When he Robina Foundation It was created in 2004 with $ 150 million, it had an unusual mandate: to spend all the money in 20 years.
Family foundations are generally created to establish a philanthropic legacy that can span generations. But James H. Binger, Honeywell's former executive director who married the family that started the 3M empire, started Robina to give away his money in two decades. A renowned philanthropist stipulated that he had to make transformative gifts.
This year, the foundation will close four years earlier than scheduled, having awarded 45 grants to only four organizations. The largest was nearly $ 29 million for the University of Minnesota Law School to create the Binger Center for New Americans. The foundation also awarded two grants of more than $ 20 million to Yale University to begin a human rights scholarship in law school and build a theater for a new drama.
"I think many family foundations should make this model if they have time to dedicate it," said Susan V. Berresford, vice president of Robina and former president of the Ford Foundation. "If they are going to have a family base to cause an impact, it is a great model."
Family foundations have a reputation for providing a steady drip of funds to established institutions, and their donations can act as a link for extended family members. But the scale of problems in certain areas of society has led some family foundations to gather their resources and put them to work quickly in highly focused areas.
These "limited time" foundations, also known as cost reduction or limited life foundations, are on the rise, according to a study from Rockefeller Philanthropy Advisors and Campden Wealth, which analyzed about 200 family foundations that together contribute $ 2.4 billion annually.
The increase was driven by donors who were more committed to the problems and more interested in seeing the impact of their donations, said Melissa A. Berman, president and CEO of Rockefeller Philanthropy Advisors.
"Donors are thinking much more proactively about what they are doing," Berman said. "Fewer of the major donors choose some organizations and set it up on autopilot or set their donations as legacies."
Foundations created in perpetuity still make up the bulk of 71 percent, according to a separate report from NORC at the University of Chicago, which conducted the research on behalf of Rockefeller. Foundations of limited life accounted for 21 percent of the total.
Before the 1980s, there were virtually no foundations for cost reduction. But by the 2010s, 44 percent of the new foundations were created to spend the assets during a given period, according to the NORC report.
The report also noted that approximately one third of the foundations of cost reduction that had been founded in perpetuity voted to adopt the limited life structure later.
That is the way Compton Foundation I take. It began after World War II by the Danforth family, whose money came from Ralston Purina's pet food, with the initial goal of ending the war. That mission evolved over the years to grant grants in the areas of national peace and security, the environment and climate change and women's reproductive rights.
But in 2018, the great-grandchildren of the founders voted to spend all assets within seven years, given what they saw as an urgency in all three areas of focus.
"It was really a recognition that we have a responsibility to the public, not just to our family," said Ellen Friedman, executive director of the foundation. "If we don't address these problems now, we are going a very different way."
The growing interest of younger generations was not surprising, said Joe Grasso, associate dean of finance, administration and corporate relations at the School of Industrial and Labor Relations at Cornell University.
"When you look at the foundations, it's very similar to having a family business," Grasso said. "Some companies get transmitted to offspring, but with other companies, offspring no longer want to be part of the family business. "
Rockefeller's report found three drivers for a cost reduction base: see the impact of the gift on the donor's life, reduce the philanthropic approach and send more money to urgent causes sooner rather than later. Those who chose to maintain a perpetual basis were motivated to address continuing problems, strengthen their family's values and purpose and have an impact on the beneficiaries for several generations.
One of the most well-known cost reduction foundations is Atlantic philanthropy, created by Chuck Feeney, who helped found Duty Free Shoppers. Through him, Mr. Feeney has given away approximately $ 8 billion.
In 2002, he decided that he wanted to give away all his money in his life, setting 2016 as the date for the last donation.
"This whole notion of limited life concentrates the mind," said Christopher G. Oechsli, president and chief executive of Atlantic Philanthropies, in 2014. "It introduces a dimension of urgency."
That sense of immediacy was common, the Rockefeller / Campden Wealth report found, particularly for foundations that later switched to a cost reduction model.
the SOUTH DAKOTA. Bechtel Jr. Foundation, which began in the 1950s by a grandson of the founder of the engineering firm Bechtel, had been making donations for decades focusing on problems that worried the family. But in 2009, Mr. Bechtel decided that he wanted the foundation to focus on what he considered imminent concerns in California: integrated water management and STEM education for children.
"I wanted to make a big difference on key issues in California," said Barbara Kibbe, director of effectiveness of the foundation, which was hired in 2013 to spend her money. “I wanted to do more than just spend 5 to 10 percent a year. I wanted to dig deeper. "
What made giving away money more complicated was that Bechtel began adding resources to the foundation at the same time he decided to spend them. In 2009, the foundation had $ 182 million and gave away $ 17 million. Since then, the foundation has given away $ 1.1 billion.
The number of beneficiaries of the foundation has decreased and the size of its grants has increased. "We wanted to push the rock uphill to a flatter place," Kibbe said. "We knew that not everything would be done. We wanted to get where we could better move on after us."
Limited time bases work better in some areas of philanthropy than in others. Families often take the route of cost reduction, according to the report, when their approach has a greater sense of urgency.
An area like the environment was a focus for institutional foundations, for example, but not for family foundations, according to the Rockefeller report.
"We thought that families who were concerned about the environment would be much more apt to adopt a limited time strategy," said Berman of Rockefeller Philanthropy Advisors. “I think that for families, the commitment of the next generation may be overcoming the sense of urgency. There are still many baby boomers who are making the decisions. ”
On the other hand, the most persistent social service needs lend themselves to family foundations structured in perpetuity, Rockefeller's study found. Hunger is an example. Mr. Grasso de Cornell noted philanthropy that focuses on a city or area, such as Allyn Foundation in Syracuse, New York, and the John R. Oishei Foundation in buffalo
"They want to continue to have a voice in the community to be a convener of important social conversations," he said.
There is another area where this strategy requires planning: how to close it on the indicated date. Market returns can increase or decrease donation amounts, no doubt, but there is also the practical problem of having someone close to make sure that these last grants are used correctly.
Atlantic Philanthropies awarded its last grant in 2016, but it will close only this year. In the case of the Robina Foundation, some trustees were appointed to review the grant reports for the next two years. After that, the lights go out.