Private Law Theory

ABSTRACT
The perpetual foundation – an endowment designed to exist indefinitely while distributing only a small fraction of its corpus each year – is treated as the default architecture of institutional philanthropy, a neutral container for serious charitable intent. This paper argues that perpetuity is not a neutral container but a capital structure with its own logic, and that this logic is systematically misaligned with the missions it is meant to serve. The misalignment is structural rather than behavioural: a foundation operating a perpetual endowment is bound by two fiduciary duties – a duty to preserve the corpus and a duty to advance the mission – and the real-terms preservation mandate forces the first to dominate the second, so that the institution is optimised for its own survival rather than the resolution of the problem. The paper traces three failure modes that follow from this conflict and reproduce regardless of the quality or sincerity of trustees: corpus primacy, in which the institution’s perpetuity structurally outranks the problem’s urgency and the mission becomes the residual; the payout floor as ceiling, in which the regulatory minimum distribution – a figure reverse – engineered from preservation rather than need-becomes the operative maximum; and horizon inversion, in which capital is held longest precisely where the social return to early deployment is highest. It shows that the conventional reforms – higher payout rates, mission-related and program-related investment, and spend-down commitments – are within-structure adjustments that soften symptoms while leaving corpus primacy intact, and that this is why the perpetuity trap is a trap rather than a flaw: the structure constrains the very remedies its stewards can adopt. The paper closes by specifying the conditions a capital architecture aligned to mission cycles rather than institutional survival would have to satisfy – capital that recycles rather than depletes, return horizons synchronised to mission horizons, and measurement across cycles – and by reframing the fiduciary question itself: from the stewardship of a corpus over the life of an institution to the stewardship of a problem over the life of its resolution.

Ghadamian, Roshan, The Perpetuity Trap: Why Foundation Endowments Misallocate Capital (June 7, 2026).