Accompanying our recently published research on the approaches of limited life foundations, CEP produced case studies of three of the foundations featured in the report, titled A Date Certain: Lessons from Limited Life Foundations. Here, we share the second of the three cases, on the Lenfest Foundation, an independent foundation in Philadelphia, PA that is committed to improving the educational and workforce development outcomes for the children of Philadelphia. The foundation plans to spend out its $82.8 million in assets (as of 2016) by 2026.
You can download the full case studies here.
Why the decision to spend down?
Executive Director Stacy Holland explains that the decision to spend down stemmed from the donors’ wishes to help Philadelphia youth obtain the necessary skills needed to enter the workforce — and to use the remaining endowment to make a difference within a finite period of time. The donors also have a desire to see, while they are living, the positive impact of their wealth on the lives of children, Holland says.
How has the foundation approached the process of spending down?
The foundation was originally established in 2000 with the intention of spending down but with a flexible time frame. Giving was donor directed, and so funding went to many different areas, Holland explains. But in 2013, donor Gerry Lenfest decided to reinvest $100 million in the foundation with the specific goal of focusing impact on the youth of Philadelphia. And so, at this time, the foundation was re-funded and given a new focus. A new, independent board and chairman were appointed, who then identified a flexible, 10- to 15-year time frame for the spend down.
Since the beginning of “the new Lenfest Foundation,” as Holland calls it, the foundation is moving forward with a spendout date of 2026. The date is flexible because “we’re not necessarily convinced that it’s going to take a fixed number of years to accomplish what we want to accomplish,” Holland says. In the first year after this decision was made, Holland explains that the foundation devoted its energy to “tweaking our strategy and really building an infrastructure to distribute the funding using a co-creation strategy.”
At this point in the arc of the spend down, the foundation is focused on identifying organizations to support and building its governance and decision-making processes, Holland says. Holland envisions that the highest point of the foundation’s giving will come in the next few years, once the foundation has a portfolio in place and “will be working with those individual investments and/or grantees to understand what’s happening, and bring support as needed.”
After this period, the foundation will “ramp down incrementally with grantees, and then begin slowly rolling off,” Holland says. During these “out years,” Holland says a large focus will be sharing evidence about best practice and strengthening the capacity of the foundation’s grantee network. “We want to say, ‘This is what we learned; these are the types of practices that really help young people thrive,’” Holland says. “Our goal is to embed those lessons in as many systems and other investors as we can.”
How is the foundation approaching its relationships with grantees in the context of the spend out?
According to Holland, as a spend-down foundation, Lenfest owes its grantees “transparency, honesty, and a very clear sense of curiosity about their work, as well as serving as their champion and helping to connect them to future funders.”
What legacy does the foundation seek to leave after its doors are closed?
Holland says the foundation’s legacy will be to positively influence the education, youth development, and workforce development fields and communities by embedding new practices and strengthening organizations that provide these services. The foundation seeks to achieve this goal by leaving behind organizations that have leaders and staff with increased knowledge, skills, and abilities.
As a key part of its legacy, Holland says that the foundation is also seeking to partner with and influence the work of other foundations and donors who can carry on the work when its doors close. The goal “is to potentially cultivate the next generation of philanthropists…and co-create projects together so that they can pick up where we left off,” Holland says. By working with other philanthropists in the community, the foundation aims to combine its intellectual and financial resources to improve outcomes for children. In addition, Holland explains, the foundation can share its lessons learned with the goal of influencing the new generation of philanthropists.
What advice would you give to other funders in the process of spending down or considering the decision to spend down?
From her experiences thus far into the process of spending down, Holland stresses the importance of considering how resources can be uniquely used, and of being willing to play a catalytic role,
if possible. “Spending down gives you the flexibility and urgency to stimulate different thinking about the problem you are trying to solve,” she says.
In addition, Holland stresses the need to be in constant communication with the board. For other foundation leaders who are considering the prospect of spending down, Holland recommends: “Go into this spend down with a curious mindset and one of co-creation with your board. If you do that, you will really create something that’s unique and impactful for your community.”
Ethan McCoy is senior writer – development and communications at CEP.