|
|
 |
|
| Philanthropy |
Three Vehicles for a Vision
Jay Steenhuysen
12/01/2003
|
These funds offer economic benefits similar to those of supporting organizations, such as a public-charity deduction for contributions, but they do not carry the administrative burdens of private foundations and supporting organizations—namely, the tax and state regulatory filings—thereby significantly reducing their operating costs. All the investment and management expenses are covered by a fee that is based on a percentage of assets in the fund. This can range from 0.8 percent to more than 2 percent, depending on the fund. At the same time, these instruments have the disadvantage of lacking focus: All the gifts made by donors are typically comingled, and so the use of funds may not completely match the goals of any one individual. Philanthropists can only advise the board where to focus its effort, though it should be pointed out that their wishes are, in most cases, respected.
| "Selecting which vehicle is not an effort
to seek tax benefits, but it is important to be
tax efficient. Goals come first." |
Like the Collins’ combination of the foundation and supporting organization, some philanthropists have used both donor-advised funds and foundations with good effect. One investment planner with a $700 million net worth found this two-pronged approach best suited his needs. "I did the foundation first," he says. "I did not know anything about donor-advised funds. We liked the private foundation. It was both charitably and educationally inclined for our kids. It became a place where we were able to hold quarterly family meetings." He later set up a donor-advised fund, drawn by the opportunity to give anonymously in some circumstances—indeed, his children are not aware of the fund’s existence. "We use our private foundation when we want to personally touch an organization as a family with our efforts and also with our funds," says the investment planner. "The tax benefits were not a deciding choice in starting the donor advised fund. However, the absence of expenses for the donor-advised fund has become an additional benefit."
Some have worried that the concurrent use of these different vehicles may postpone the delivery of funds to the charitable organizations. But a combination may actually mitigate fluctuations in the philanthropist’s donations over the course of many years, facilitating consistent giving. "For the charity," the investment planner says, "long-term consistent giving is better than receiving a big check every few years."Related Charts
 Strategic Overview
 The Fine Print Illustrations by Jim Frazier
|
|
|
|
|
|
|
; function voidFunc() { } voidFunc();)
Strategic Overview; function voidFunc() { } voidFunc();)
The Fine Print
