Since antiquity, philanthropy (meaning “love of humanity,” with roots in Greek and Latin) has aimed to make life better for people. Ancient Greek culture encouraged wealthy men to subsidize the costs of public spaces, such as temples and city walls, whereas ancient Egyptians believed giving food and clothing to those in need granted them a chance at the afterlife.

Fast forward to our modern era: In this country alone, according to Giving USA, philanthropy has become a $500-billion sector. And while the textbook purpose of philanthropy—to improve people’s quality of life and address fundamental societal problems—has not changed, there has been a growing conversation in recent years regarding exactly how to go about giving. Today, a small yet growing wave of grantmakers are exchanging old modus operandi for a bold approach that puts more resources into communities at an accelerated pace.

At the Mortimer & Mimi Levitt Foundation, we have joined the ranks of those who have decided that change can’t wait by becoming a spend down. Over the next two decades, we will dramatically ramp up support for strengthening communities through free, live music in public spaces across America by spending down $150 million in assets.

People come together for the Levitt AMP Sheboygan Music Series, which comes to life each summer at the town’s City Green in Wisconsin.

The Levitt Foundation’s decision to spend down emerged from recognizing the impact of our programs: By transforming underused public spaces into vibrant, inclusive gathering places that foster points of connection, like social bonding and bridging, Levitt venues and concert sites are building social capital in towns and cities, leading to more cohesion, better health outcomes, and increased resiliency and economic vitality within communities.

We asked ourselves: How much greater impact could be realized if we invested more in communities today, rather than maintaining a standard pace of giving? How could we better serve the changemakers on the ground, within communities themselves? Does change have to wait? In today’s culture as polarized as ours, can it?

A common trope is that society will inevitably become more calamitous—and when it does, only select individuals and institutions will be willing to solve these problems down the line. This mindset is often used to justify philanthropy’s general reluctance to give more today and save for decades to come. We believe the opposite: that the equitable and prosperous future we envision will arrive even sooner if we give more now, rather than waiting. Within the arts funding space, the Levitt Foundation stands at the vanguard; few arts grantmakers have publicly committed to spending down. Though, within the larger philanthropic ecosystem, there is a growing number of foundations across a range of sectors that have adopted this strategy—also referred to as spend up, spend out, limited-lifespan, or sunsetting.

While the concept can be communicated in numerous ways, the purpose behind it remains consistent: to bring more resources into communities now, setting the stage for a better future for everyone. Indeed, the spend down approach is defining a new era of philanthropy—one in which this bright future arrives sooner than later.

Giving to a Different Beat

The traditional foundation model is structured to exist in perpetuity (i.e., with no end date). The vast majority of foundations fall under this category, as, historically, most private foundations were endowed, or funded, to exist in perpetuity upon conception and thus have no set plans to stop existing. Additionally, in the U.S., a private foundation is legally required to only pay out a minimum of five percent of the value of its assets every year for charitable purposes, including operational expenses and grants—allowing philanthropies to grow their principal through their investments and to theoretically then have more money to give away in the future.

Many of the largest foundations in the United States, such as the MacArthur, Ford, and Rockefeller foundations, exist in this form. And yet, by holding on to principal gains for decades to come, the traditional foundation model may be unintentionally holding back communities. Spending down is a compelling alternative—one that entails disbursing a foundation’s endowment faster than the rate of return on its investments and within a strategically designated timeline. The Levitt Foundation gave away $20 million during the 20-year period of 2002-2021; in contrast, from 2022-2041, the Foundation will spend down $150 million to accelerate positive change and realize greater impact in communities.

Joining a Burgeoning Movement

Spending down is a relatively new philanthropic strategy, especially for family foundations like ours. According to the National Center for Family Philanthropy, only three percent of family foundations established before 1970 plan to spend down their endowments; this estimate puts the Levitt Foundation, founded in 1966, in smaller company. However, the tides are turning: Among family foundations created between 2010 and 2014, 19 percent are operating in sunsetting mode, reflecting a significant shift toward establishing foundations with fixed endpoints from the start. These more recent philanthropies join a growing number of long-established foundations, which are also choosing to spend down.

One philanthropic leader often credited with pioneering the spend down movement is the late entrepreneur Chuck Feeney, who, after deciding to devote his wealth to the service of humanity, founded  Atlantic Philanthropies in 1982. Twenty years later, Feeney’s vision of a better world drove Atlantic’s board of trustees to limit the foundation’s life to a fixed term. In 2020, Atlantic Philanthropies closed its doors, having given away its $8 billion endowment in grants to a wide variety of international causes—including advancing the peace process in Northern Ireland, modernizing Vietnam’s health systems, and building STEM hubs across the globe. “I see little reason to delay giving when so much good can be achieved through supporting worthwhile causes today,” Feeney said. “It’s a lot more fun to give while you’re alive than to give while you’re dead.”

Dubbed “giving while living,” Feeney’s entrepreneurial approach to philanthropy was so impactful that it inspired others to follow suit. Some additional foundations that have sunset in the last few years include the Whitman Institute, the S.D. Bechtel, Jr. Foundation, and the Quixote Foundation. And, as a foundation actively spending down, the Levitt Foundation is in good company: Among others, the Compton, Stupski, and Ivey foundations are all in the process of boosting support for the communities they serve by giving away their full endowments within the coming years.

“Spending down gives our team of staff and grantee-partners the opportunity to dream big, take risks, and make real change in our communities,” said the late Joyce Stupski, founder and board chair of the Stupski Foundation, in 2019. “We’re committed to doing our part by investing in local leaders and systems change that will last long after we close.” Other organizations, referred to as “limited life” foundations, are defined by an endpoint often tied to the lifespans of their founders. For example, the Bill and Melinda Gates Foundation will cease to exist 20 years after their founders pass away.

2019 Levitt National Tour and GRAMMY-winning artist Flor De Toloache energized audiences with their fusion of mariachi, jazz, salsa and pop.

Also inspiring the philanthropic sector’s expanding spend down movement has been a mix of interconnected social, political, and economic circumstances impacting communities across America. Many within and beyond the philanthropic space have closely examined the role of foundations in perpetuating systemic economic inequity among Americans.

The coronavirus pandemic heightened these concerns even further and sparked renewed conversations about the minimum five-percent payout rule of thumb—which, in many cases, leads to constrained grantmaking that does not meet the urgent needs of communities and may, in fact, maintain the very challenges that communities are trying to overcome. The calls for racial justice following the murders of numerous Black Americans, including George Floyd and Breonna Taylor, generated additional dialogue on how funders could effectively empower communities to advance systemic change.

As a result, a growing number of foundations are entering spend down mode in a conscious effort to combat historical inequities and challenge the power structures often mirrored by traditional philanthropy. As the Levitt Foundation embarks on its journey as one of the only arts funders to enter spend down mode, we hope to inspire our sector peers to reimagine their philanthropic approach and consider that, as with other forms of grantmaking, arts funding can be most impactful when seen as a critical need and essential component to elevating communities.

Passing the Mic to Amplify Impact

While each foundation is driven by its own mission and vision for the future, nearly every grantmaker that chooses to spend down shares a similar goal: amplified impact, now. In rejecting the traditional practice of endowment growth, spend down foundations can more assertively and immediately redistribute their private wealth into the communities they aim to empower, no-holds-barred. “When my father handed me the reins of the Foundation, we knew free concerts made a difference in communities,” said Liz Levitt Hirsch, Board President of the Levitt Foundation and daughter of Mortimer and Mimi Levitt. “Here we are two decades later in dozens of communities, and we have seen the incredible impact of this work, and that inspired us to make this decision to spend down.”

The Levitt Foundation’s spend down will seed and nurture community-driven efforts for exponential impact.

At the Levitt Foundation, we believe our grantmaking can be most catalytic when we recognize that to build a better tomorrow, we must invest significantly in the present. So, for our organization, spending down means increasing the number of communities receiving funding for free concerts in public spaces across the country, providing our current grantees with additional funds, continuing our investments in research exploring how the Levitt model builds social capital and creates economic opportunity, broadening our support to organizations and programs that expand access and nurture equitable music ecosystems, and offering robust, grantee-informed resources and capacity-building support to ensure free Levitt concert series continue after we sunset—all initiatives that align with our mission to strengthen the social fabric of America.

Of course, the what (as in the kind of grantmaking) and when (as in timeline) of how a foundation decides to spend down its assets ultimately depends on the foundation’s funding priorities and its relationship with grantees. Some may opt for a more accelerated timeframe to spend down—for example, giving away all assets within 5-10 years, while other foundations may opt for a longer timeframe in which to disperse funds. In the Levitt Foundation’s case, the decision to spend our assets over a 20-year timeframe was driven by current funding commitments and to ensure ample time for our grantees to prepare for sustainability beyond our sunset—while also providing time to expand our number of grantees and build new relationships with a range of towns and cities, further fueling the movement for free concerts in public spaces as essential to community life.

Beyond amplifying impact in communities, another motivating quality of the spend down movement is that regardless of how a foundation chooses to spend down, its decision to do so hopefully inspires other philanthropic organizations to consider the same path. Increasingly so, grantmaking organizations are being presented with this alternative model that puts more funding into communities today rather than at some point in the distant future—and numerous philanthropic thought leaders are advocating for their peers to join the wave.

“Positive interventions can have greater value and impact if made today, rather than delaying to when needs might be even more intractable,” Levitt Foundation CEO Sharon Yazowski said. “Now is the time to challenge the scarcity mindset, particularly when thinking about the future. We believe giving more means leading with a worldview of abundance—that others will come after us and continue supporting this work.”

As music moves us to come together and create catalytic change, we are preparing to pass the baton and seizing faith in the idea that, when we increase our giving and trust our successors to carry forward, the impact of Levitt programs will continue fostering more equitable, healthy, and thriving communities long after the Levitt Foundation ceases to exist.

To learn more about the Levitt Foundation’s spend down, read our press release.