foundation/Renewal Partners, a time-limited entity, parlayed a relatively small asset base into charitable and for-profit investment in British Columbia, including the development of the Tides Canada Foundation, a public foundation, which now administers grantmaking for Endswell and others.

This paper looks at 13 foundations, and examines the ways in which their non-standard structures - whether in the areas of lifespan, payout, or methods - arise from their missions. For many of them, the choice to do things differently has meant that they have had to invent their own methods to carry out their work. While it is a given in the field that every foundation is different, some are more different than others, and the kinds of rethinking required by these unusual foundations yield lessons not only for those who are considering following in their footsteps, but for all foundations and donors.

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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

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