“With the stock-market slump taking a bite out of charitable endowments, many foundations are cutting back spending to preserve assets. But to a growing number of philanthropists, a different approach makes more sense: Spend it all and close up shop,” writes David Bank in today’s Wall Street Journal.

“These donors say they simply enjoy the personal involvement of ‘giving while living’ and figure future problems can be tackled by future philanthropists. Applying business practices to their giving, they are analyzing the ‘time value’ of their money and concluding that a dollar spent now can be worth more than one, or even two, spent later. They argue there is plenty of money on hand to accelerate spending on today’s critical problems. They also say that despite the recent downturn in the stock market, long-term economic growth will generate plenty more to deal with tomorrow’s issues.”

“One such donor is Charles F. Feeney, the reclusive millionaire who co-founded the Duty Free Shoppers Group Ltd. chain of airport stores. Earlier this year, Mr. Feeney pushed his foundation, the Atlantic Philanthropies, to adopt a plan to exhaust its $4 billion endowment over 15 years or so. Now 70 years old, Mr. Feeney told his board that the prospect of going out of business would focus the foundation on bold problem-solving rather than self-perpetuation.”

“The foundation, which approved about $100 million in grants in 1995, will now give away roughly $400 million each year. That puts the Atlantic Philanthropies, which until last year made nearly all of its grants anonymously, in the top ranks of private givers. (Mr. Feeney himself attracted attention in 1994, when he became one of the biggest American financial backers of Sinn Fein, the political wing of the Irish Republican Army.) As part of its recent deliberations, the board decided to concentrate on three areas: the aging population, disadvantaged youth and global public health.”

” ‘Organizations as they get older get sclerotic. You can see it in most longstanding foundations,’ says Harvey Dale, the first president of the Atlantic Philanthropies and now director of the National Center on Philanthropy and the Law at New York University. ‘It’s a passion of Chuck Feeney’s and mine that that not happen. We said, “Let’s have fun while we’re still alive.” ‘ “

“Atlantic is among a small group of charities that are bucking the prevailing approach of established foundations, which have traditionally sought to sustain their endowments and their grant-making forever. A federal tax-code change in 1981 relieved foundations of the obligation to distribute at least as much as they earned on their assets each year. Since then, overall foundation ‘payout’ rates have drifted down to near the legal minimum of 5% of assets.”

“In the same period, according to the Foundation Center in New York, foundation assets have greatly increased, from $47.6 billion in 1981 to $486.1 billion in 2000, the most recent year for which full information is available. Last year, foundations paid out about $29 billion in grants.”