by Hiram Wurf | Mar 17, 2015 | Donor Intent, Donor-Advised Funds, Featured |
Nonprofit general operating support gives mission-critical funding. While nonprofits often welcome program-specific support, program funding often drains other resources. Without enough unrestricted support nonprofit operations are less effective and successful. Increasingly charity associations, funders, and media advocates believe nonprofits need more general operating funds than they receive to achieve their mission. Seven Reasons Nonprofits Need General Operating Support Why do charities need unrestricted support? In many cases general operating funds not only keep the lights on – they also contribute to the effectiveness of charity program development and implementation. Here are seven reasons why nonprofits need unrestricted support. Fostering financial sustainability and capacity building; Strengthening donor and charity relationships and trust; Providing flexibility to efficiently and effectively meet charitable missions; Promoting mission-focused work using core capabilities and strengths; Permitting better long-term planning; Easing administrative burdens for charities and in some cases donors; and Establishing broad, mission-based outcome accountability. Just like other organizations, nonprofits need funding responsive to their unique needs. Donors Contributing to General Operating Support Perhaps aware of these concerns, in recent years some donors have increased their gifts for unrestricted support. One study of foundations found that from 2008 to 2014 the percentage of grant dollars going to general operating costs grew from 20% to 25%. Donor-advised fund donors often provide more unrestricted support than foundations. This may reflect a difference in giving culture. While some donor-advised funds solicit grants and have staff with program expertise focused on grants, most do not. Donor-advised fund donors tend to base grant advisement decisions on personal charitable experiences. These donors often volunteer individually or as a family at charities they...
by Andrew Hibel | Feb 25, 2015 | Donor Intent, Donor-Advised Funds, Featured |
Recently, the Chronicle of Philanthropy released their Philanthropy 400 that included a number of high ranking donor-advised funds. This led to positive and negative reviews of the growth and place of donor advised funds in charitable giving. It’s a great time to take up this discussion because donor-advised funds have reached a crossroads in the charitable community – and we must choose their future path. At its essence a donor-advised fund is uniquely able to separate the tax efficient portion of charitable giving from the granting portion of the gift. Often marketers of donor advised funds – coming from professional investment backgrounds – like to sandwich these two features around what happens between them (i.e. investing the funds that have already been contributed to charity) to create what I call the “features sandwich” of donor advised funds – Give. Grow. Grant. The discussion of donor advised funds today has too much energy placed on the features of investment and tax deduction. While investment and tax deduction features are essential to planning the gift, they are not the benefits donors receive from a fund. Changing the “grow” of the features sandwich to “guide”, and moving the discussion from investments to stewardship, sets us on the path of reclaiming the donor-advised fund as a leading gift planning vehicle focused on charitable intent. Give. Guide. Grant. This “benefits sandwich” focuses charities (which all donor-advised fund purveyors are legally required to be) on providing unique benefits as stewards and grant makers. It offers us a chance to discuss the following incredible gift planning benefits that donor advised funds can offer donors: Timing –...
by Andrew Hibel | Feb 17, 2015 | Charitable Alt-IRA, Donor-Advised Funds, Featured |
The Charitable IRA Rollover, also known as a qualified charitable donation or distribution, offers a tax advantaged way to donate to charity. It permits donors to gift up to $100,000 from their IRA to a public charity. But while popular, the Charitable IRA Rollover suffers from legislative and qualification limitations. Charitable IRA Rollover – Limited by Legislative Limbo Every one or two years since 2006 Congress has renewed the Charitable IRA Rollover, but donors and their financial advisors are never sure if it will happen. In 2014 it passed with two weeks left in the year – and only for tax year 2014. Proposed legislation in the House of Representatives would make the Charitable IRA Rollover provision permanent, but the Obama Administration has rejected similar bills in the past. Its legislative fate is uncertain. But even if the Charitable IRA Rollover becomes permanent, it still has limits the legislation does not propose to change. Charitable IRA Rollover Limits While popular, the Charitable IRA Rollover provision has restrictions limiting its appeal. Donors qualify for a Charitable IRA Rollover at age 70-1/2 or older. The provision limits contributions to $100,000 annually per person. Donors may not contribute to a donor-advised fund, supporting organization or private foundation (with the exception of a private non-operating foundation meeting conduit rules). Charitable Alt-IRA – a Better Alternative No matter what happens in Washington, the Charitable Alt-IRA technique offers many and perhaps most donors a better alternative than the Charitable IRA Rollover. More donors qualify for the Charitable Alt-IRA, with fewer downsides and more advantages. The technique involves contributing long-term appreciated securities to a donor-advised fund,...
by Rosalyn Lambert | Jan 13, 2015 | Donor Intent, Donor-Advised Funds, Featured |
In my life as a development officer I hated donor-advised funds. I felt they took money from my mission, made me miss out on my goals and just made things difficult. Who were these people with their funds – and how could I find them? As donor-advised funds have grown more popular – and I have become more familiar with them – I’ve moved from respect to real appreciation. I see donor-advised funds in an entirely new light because I better understand their important role – and potential – in charitable giving. Let’s address common criticisms first. Common Criticisms Money (That’s What I Want) I agree donor-advised funds seem like a charitable bank account or just a financial tool that saves taxes. But the overall annual rate of donor-advised fund contributions – the “payout rate” to charity – regularly exceeds the payout from private foundations. Sometimes the donor-advised fund payout rate is more than double the amount that private foundations donate with their 5% minimum. Waiting on a Friend If your concern is waiting for the money, then you should know in practice donor-advised funds compare favorably with many types of charitable giving vehicles, including private foundations, charitable remainder trusts and charitable lead trusts. In fact, many donor advised funds – including The Advise Us Fund – have rules that require donors to make advisements at least annually. Good Times Bad Times When it comes to tough financial times, think of donor-advised funds as deep pockets that keep our nonprofit missions motoring. In fact, donors often give more to donor-advised funds when they have an economic windfall, like a...
by Hiram Wurf | Nov 17, 2014 | Donor-Advised Funds, Featured |
E.W. Scripps Co. Chair, President & CEO Rich Boehne seeks a $1M donor-advised fund in his name as employment compensation. Boehne describes the effort as a ‘partnership’ to further align the company’s and his ideals, “The Scripps Howard Foundation’s commitment to the future of journalism and to the well-being of the communities we serve makes it a vital partner for both the company and individuals – like me – who share the same values and passions.” It sounds like the charitable equivalent of using stock options to align company shareholder and executive interest. But the spirit seems quite different. In this case it’s aligning the company and its executive around philanthropy, with charitable beneficiaries as major stakeholders. Using a donor-advised fund to align corporate and management philanthropic interests could be a future trend for executive compensation. Already an old story among investment banks with their own foundations and donor-advised funds, Rich Boehne’s efforts could signal a move in companies with more diverse business interests. Boehne himself is no stranger to donor-advised funds. He has had a family donor-advised fund for at least 13 years. ____________ Hiram Wurf is Charitable Catalyst, Managing Director of The Advise Us Fund®. The Advise Us Fund is an independent 501(c)3 nonprofit organization that offers a donor-centric approach to charitable giving. Hiram formerly served as Executive Director and Founder of the nonprofit 12 State, Inc. and as Marketing Communications Manager for Cool Choices, Inc. He has more than 16 years experience in nonprofit development, marketing and communications including nine years administering grants at a family foundation. The information in this blog post is general and...
