The Gates Foundation is Spending Down. Will Others Follow?

This month, the Gates Foundation made headlines with a big announcement: the foundation will spend down its assets and close its doors by 2045.

The news sent ripples across the philanthropy sector – and raised a number of questions. How will this work? What will the mechanics look like? Will this news reshape norms in philanthropy around perpetuity and legacy?

We called up Glen Galaich, CEO of the Stupski Foundation, who has been one of the loudest and clearest voices on the topic of foundations spending down. Galaich is currently guiding the Stupski Foundation through its own spend down, as the foundation plans to sunset in 2029. He and his team have guided other foundations through decisions around perpetuity, and Galaich is finishing a book on the subject, set to publish next year.

We talked about the "mystery math" behind the Gates Foundation's spend-down, the shifting meaning of philanthropic legacy, and what this moment and the role of trust-based philanthropy in this debate. The following conversation has been edited for length and clarity.

First off, a question on a lot of people’s minds: what do you make of the math behind this spend down?

Some journalists have raised questions about the “mystery math” of how to give away an estimated $200 billion – by one count, the foundation could increase giving to $10 billion a year and still not even touch its endowment, which keeps earning interest. How do you see that working?

I think they’re being conservative with their estimates. The fact is, there are so many variables – market behavior, operational needs – that any projection is bound to change. It’s a lot better to throw out the number “$200 billion” and exceed it, than the other way around.

I learned that lesson firsthand. Back in 2014, when Joyce Stupski made the decision to spend down at Stupski Foundation, we had an endowment of $260 million, and that money was tied up in a lot of extractive investments. Then Covid hit, and the market shot up. So we had years where, despite giving beyond the minimum required 5%, we earned back all that we gave away.

If they were asking me for advice, I would tell them to divest as rapidly as possible from their investments – to get out of the for-profit business of foundation endowments, and move their assets into everything mission-related. That would decrease the amount they're going to earn, but it would also put that money to work a lot faster.

Let’s talk about legacy. In his recent interview with the New York Times, Bill Gates said that he’s “not trying to steward our money for some weird legacy thing”. Gates has always been admired by others in philanthropy; do you think this news will materially change the conversation about perpetuity and legacy?

Legacy shows up in so many different ways. Sometimes it’s about greenwashing – take the Sacklers, who were killing people with opioids and wanted to look good, so they funded all kinds of things. Others desire to leave a legacy of how they’ve helped the world.

How do you undo that? At the end of the day, it’s a mindset shift. It’s about asking: can you find security in the idea that doing this well is the legacy you leave behind? That doing it with integrity, with deep empathy for and engagement with communities, is the ultimate goal?

One of the best theories of change that I’ve ever seen comes out of the Marguerite Casey Foundation. They say “We are here to support communities that seek the government that works best for them”. It’s a strong, community-centered approach – now that is a legacy.

Let’s talk about grantmaking practices. The Gates Foundation has a long history of opaque, technocratic grantmaking, and they have been notoriously slow to adopt participatory or trust-based philanthropy. How should the foundation think about the methods of giving away all this money?

It’s incredibly important to talk about – how the public gets input into these public assets.

Trust-based philanthropy is typically framed as the donor trusting the community. But I think the conversation needs to be the other way around: what does it look like for communities to trust the donor? That’s the work Gates will have to do, and it starts with some of the things they’ve been saying this month.

In my experience, this opens the door to different types of grantmaking and relationships. There’s something interesting that happens when a donor decides to spend down. I noticed it with Stupski. The donor’s guard comes down. Their willingness to be more transparent goes up. 

The traditional model of running a foundation in perpetuity – it’s a business. You’ve got to invest really well. You’ve got to make decisions about how close to the 5% you’re going to hit this year or next. You’re in the business of making money to give money. It’s very stressful. 

But when you remove that business aspect and just do philanthropy, it’s exciting. You can engage in practices that break all the rules of a business — and that’s to the benefit of communities that have, in many cases, been harmed by those extractive business practices.

You’ve worked directly with a number of foundations that have chosen to spend down or are considering it. How do you guide them through it? Does Stupski Foundation offer advisory services?

I wouldn’t call it a service. But if someone puts up the bat signal, I’m coming.

I’ve spoken in the boardrooms of ten foundations, and I believe all of them have chosen to spend down. I’ve had 1-1 conversations with another thirty or so foundation CEOs who are considering spending down or just curious. Some of them, I’ll admit, I scared the shit out of. They didn’t want to talk again. That’s okay. But others came back and wanted to talk more.

What you see immediately when you go into a spend down is this sheen of negativity – people say, “you’re not going to get to do this anymore.” But they rarely talk about what you get to do.

As the guard comes down, the joy goes up. The excitement, the possibilities – you end up gaining so much more than you give away.