February 10, 2020
How do foundations make the important decision about how much to spend? This is the topic that is explored in a recent article, A Balancing Test for Foundation Spending, by Dimple Abichandani, Executive Director of GSF in the Stanford Social Innovation Review. The article offers a critique of traditional foundation spending policies and shares an alternative approach that takes into account non-monetary factors including our missions and meeting the moment.
At GSF we reimagined our approach to spending in 2017, as we considered yet another, “one time” increase to our budget. As we began researching foundation spending policies, and the broader issue of foundation spending, we were struck by how the traditional spending policy was outdated for the times we find ourselves in.
The article details an alternative approach which involves balancing seven factors to arrive at a spending percentage. At GSF our experience with this approach has resulted in a deeper level of governance and increased spending, as our board members have grappled with the strategic questions that should underlie the critical decision of how much to spend.
As funders, spending is one of our key tools for achieving justice, and so having a spending policy that is values aligned is critical. We hope the article is a contribution to the broader conversation that so many of us are having about how to make philanthropy more responsive to this moment, and how to align our practices with our values.