For nonprofits, time is money

Abstract

Despite years of financial growth in the US nonprofit sector, foundations and endowed nonprofits accumulate assets without effective redistribution. Analyzing the time value of money shows that this hoarding incurs losses. Such organizations have low distribution rates of their assets, which can be better utilized if spent. The return on these investments is realized by society rather than the donor and manifested in hard-to-quantify social benefits. Increasing discount rates, lifting payout rates, focusing on temporal value rather than perpetuity of endowments, and reconsidering giving practices will help utilize these assets more efficiently. – AI-generated abstract.