Spending Out: One Funder’s 30-Year Journey

Nothing focuses the mind more than knowing your time is limited.

Like a small but growing number of foundations, the Kendeda Fund will sunset at the end of 2023, concluding three decades and more than $1 billion of grantmaking. The decision by our founder (and Dena’s mother) Diana Blank to give away most of her resources was the right choice for Kendeda for a host of reasons. Paramount among them are the urgent, existential challenges facing our planet and all who call it home. But there is more to it than just “the fierce urgency of now.”

In many ways, Diana’s discomfort with her own wealth led her to make a number of structural and operational choices that initially informed, and ultimately defined, how she approached her philanthropy. Fortuitously, these same choices positioned Kendeda well for an efficient, and hopefully graceful, spend-out process.

The Center for Effective Philanthropy’s 2017 report A Date Certain: Lessons from Limited Life Foundations captured many of the considerations and complexities foundations commonly wrestle with during a spend down process. Our own journey, punctuated by a 2023 CEP Grantee Perception Report (GPR), illuminates these, plus a few more. What follows are five insights that we hope other funders — including, perhaps surprisingly, organizations who aren’t sunsetting — might find instructive.

1. Visibility Enhanced Our Impact

Coming from modest roots, Diana wasn’t sure how to respond to the wealth she obtained in adulthood. The discomfort she felt in those early years led her to guard her privacy tightly, even as she began to ramp up her charitable work. She did her giving quietly and anonymously for nearly two decades.

A GPR conducted by CEP for Kendeda in 2010, however, led Diana to think differently. Respondents (our grantees) longed for more visibility from the Fund, arguing that amplification from Kendeda would be an important validator for their work. Informed by that feedback, Diana came to understand that one of the greatest assets we could wield was our institutional voice. Our anonymity was hurting — not helping — our partners.

In response, Kendeda began partnering publicly with other funders and standing alongside grantees with greater frequency, championing their efforts and de-risking them for other potential investors. That decision to begin actively promoting and lifting up the work of our grantees has become all the more important in our spend-out years, as we seek to encourage others’ investments in the causes and partners we have held dear.

2. Intermediaries and Collaboratives Provided Natural Partnerships

While we chose to keep our staffing structure small, we also aspired to be a deeply engaged, hands-on funder with local fluency and expertise in communities from Atlanta to Buffalo, Bozeman to Kolkata. To balance these seemingly contradictory priorities, we often relied on intermediaries and collaboratives to support values-aligned regranting efforts, a choice that proved fortunate as we approached spend out.

While some interviewees in A Date Certain noted the need for increased collaboration related to the decision to spend down, for Kendeda such collaboration was built-in from the beginning with our partnerships, funding intermediaries, and donor collaboratives. Importantly, all of the donor collaboratives we were engaged with will live on beyond Kendeda, allowing us the comfort to know there are organizations well-built to continue work beyond our lifespan.

3. Our Approach to Grantmaking Fostered Resilience

As our 2023 GPR results showed, Kendeda came to be known for an approach to grantmaking that focused on long-term relationships. We often gave multiyear, general operating grants, known to be the most desirable but still underutilized type of grantmaking. Part of our consistency included a consultative, long-term “beyond-the-check” mindset toward the nonprofit partners we supported. This led to many efforts aimed at building grantee capacity, including support with succession planning, scenario planning, and a “noses in, fingers out” orientation that informed nearly every choice we made.

Three to five years before our spend out, we had conversations with nearly all of our grantees. In those discussions we laid out how we saw the trajectory of our support shifting as we headed toward our sunset date. Grantees were invited to work with us to co-design their optimal spend-out cadence, including size and pacing of final gifts. We also designed and instituted a unique operating reserve program, helping almost 40 grantee organizations build significant rainy-day funds, each with deep board support and fiscal guardrails ensuring proper fiscal oversight. Finally, our strong relationships with many grantees meant that our staff had value to add until the end, even after the last grant payments were issued.

4. A Values-Based Operating Model Eased Our Spend Out

Saying no to perpetuity allowed Diana to make her imprint on the world through the work, rather than by building a large, multi-generation legacy institution. For Kendeda, that meant no board, hiring only one staff member per funding area, having no in-house evaluation function, and utilizing Foundation Source as our back-office partner. We avoided costly, time-consuming program redesigns and strategy reviews (an annual slog for many foundations), and we created a relatively simple, lean grant application process. The benefits of these choices included agile grantmaking from beginning to end and a right-sized staffing and decision-making structure. Our founder and executive director approved grants on a rolling basis throughout the year, avoiding rigid deadlines, moving large amounts of money with little process friction, and quickly responding to emerging grantee needs and opportunities when they arose.

As we moved into spend out, this same format served us well; there was simply less “overhead” to unwind or disassemble. Staff members stayed through the end partially because of this grantmaking style, as well as above-market compensation, competitive benefits, and a flexible remote work model that existed well before the pandemic. As we hit our final years, we also instituted a “stay-to-the-end” bonus structure for the spend down. Further, with no need to reduce staff or wind down lots of administrative structure, we sidestepped having to ratchet down head count or guess at the number of people needed to see us through to closure.

5. Our Investment Approach Adjusted with the Times

Spending out involves a balancing act between risks and returns. As noted in A Date Certain, end-date precision becomes tricky as foundations balance market volatility, operating costs and the size of payouts. In relation to these challenges, Kendeda’s investment journey may be especially instructive for beginning philanthropists.

First, Diana’s philanthropic funding came from a single well-performing stock, with initial grantmaking done out of pocket, in stock and cash, using one financial advisor. Over time our vehicles evolved to include donor-advised funds and a charitable trust, which worked as a pass-through, never having had an endowment. Investment diversification came later to ensure that there would not be any shortfall due to market downturns or other volatility.

More seasoned funders might be interested in how all the factors combined. Kendeda could lean in heavily to the limited-life urgency and the desire to make an immediate difference because of its agile approach to investing, its limited operating costs, funding intermediaries and making relatively large grants to move money more efficiently.

A Few Downsides

Of course, no singular approach is perfect, and every choice we made came with its own drawbacks. One of the more noteworthy of these, caused by our lean operational structure, was a lack of record keeping and detailed data, especially during the first decade of Diana’s philanthropy. Put plainly, the historical record from our early giving is a bit blurry.

Another challenge is a lack of outcome measurements across many (but not all) of our core programs. Without a dedicated and well-resourced measurement and evaluation team, we relied on our grantee partners to assess and quantify impacts, outcomes, and long-tail results. That knowledge exists in many cases, but it is held by our partners rather than by us.

Finally, while we succeeded in proactive communications with our grantees and staff, preparing them well for our spend out, conversations with fellow funders proved harder. We anticipate there may be some gaps in the coming years, as funders who relied on us to be “first money in,” for example, may not be prepared to pivot or close the gaps our exit may create.

The Biggest Takeaway: End as You Lived

Philanthropic advisor Anita Nager illustrates this point in Episode 8 of our new Stories from the Kendeda Fund podcast. Nager describes a 2015 retreat she facilitated with Kendeda staff where she asked our small team to imagine 2023 and what we would want to say about our impact when the Fund’s work was finished.

Team members eloquently described the substantive issues they hoped to have shaped — things like climate change and land conservation, gun violence and girls’ rights, green building, economic equity, and more. Then Diana spoke, as only a founder can. “I hope Kendeda can be remembered for all the good things we did and all the changes, big and small, that our grants helped bring about,” she said, “but I also want to feel proud about how we worked.”

When Dena was a child, her mother used to recount the story of a Hasidic master who lay crying on his deathbed. His students couldn’t understand why he was so sad, given the Rabbi’s life of piety and good deeds. The Rabbi answered, “Because on my death bed, God will not ask me why I was not more like Moses or King David. Rather, God will ask me, why was I not more like myself?”

For Kendeda, the how and the what have always been inseparable, and both have been inextricably linked with Diana’s values and ethos. The choices we made — exiting with transparent, proactive communications, with a simple unwinding, and with investments in our grantees’ organizational health — all mirrored the way we tried to operate for our entire lifespan.

The approach we’ve taken may not translate directly to other foundations. We don’t pretend it is a playbook or instruction manual. But as we move through our final months of operation, we urge other sunsetting funders to spend out by leaning into the unique strengths of your own approach. Maintaining the integrity of our approach has made this process one of deep joy and fulfillment for Kendeda. Hopefully others will be as lucky.

Dena Kimball is the Kendeda Fund’s executive director and the daughter of founder Diana Blank. David Brotherton is president of Brotherton Strategies and has led the Fund’s communications and Gun Violence Prevention program since 2014. They will be discussing these and other spend out insights on November 1 at the CEP2023 Conference in a session titled Planning Wisely for a Spend Down.