This year, the William E. Simon Foundation is closing its doors, or “sunsetting,” in the parlance of modern philanthropy. Since it was founded in 1967 by former Treasury Secretary William E. Simon and his wife Carol, the foundation has given away almost $300 million to the causes that mattered to them—faith, family and education. It has made some 13,000 grants to support inner-city Catholic schools, charter schools and school-choice litigation, as well as mentorship, literacy and after-school programs, foster care and domestic violence services, and counseling for women with unplanned pregnancies. (Full disclosure: I have received grants from the Simon Foundation for my own work.)

Plans to sunset foundations within a generation of the founder’s death have a long history. Julius Rosenwald, an early investor in Sears Roebuck, helped to create a network of almost 5,000 schools for Black children across the South during the early 20th century. He was the first major philanthropist to place a formal ending date on his foundation: 25 years after his death, which was in 1932.

But the strategy has become much more popular in recent years. According to a study by the Bridgespan Group, in the 1960s foundations with an end date represented just 5% of the total assets of America’s largest foundations; by 2010, that figure had risen to 24%. Melissa Stevens, executive director of the Milken Institute Center for Strategic Philanthropy, says she is seeing more donors who want to disburse funds quickly to address issues such as climate change, racial injustice and pandemic preparation. She notes that “younger donors want to put philanthropic capital to work more expediently to tackle those issues.”

Traditionally, sunsetting a foundation has appealed to more conservative donors. Bill Simon, Jr., who manages the Simon Foundation along with his six siblings, says that his late father set a closing date because he had seen “foundations that seemed to veer off of their donor’s intent.” Simon recalls: “Dad trusted his own seven children to know where he would have put his money…But as much as he loved his grandchildren, he did not know them.”

Indeed, Henry Ford II resigned from the Ford Foundation’s board in 1977, writing that its hostility to capitalism had thrown it off course: “Perhaps it is time for the trustees and staff to examine the question of our obligations to our economic system and to consider how the foundation, as one of the system’s most prominent offspring, might act most wisely to strengthen and improve its progenitor.”

Darren Walker, the current president of the Ford Foundation, says that foundations that exist for longer periods “are designed to respond to a changing world.” If the Ford Foundation had closed decades ago, he wonders, “What would we not have done? And I think about all of the institutions the Ford Foundation helped to create over its many decades of existence,” like the Corporation for Public Broadcasting. Walker believes its current focus on income inequality can be seen as a way of honoring its founder’s legacy: Henry Ford thought “inequality was a threat to democracy,” Walker says, which is why he “raised wages of front-line workers.”

But Rob Reich, a professor of political science at Stanford and the author of “Just Giving: Why Philanthropy Is Failing Democracy and How It Can Do Better,” argues that perpetual foundations undermine democracy by prioritizing the desires of the dead over those of the living. “With little or no formal accountability, practically no transparency obligations, a legal framework designed to honor donor intent in perpetuity, and generous tax breaks, what gives foundations their legitimacy in a democratic society?” Reich asks.

The idea of sunsetting a foundation doesn’t have to mean rushing to give away money. Rather, it gives staff and board members a clear time frame for thinking about larger gifts. Walker himself serves on the board of a new climate-change-focused foundation called Waverly Street, created by Laurene Powell Jobs, that has a 10-year time frame for sunsetting. “It is an urgent issue around which we want to contribute moonshots and accelerating solutions,” he says.

The idea that philanthropists need to spend money faster is seeping into many aspects of the national conversation about charity. Take donor-advised funds (DAFs), in which wealthy individuals give their money to nonprofit organizations but retain a role in advising on how it is invested and disbursed. The IRS warns that these arrangements are sometimes abused “for the purpose of generating questionable charitable deductions, and providing impermissible economic benefits to donors and their families,” while enjoying a tax benefit.

A coalition called the Initiative to Accelerate Charitable Giving, led by philanthropist John Arnold, is pushing for legislation to eliminate the tax deduction for contributions to DAFs unless the money is disbursed in under 15 years. “The money was just sitting there growing,” Arnold complains, though many donors to such funds say they are simply putting the money away until they can devote the attention they want to a cause, or until an urgent need arises.

But establishing a time-limited foundation can also appeal to donors, by allowing them to have a larger impact in a shorter time. Adam Meyerson, who was head of the Philanthropy Roundtable for almost 20 years, notes that a sunset clause “helps the foundations concentrate their minds.” Partly, he says, “that involves maintaining an entrepreneurial spirit consistent with the founder.” But it also means “you can spend a lot more resources to achieve your charitable objectives.”

Meyerson gives the example of the Donald W. Reynolds Foundation, which ended its grantmaking in 2017. That gave it the freedom to “make some special very large gifts, including $100 million to further the appreciation of George Washington,” Meyerson said. The money went in part to create an education center at Mount Vernon.

It is easier to encourage philanthropists to adopt a sunset clause rather than trying to change the law to mandate faster giving. Bill Simon says that the process of planning for the end required some forethought but wasn’t very complicated. For most of the Simon Foundation’s life, he says, its endowment was invested in a traditional mix of approximately 60% stocks and 40% bonds. A couple of years ago, the board started to be more careful “in terms of commitment and liquidity.” They had to make good on grants they had promised and kept a higher percentage in cash or fixed-income assets. The foundation also needed staff until the end to ensure the work was finished. But “it was kind of remarkable how it all worked out,” Simon says.