3. Strategic Sunsetting Depends On Long-Term Planning
A third client of ours, after operating for 20 years, is in the process of closing or “sunsetting”—intentionally spending its endowment to deplete its funds and discontinue operations. Choosing to sunset is a major decision and the effort involves myriad issues that can take a year or longer to address:
• Will the foundation make greater philanthropic impact by giving away 100% of its assets now (instead of, say, 5% per year in perpetuity)?
• If the foundation has no obvious succession plan, can it partner with a grantee for long-term leadership instead of sunsetting?
• How will the foundation communicate its sunsetting plans to family, staff, grantees and fellow funders?
We have been working with this foundation client since last year to implement a carefully designed communications plan about its closure while facilitating the spend down of its substantial portfolio. As we turn our attention to the final stage of the entity, we are also helping it tie up the logistics (its final tax returns, archiving documents, etc.).
Regardless of size, a foundation can make tremendous charitable and social impact with the right vision, strategy, tools and support—and many family and corporate philanthropists will look to their advisors to provide them with tailored guidance.
Advisors should be attuned to foundations’ activities and long-term vision in order to provide scalable assistance accordingly.
Sunil Garga is the president and chief executive officer of Foundation Source, the nation’s largest provider of management solutions for private foundations. The firm works in partnership with financial and legal advisors as well as directly with individuals and families. ©2022 Foundation Source Philanthropic Services, Inc. All rights reserved.