Why We Decided To Spend Down the Onion Foundation

When we started the Onion Foundation in 2014, we weren’t thinking about how it would end. We were thinking about how it would begin. We were defining a mission, setting up systems, making grants, meeting with grantees and funders, and learning about philanthropy in general.

As a small family foundation, we worked on the mission with our children, thinking that they might want to carry the work into the future. Like most foundations, we started by using the practice of granting out 5% of our assets each year.

Over time, we experimented with different models for determining our annual grant budget. When our company, Pluralsight, went public in 2018, for example, we decided to gift a fixed number of shares to the foundation each year and grant out those proceeds in addition to the 5% from the endowment. Had the company stayed public, we might have continued this model indefinitely.

That all changed in 2021, when Pluralsight was sold. We used this opportunity to significantly grow the foundation’s endowment, and we no longer had the variability of stock sales as part of the granting model. With the endowment fully funded, we found ourselves thinking seriously, for the first time, about the foundation’s future and its longevity, which led us to our next question: Should this foundation really go on forever? The more we thought about it, the clearer the answer became: We decided to spend down the foundation’s assets and sunset the organization by 2044 — an even thirty-year span from where we began. This is the reasoning behind that decision.

We Want To See the Mission Through

The simplest reason is also the most personal: We want to be here for it. We want to work toward the foundation’s mission within our own lifetimes and be present for the full arc of the work — the decisions, the inevitable mistakes, and the relationships with grantees that take years to develop.

A foundation built to last forever is eventually stewarded by people who never knew its founders or the reasoning behind its earliest commitments. Strategic choices made decades prior can feel like inherited constraints. We recognize that a mission set up in the past may be difficult to carry into the future, and as living founders, we can help evolve priorities year over year without the constraint of defending them against some perception of founder intention.

While our children have continued to support the mission of the foundation, as they grew older, they decided that they didn’t want to be part of the day-to-day work. This gave us one more reason for not keeping the foundation around forever.

Move the Capital to Those Doing the Work

By law, a private foundation is required to pay out 5% of its assets each year, on average. That figure wasn't chosen to maximize giving — it traces back to the 1969 Tax Reform Act, which originally set the payout at 6%, from an assumed 8%investment return minus roughly two points for inflation. Congress cut that figure to 5% in 1976 after foundations argued that the high inflation and volatile markets of the era made 6% unsustainable. Either way, the logic hasn't changed: The standard model is designed so that the corpus of the endowment remains in perpetuity.

According to Foundation Source's 2025 report on private philanthropy, U.S. private foundations paid out a mean of 7.1% of their assets in 2024 — the same as the year before — while sitting on an estimated $1.64 trillion in holdings.

Donor-advised funds (DAFs), which held nearly $328 billion by the end of 2024, paid out at a higher rate: 25.2% in 2024, per the DAF Research Collaborative's Annual DAF Report. It’s encouraging that DAFs are paying a higher percentage and that some donors are clearly choosing to get money out faster.

There has also been a movement to invest foundation assets in impact investments so that the endowment fuels mission-related work in addition to grantmaking. In 2024, about 5% of U.S. foundations were actively pursuing impact investing. Yet, the Institute for Policy Studies projects that combined DAF and foundation assets will continue to grow and will top $2 trillion in 2026, a staggering number that should make even the most conservative foundation investor think twice about how quickly to move funds out.

When we placed assets into the Onion Foundation, that money stopped being ours. It became charitable capital, legally and morally bound to be used for the public good. For us, given the state of philanthropy today, fulfilling that obligation includes the need to move the capital out — steadily, thoughtfully, and eventually completely — into the hands of the organizations doing the work.

A Defined Timeline Focuses the Work

We didn’t anticipate this one at first, but it has turned out to be one of the most interesting consequences of our spend-down decision. An end date changes how everyone — board and staff alike — thinks about the work.

When a foundation expects to exist forever, its goals can drift toward the open-ended and the perpetual. When you know the foundation has a finite number of years left, you begin to think in terms of more specific outcomes. What can we actually accomplish in the time we have left? Where can we make a difference that will hold? A deadline has a way of clarifying priorities that an unlimited horizon never does. It pushes us toward goals that are achievable within the foundation’s remaining years.

Planning a Responsible Exit

Deciding to spend down is the easy part. Doing it responsibly is the hard part, and we’re beginning to think about what the transition will look like when our grantmaking eventually ends.

Our hope is to leave the organizations we support stronger, not hanging. That means being transparent with grantees about our timeline so no one is caught by surprise. It means structuring our final years of giving to build sustainability rather than dependence — helping organizations strengthen their institutions, broaden their base of support, and develop the leaders and networks that will carry the work forward without us.

It also means showing up as more than a source of funding. We’ve invested in hiring knowledgeable, experienced staff because we know a foundation can offer more than money. Grants matter, but so does the work that surrounds them — technical assistance, capacity building, strategic guidance, and the kind of hands-on partnerships that help an organization grow more sustainable and effective over time. If our goal is to leave Maine’s arts and environmental organizations stronger after the foundation is gone, the expertise we bring to relationships matters as well as the dollars.

Looking Ahead

That’s the thinking behind our decision. We’re not winding down out of fatigue or doubt — quite the opposite. We're choosing to commit our assets and staff time to work on problems within a defined span of time, and we want to get the capital out to do the most good now. We have about 18 years left, and we’re looking forward to every one of them.