“[T]ake the money and spend it now” – Bill Gates
What Gates’ spend down means for every foundation
I’ve spent nearly a decade advocating for foundations to spend down their endowments—to give boldly to the communities they exist to serve—with the understanding that the problems we face today demand the full weight of today’s resources, not a trickle of grants stretched over decades.
So when I heard the news about the Gates Foundation committing to spend down its entire $200 billion endowment, while Gates himself pours the vast majority of his personal fortune into the effort, I wanted to stand up and cheer.
“There are too many urgent problems to solve for me to hold onto resources that could be used to help people. That is why I have decided to give my money back to society much faster than I had originally planned.”– Bill Gates
This is a big deal. Not just because of the scale of the money involved (though, let’s be honest, to have one of the largest foundations in the world take this step provides a staggering amount of resources), but because of what it signals to the rest of our sector: Perpetuity is not the only way. In fact, it’s mismatched to the needs of now.
Impact > Perpetuity = The New Legacy
Gates decided it was more important to save the lives of millions of children around the world today than to have his foundation last forever.
Sunsetting the Gates Foundation “allows us to do a lot more because we’re not trying to steward our money for some weird legacy thing. If we were trying to be a forever foundation, instead of being able to spend $9 billion a year, we’d have to drop down to spending like $6 billion a year.” – Bill Gates
That’s the power of a spend-down: You get to break the fake rule of prioritizing perpetuity over humanity.
Perpetual foundations operate in a 5% straightjacket—they give just enough to maintain tax status while hoarding the rest for “the future.” Worse yet, the other 95% of an endowment is all too often invested in vehicles that work at cross purposes to a foundation’s mission (think weapons manufacturing investments in the portfolio of a gun violence prevention foundation, real estate speculation in the investments of foundations focused on the unhoused, and more).
But when you spend down, you can make $9 billion bets instead of $6 billion ones. You can fund organizations at the scale they actually need to transform systems, not just scrape by. And you can be sure that all of the endowment is having the intended impact.
What about providing for the needs of the future? Well, Gates reminds us that “we’re not running out of rich people. There will be more rich people…” and that means there will be more foundations in the future.
1-2% Increases Won’t Cut It
As many in our sector are patting themselves on the back for increasing giving by a percentage point or two, the Gates’ announcement forces us to reconsider if that’s really the best we can do.
Trustees, CEOs—can we celebrate this development from a place of courageous self-reflection and engage with our organizations to honestly explore: What is the maximum increase we can make personally and organizationally to meet what this moment demands?
Are we ready to do what it takes?
The Invitation
“I do think good examples influence other people. I think the rich people today should do more philanthropy, and we have some examples of that. And I think the rich people 20 years from now should do more in philanthropy.” –Bill Gates
I’m so grateful Gates has provided this opening for our sector to take an honest look at if, how, and when our foundations can spend down. And if not with our full endowment, then how much can we each move right now?
The problems we’re facing today will only get harder to resolve the longer we wait. Let’s celebrate this sea change by funding solutions like we mean it.
With hope,
Glen
P.S. If you’re considering a spend-down and want to talk through the how (or the why), hit reply. Let’s make it happen.
Resources
Check out the Enough Project, a growing movement where the wealthiest among us are asking what they need, and the rest, they give away.
Read about how Marguerite Casey Foundation is tapping its endowment to meet the moment.