Foundations Should Spend Money Today

To the Editor:

Regarding Mark Dowie’s recent column (“Carnegie’s Views on Giving: No Longer Gospel,” Opinion, May 6), the example of Irene Diamond’s decision to distribute the entire assets of the Aaron Diamond Foundation over 10 years rather than give away a perpetual 5 or 6 per cent can be instructive to donors and fund raisers as well as foundations.

Like Mr. Dowie, I believe that there are “crises before us that demand a rapid spending of foundations’ assets,” as well as some curtailment of the hungry acquisition of capital for endowment by many charitable institutions.

Consider a gift that provides benefits for 10 years rather than forever. An initial $1-million of endowment provides $55,000 per year at 5.5 per cent. However, the same payout for 10 years requires only $415,000 at 5.5 per cent discount or $370,000 at 8 per cent. Then, good stewardship should generate a gift for another limited period.

Many donors will not reduce the size of the gift. That $1-million at 8 per cent pays almost $150,000 for 10 years; now that’s some real action for both donor and institution.

Endowment certainly has its place. But donors might warmly appreciate a choice: 10 years or forever? More to the point, children and some plants and animals will not be here in 11 years to receive a perpetual benefit.

Gordon G. Lund
Gift-Planning Officer
Northland College
Ashland, Wis.