Questions of how and when legacy and donor intent should drive the structure and strategy for philanthropic activity has taken on fresh relevance in recent years. The philanthropic sector is increasingly called upon to fill gaps in social services, advocacy, and community resilience efforts. At the same time, a new generation of philanthropists is questioning whether foundations should exist in perpetuity or spend down their endowments, reflecting a sense of urgency to address issues such as climate change.
One of the most crucial factors in determining questions of perpetuity and payout is mission or purpose. When purpose is considered, the appropriate payout becomes clearer. One foundation cited in this report decided to spend down its corpus to address climate change, food systems, land and water stewardship, and social justice. Other impact areas, such as support for arts and culture or religious causes, may be more appropriate for a perpetuity mandate.
In this report, we explore the interplay between payout and duration, and the importance of purpose in determining the most appropriate structure and strategy for philanthropic entities, including private foundations and DAFs. In doing so, we cite several examples of organizations that have taken creative approaches to the question of payout and perpetuity based on their mission and family history and provide key questions to consider.
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