The Sunsetting Swift Foundation Is Giving Grantees the Power to Sustain Themselves

Established in 1999 by conservationist and organic farmer John Swift, the Santa Barbara-based Swift Foundation is dedicated to Indigenous rights, food sovereignty in Indigenous communities throughout South and North America, and biocultural diversity.

In 2019, the foundation began disbursing 10% of its total assets per year, double the baseline mandated by the IRS. The following year, Suzanne Benally became its first Indigenous executive director, and by early 2022, she and the board began to discuss whether the foundation should sunset.

Scrutiny into the perpetual foundation has intensified in recent years, with commentators arguing that with U.S. foundations collectively sitting on $1.6 trillion in their endowments, they have a moral obligation to increase their grantmaking, even if that means shuttering their doors decades from now. Benally told me the case for winding down “made sense to us,” and in February of last year, the Swift Foundation publicly announced it would sunset by December 2028. To do so, it will disburse roughly $67 million in large and unrestricted grants to select grantee partners.

I can’t overestimate the importance of the unrestricted component, because it addresses a key argument often deployed in defense of perpetuity.

If a foundation sunsets, the thinking goes, grantees will be worse off 10, 50 or 100 years from now because a critical funding source dried up — one that could have otherwise continued supporting those grantees that whole time. And while it’s certainly true that any endowed foundation will be able to give away a lot more money if it’s around for a hundred more years, why shouldn’t nonprofit grantees put the power of endowments to use themselves?

While the Swift Foundation’s support isn’t intentionally earmarked for endowment funding, the unrestricted nature of its sunsetting grants empowers leaders to make the choices they deem necessary to bolster their organizations’ long-term sustainability. The foundation won’t be cutting checks in 2074, but nonprofits that spend the next 50 years stewarding Swift-backed endowment funding should be alive and well — assuming, of course, that organizations are willing to set up and sustain an endowment.

Benally and her team clearly harbor no misgivings that organizational leaders are up to that task and can handle large unrestricted grants. Staff “had built out a framework for grantmaking focused on community-based Indigenous peoples,” she said. “And if we’re truly going to honor the self-determination of Indigenous peoples, then we should let them determine how that funding gets used.”

Factors that facilitated the spend down

Before joining the Swift Foundation, Benally served as the executive director of the Indigenous rights advocacy organization Cultural Survival. “I’ve always been on the other side of the fence, asking for money,” she said, although she also has served as a consultant to foundations. Her range of experience would come in handy — three years into her first major role at a grantmaking organization, Benally was talking with stakeholders about putting the foundation out of business.

We know what direction the Swift Foundation ended up taking, but settling on a spend down is never a guaranteed thing. There are any number of reasons that stakeholders at a foundation might shoot the idea down. Family members might lobby for perpetuity so their heirs can inherit the philanthropic mantle. Program staff, having built up a deep body of institutional knowledge and expertise, might protest to see all of that — and their paychecks! — vanish. And board members might object on the basis that the foundation’s absence will leave a gaping hole in the funding ecosystem — one that in this case is marked by underwhelming funder support for Indigenous organizations.

Conversations among Swift Foundation stakeholders proceeded throughout 2022, culminating in a board retreat in December of that year in which leaders officially decided to shutter the foundation’s doors. Benally cited a handful of reasons why “there was general support across the board, from trustees and staff” for the decision.

On a philosophical level, sunsetting comported with the Swift family’s belief that its work “is best achieved outside of the traditional philanthropic paradigm.” In addition, since the foundation had been disbursing 10% of its assets a year since 2019, gradually increasing that figure until the safe was empty seemed like a logical next step. Lastly, the board had already reallocated 30% of the foundation’s endowment toward mission-related investing. “With the payout and the kinds of investments we were making, the foundation was in a natural spend down already,” Benally said.

“Our workloads nearly doubled”

So in this case at least, the board didn’t have conceptual qualms with winding down the foundation. Rather, their questions centered around operational logistics. “None of us had been involved in a spend down process before,” Benally said. “So the big concerns involved setting up a strategy and determining where the funding would go.”

Stakeholders crunched the numbers and concluded that the earliest the foundation could responsibly sunset was December 2028. They also decided to provide larger grants to existing partners rather than bring new nonprofits into the fold. “We're not accepting new applications, but focusing on building out those organizations’ sustainability,” Benally said. To achieve this, the foundation would provide large and unrestricted grants.

Having spent 35 years in the nonprofit sector, Benally, who is Navajo and Santa Clara Tewa, grasped the transformative impact this type of funding could have on recipients. Grantmakers’ penchant for restricted project grants “is built into an old and very problematic ideology, at least as it pertains to Indigenous people, because it’s about having an agenda,” she said. “But if you really believe in what you’re doing, you’re going to trust your partners. We do our due diligence, trust our grantees and make the money unrestricted.”

Benally and her team notified grantees that the foundation was considering sunsetting before formally finalizing the strategy. In addition, the board provided grantees with transition grants, with the caveat that some of them would not receive large sunsetting grants. “There was an understanding among our partners of what we were doing,” Benally said. “Many of our Indigenous partners were very excited about the foundation’s plans and what it meant.”

Some organizational leaders, however, were understandably worried about the looming hole the foundation’s absence would leave in the field. In response, foundation staff are helping organizations build fundraising capacity and identify new sources of philanthropic support to tide them over in a post-Swift future. “It’s been a phenomenal amount of work so far,” Benally said. “I think our workloads suddenly doubled.”

The power of unrestricted support

One could argue that the Swift Foundation is something of an anomaly since it seems distinctively hardwired for sunsetting. The family has a healthy suspicion of conventional philanthropic norms, and the board’s 2019 decision to disburse 10% of its assets a year paved the way for a financially frictionless spend down. It’s also a small family foundation, so proponents didn’t have to get consensus from dozens of board members and lawyers, navigate pushback from investment managers with skin in the game, or figure out how to move billions of dollars out the door.

But Swift’s “sunset-friendly” profile doesn’t let other foundations completely off the hook.

Proponents of perpetuity who argue that grantees will be worse off if a foundation disappears may be discounting just how much funders can do to smooth the sunsetting process. The Swift Foundation’s approach shows that funders can provide transition grants and help organizations access new sources of funding, fully cognizant that, to quote an adage frequently cited by spend down proponents, “Tomorrow’s rich people can solve tomorrow’s problems.”

All of which brings us back to how the Swift Foundation’s sunsetting funding is entirely unrestricted. Recipients can use big gifts of unrestricted support to set up an endowment so leaders can spin off income to pay for programming, salaries and rent for, well, perpetuity. Or to put it another way, the very financial mechanism that would have sustained the sunsetting foundation’s wealth can bolster nonprofits’ long-term financial sustainability. And that calls into question the entire idea that funders need to stick around forever so they can slow-drip organizations strategically dubious restricted project grants.

Indeed, research from the Center for Effective Philanthropy suggests that nonprofit leaders would enthusiastically embrace a paradigm shift toward endowment funding, as nearly two-thirds of surveyed respondents said MacKenzie Scott’s large and unrestricted gifts will “significantly strengthen the long-term financial stability of the organization.” Funding leaders — sunsetting and otherwise — can position grantees for the long haul by providing copious amounts of general support. The catch, however, is that the strategy requires grantmakers to trust that nonprofit leaders will responsibly handle the windfall, and if follow-on CEP research is any indication, that’s still a huge ask.

In contrast, the Swift Foundation’s board and staff, having spent the past 25 years working closely with leaders serving Indigenous communities, were more than happy to go big and unrestricted, even if it meant they’d disburse themselves out of existence. “The board placed a great deal of trust in its staff to develop and implement the model and the values behind it,” Benally said. “The rationale was laid out and everyone supported it. This may be rare, but it was our process.”

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