Friday, May 1, 2020

Battle Over Foundations Spending Endowment in Crisis in Washington Post

The Washington Post took a look at the age old battle of whether Foundations should dip into their endowments during a deep recession. They feature an ongoing battle at George Soros' Open Society Foundation where employees are angered that the Foundation is apparently not dipping into its endowment but using messaging to sound like it is.

From the Post: "The dispute between staff and leadership at Soros’s foundation touches on a broader discussion in America’s philanthropic community, where some industry leaders are calling for foundations with large endowments to ramp up spending in response to the covid-19 crisis. IRS rules require foundations to spend at least 5 percent of their assets annually, and many foundations hover around that spending figure, opting to preserve savings and endowment money.

On April 2, nine philanthropic membership and advocacy organizations published a joint statement urging foundations to boost spending this year and use endowment money if necessary.

“What nonprofits need most right now is more money. . . . Unprecedented challenges require unprecedented responses,” wrote the leaders of organizations including the Council on Foundations, the Center for Effective Philanthropy, and the National Committee for Responsive Philanthropy."

Philip Hackney

https://lawprofessors.typepad.com/nonprofit/2020/05/battle-over-foundations-spending-endowment-in-crisis-in-washington-post.html

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Comments

It's important to recall that the permissible range may be small. While private foundations generally must spend 5% of their assets annually, in about 19 states the 7% presumption of imprudence rule may apply, at least if the foundation's portfolio does constitute true endowment.

Posted by: Harvey Philip Dale | May 2, 2020 8:07:51 AM

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