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4 minute read
While sunsetting foundations are a small portion of foundations, there are many strategies other foundations can apply to their own organizations. Adopting spend-down strategies and focusing on grantee sustainability can help charitable organizations create organizational resilience and programmatic support for the long term.
How spend-down foundations and grantmakers work
Spend-down foundations have a finite lifespan determined by the founders or governing boards. These time-limited foundations operate with the deliberate intent to allocate their entire endowment within a set timeframe, typically within a specific number of years. This time-bound approach necessitates a focused, accelerated deployment of resources to maximize community impact during the foundation’s existence.
Why should foundations choose the spend-down grantmaking strategy?
Foundations embracing the spend-down strategy are driven by a commitment to addressing urgent societal issues with a sense of immediacy. The decision is often influenced by a belief that real change requires concentrated and sustained efforts over a defined period.
Spend-down foundations aim to make a significant impact within their chosen areas of focus, acknowledging that some challenges demand swift action to effect meaningful change. With this approach, foundations reassess their grantmaking strategy, capacity building grants for nonprofits, and community goals.
How all foundations can set grantees up for long-term success
Sunsetting foundations take risks based on their vision and timeline, but there is a lot that all foundations can take away from their practices. Spend-down foundations are leaders in resourcing grantees for sustainability and success.
They pursue bold, outgoing actions to open opportunities for grantees –– including capacity building grants or capacity building resources like Catchafire –– to ensure transparent communication, collaboration, and trust with grantees. Executing a spend-down strategy successfully involves not only disbursing funds but also strategically positioning grantees for sustainable success beyond the foundation’s tenure.
Foundations can reexamine their practices and determine how they can redistribute wealth and power, particularly to underinvested communities. At the same time, they can examine how to resource nonprofits and communities for both immediate and long-term success.
All foundations should consider: How can they go beyond the grant? How can they contribute to healthy community organizations that thrive beyond their own grantmaking process?
Foundations committed to long-term impact can consider the following key elements:
Capacity building grants for nonprofit organizations
Invest in grantees’ organizational capacity, empowering them to continue their mission independently and sustainably. This may include leadership development, strategic planning, and infrastructure enhancements.
Collaboration and networks
Encourage collaboration among grantees and facilitate the formation of networks. Shared resources and expertise can extend the impact of individual organizations, creating a collaborative ecosystem that outlasts the foundation’s existence.
Knowledge transfer
Document and share best practices, lessons learned, and institutional knowledge. Establish mechanisms for knowledge transfer to ensure that grantees inherit the insights and strategies that contributed to the foundation’s impact.
Financial planning
Work collaboratively with grantees to develop realistic and sustainable financial models. This may involve diversifying funding sources, establishing earned revenue streams, and fostering a culture of financial resilience.
In embracing the spend-down strategy, foundations have the unique opportunity to leave a lasting mark on the causes they champion, creating a blueprint for effective philanthropy and impact that resonates for years to come.
Practical advice for foundations planning an exit from philanthropy
For foundations contemplating a spend-down strategy and the subsequent exit, several practical considerations can guide the process:
Catchafire can support your grantees: community capacity building
Whether or not you are a sunsetting foundation, a grantmaker, or in corporate philanthropy, Catchafire serves as a resource to help you scale capacity building resources and drive impact for your grantees. It can be difficult and challenging to plan out your spend-down strategy –– but you don’t have to do it alone. Catchafire can continue to support nonprofits and their vital community work for the long-term.
With access to Catchafire, your grantees receive:
- Knowledge transfer: We provide professional development and one-on-one coaching on topics like financial planning, marketing, and organizational strategy.
- Collaboration and networks: We host monthly trainings and events, as well as skill-building opportunities, peer-to-peer learning, and networking groups with other nonprofit leaders. We also host groups for executive directors and BIPOC leaders.
- Capacity building for nonprofits: Access to thousands of volunteers to provide project support to grow in directions important to the nonprofit.
- Financial planning: Our team of experts have designed project templates for every need, like business plan reviews, organizational goal setting, and program assessments that strengthen the financial position.
Some grantees reflect that the opportunity to access Catchafire created more change than receiving typical grants:
“I realize now that I would rather take Catchafire over a grant. The projects that I have gotten done have resulted in much more value in comparison to that grant.”
Payal S.
Founder and Executive Director Saahas for Cause
Capacity building examples: Hellman Foundation
The Hellman Foundation has a ten-year spend-down agenda, and partnered with Catchafire to provide additional capacity building support to their grantees. Volunteers on Catchafire have created $1.5 million in nonprofit value, offering needed assistance to nonprofits dedicated to urban green space, health equity, and education.
“Catchafire has proven to be an invaluable resource, playing an important role in our capacity-building efforts and supporting our recently announced strategic spend-down plan. The platform helps our nonprofit partners build their long-term sustainability so they can focus their efforts on meeting the immediate needs of communities in the San Francisco Bay Area.”
Annie Ulevitch
Executive Director, The Hellman Foundation
Request a demo of Catchafire’s organizational capacity building program
As you assess your approach to nonprofit capacity building, request a demo and speak to a member of our team today. Learn more about Catchafire’s suite of capacity building resources and how we can help you scale your grantmaking investment.
