Thus far, this book has taken a critical look at the growing popularity of time limits and “giving while living” and their effects on the future of American philanthropy and compared those approaches with the long and fruitful tradition of perpetual foundations. Still, for all its reservations and cautions about the limited-life model, this book is not a polemic against spending down. On the contrary, it should be clear by now that I consider the rich diversity of forms, purposes, methods—and, yes, of time horizons—in American philanthropy to be among its greatest strengths. For any donor, the key to a right decision in deploying your philanthropic assets is to align carefully the duration of your philanthropic vehicle with the amount of resources at your disposal and the nature of the values and goals that matter to you.
In this chapter, I offer some thoughts on how to approach that challenge of alignment. Although it is written to give guidance to donors, it is in reality a broader meditation on the way foundations should be structured, the trade-offs that any funder must make, and the kind of good that various kinds of institutions can aspire to do in the world—whether in a short time or across a distant horizon.
Start by consulting with others who have significant knowledge of the areas in which you wish to achieve impact and who have already demonstrated success. Choose highly credible advisors and partners from among them, even if they have not manifested the ability to do exactly what you hope to do. They may well be able to help you avoid pitfalls that could otherwise waste your philanthropic assets. Leverage the experience and knowledge of highly regarded institutions in the field of your interests. The earlier you get to know the successful players in your chosen field, the more likely you will be to make informed choices about the most productive way to proceed.
Don’t try to reinvent the wheel; instead, support or endow an experienced, gifted wheelmaker! Virtually always, donors must accomplish their goals through others—usually nonprofit organizations, universities, think thanks, hospitals, or scientific research centers. Undertake rigorous due diligence about which organizations and, even more important, which individual leaders are committed to the mission you envision and have a reputation for doing the best work.
If you are blessed with a superabundance of philanthropic wealth, as are the billionaires in the tech and finance worlds, consider establishing an entity similar to the Howard Hughes Medical Institute. The visionary Hughes was determined to make possible path-breaking basic biomedical research that would lead to new understandings about the molecular processes in human beings. That Institute, founded in 1953, is now the single largest source of biomedical research support for the life sciences in this country, with assets of over $18 billion and more than half a billion dollars in grants awarded annually. It achieves its mission primarily by identifying talented biomedical researchers—both individuals and teams of scientists—in universities and research institutes, designating them as Howard Hughes Investigators, and giving them the freedom to pursue their research ideas. The Institute describes its mission as being “to advance biomedical research and science education for the benefit of humanity. We empower exceptional scientists and students to pursue fundamental questions about living systems.”1 The Institute has become the seedbed of many scientific innovators of great distinction, including many Nobel Prize winners. The Atlantic Philanthropies’ Global Brain Health Institute, discussed in Chapter 6, is another example of a major effort by a time-limited foundation to create a center of support and networking for the best minds in a field—in this case, the prevention and treatment of dementia.
The initiatives of Sean Parker, some of which have been described earlier, follow the same practice of identifying individuals and institutions with talent and experience and partnering with them. As mentioned, he, too, has determined to spend most of his philanthropic assets during his lifetime. Along with countless others, Parker suffers from allergies to nuts and shellfish, so it should be no surprise that he decided to finance research to improve the lives of other such sufferers. In 2014, he made a $24 million pledge over two years to Stanford Medical School to create the Sean N. Parker Center for Allergy & Asthma Research, which Stanford describes as the first interdisciplinary center in the world to focus on the wide variety of allergies affecting millions of adults and children. The mission of the Parker Center is to “focus on understanding the mechanisms of the immune system, the dysfunctions of which result in allergic reactions.”2 In 2015, he established The Parker Foundation with a gift of $600 million, announcing that its focuses would be on the life sciences, global public health, and civic engagement. In June 2015, Parker gave $4.5 million to the University of California at San Francisco (UCSF) to support research on ending malaria. In November 2015, he announced a $10 million gift to UCSF to establish the Sean N. Parker Auto-Immune Research Laboratory, which will be headed by Jeffery A. Bluestone, described by UCSF as “one of the world’s leading immunologists.”3 And in April 2016, he announced a gift of $250 million to create the Parker Institute for Cancer Immunotherapy, which Fortune magazine described as “an unprecedented cancer research effort.”4 The goal of the Parker Institute is to speed up the development of immunotherapy treatment of various cancers by facilitating the collaboration of about 40 very highly regarded laboratories, including the six most celebrated cancer centers in the United States, and more than 300 researchers. The Fortune article spells out how the Institute will work: “It plans to do that by coordinating research across the field’s top laboratories and pushing those findings quickly into clinical trials. The Parker Institute will not only provide comprehensive funding, clinical resources, and technology to each location, [but] it will also create a central repository for intellectual property. This will allow researchers across the six cancer centers to quickly access a broad swath of core discoveries, further speeding other research avenues.”5
What Parker plans to do through the Parker Institute is similar to the initiative that financier Michael Milken undertook about two decades ago in creating the Prostate Cancer Foundation.6 Milken identified and promised annual funding to prostate cancer biomedical researchers, conditioned on their coming together twice a year to share their findings with the other grantees. In 1994, the foundation received 200 applications for support, and by 1996 it was receiving 600. Dr. Patrick Walsh, the head of prostate cancer research and treatment at Johns Hopkins University, the scientist who invented the prostatectomy treatment for that disease, declared that “Mike’s done more for prostate cancer research than anyone in America.”7
Another variant of the biomedical scientist group research model is that used by the Christopher & Dana Reeve Foundation, which, in its prior incarnation as the American Paralysis Association, created a worldwide network of neuroscientists who specialize in treating spinal cord injuries and in doing research on innovative ways of understanding and remedying such injuries. That network convened periodically for report-sharing among the participants, some of whom were responsible for identifying a protein that could facilitate the growth of new spinal cord tissue.
In many ways, all of the above examples reprise a theme we examined early in Chapter 7: the virtue of identifying a gap and seeking ways to fill it. Having the vision to spot a niche and a willingness to deploy energy and financial resources to supply what is missing are the two crucial ingredients to success in such efforts. On a much smaller scale and in an entirely different field, you might emulate Duke University’s Center for Documentary Studies, which was founded in 1984 initially as the Center for Documentary Photography by Alex Harris, a visionary documentary photographer and faculty member of what is now the Duke University Sanford School of Public Policy. Harris’s overriding desire was then, and still is now, to enable bright students who are planning careers in government, nonprofits, foundations, and politics to augment their economics, political science, and statistics courses with knowledge of the human condition of individuals who are intended as the beneficiaries of public policies but who are all too often instead their victims. Harris began his documentary career by studying the often sordid housing conditions for migrant workers all over North Carolina. His vision for the center attracted a generous donor, Jack Lupton, who had a similar vision, also shared by the trustees and executive director of the Lyndhurst Foundation, which he founded. That confluence of ideas led the Lyndhurst Foundation to create on the Duke campus what is still the only endowed center focusing on documentary studies on any university campus in the United States. Informed by Harris’s and Lupton’s beliefs, the center is dedicated to social justice and to documenting the lives of America’s less well-off through the work of professionals and students in the fields of photography, film, history, and literature. The Center for Documentary Studies is the parent of the Full Frame Documentary Film Festival, one of the nation’s leading film festivals specializing in documentary films.
Most donors, including life-limited philanthropists and spend-down foundations, think first of partnering with institutions they care about, such as universities and colleges they attended and hospitals and physicians that treated them. The same is true for the Pritzker Family Foundation’s 2015 $100 million gift to Northwestern University Law School for scholarships and for the support of social justice centers, including the Center on Wrongful Convictions. J. B. Pritzker is an alumnus of that law school, one of the top 15 in the country. As a result of his foundation’s gift, Northwestern University Law School was renamed the Northwestern Pritzker School of Law, and its Entrepreneurship Law Center was renamed the Donald Pritzker Entrepreneurship Law Center in memory of J. B.’s father. The younger Pritzker’s devotion to human rights and civil liberties is reflected not only in his involvement in such nonprofits but also in his philanthropic giving.
What should you do if no one with the requisite distinction or specialization is identifiable as a possible funding recipient for an initiative that is dear to your heart? Emulate Herbert and the late Marion Sandler of San Francisco’s Sandler Foundation. They were concerned about the lack of significant progress in understanding the causes and treatment of asthma over more than 50 years and decided to try to catalyze discovery and innovation in asthma research. As virtually all of the sources of support from government and other foundations are focused on helping those with a track record of research on a particular disease or biomedical process, there was little funding for talented scientists who wished to tackle something that they had never worked on before. This is still the prevailing situation, despite the caution implied in the profound observation by Arthur Koestler: “All decisive advances in the history of scientific thought can be described in terms of mental cross-fertilization between different disciplines.”8
The Sandlers decided to make funds available for a number of highly talented biomedical scientists who had never before studied asthma, and they funded the creation in 1999 of the American Asthma Foundation to administer and oversee the grants for that purpose. The AAF is based in the Sandler Asthma Basic Research Center at UCSF. Guided by the Sandlers, the AAF created a Scientific Review Board, consisting of an interdisciplinary group of distinguished research scientists; and an entirely new cadre of promising scientists has been created, most of whom are continuing to probe asthma’s causes and experiment with new treatments and possible cures. As of 2014, AAF has supported 169 grantees, two-thirds of whom continue to focus on asthma after the years of their support. Their work has yielded 527 articles from 124 grantees published in peer-reviewed journals. AAF grant recipients have received $107 million in grants from other funders, more than the $100 million provided by AAF. And five drugs developed by AAF grantees were in Phase I or II clinical trials in 2014.9
Another possible course of action is to scour the landscape of successes in the past and to take on the challenge of updating them through the use of newly available technology. For example, the 911 National Emergency Response Telephone Number, initiated and funded in 1973 by the Robert Wood Johnson Foundation, which has saved countless lives by dispatching emergency help to accident and disaster victims, turns out to be incapable of communicating data via cellular telephones.10 In November 2015, Tom Wheeler, chairman of the Federal Communications Commission, in a New York Times opinion column, urged the federal government to finance that updating, but, as we know all too well, Congress was and still is in a state of gridlock. If you care about bringing technology to the aid of Americans who need instant assistance in the face of threatening circumstances, perhaps you can help update 911.11
If you are determined to focus on a problem, you should see if anyone else has taken a first step to solve it with the kind of rigor, passion, and determination that you have. If you are fortunate, you will find someone who has started at the level of quality that you demand but who doesn’t have the resources to take it to scale. That is exactly what Donald and Doris Fisher, cofounders of Gap Inc., did with their desire to put considerable resources behind charter schools for America’s underprivileged youngsters. They identified two highly effective charter schools called KIPP Academies (Knowledge Is Power Program), one in Houston, Texas, established in 1994, and the other in New York’s South Bronx, established in 1995. The schools were founded by Mike Feinberg and Dave Levin, former Teach for America volunteers. In 2000, the Fishers launched a nonprofit partnership with them called the KIPP Foundation, based in San Francisco, with an initial gift of $10 million with which to scale the growth of KIPP Academies nationwide. As of 2016, in part thanks to the continuing support of the Fisher Fund, there are 190 KIPP Academies across the United States.
If, after scouring the landscape, you cannot find an organization that suits your purposes, you may have to create and run your own initiative, just as Laurene Powell Jobs did. The widow of Apple founder Steve Jobs was intent on transforming the high school experience for American teenagers, but as far as she could tell, there was no existing organization that could and would be willing to undertake that task at the level of quality on which she would insist. She reached that judgment after consulting with some of America’s leading education reformers, including Arne Duncan, who was then US Secretary of Education, and Ted Mitchell, the Under Secretary. So Ms. Jobs decided to create XQ: The Super School Project and committed $50 million to establishing it. As of the writing of this book, it is in its very early stages but appears quite promising. The XQ staff members are dynamic and creative and have organized an impressive nationwide tour of the XQ Super School Bus that travels the country to meet with groups of students and teachers who have volunteered to help “rethink high school.” Some 10,000 people have submitted 1,400 concepts for how to do so; 700 of the proponents have been invited to submit applications to XQ for funding of their experiments. Like many others, I am excited to see which ones get funded and what happens next.12
Finally, for those who are determined to achieve the greatest impact for dollars spent but don’t have a particular problem in mind, I suggest you consider the model that Facebook cofounder Dustin Moskovitz and his wife, former journalist Cari Tuna, are following.
Moskovitz and Tuna, two of the “new players in philanthropy” we encountered in Chapter 2, rejected the idea of a perpetual foundation at the outset. As Tuna says:
For us, there was never a question of whether we would have a spend-down foundation or have a foundation that would exist in perpetuity. We always knew it was going to be spend-down and there are a few reasons for that. Our highest intention is to do as much good as we can with our giving. If you’re creating a foundation to live in perpetuity, you have to preserve that endowment, and that leaves you with so much less to work with while you’re alive.
We think that we are best positioned to work on the problems that exist today and that future generations will be much better positioned to work on the problems of the future.
To set up a structure that’s going to remain relevant beyond our deaths seems really difficult. We hope and expect that people are going to be much better off in the future than they are today. That could mean it’s going to cost a lot more in 30 years than it does today to improve lives significantly via philanthropy. Finally, as more wealth is created, we expect there to be much more philanthropy in the coming years and decades as well. And so, those feel to us, in addition to our desire to alleviate suffering now, like really strong arguments for giving as soon as we can do so confidently.
In the first few years, we moved relatively slowly while we laid the foundation for our future philanthropic giving. But we’re beginning to scale up our giving, and we hope within the next 30 or 40 years to have given most of our wealth away.13
Tuna and Moskovitz are casting a wide net to identify the areas in which they might be able to achieve significant impact and are actively seeking advice from experts on the range of subjects they find to be of interest to them.
In my 2016 interview of her, Tuna reported:
Our overarching goal is to do as much good as possible for others with the resources we have. In service of that goal, we set out to learn about four broad categories of work that seemed especially promising: policy-oriented giving, global catastrophic risks, scientific research, and global health and development. As our team looked at the history of philanthropy, we came to realize that many of philanthropy’s biggest successes have come from improving policy and funding scientific research. We are interested in mitigating global catastrophic risks—risks that could seriously threaten humanity’s survival or progress—because such work seems to us a good conceptual fit for our philanthropy, given the long time horizon that we are able to have. We’re interested in global health and development because dollars can go very far when focused on improving the lives of extremely low-income people.
Dollars donated today can go surprisingly far toward improving people’s lives in a meaningful way. Our biggest grants [to date] have been to GiveWell’s top charities—Give Directly, which makes direct cash transfers, the Against Malaria Foundation, the Schistosomiasis Control Initiative, and the Deworm the World Initiative. They are delivering evidence-backed, cost-effective, scalable global health and development interventions as well as cash transfers. In working to improve policy or fund scientific research, we might not see an impact for many, many years, and therefore we seek to balance those initiatives with giving cash now and giving bed nets now. We want to have a meaningful impact on people’s lives today alongside the slow payoff of our longer-run, higher-risk-of-failure initiatives.14
One cannot help but be impressed by the genuine humility with which Tuna and Moskovitz have approached their philanthropic mission. They don’t name programs after themselves. Tuna radiates an unpretentious zeal for doing the most good possible with the resources that she and her husband have available. She asks good questions but in a deferential way, and her manner of dealing with prospective donors contrasts strikingly with the high-handed ego and hyper self-confidence with which many of her fellow Silicon Valley philanthropic peers go about doing their good work.
For those wishing to spend all of their philanthropic resources during their lifetimes, the Tuna/Moskovitz model of impeccable due diligence, carefully analyzed choices, and admirable dealings with their recipients would be an excellent model for anyone to emulate, whether or not you are intent on “giving while living” and whether or not you have a predetermined notion of the problems you wish to solve or mitigate philanthropically.
The lesson to be learned from the above examples is this: First, crystallize a philanthropic mission consonant with your values and commensurate with your philanthropic means. Next, define your vision of what success will look like. Then craft a strategy or strategies to achieve that mission, complete with performance benchmarks to track your fidelity to those strategies and to reveal where fine-tuning of the strategies is necessary.
Then pray for good fortune and success!
While many limited-life foundations have targeted late-year support for some of the organizations they have supported prior to and during the spend-down years, none have done so with the laser-like focus, generosity, and persistence that the S. D. Bechtel Jr. Foundation has. By formally establishing an Organizational Effectiveness team of program officers, and creating a “Resiliency Guide” to keep the foundation staff’s attention on the foundation’s critical obligation to fulfill its role of strengthening recipient organizations’ capacity and resiliency, Bechtel raised that obligation to the highest possible level of attention.
Give yourself plenty of time to plan the spend-down. Don’t fool yourself into thinking that you have all the time in the world to complete the responsible payout of your assets. You don’t! What about the organizations to which you have contributed? Will they be able to survive when you exit from your role as donor? Spare no effort to prepare them for the day when your financial support will cease. That means ensuring that they have learned how to raise money from other donors. Create a trajectory of gradually declining support over multiple years. If your practice was to start new organizations or to provide a substantial proportion of an organization’s funding, such a slowly diminishing schedule of support is all the more essential to help recipients learn how to compensate for the absence of your support.
Despite all the alarm bells from those with an ideological ax to grind, the most important thing to understand about the prospect of creating a permanent foundation is that the future is not a hostile and dangerous terrain. It is possible—indeed, it is not at all unusual—to create a lasting institution that remains faithful to the vision, values, and purposes for which it was created. However, to achieve that goal, it is crucial to spell out, as precisely as you and your lawyer can, the areas on which you do and do not wish your philanthropic successors to focus. These nine guidelines should be helpful:
1. Embody your intentions in the founding legal document creating the foundation and in a letter you send to your trustees and executor of your estate. Make it as specific as possible. On the other hand, if, like Andrew Carnegie, you wish to grant your trustees some flexibility to adapt the foundation to future needs, you could follow the example of the letter he sent, quoted at length in Chapter 6, in which he explicitly gave his trustees “full authority to change policy or causes” as they saw fit, and assured them that “They shall best conform to my wishes by using their own judgment.”15
2. Commission a video recording of you speaking directly to your successor trustees, in which you spell out your philanthropic intentions, why they are important to you, and what you’d like the boundaries of the trustees’ grantmaking to be. James B. Duke, the donor/founder of Duke University and The Duke Endowment, required that his Trust Indenture be read aloud annually at a meeting of all of the trustees. You might require that your video be viewed annually in a meeting assembled for that purpose.
3. Think about the role you would like your family to play in your foundation—your spouse, your children, if any, and your grandchildren. In doing so, consider the alignment of their interests with yours.
4. Consider carefully the variety of structures that are available for creating your foundation.
5. Recruit and appoint a trusted attorney who is knowledgeable about laws regulating nonprofits and foundations as well as tax policies affecting exempt organizations.
6. Learn about the alternative structures that could define the governance of your foundation. Are you satisfied with one governing board of trustees with the power to select their successors in office? Perhaps you should consider a two-tier governance structure with a small group of carefully chosen members of the foundation corporation, who will have the power to select and terminate the trustees of your foundation. Perhaps you will wish to qualify your foundation as a supporting organization of the university you attended or of any other nonprofit institution with which you have trusting relationships, which will enable you to reduce the number of logistical chores you and your successors will have to perform if your foundation is a freestanding corporation or trust. You should seek the advice of an attorney who specializes in the practice of nonprofit and foundation law.
7. Recruit and appoint foundation trustees whom you trust, who share your values, and on whom you can depend absolutely.
8. Recruit and appoint at least two experienced practitioners and/or academic experts from the fields of nonprofit organizations in which you have primary interests.
9. Recruit and appoint at least two experienced businesspeople with knowledge about financial management, investment policies, and strategic and business planning.
These principles apply regardless of the kinds of goals a foundation may embrace and regardless of the ideology with which it is founded. My recommendations for structuring a foundation are almost the same, with one major exception, as those advanced by Adam Meyerson, president of the Philanthropy Roundtable, in an essay he wrote for the Wall Street Journal. I have made my disagreements with Meyerson clear in earlier chapters, but his guidance here is nearly unassailable:
To avoid such problems, donors—whether large or small—need to take concrete action to safeguard their philanthropic principles:
Clearly define your charitable mission. Write it down in your founding documents. Add a long written or oral record about your likes and dislikes in charitable giving.
Choose trustees and staff who share your fundamental principles. Family members, friends, and close business associates such as lawyers, bankers, and accountants may not be good choices, unless you share the same worldview.
Separate your philanthropic interests from your interests in maintaining control of your company. Donor intent frequently suffers when the two are mixed, as happened at the Ford Foundation. [Note: Here, as I explained in Part Two of this book, I disagree with the reference to the Ford Foundation, but the caution against mixing business and foundation concerns is sound.]
…
If you do establish a foundation in perpetuity, create strong procedures for electing future trustees who share your principles, and make respect for donor intent part of their fiduciary duty.16
In this quotation, I have omitted a passage with another bit of advice, which I cannot endorse: “If you establish a foundation, strongly consider a sunset provision, perhaps a generation or two after your death.”17 As I hope this book has shown, there may be a few good reasons to follow that advice under certain circumstances, but there are also many excellent reasons to ignore it. Any perpetual foundation whose donor heeds Meyerson’s final recommendation, along with the other guidance I have offered in this chapter, has little to fear and much satisfaction to gain from bestowing a lasting gift on future generations.