Ensuring a Strong End to a Philanthropic Journey

Closing Down is a Big Decision

Foundations devote a huge amount of time, resources, and effort to developing relationships with other organizations, government agencies, grantees, and the broader public. They work hard to develop well-regarded programs and staff and build reputations of expertise and leadership in their chosen areas. The longer the foundation exists, the more robust those relationships and expertise become. It’s hard to let that go.

Shutting down is complicated and can be expensive. Many factors are involved in the process and many people’s lives—and livelihoods—might be at stake. It can be easier just
to continue on rather than to go through the disruption and uncertainty of shutting down.

However, careful planning can make the decision to close and the subsequent process smoother and more successful.

Strategies for a Successful Exit

• Clearly know and articulate the reasons for shutting down: In some cases, the reasons are clear—the loss of a major funding stream, the death of the foundation’s leader, a shift in the political or cultural environment. In other cases, the reasons are more personal or less tangible. Whatever the reasons, articulating them clearly lays the groundwork for productive planning that maximizes a foundation’s impact even after it has shut down.
• Ensure sufficient financial assets to last through the shutdown process: Plan for the disposition of assets to ensure promises to partners and grantees can be kept. Creating this plan early allows enough time to be flexible about how and when assets are liquidated with the least amount of risk.
• Develop a final grant-making strategy: Determine the focus areas for final grants to achieve lasting impact. During its last four years of grantmaking, The Nicholson Foundation continued its support for health and early childhood, with a new emphasis on the intersection of the two areas. To help ensure the work would continue, the Foundation seeded policy and research institutes and established new collaboratives that included other foundations and state leaders.

  One critical component of a foundation’s financial strategy is determining the amount of funds to allocate in each year leading up to the final year. As grants end, less funding will be devoted to projects and more devoted to staff support and the details of closing down. Another component to this strategy is determining what funding mechanisms to use—grants versus contracts—to best achieve specific goals. A third is to reserve some funds to cover unexpected expenses.

• Create a plan for winding down operations: A clear and detailed plan is essential for a successful shutdown. The Nicholson Foundation engaged its staff in all aspects of planning and assigned staff members to lead specific projects. The plan had two major phases:
  • — The first phase dealt with office-related issues, such as ending office leases, disposing of equipment and furniture, going fully electronic with files, and disposing of paper files.
  • — The second phase concerned staff-related issues, such as terminating payroll and benefits, scheduling exit interviews, providing legal and other advice, and managing workloads as staff members left.
• Develop a communications strategy: Create a plan for clearly and transparently informing staff, grantees and partners, and the broader environment. Pursue a graduated strategy, with staff first, then grantees and partners, and the wider public last. Also, by including clear confidentiality provisions, foundation management is better able to control the news and shape their story in desired ways.

  Determine who should inform grantees and partners. The Executive Director may be appropriate for some communications, whereas program officers who deal directly with grantees may be best for other communications.

  Foundations may wish to cap their communications strategy with a book or a website that tells their history and accomplishments. The Nicholson Foundation published Changing Systems, Changing Lives: Reflecting on 20 Years, a book that described its philanthropic history and work.

The Nuts and Bolts of Doing it Right

• Support your grantees and take actions to facilitate their continued success:
  • — Ensure that purpose is built into the work, such as by funding strategic plans or creating reports that lay out a roadmap for future action.
  • — Invest in policy institutes, innovation centers, partnerships, and capacity building structures that foster continued work.
  • — Provide professional development support to grantees to help develop their ability to generate new sources of funding.
• Retain staff to the extent possible:
  • — Remove reasons to panic. Make staying worthwhile by providing emotional and other kinds of support, and by paying staff well.
  • — Encourage the team to remain committed to the work, the grantees, and the partners.
• Support the staff in ways that help ensure their future success:
  • — Give staff time and opportunity to pursue future job prospects. Tell them you understand the time they spend on searches will increase as the date for closing down approaches.
  • — Manage workloads to suit staff availability as the wind-down continues and staff depart.
  • — Provide support and opportunities for outside professional activities and career coaching.
  • — Provide personal development support, such as through life coaching or financial planning assistance.

For More Information

• Watch Graceful Exits, a webinar sponsored by the Chronicle of Philanthropy, and featuring Jan Nicholson (President, The Nicholson Foundation) and Kim Boller (former Executive Director, The Nicholson Foundation).
• Order a free copy of Changing Systems, Changing Lives: Reflecting on 20 Years. This book describes the 20-year journey of The Nicholson Foundation.