Future Focus

A Perpetual endowment model is an important funding mechanism within the charitable sector and one which has been "promoted extensively in the last 30 years in Canada," according to Malcolm D. Burrows. It has an emotional appeal to donors who want their gift to have a legacy that spans generations. Building a healthy, perpetual endowment has become a cornerstone of contemporary philanthropic foundations, one that foundations generally consider a source of long term stability that future generations may enjoy. During the pandemic, a critique of perpetual endowments heated up, consisting of calls for a higher rate of disbursement, especially during a crisis, and even for spending-down endowments to maximize impact on today's wicked problems. In November 2021, Toronto-based Justice Fund made a bold accusation: emblazening "'Charitable' Institutions in Canada are Hoarding $85,000,000,000" across an 18-wheeler truck in front of Toronto City Hall. They argued that allowing so much money to be stashed away in endowments was disproportionately hurting Black and Indigenous communities in Canada who are under-resourced and under-served in a crisis happening now. This question of the responsibilities of the present generation to address it's own ills, versus what it should hand down to future generations is many-sided. For example, fostering relations of accountability and reciprocity across generations is at the heart of a seven generations, seven teachings approach, integral to Indigenous peoples like the Haudenosaunee and Anishinaabe. These values also lend themselves to prudent stewardship of resources from generation to generation. As Rick Hill, former Chair of the Haudenosaunee Standing Committee shares:

That inherited duty calls for balance and restraint. Material and non-material resources should be protected and carefully stewarded over time. Within this frame, charitable trust law and perpetual endowments may be helpful mechanisms for looking after resources over the long-term. While spending down endowments is not intuitive to a seven generation, seven teachings approach, neither is growing endowments in ways that deplete environments and compromise relationships. Indeed, the spirit with which dollars are earned, saved, and spent really matters.

John Borrows, Chair of Indigenous Justice and Governance at the University of Victoria, describes the importance of ritual and rotating leadership when making long-term distributive decisions. Resources do not belong to individuals but to the community and must be stewarded by community. The intentional use of ceremony, including smudges, pipes, and songs brings a mindfulness to decision-making that is often lost in the day-to-day grind of modern, formal institutions. The fixed hierarchies of institutions also stand in the way of balanced decision-making. Instead of power vested in people who occupy particular positions -- like board chair or CEO -- power rotates amongst multiple chiefs, who regularly step up and down in their community. At one moment they are in the role of giver. At another moment they are in the role of receiver. There is an ongoing choreography of reciprocity, within and between generations.

While there is some overlap between Indigenous approaches and charitable trust law, reciprocity isn’t the central tenet of current legal frameworks so much as control. With donor advised funds, for example, individual donors have the right to set the terms & conditions of where their dollars go, even after they die. Where a foundation has many donor-advised funds, decisions about how to steward philanthropic funds can become constrained by the visions of past donors. Arguably, this limits the spirit of reciprocity between generations; or, it may be a means of transmitting teachings across generations.

Chris Abbinante, in his piece on Protecting Donor Intent in Charitable Foundations, argues that donor intent is both a critical legal obligation and a core motivation to give. He argues that generosity is related to the level of control. He writes,

In the absence of explicitly changing this basis of exchange, Abbinante says ignoring or circumventing donor intent throws up ethical and pragmatic concerns. Besides, he pushes back against the claim that adherence to what donors want is inversely related or mutually exclusive with the common good. Provided that a donor’s intent is not illegal or impractical, it affords some sort of direction in an otherwise muddy arena. Because there is little consensus on what constitutes the common good, Abbinante asks: Why shouldn’t we go with the donor’s point of view? Of course, Abbinante is writing in a Canadian context where Donor Advised Funds (DAFs) are subject to a minimum disbursement quota; whereas, in the United States, DAFs have no requirement to disburse funds to the charitable sector on an annual basis.

Stafford Easterling is now a judge, and a board member of the ACLU (American Civil Liberties Union), but, he states,

He was able to develop his potential because he went to Berea College, for free. These days, fundraising at Berea College is actually quite present-focused, but that's only because the donors of the past were so future-focused. In fact, no student at Berea College has paid tuition in 130 years. Nestled in the heart of Appalachia, this Kentucky college educates first-generation students, students of colour, and students from Kentucky and Appalachia, a low income region. It's present-day success is founded on the preservation of a vision that was fiercely opposed at the time it opened in 1855 as the first interracial, co-educational college in the South. It's motto, chosen by its founder Rev. John G. fee is based on the "inclusive Christian notion [that] impartial love could create a remarkable learning and living community in a slaveholding state before the Civil War"

Because their endowment has grown to over $1billion and funds 74% of their annual operating budget, and they receive another 18% from state and federal aid, they only need to fundraise the remaining 8% every year., about $5 million. This allows Berea to charge $0 in tuition, from a student body of 1,454 students. Berea College believes that an educated population is a common good and that intelligence is more evenly distributed than income. As long as post secondary education is treated as a consumer good in the United States, rather than a right, their perpetual endowment will be a force for greater equity. Many alumni argue that graduating without student debt meant being able to pursue the work in which they could make their best contribution, even if it wasn't the highest paying.

While Berea College's mission may currently feel in step with the times, when it was founded, the institution was deeply controversial, offering a vision of the future that most others couldn't grasp. In this instance, Berea College built it's endowment in a very future-oriented manner to provide opportunities that still aren't available elsewhere for most of its students.

Some critics argue that foundations become too narrowly focused on building their endowment, missing other opportunities to create purpose-driven impact in the present and future. World Land Trust is future-oriented by spending today. Established in 1989, the purpose of World Land Trust is to protect the world's most threatened habitats and species for the future. It does this by helping people across the world protect and restore their land to safeguard biodiversity and the climate. In the area of maintaining biodiversity it is very clear that actions today can protect species that might otherwise go extinct, whereas saved money for the future has less certain impact. In 2022, World Land Trust had an income of £8.8 million, of which it spent £8.5 million (96%). £7.9 million of that was spent on charitable activities. Their endowment funds contained a comparatively small £1.04 million that year.

World Land Trust chose to spend on land acquisition, reserve management, reforestation, and partnerships & communication now, as the best strategy for biodiversity later.

World Land Trust has been successful at attracting legacy donors. Only, at World Land Trust, legacy dollars are turned into land trusts, ideally within a two year period, rather than being more slowly disbursed through a Donor Advised Fund.

"Action is critical. Too many conservation bodies spend far too much time going to conferences, doing conversation instead of conservation. Acquiring land, as Sir David Attenborough has said on several occasions, is one the safest and best ways to conserve nature. As far as WLT is concerned, we need to do more of the same – ideally on a bigger scale, and we need to do it, not talk about doing it." Dr. John Burton, Founder and Past Chief Executive

In both the case of Berea College and World Land Trust, a clear purpose, strong values, and focused strategy have attracted donors to invest in something of great value to future generations.

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  Perpetual Endowment Controversy

  Some see perpetual endowments as a source of stability across generations that should be managed with prudence; others worry about hoarding resources that could have more impact if spent now.
  
  
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  Reciprocity & Accountability

  Across Generations Anishinaabe and Haudenosaunee perspectives emphasize that material and non-material resources should be protected and carefully stewarded over time, but also that those resources should not be amassed at the expense of the environment or community needs.
  
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  Who controls the use of future resources?

  Donor Advised Funds allow donors to specify how their legacy gifts will be allocated after they are gone; whereas, in Haudenosaunee and Anishinaabe culture these decisions are made by community leaders in rotating roles.
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  Unpopular Cause

  Berea College donors allocated their gifts to a cause very unpopular in its early days: interracial, co-educational college. Their vision has resulted in 130 years and counting of tuition-free college education for communities with low rates of college attendance.
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  Spend Today for Impact Tomorrow

  World Land Trust has resisted the common priority of building a large perpetual endowment in favour of acquiring more land for conservation today, protecting biodiversity for future generations.