I have observed with interest the debate playing out in Alliance magazine on whether UK foundations should have a minimum payout.
The debate is an important one because it relates directly to the legitimacy of philanthropy. Philanthropy’s legitimacy is derived from the community – it depends on whether it’s accepted and supported by the community. It cannot be taken for granted, but must be cultivated. Philanthropy’s legitimacy will depend on a variety of factors, including how it engages with charities and end-users, as well as how open and transparent it is.
Foundation payouts are also a source of philanthropy’s legitimacy. Foundations are established to benefit the community, by providing support to charities so that they can further their purposes. This is recognised and supported by government through the provision of various tax concessions. In return, there is an understandable expectation from both the community and government that foundations will provide regular and ongoing support for charities.
Should foundations cash in on endowments now?