Spending Down Well - Lessons in the Art of an Elegant Exit
Gates Foundation just announced it will spend down and close by 2045 (more than doubling their spending rate). And, they’re not the only ones responding to the state of the world with this kind of move.
Whether you’re excited, nervous or skeptical, it’s a moment to ask: What does it take to exit well in philanthropy?
‘Spending down’ (disbursing a foundation’s assets within a predetermined timeframe rather than investing to continue grant making in perpetuity) can be a powerful approach. It allows for concentrated impact and can be a way of recognising the urgency of societal issues. However, done poorly, a spend-down can create dependency, distort funding ecosystems, and leave behind a vacuum.
At I.G., we have spent years guiding clients through developing spend-down strategies and programme exit plans that prioritise equity, sustainability, and resilience (in fact, our #FixTheFlow Fellowship has en entire module on ‘elegant exits’.
Drawing from our work and observing best practices in the field, I wanted to share some strategies that work best for an ‘elegant exit’.
1. Simplify Grantmaking Processes
Spending down usually requires an increase in grant making pace and scale, and this means complex procedures can become bottlenecks. You need to find ways to scale grants and impact without scaling operations and bureaucracy - not just so your Foundation doesn’t balloon, but so the costs of engaging with you for your grantee partners don’t go up. Adopting trust-based or less restrictive philanthropy approaches, and authorising giving based on high level strategies and a spirit of experimentation and learning (rather than micromanage-y contracts or top-down directives) can improve efficiency, impact and scale.
For example, The Compton Foundation embraced trust-based practices during its spend-down phase, creating deeper partnerships and more effective processes
.
2. Invest in Community Ownership and Infrastructure
Supporting communities in building and owning assets such as land, housing, and endowments ensures that the benefits of philanthropic investments endure beyond a Foundation’s lifespan. And, often, can be a form of redistribution or even reparations by creating community assets and infrastructure for historically marginalised groups.
For example, Lankelly Chase Foundation in the UK committed to redistributing its assets to community-led organisations, empowering them to sustain and expand their impact.
3. Align Investments with Impact
Spending down can be practically challenging when your investment returns are outpacing your grant making. Whilst many impact investments can now show returns that are near market rate, Foundations that are spending down have the freedom to prioritise short term impact over long term returns, and can therefore can enhance their impact by aligning their endowment investment strategies with their mission, prioritising social and environmental returns.
For example, Esmée Fairbairn Foundation in the UK has integrated impact investing into its strategy, ensuring that its endowment supports its charitable objectives.
4. Support Movements and Ecosystems
As we’re seeing very clearly around the world right now, social progress is not permanent, and it can backslide. Funding movements (and movement leaders), policy and campaigning work, and infrastructure building rather than just direct delivery of programmes can sustain impact and ensure the resilience of the institutions, democracies, cultures and economies that are needed to protect progress beyond the lifecycle of your funding.
For example, Atlantic Philanthropies focused on building robust health and education systems, leaving a legacy of strengthened institutions and policies behind when it closed.
5. Target ‘System Health’ not ‘Mission Accomplished’
Setting realistic objectives that can be accomplished within the spend-down period is important, and whilst (for example) ending a disease might be tangibly ‘final’, most social and environmental issues are more complex and don’t have a neat ‘end’. Instead, the goal should be to get systems to a healthy, resilient, self-reinforcing place (with virtuous rather than vicious cycles) that can function without your funding, or where ongoing funding, management or sustainability is resourced in other ways (e.g. government adoption).
For example, The Diana, Princess of Wales Memorial Fund operated as a spend-down foundation until its closure in 2012, and was instrumental in the Ottawa Treaty of 1997, which banned the use of anti-personnel landmines. Rather than attempting to eliminate landmines single-handedly, the Fund focused on strengthening international norms and supporting systemic change that would outlast its own operations.
6. Preserve and Share Knowledge
When a foundation closes, the risk isn’t just the loss of money - it’s the loss of knowledge, networks, and lessons learned. Spend down ALL your assets, not just funding. This means: harvest your lessons, publish your missteps, and ensure your knowledge and data doesn’t disappear when your Foundation does. Document your successes and failures. Share your research. Publish your frameworks. Archive your story so others can build on it. Empower the whole sector, and the funders who will outlive you, to not have to reinvent the wheel or start from scratch.
Example: Edward W. Hazen Foundation published comprehensive reports on its learnings when it closed, and the Atlantic Philanthropies report linked in point 4 above is also reflective of this practice. Initiatives like 360Giving in the UK, which enables Foundations to publish all their grants data in a standard format, are also good examples of this kind of ‘open philanthropy’ approach. .
7. Co-Design Your Obsolescence
Don’t just ask, ‘how can we make grantees less dependent on us before we close?’ Instead, explore the provocation: ‘what would a world look like where none of us are needed anymore?’, and crucially, ask the communities you are working with what they consider the actual risks to be (so much of this work is done based on assumptions, but often the concerns are more nuanced than simply the financial component). Work alongside communities to design for systemic change that makes your exit not just manageable, but transformational, for the field.
For example, The Quixote Foundation deeply involved its grantees in the planning of its exit strategy, including supporting grantees to determine their own disbursement timelines and next steps. And The Lillian Holofcener Charitable Foundation transferred its remaining assets to the Baltimore Beat, a Black-led newspaper, in close collaboration with the community, focussing on their autonomy and sustainability.
8. Prioritise Staff Wellbeing and Transition Support
A spend-down isn’t just a programmatic shift, it’s a deeply human one. Often, you’re asking your team to end relationships, programmes, and even entire careers that they’ve poured themselves into for years, if not decades. At the same time, you may be increasing the pace and volume of their work, and putting pressure on the quality of it. And often, you’re asking them to begin operating in a way they haven’t been trained for (planning for obsolescence and targeting ‘system health’ when they’ve previously been operating on longer-term thinking can be hard, and require different skills). Honour that reality. Provide space for care, closure, and sharing of lessons as you go. Design your spend-down in a way that respects not just the mission, but the people who’ve delivered it.
For example, Stupski Foundation implemented comprehensive support for its staff during its spend-down, including career development resources and emotional support services. And, I.G. Advisors ourselves hosted internal ‘communities of practice’ and provided 1:1 coaching for the staff of a major US Foundation across its exit planning in 2023 and 2024.
At I.G., we are committed to guiding organisations through this complex process, ensuring spend-down strategies are equitable, sustainable, and resilient. We’re here if you want help to think this through for your own organisation, or join our movement of resource activists in the #FixTheFlow Fellowship exploring this alongside other ways they can make their practice more equitable.