Why is spend-down philanthropy increasingly popular?

spend-down philanthropy

Why is spend-down philanthropy increasingly popular? Before we answer the question, let’s define our terms. There are two basic types of charitable organizations and philanthropic concerns. One type is an open-ended, perpetually funded (or perpetually in need of funding) organization. The other is a type of foundation or organization that has funding but must spend it and accomplish their work within a fixed period of time and to a deadline.

Defining Spend-Down Philanthropy

Spend-down philanthropy is gaining popularity as many are coming to grips with a notion that it’s not realistic to try to accomplish the entire goal of something big like stopping animal cruelty, mitigating climate change, or reducing the number of hungry people living in America (or anywhere else, for that matter).

Economics-focused publications like Marketwatch note that spend-down methods are gaining popularity as people struggle to find better solutions to the issues they confront with their charitable work. Not everyone is jumping on the bandwagon fully–some agencies have pledged to increase their spending directly on issues like COVID-19 relief, while others have been committed to the spend-down concept over a longer term.

A Marketwatch article notes one concern that was in operation for more than 30 years; Atlantic Philanthropies, described in the article as one of the “best-known spend-down foundation” concerns, closed its operations as planned after donating some eight billion dollars over a staggering 38 years. That operation is closed now, as planned.

Why It’s Gaining Popularity

Why is this concept catching on? Spend-down philanthropy has an important philosophical concept working for it that doubles as a marketing hook–scarcity. When you know the charitable work doesn’t go on indefinitely, when it has a specific end date after which there will be no more work from that organization, it seems to be a powerful motivator to get involved while the getting is good.

There are likely many reasons why spend-down philanthropy is working for Americans right now–the concept of compassion fatigue might be one of them. Knowing that an agency won’t keep coming back to you, again and again, asking for more donations, more volunteer time, and more of everything else and in perpetuity too? That’s likely to be a good incentive for at least a certain sector of givers and volunteers.

Add to that the idea that any new-to-you approach might be something that piques your interest after much “been there, done that” and you have a recipe for a growing (or re-growing) trend that could help redefine at least a small sector of very familiar territory.

You might not be sold on spend-down philanthropy today, but in the next year as we see more causes growing in response to the economic damage caused by COVID-19, you might find yourself tempted to give this idea a try.

If you are looking to dip your toe in this growing initiative, companies like Aspiration could be a good place to start. Aspiration offers socially-conscious and sustainable ways to spend and save on your everyday purchases while making the world a better place through their financial account and debit card. They are 100% committed to clean finance and are setting the standard for money management by rewarding you for socially conscious spending habits.