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Program on Philanthropy and Social Innovation (PSI)
Sunsetting: A Framework for Foundation Life as Well as Death
Two reports on foundations that decide to spend all of their funds and close, rather than continue in perpetuity, are here released by the Aspen Institute’s Program on Philanthropy and Social Innovation. The reports, by Francie Ostrower, Professor at the University of Texas at Austin, provide important lessons and a guide to decision-making for foundations that “sunset” or “spend down.”
Ostrower surveys donors, foundation family members, trustees, staff grantees and archival documents from four sunsetting foundations to glean best practices and lessons that can be applied to other sunsetting, as well as perpetual, foundations. The foundations studied include the Beldon Fund, Mary Flagler Cary Charitable Trust, Jacobs Family Foundation, and the Pear Foundation,
The first report, Sunsetting: A Framework for Foundation Life as well as Death, uses detailed case studies to understand why and how these foundations decide to discontinue their services. By discussing the common themes, challenges, and opportunities associated with sunsetting, the report shows how limiting a foundation’s life can be a strategy for innovative and effective philanthropy.
The study reveals that ironically, sunsetting foundations are greatly concerned about the sustainability of their values. All four foundations provided a core set of grantees with ongoing general operating support and assistance as a means of carrying on their values. The author argues that this approach, when combined with a specific philanthropic purpose, allows foundations to build unusually strong and effective partnerships with grantees.
In addition, there are lessons to be learned from sunsetting foundations that can be applied to perpetual foundations. For example, perpetual foundations can view individual program areas as “miniature sunsets,” with a clearly-defined beginning, middle, and end.
The second report, Foundation Sunset: A Decision-making Guide, is a practical companion piece that draws extensively on the case studies. It shows how donors and trustees can use sunsetting as a philanthropic strategy consistent with their values, circumstances and motivations. Five key components of each foundation’s sunsetting plan were examined: 1) motivation for sunsetting, 2) sunsetting framework, 3) timing of termination, 4) plans for sustainability, and 5) closing the foundation. As such, this report serves as a useful guide to help donors and trustees design a blue-print for shutting down. As the author states, “a good game plan is one that does not only help a sunsetting foundation to close. It is one that helps the foundation make the most of its philanthropy during its lifetime.”