Value, Time, and Time-Limited Philanthropy

Value, Time, and Time-Limited Philanthropy

Limited-life foundations are based on the premise that if a foundation’s grants generate a social return, and that return compounds at a higher rate than its financial assets would, then making the grants sooner generates more social value than preserving the capital and making more grants later — but how would we know, asks a report from the Atlantic Philanthropies, whether, or when, this is true? The report, Value, Time, and Time-Limited Philanthropy (25 pages, PDF), highlights discussions among philanthropic leaders, advisors, and scholars about the social value a philanthropic initiative can be estimated to generate — taking into account direct outlay, social value, ripple effects, and durability — and whether, considering social utility, rates of return, and the compounding or erosion of value over time, the premise holds true for three Atlantic Philanthropies-funded initiatives. The report finds that the foundation’s choice to invest today rather than tomorrow in ending the “school-to-prison pipeline” in the United States (direct outlay of $47 million) is paying off; that its support for better services for children in Ireland ($5.3 million) is yielding fairly high near-term returns, with persuasive odds of compounding the value of those returns; and that its efforts to increase the supply of nurses in South Africa ($32.8 million) is expected to pay off — in part because other funders have taken a different, slower, more sustained approach than Atlantic. Seeking high social returns on a large short-term investment may particularly make sense, the report concludes, when a foundation’s goal is to improve the performance of large public systems.

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November 5, 2016