Doing Spend Down Right
by Marty Linsky
In the summer of 2010, I received a call from Jeff Solomon, President of The Andrea and Charles Bronfman Philanthropies (ACBP). “We are spending down. We will close our doors in 2016. We want to do spend down ‘right’ and want to document our process so other organizations can learn from our experience.”
By aspiring to do spend down right, he and Charles Bronfman were continuing their commitment to break new ground, experiment, learn from their experience, and share their learning with the broader Jewish and non-Jewish philanthropic communities.
ACBP knew they needed some outside assistance, but they did not know what that would or should look like. Our first task at Cambridge Leadership Associates (CLA) was to help Charles, Jeff and the ACBP staff turn their aspiration into a more concrete and shared view. What does spending down “right” actually mean? How does it look at the ground level?
What emerged was a desire to encourage ACBP’s incubated grantee organizations to work individually and with each other during the spend down period, with continuing mentorship and advice from ACBP’s leadership and program staff, to assure sustainability of their organizations, missions and people as ACBP funding ended. ACBP was wired to mentor and support and assumed that it would continue to perform those functions for the grantees, albeit perhaps in slightly different forms.
That high-level aspiration was based on values of relationship, commitment and collegiality embodied by Charles and Jeff.
From CLA’s perspective, there was not much to learn from other spend down foundations so inextricably focused on sustainability and intense fieldwork. We took what Charles and Jeff started with as our initial marching orders, not knowing what to expect once we began to dig deeper into the internal and external dynamics.
As sustainability became our collective mantra and shared goal, CLA and ACBP designed a set of activities to lead us to that point. Inherent in the concept of “sustainability” was an image that grantee organizations would use the period up to 2016 to prepare themselves for independence with ACBP’s advice, support and occasional prodding.
We began our process by having preliminary conversations with several CEOs of the grantee organizations and some members of the ACBP senior staff. What we learned from those initial inquiries was revealing, and challenging to some of our assumptions.
Among our initial findings:
- Grantees felt very much in the dark about why ACBP was spending down and what that would mean for them during the spend down period and beyond.
- Ambiguity generated some anxiety, including at the staff level at ACBP.
- Uniformly, grantee organizations were not enthusiastic about spending time and effort working with each other. They did not see themselves as part of a larger ACBP family with a collective stake in the spend down process or the future.
- Each grantee organization was on a unique journey, with different internal and external challenges and dynamics, and each was in a different stage of their life cycle. There were nine operating programs and just as many separate stories and distinct sets of interests in the spend down process. For example, they differed considerably in their dependence on ACBP for administrative, back-office support and those distinctions created vast differences in their views of the spend down process.
Addressing those issues resulted in:
- Development of a multi-faceted communications strategy to explain the spend down decision and to share ACBP’s experience of the spend down process with a wider audience.
- Meetings conducted by Jeff Solomon with individual staff members to clarify their employment status and the expectations for them during this period and beyond it.
- Site visits to each of the incubated organizations to define their sustainability. In other words, what would they need from ACBP to get from here to there? Were their staffs being appropriately considered during this period and were their future professional options and opportunities being developed? During this stage, CLA worked with John Hoover, ACBP’s Senior Vice President and CFO, to develop a series of quantitative metrics to assess the current reality of each grantee.
In June 2011, Charles Bronfman and Jeff Solomon disseminated an open letter to grantees, peer funders, other stakeholders and the wider philanthropic community explaining the decision to spend down and setting expectations for the spend down period and beyond it. This step was an important milestone in clarification and transparency and also served to address and relieve anxiety.
While spend down issues consumed ACBP’s senior leadership team, ACBP’s strategy, rationale, and process were undefined to the rest of the wider ACBP family and other interested constituencies such as grantees and Jewish communal organizations.
Later that summer, CLA finalized an internal report on its site visits. Discussions were held with ACBP leadership that focused on strategy and approach for each grantee. Choices about priorities and allocation of limited resources were offered to Jeff – and ultimately Charles.
As a purposefully objective player in this stage of the spend down process, we at CLA learned much about this trajectory, with some takeaways particular to ACBP and some more general. Among them:
- The spend down process is inherently fraught with anxiety and uncertainties. Some grantees are likely to default to denial. But day-to-day business both at ACBP and in the grantee organizations must continue, even as the spend down hovers over them. Clear and timely communication will help address the new reality, but communication itself will not be enough to make the decisions that need to be made and to develop the necessary plans for the future.
- Treating each grantee individually means that “sustainability” has multiple and some unanticipated meanings. Approaches must be customized, as one size definitely does not fit all.
- In order to help some grantees, such as 21/64, reach sustainability, ACBP needed to make additional financial investments to help them reach their independence. We began to use the phrase, “increasing dependence on the way to independence” to describe temporary increased fiscal support to lead to that more sustainable future.
- For others, the reality was that sustainability would require more resources and effort than ACBP was willing to commit. In such cases, “sustainability” might mean little more than a celebration of work accomplished together and then a planned phase-out of a grantee’s life, or a concerted effort to identify new funding sources.
- And for some grantees, the ACBP spend down process was close to irrelevant anyway, as over the course of their lives, they had secured a level of independence, with ACBP taking its place as a peripheral funder. Still for others – like Birthright Israel – it was clear that support would continue from Charles personally long past ACBP’s 2016 closure date.
- All of this meant that the road to sustainability was more complex – technically and emotionally – although not necessarily any longer than had been initially envisioned; it was never the intent of ACBP to open-endedly fund incubated organizations.
- While sustainability was the goal, a feeling of loss was everywhere – among ACBP staff, within the grantee organizations, and among the external constituencies of those organizations. They all had and continue to have enormous respect for Charles and Jeff, but were uncomfortable facing a new and less certain future. For Charles and Jeff, this process was the implementation of a decision made years ago and was, in many ways a relief, albeit with some difficult moments. For many others at ACBP, it was a jarring and unanticipated life change. As part of doing spend down “right,” ACBP was committed to their staff as well as grantees’ missions and impact. Helping people through that loss was also a customized effort, taking attention, time, and resources, where speed and efficiency had to be subordinated.
We – along with ACBP – saw the evaluation as an opportunity for CLA to carry out fieldwork, facilitate more efficient communication both internally and with key partners, and frame inefficiencies.
ACBP recognized that it needed outside evaluation to create and execute a deliberate process that would serve its best interests, as well as that of its supported organizations. Clearly, this evaluation phase proved vital to a customized approach and revealed some not-so-attractive options paired with difficult questions.
Marty Linsky is Co-Founder of Cambridge Leadership Associates.
[eJP note: “Making Change by Spending Down” is a new commentary series of The Andrea and Charles Bronfman Philanthropies (ACBP) – in partnership with the Foundation Center – to share insights and lessons of ACBP as it spends down its endowment by 2016 and closes. Each month various stakeholders will contribute new posts that will explore how ACBP’s decision to spend down affects a broad range of interests: from mission, employees and grantees, to investments and legacy. Decision makers across the social sector will benefit from the first-hand knowledge and community of learning being created.