The Robert Bowne Foundation spends down

The Robert Bowne Foundation did not live to see 2016. And its executive is pleased.

One of the many consequences of the Great Recession was its effect on foundations whose endowments were heavily invested in a deteriorating stock market. For the Robert Bowne Foundation, the loss of over one-third of its funds forced it to consider spending down its remaining assets.

“The foundation's money had been invested pretty aggressively because they weren’t imagining a spend down,” said Lena O. Townsend, the foundation’s executive director. “The most we ever had was back in around 2000, and it was about $22 million. So when we lost so much money, we had a couple of choices. We could have not made any grants for a couple of years, because we always made more than the required 5 percent in grants, or we could just decide to spend down, because the organizations needed the money.”

Following discussions with board members – one of whom were relatives of the foundation’s founders – in the aftermath of the Great Recession, the foundation chose to spend down its remaining assets. Dec. 31, 2015, was selected as the last day of operations. Fortunately for some of their most cherished grantees, the move also led to more aggressive giving in targeted areas and ultimately helped the foundation realize some of its longest-held goals.

“(After deciding to spend down) we really just kind of ramped up what we were already doing. We spent a lot more money on the management capacity building and then we also spent more money on capacity building around literacy,” Townsend said. “We really, really ramped up a lot with professional development and technical assistance so that, once we closed, (grantees) would hopefully be able to find the resources they need and they’d be strong organizations.”

Edmund A. Stanley, Jr. established The Bowne Foundation in 1968 and named it in honor of Robert Bowne, founder of Bowne & Company, a financial printer located in lower Manhattan. Its work has always focused on supporting literacy initiatives, particularly in “out-of-school-time” education settings. The foundation spearheaded the Julia Palmer Library Development Project and the Afterschool Matters initiative. With its final grants, the foundation was also able to focus on supporting its grantees’ advocacy efforts and address what Townsend sees as a particularly stubborn challenge.

“It’s very hard for the advocacy organizations to get foundation funding because board members tend to believe that they can’t give money for advocacy, and basically you have to call it ‘education,’ you have to be careful. But you can give money for advocacy, but a lot of board members, in general, in foundations don’t really know that.”

There is great debate within the philanthropic community as to whether “spend-down” foundations, which choose to distribute all of their assets and then cease operations, or “in perpetuity” foundations, which live on perpetually by making grants from a percentage of their assets, better serve the foundation, its mission and the grantees they support. Spending down can allow foundations to expend their assets while relevant stakeholders – such as the patriarch of a family foundation – are still around to monitor the process. But they must also consider all the factors that come into play when choosing to run themselves out of business. Foundations held in perpetuity can leave a longer legacy, but may eventually make grants that drift away from the donor's original intent and dilute the impact of their original mission.

“I think this was definitely much more effective,” Townsend said. “(As an in-perpetuity foundation you) only have to give five percent per year of your worth, but if you’re only worth, say, $15 million dollars, that leaves you a small amount. It’s not really enough to be as effective.”

“We’re finally seeing things that we’ve wanted to see for years around advocacy,” Townsend added. We’ve been interested in advocacy for a very long time. … Now we’re actually finally seeing some change, in part because of our funding.”

The Bowne Foundation was very intentional about its spend-down process and kept its grantees fully informed and engaged. Grantees were told the end date five years ahead of time in a letter from the executive director. Selected grantees sat on a planning committee where numerous conversations were held about exactly how they should administer their final grants.

“We went back and forth. We were going to make smaller grants to more organizations and then we went in the middle and made kind of mid-sized grants to not quite everyone,” Townsend said.

Although the last day of operations has passed for the three-member staff, the foundation’s work will continue through some final, multi-year “legacy grants” awarded to organizations such as the Center for Sustainable Journalism (which will create a hub to house all of the research the foundation has had done), the Community Resource Exchange and the Center for Educational Options.

If one of your funders is spending down, Townsend offered a few suggestions. If you’re going to honor a foundation that is spending down, be sure to do it early on in the process, before its money is all gone. In addition, “hopefully the spend-down foundation will communicate with their grantees. If they do, you need to just keep track of what’s happening and see if they’re offering something that you need or something that you can benefit from.”