Foundations should increase spend-down rate
A New York Times story on the two types of foundations, one that lives on in perpetuity and the other that's set up with the intention of giving away all of its money within a finite period of time. It gives the example of the Aaron Diamond Foundation and quotes former Senator Bill Bradley, a consultant at McKinsey & Company's nonprofit division, and a managing director at the investment firm, Allen & Company:
"In fact, if foundations step up to problems now and fund solutions at a faster spend-down rate, there will be a lessened future burden," he said, "and it will be less costly in both a social and monetary sense."
...The [Aaron Diamond] foundation's mandate to spend its financing in 10 years was made in 1987; it closed in 1997. Some $220 million and 2,290 grants were dispensed for AIDS research, as well as arts and education in the city. "The foundation is gone," Mr. McGee said, "but the legacy lives on in breakthrough basic scientific knowledge about AIDS/H.I.V., which has spurred further research, and critical steps accomplished toward a cure." The breakthrough occurred under the directorship of Dr. David Ho, who with colleagues at the Aaron Diamond AIDS Research Center in Manhattan developed the "cocktail" drug treatment, or protease inhibitors, for AIDS patients.
On the opposite side are most foundations:
The Ford Foundation, however, is a believer in a long foundation life. "Preserving the option of long-term foundations is important, as new foundations won't necessarily attend to those ongoing problems" like income and racial inequality, which need lasting attention, said Susan V. Berresford, the president of the Ford Foundation. "A foundation that is long-term can accumulate an expertise in a set of problems."