Foundations On Right Sun-Setting Faster Than Those On Left

Among foundations that seek to influence public policy, those on the left have vastly larger assets. But among those that plan to spend themselves out of existence, foundations that lean to the right are spending at a faster rate.

“When Policy-Oriented Foundations Sunset,” a report released by the conservative Manhattan Institute, examines 64 U.S. foundations that have a record for funding research aimed at influencing public policy, focusing on the period of 2000 through 2015. The value of such philanthropy was estimated by Giving USA to be almost $27 billion, or about 7 percent of overall philanthropy in 2015.
The 12-page report was written by Howard Husock, vice president for research and publications, and director of the social entrepreneurship initiative, at the Manhattan Institute.

Based on mission statements, 24 of the foundations have a left-leaning cast while 28 lean to the right. Among those that announced a decision to sunset between 2000 and 2015, seven were identifiably on the left and eight were on the right.
Overall, left-leaning policy foundations have far greater assets than right-leaning policy foundations, about $38.38 billion compared with $7.41 billion. Among those that plan to sunset, foundations on the left have an average of $1.94 billion in assets compared to $238 million for those on the right.

Foundations on the right are moving toward their sunset date at a faster pace, annually distributing about 15 percent of assets on average versus 7 percent by those that lean to the left.

“Because sunsetting foundations spend more than otherwise in the short term, grantees of all sunsetting foundations stand to reap greater benefits in the short run,” the report author writes. “At the same time, assets held by right-leaning groups overall have grown at a faster pace than assets held by left-leaning groups as a result of growth in assets held by those not sunsetting.”

Major left-leaning grant-makers include the Open Society Foundations, The Atlantic Philanthropies and the Ford Foundation, which direct money to “curbing financial, racial, gender, and other inequities.” On the right, prominent foundations include the William E. Simon Foundation, John M. Olin Foundation, and Lynde and Harry Bradley Foundation, which focus on “strengthening American democratic capitalism and the institutions, principles, and values that sustain and nurture it.”

At least 80 major foundations in the last 100 years have chosen to“spend down” assets, according to the Sanford Center for Strategic Philanthropy & Civil Society at Duke University. “The trend toward time limitation or spend-down appears to be a regular feature of American philanthropy and one that is becoming more common, based on the number of foundations in the post – World War II era that have chosen to sunset,” according to the report. About 20 major foundations established between 1948 and 1978 chose to sunset and about 42 have chosen to do so since that time.

Last year, the Edna McConnell Clark Foundation announced it would engage in “accelerated giving” — $1 billion over the next decade – citing its understanding that the founding family did not “envision it as a perpetual foundation.”

Although tax law views the 5-percent distribution of assets annually as a minimum, it’s widely viewed as a maximum, according to the report.

To combat the phenomenon of large charitable foundations that may have drifted from their founders’ original missions, a growing number of them are adopting “sunset provisions.” They mandate that the foundation disburse assets and suspend operations over a specific timeline.