Setting a Time Horizon

This guide discusses some of the main ways to evaluate and set a time horizon for
giving. Written for established and emerging philanthropists, it looks at four main options: giving while living, defining an endpoint to a particular philanthropy, endowing in perpetuity, and other approaches.


How long should a giving program or foundation last?

Is it best for donors to distribute all their philanthropic resources before they die?

Should a giving program or foundation be established with a defined goal and endpoint?

Or is it most effective to endow a foundation so its giving can be ongoing?

Many donors consider the time horizon of their philanthropy only after they have been giving for some years. Perhaps they created a private foundation thinking that endowing in perpetuity was not only the norm, but the only way to set things up. Perhaps their lawyer prepared the papers and they signed them without even being aware they had a choice. Perhaps they are reconsidering their positions after learning about respected philanthropists, like Bill and Melinda Gates, who plan to spend all their resources within a limited time. Perhaps they are simply undecided.

In any case, both new and experienced donors have become far more thoughtful about the time frame of their giving. And setting a use-by date for philanthropy has become a common consideration. Conscious philanthropy often pays dividends for donors. And effective giving usually relies not just on how we decide to give, but for how long.

All of which begs another question: Where’s the time horizon for your philanthropy?

Part of our Philanthropy Roadmap series, this guide discusses some of the main ways to evaluate and set a time horizon for giving. Written for established and emerging philanthropists, it looks at four main options:

Giving while living
Defining an endpoint to a particular philanthropy
Endowing in perpetuity
Other approaches

(A brief summary of the advantages and drawbacks of these options can be found at the end of this guide.)


Setting a time horizon is a decision that logically follows others in the philanthropic journey. Determining your values and motivation, finding your focus and approach, and thinking about how you will evaluate the results of your giving all have a bearing on whether you want to make your giving more immediate (and finite) or ongoing. Our other guides—namely Your Philanthropy Roadmap and Knowing Your Motivation—may give helpful perspective and context on this process.

A Few Figures to Start

A look at the numbers

The optimum lifespan for a foundation or giving program is shaped first by the values and goals of the donor. That said, understanding general trends often lends valuable perspective to the decision-making process. In 2009, the Foundation Center released a survey of 1,074 U.S. family foundations.

Key results

Most family foundations (63 percent) seek to operate in perpetuity.

A small segment (12 percent) plan on spending down their endowments or have decided to set an endpoint on their operations.

Twenty-five percent of all foundations surveyed say they are undecided—either because they haven’t discussed the issue or because there is uncertainty about the family’s future involvement in the foundation.

Most family foundations (55 percent) don’t specify either perpetuity or lifespan limits in their founding documents.

Smaller, newer family foundations are more likely to set a limited time horizon on their giving—three times more likely if the main donor is alive.

In this guide, we explore four major options as you begin to consider—or re-consider—the time frame of your giving.

It’s a lot of work when you are over 65 to start a giving program. It doesn’t happen overnight. If you want to give it away, think about giving it away while you are alive because you’ll get a lot more satisfaction than if you wait until you’re dead. - Chuck Feeney, Founder of the Atlantic Philanthropies

Giving While Living

Giving While Living

For some donors, a sense of urgency impels them to use their resources now. They want to create social change to improve present conditions and address immediate problems. Many of these highly engaged donors think in terms of making big investments to achieve scale and garner significant social returns.

Giving while living also protects donor intent from what some perceive as the inevitable drift from a founder’s focus to the priorities of subsequent stewards.

In short, the approach offers control, the opportunity for hands-on involvement and the flexibility to bring giving to scale to increase impact. Donors who have chosen this path also report great personal satisfaction.

Of course, the challenges should not be underestimated. Giving on a deadline can require complex planning and timing, and can increase the need for collaboration. The ability to make sustained, long-term commitments to an ongoing area like education is, by definition, limited.

Funders who favor giving while living answer such criticism by pointing out that the needs of future generations are best addressed by future donors who possess relevant knowledge as well as resources.

The Atlantic Philanthropies is set to become the largest foundation in history to spend down its endowment when it closes its doors in 2020. John Healy, Atlantic’s director of impact assessment, says the foundation—created by entrepreneur Chuck Feeney—prefers to spend its endowment on the problems of today, rather than “pretend that we can deal with the problems of future generations.”

And Mr. Feeney himself had an interesting insight on the effectiveness of the approach. When the market dropped precipitously in 2008, Mr. Feeney told The New York Times, “Just think, if wealthy people had given away more of the money they had over the last decade, they wouldn’t have lost it.”

Defining an Endpoint

Defining an Endpoint

Some philanthropists use an aggressive results-oriented approach to carry out their giving strategy. For them, giving is most effective—and most likely to pull others in to leverage funds— when there’s a defined goal to be achieved by a certain date.

The strategic thinking behind this limited time horizon often includes the following points:

Many social problems are most effectively fought by committing as much funding as possible while the issues are current and relevant.

This early and intense funding can have a more decisive impact than smaller long-term grants from foundations that protect their endowments.

Problems change over time, and a foundation endowed in perpetuity may not be flexible enough to work on new and unpredictable issues as they arise, due to outdated missions.

It’s worth remembering, however, that the management demands on such an approach can be considerable. The deadline for ending giving, while seen by some as a great advantage, can become cumbersome if it is artificial. Addressing large social problems is rarely straightforward. And donors who want to achieve results in a limited amount of time may find they have underestimated the challenge.

Still, some philanthropic advisors tell their clients that the social investment they make through grants has far greater returns than the potential financial earnings of the foundation’s endowment. Paul Jansen is one of the founders of the nonprofit practice of McKinsey & Co. and remains a director emeritus of the organization. He says that for foundations to give only the five percent minimum per year represents “a tremendous cost to society.” Foundations’ endowments exist, he argues, to do social good. It’s just a matter of when the benefit happens; in his opinion, the sooner the better.

These new-style donors think of projects—multifaceted, multipronged efforts that involve significant capital— so they are more likely to invest capital, not just income. Many of these newer donors also have a lot of confidence. They’ve made a fortune, and they believe that the next generation will make its own. - Melissa Berman, President and CEO of Rockefeller Philanthropy Advisors

Endowing in Perpetuity

Endowing in Perpetuity

The most popular time limit for philanthropy is no time limit at all. Here, we look at some of the major reasons why:


One of the strongest arguments in support of ongoing foundations is that they can create unity and continuity for philanthropic families. Encouraging engagement down the generations and sharing values and responsibilities are key goals for many families who give.

Philanthropic Capital

Endowed foundations create the “capital market” for nonprofits— an ongoing source of potential funding. Typical investment policies of foundations in perpetuity call for spending a small amount of the endowment and investing the rest. This strategy, often based on the tax code’s minimum payout of five percent for private foundations, not only provides a capital market, it literally grows the amount of money that is given over the long-term.

Development of Staff and Institutional Expertise

Some foundations use their endowments to invest in the knowledge and expertise of their staff. When foundations have more resources to devote to the size and quality of their staff, they may be more likely to find smaller or newer grassroots organizations to fund that might otherwise have gone unnoticed.

Long-term Perspective and Presence

Foundations that grow through time and examine the problems of the world from a long-term perspective can build long-lasting institutional relationships and maintain ongoing programs to meet ongoing needs. (Students, for example, are likely to require college scholarships for the foreseeable future. Funding such scholarships provides a long-term service to society.) It’s interesting to note that in the U.S., many of the largest foundations take a long-term approach to philanthropy.


Donors who create foundations in perpetuity are investing in future philanthropic capability. Their investment/spending policies not only guarantee resources will be available in years to come, they underline the concept that future giving is just as important as current philanthropy.

Personal Legacy

There remains a power and a romance about leaving a personal legacy that serves others. Such ongoing philanthropy does more than provide a way for donor names to be remembered; it also creates visible examples of generosity that can inspire other donors to follow suit.

Other Approaches

Other Approaches: Limited term or perpetuity?

For many donors considering their time horizon, the choice appears that stark and simple. But this kind of “either/or” thinking doesn’t suit some donors. These innovators combine aspects of both options or else find entirely different ways to answer the time horizon question. Here are a few examples to get you thinking:

Social enterprise investing offers limited-term programs that often support ongoing socially responsible businesses. The boom in micro-finance is an indication of the lasting impact such short-term philanthropic investments can have.

Foundations or giving programs can adopt a flexible strategy around their time horizon status. They can also be flexible around their approach to investment and spending. They can even plan for future reviews of their timeframe for giving. (See the Rockefeller Brothers Fund case history on page 23.)

Donors can choose to combine aspects of different time horizon approaches. For example, a large foundation in perpetuity can announce they will be dedicating a certain amount of funding to a certain focus area over a limited amount of time. This provides the flexibility to respond to urgent needs in a concentrated timeframe while maintaining the overall status of an ongoing foundation.

Foundations may decide to merge. This move technically ends their individual entities, but continues to work towards their goals in a new organization, which itself is often a foundation in perpetuity. The Silicon Valley Community Foundation (2011 assets $2 billion) became one of the largest community foundations in the country when the Community Foundation of Silicon Valley and the Peninsula Community Foundation merged in 2007.

Donors can collaborate with other donors and giving institutions to reach their goals in the timeframe they choose. Giving through a community foundation or through a charitable giving fund can offer the ability to create separate giving programs in perpetuity or with a limited term.

Moving Forward

Moving Forward

Philanthropists are often experienced decision-makers. So it’s natural for them to ask: What are my options? Once they have a satisfactory answer to that question, they usually seek reliable information on how to decide wisely among their options.

To this end, personal advisors and professional philanthropic advisors can be useful. Still, there is some information only the philanthropists themselves can provide.

When it comes to setting a time horizon on philanthropy, the most important question hinges on personal values. What is the purpose of your giving? Once donors know the answer to that question, it becomes much easier to decide how long a foundation or giving program should last.

For billionaire Warren Buffett, knowing his philanthropic purpose means he doesn’t need to create a foundation or an endowment. In his giving pledge letter, he wrote: “I want the money spent on current needs.” Many other philanthropists will see their purpose differently and will choose to create a giving vehicle without a specific endpoint so they can address long-term challenges.

In the end, the time frame for philanthropy depends on the problem or problems a donor seeks to address. In that sense, the best time horizon will always be set according to a donor’s own motivations and goals.

Option Overview

Four Options: A Quick Summary


Giving While Living


  • Personal involvement—opportunity to apply donor skills and experience
  • Donor intent protected
  • Fast deployment
  • Big investments with big potential
  • Concern about burdening family with inheritance and/or philanthropic duties


  • Complex timing and planning
  • Harder to collaborate
  • Tends to favor big nonprofits
  • Harder to take the long view
  • Will new giving sources emerge?


Defined Endpoint


  • Clear goals and timeline
  • Clear information for nonprofits
  • Timing can relate to issue, not donor
  • Good structure for collaboration


  • Underestimating challenge
  • Artificial deadlines
  • Complex management


Endowing in Perpetuity


  • Allows for evolution
  • Principal can support granting
  • Forms the ongoing “capital market” for nonprofit sector
  • Structured for very long-term efforts


  • Principal not fully utilized
  • Institution can “calcify”
  • Donor intent may drift


Other Approaches


  • Elements from perpetuity and limited-term options can be combined
  • Collaborations and even mergers offer new ways to achieve goals
  • An open approach to time horizon can lead to other philanthropic actions like social enterprise investment


  • Lack of certainty can affect grantees and donor partners
  • Personal and institutional legacy can be obscured in collaborations or mergers
  • Investments can suffer without a clear strategy