To Be an Effectie Major Gifts Fundraiser Understand Your Donors
Donor-advised funds used to be created only through community foundations. Then, professional investment management funds got in the business. They brought their sales skills and relationships with people of wealth together to build their own advised funds. They have changed our fundraising world.
To talk with donors about options as they consider gifts to endowment funds and to discuss with them possible planned estate giving we, as major gift officers, need to understand how donor-advised funds work. Why are donors so attracted to them?
A recent article in The New York Times provides some answers. Author Geraldine Fabrikant noted that Fidelity Charitable Gift Fund is the nation's largest with $4.7 billion in assets. Here are some factors why donor-advised funds are attractive.
- For people giving less than $1 million the costs of setting up and using the fund are less than a traditional private foundation
- With a down economy, the efficiency of having someone else management the assets and administrate the fund are even more attractive
- Privacy — with a formal foundation you file tax forms that others can view to determine the asset size of your foundation; a donor-advised fund is shielded from outside review
- While private foundations are required to give away 5% of their assets, the experience with donor-advised funds is 20% (this implies that people with donor-advised funds are not as interested in perpetuating the fund as those with a private foundation) with href="https://www.vanguardcharitable.org/">Vanguard Charitable Endowment Program, advised funds of $1 million or more can use the services of the Investment Fund for Foundations to more widely diverse fund investments — at Fidelity, donors with funds of $1 million or more can manage the assets themselves (something some donors absolutely love)
- Setting up and running a foundation takes time and energy for not only investments but also in making grants — Foundation Source handles many of these tasks online
Commentary — as someone who has done a lot of foundation grantsmanship, and as someone who has worked with many donors on endowment and planned estate gifts, this article was fascinating. We've got to track (I've got to track) this rapidly changing world of donor-advised funds better. I urge you to click on the highlighted links about to better understand what is going on in your donors' world.
TomWilsonMajorGiftsGuru@gmail.com
Permanent Link: Fundraisers Need to Understand Donor-advised funds
http://majorgiftsguru.com/2008/09/fundraisers-need-to-understand-donor.html
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