Tag Archives: endowments

A Catchy, Popular, Attractive, and Bad Idea

[This post was co-published in The Chronicle of Philanthropy on August 9, 2016.]

The charitable world has been buzzing recently about a new idea from the Minneapolis Foundation: The Pay It Forward Forever Fund, a uniquely structured effort to build a community endowment. Many people see the Pay It Forward Forever Fund as innovative and far-sighted, but it strikes me as precisely the wrong sort of initiative. Its founders miss the point about how philanthropy should work, and they misunderstand the needs of society and the appropriate role of a charitable endowment. Continue reading

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The False Allure of Charitable Endowments

[Note: This article was co-posted March 2, 2015 at Inside Philanthropy.)

In her recent Inside Philanthropy guest blog post defending donor-advised funds, Council on Foundations CEO Vikki Spruill asserts that those of us who are critics of donor-advised funds and perpetual foundations undervalue the role played by charitable endowments. Spruill writes, “The compulsion to ‘pay it out now’ in order to address immediate needs is woefully shortsighted.” In a comment to Spruill’s piece, Inside Philanthropy blogger Frank Monti agrees, writing, “…the value of the endowment is that resources are available in perpetuity. Jesus said ‘the poor you will always have with you.’”

I’m neither a theologian nor an economist, but I challenge the sacred place held by endowments in American philanthropy. And while I will reluctantly agree that there are always likely to be some poor people, I suggest that our addiction to endowments makes poverty worse, now and in the future. Continue reading

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Think Before You Endow

I was recently asked at a public forum why I don’t like endowments. I answered: “It’s not so much that I don’t like endowments. It’s that nonprofits and their donors like endowments too much.”

Endowments have become the default destination for major gifts and bequests. If someone dies and leaves an organization a lot of money, the odds are good that the bequest will come with instructions to create an endowment in the name of the deceased. If a nonprofit launches a major campaign, there is inevitably a significant endowment component. As I’ve said before, endowments feel good. Endowments connote a certain sense of immortality. And endowments seem like a prudent investment. But do endowments, paying out 4% or so of their assets a year, have all that much impact? Or are there better ways to direct the donors’ generosity? Continue reading

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Waiting. And Waiting.

There’s an epidemic of deferred philanthropy in this country.

What do I mean? Let’s imagine that your house is burning. Firefighters arrive on the scene, and they offer you three choices.

The first option is for the firefighters to do all that they can, now, to save your home.

The second option is for them to use only five percent of their available water and equipment and personnel to fight the fire. They assure you that this will allow them to shepherd their resources so that they will be able to direct a similarly insufficient effort toward future house fires a year from now, a decade from now, fifty years from now.

Continue reading

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