More than a third of family foundations uncertain about life span

Does your nonprofit receive funding from family foundations? If so, do you know the foundation’s intentions of lasting into perpetuity?

While existing in perpetuity continues to be the norm for the majority of family foundations, according to an item in Philanthropy News Digest, 25 percent say they are currently undecided about their life span options, while 12 percent plan to limit their life span, a new report released jointly by the Foundation Center and the Council on Foundations finds.

As the first large-scale study of the life span plans of family foundations, Perpetuity or Limited Lifespan: How Do Family Foundations Decide? benchmarks the intentions, practices and attitudes of nearly 1,100 active family foundations and sheds light on their future behavior as this large and still young segment of philanthropy matures.

According to the survey, the foundations most likely to opt for a limited lifespan are small groups established since 1980 that do not employ staff and whose founder is still alive,  although the percentage that expect to spend down remains modest. Indeed, foundations with a living founder are three times more likely to expect to spend down than those whose founder is deceased and almost twice as likely to be undecided.

The survey also found that when the decision to spend down is made at the foundation’s inception, the leading factors are the desire of the founders to have a greater impact during their lifetimes and to be involved in how the money is spent. When the decision to spend down is made later, the most frequently cited reasons are a shift in the founder’s attitudes, family issues and/or a belief that subsequent generations will create their own philanthropies.

The leading reasons for deciding to establish foundations that exist in perpetuity are the desire to have both long-term impact on the community and family engagement across generations.

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