The $70 Billion Question: Keys to Unlocking the Potential of Donor-Advised Funds

Good afternoon, everyone and welcome to our webcast the $70 billion question keys to unlocking the potential of donor advised funds. I’d like to thank everyone who’s attending today’s webinar. Jodie Rosen from Vanguard was initially scheduled Read More

Good afternoon, everyone and welcome to our webcast the $70 billion question keys to unlocking the potential of donor advised funds. I’d like to thank everyone who’s attending today’s webinar. Jodie Rosen from Vanguard was initially scheduled to present but she is unable to make it today. So we have another member of the Vanguard team, Cindy Van amburg, who will be filling in Cindy is the senior philanthropic consultant with Vanguard. And our other presenter is Doug Schoenberg, who is the CEO at software, I want to point out that today’s session is being recorded. And the recording as well as the presentation slides will be sent via email after the presentation. So keep an eye out for that. And before we get started, I just want to review a few housekeeping items and let you know how you can participate in today’s webinar. So you’ll see here, you can send in questions through this control panel. And on the left is your viewer window. That’s where you’ll be seeing you know, the presentation. On the right is where you’ll be able to send in your questions throughout the presentation, we’ll save some time at the end to answer as many as possible. And at the upper right hand corner, you should see this here, the audio mode for how you’ll be listening in the audio pane gives you information as far as using your computer’s microphone and speakers or dialing in with the telephone. Everyone listening now has already figured this part out. But if at any point the audio cuts, you can try switching the setting there. to shrink the GoToWebinar panel, there is this little button here circled in red that can close and expand the panel when you want to participate. So with all that taken care of I’m going to hand it over to Cindy now to get us started. Cindy.

Thank you all for joining us today have a lot of information to share with you. And I do want to be sure that we use our time together to address your questions, any myth or realities, you may have heard about donor advised funds, as well as guide you and how to unlock the potential for your organization that lies within donor advised funds. So before we take a deeper dive, I thought it may be helpful to tell you a little bit about myself and the role I play in the donor advised fund space. For the past five years, I’ve spent time with high net worth donors and individuals and families and corporations who have a passion to support the causes they care about the most. I do that through my employment at a national donor advised fund Vanguard charitable. So Vanguard charitable has been in existence for 19 years, we just crossed the 6 billion and assets under management threshold. These assets are represented across 12,000 individual accounts and distribute more than $700 million annually to approximately 30,000 charities across the United States. So today, we want to talk about what a donor advised fund is for those of you that don’t know, and how did they fit in to the larger picture of charitable giving trends? And how can your organization unlock the potential held in donor advised funds. We’re also going to provide you with donors perspective and learn how Doug benefits from using his donor advised fund. So let’s let’s stop here and and and throw out a question ask a poll question to the audience which best describes your impression of donor advised funds?

So while you’re continuing to answer that question, I want to go into just the basics of how a donor advised fund works. Well, there are nuances among the various supporting organizations, you know, such as investment options, contribution, minimums. In general, this is how they work. A DAF is a giving vehicle in which an individual contributes assets into it and account and receives an immediately immediate tax deduction. These funds can grow now tax free and are then distributed to qualified nonprofit organizations over time, based on the donors granting preference preferences and their philanthropic goals. Donors can determine a legacy plan for the account for when they can no longer advise on the account, you know, such as passing the account to their heirs, setting up recurring grants to one or many nonprofits, or having a lump sum distribution go to their charity of choice. So, you know, something to think about. Do you know if you have donors who give to donor advised funds? Do you communicate with them differently? You know, we would argue that it is in your best interest to identify them. So you can engage them through targeted messaging that will resonate with individuals who participate in donor advised funds. I know that many of you tuning in may feel as though Donor Advised Funds serve as a barrier in connecting with your donors. But if you understand the motivation behind the donors interest in creating and supporting a donor advised fund, and ask the right questions, you may be able to unlock giving potential as well as strengthen your relationship with your donor, which is so important. And I know maybe one of those barriers, and one of your concerns could possibly be the fact that donors can grant to charity through Donor Advised Funds anonymously. But Vanguard charitable did our donors over a 10 year period and found that only 5% of the grants issued are anonymous. So that other 95%, you know, it’s important for you to communicate with those donors, thank those donors for that gift. And, you know, certainly you can acknowledge the fact that you understand it came from a donor advised fund. So, when you know someone is donating from a donor advised fund, there are some assumptions that you can make. This person tends to be more strategic with their giving, and have identified you as an organization on their shortlist. When we think about a strategic donor. We think about someone who follows a long term plan that includes a budget, investment strategy and appropriate time horizon that will allow the individual to meet both current and long term giving objectives. There is also a greater potential for for annual giving, because you identified that there is a subset of money that is already earmarked for philanthropy. There is opportunity for this individual to support larger projects. Again, that money is already earmarked for charitable purposes. donors have the ability to set up recurring grants that can provide you with a reasonably predictable income stream allowing you to budget more effectively. And like we just discussed, there are legacy giving opportunities many of you have planned giving specialists are seeking deferred dollars to support your organization. Just as that individual can include you in their state plan. They have the capacity to name your organization as an ultimate recipient of donor advised fund assets. So, we feel you should be communicating differently with the individuals you have identified as having given with a donor advised fund. Talk to them about how they structured their philanthropic giving Well, you know which vehicle they use for which causes. So why is this so important? Why do we all tune in today seeking to learn about how to unlock the potential deaths. It’s because Donor Advised Funds year after year are becoming an increasingly popular way to manage, grow and distribute charitable dollars. They have evolved to be the giving tool of choice for many individuals, and partly due to their simplicity, the low cost tax effectiveness and their flexibility. So look at this chart, you will note that there are more than 200,000 individual donor advised accounts that exist across the United States. 12,000 of those are within Vanguard charitable. So while donor advised funds are the most utilized on this chart, you will note several giving tools that a donor may choose when distributing their charitable dollars. These tools may be used alone, or may be used to complement one another. So the way in which donors are giving really is changing and new charitable tools and technologies continue to emerge. There’s an increased focus on having a giving strategy and setting goals for donations. You know, the definition of social good is evolving as well, with terms like impact investing, we need to remain flexible and fundraising and we may be left behind. You know, we need to see this as an opportunity. But it is up to us as nonprofits to be thoughtful, creative and intentional about how we engage with donors. Because the bottom line is donors who are strategic with their philanthropy and are informed about their options will choose Who’s giving tools that best support their overall plan, you know, include including an effective tax strategy. So let’s look at the next chart and see that donor advised funds now maintain more than 70 billion in assets under management. That’s a 23% growth from 2013. They receive annual contributions of more than $20 billion, which is a 14% increase from 2013. So, think about how you solicit that, you know, the good news is the average annual payout for donor advised funds has remained fairly constant at 21.5%, which provides approximately 12 and a half billion dollars to charity annually. Donor Advised Funds are giving away assets at a much higher rate than other giving vehicles, you know, versus the private foundation required minimum distribution of 5% that 21 and a half percent is much higher. And other good news is the average size of donor advised funds accounts has increased as close to about $300,000. Now. And by the way, within the deaf space, national providers, such as Vanguard, charitable fidelity, charitable and Schwab charitable, represent more than 50% of the market share. So our goal at Vanguard charitable is to educate people on how being strategic with their giving can support philanthropic and financial plans, while creating an impact on the causes about which our donors care most. And it comes down to really three basic questions. Why? Why is philanthropy important to me? What what what do I have to give away? And how, how do I want to accomplish this? The more educated you, as the nonprofit can be in strategic giving, the better you will be able to connect your donors and unlock the potential of their giving. That allows you to have a deeper dialogue, provide value and deeper relationships. When I’m talking to individuals who I believe based on their financial and philanthropic goals will benefit from a donor advised fund. I share this slide you know, the highlight some of the key reasons why a DAP is right for them and why as we have always talked about the popularity in donor advised funds has grown exponentially over the last several years. So this is where I think it was a great project to come in and talk about his experience with a donor advised fund and how it’s worked for him. Thanks, Andy.

Skin Welcome everyone. Bill, I am the CEO of software, the provider of DonorPerfect, which I know many of you use. My participation today is as a philanthropic person, and someone just had a donor advised fund for a number of years. You know, this, this topic started and my involvement with Vanguard charitable started a few years ago when I did a blog post called Why I love my donor advised fund. And in that I talked about all the benefits that I had experienced. And it’s it’s really a pretty simple story for me, which is that for a long time, I have felt that being philanthropic was important. And and I had given to a number of different organizations over the years. But I also like to be tax efficient. And one of the strategies that I often used was the idea of giving appreciated securities to nonprofits. And of course, I that’s possible to do without a donor advised fund. You know, and what I would do is if there were five different nonprofits that I wanted to, to give to, I have to go and work with each one of those individual nonprofits get their information about their brokerage accounts, send a letter to my brokerage contact asking for the shares to be transferred. Then after I did that, you know, I had to worry about whether that transfer happened I had to worry about getting information, you know, notification and recognition of the gift and invariably, it would turn into a large Some time consuming hassle for me, some smaller nonprofits that I wanted to give to didn’t have brokerage accounts, some transactions, didn’t, that didn’t go through. In many cases, I’d get a letter recognizing my donation that was incorrect. And I’d have to go back to the nonprofit. So quite frankly, the whole experience, you know, sort of was a bit disheartening. When I discovered donor advised funds and created a donor advised fund at Vanguard, it has dramatically changed my experience and for the better, and I think, contributed to a greater degree of philanthropy I’ll speak to in a minute. And in short, what it allows me to do is, rather than giving individual gifts of stock, each nonprofit, I make a single gift of stock to Vanguard, and those and and they’ve created a very efficient and effective system for me to do so. So you know, I always get the acknowledgement that I need, and I have the information on file for where the shares get get transferred. And from there, I’m able to still go, and they’re easily in their case, it’s an online system that allows me whenever I want to make a grant request or recommendation to a nonprofit, I log into their online system. If it’s a nonprofit I’ve given to before I just select it from the list, fill in the information about how much I want to give, press submit, and I’m done. If it’s a new nonprofit, what’s a little bit more work, I have to either look and see if they’re on their list already or not, I couldn’t some basic information about the nonprofit like the address and things along those lines, and they take care of the rest. And in the past, because of the hassle factor, I wouldn’t really consider making a gift of appreciated stock, unless I was giving several $1,000 to an organization with Vanguard, their minimum gift is $500. Correct? Yeah, $500. And so I frequently give smaller gifts, and it’s no more work to make a smaller gift and a larger gift. And as a result, quite frankly, there are many times when an organization might have been someone who I might have given perhaps $100 to or $200 to, and oftentimes will say, you know, I’m just gonna do it for my donor advised fund, and they get $500. And so that’s good for them. And in truth, because of the tax efficiency of the process. For me, it actually just allows me to multiply the effectiveness of my given. The other point that I want to make about donor advised funds that I think oftentimes people don’t fully understand and appreciate is represented by this chart. So I know it’s a little complicated. But well, let’s start with the, let me say, I guess we’ll start with the blue the the area under the lowest area, which is blue. So that represents the account balance that I have at Vanguard. And you can see when I first started the accounts in 2007, it was relatively low in 2011. I had a stock that had done tremendously well. And I was thinking, well, I could sell it but it have a large capital gain. And I decided instead to contribute it to my donor advised fund. And so you can see that for several years, there were some relatively large contributions that I made. But one of the great things for a donor about a donor advised fund is it disconnects, the timing of when you might make the gift of stop from when you might put it to so philanthropic purposes. Now, different donors, as I understand it are really different. Some people contribute each year to their donor advised fund and then distribute most of that money each year. But many donors including me, sort of view it as a philanthropic savings account. So you know, at periods of time where I might have a staff that I want to contribute. I may put a lot of weight and I know that I’m going to be Giving that out over time in the future. And that really is critical in my mind about how you as a nonprofit leader should think about donor advised funds. And think about donors who have donor advised funds, it’s a good indicator that you have someone that they might have given you $1,000, or $5,000, or whatever it is, but there’s a very good chance that you’re just looking at the tip of the iceberg. And, and that iceberg is going to melt in the future, as it were, and you want to be able to benefit from that. The other reason why I think of it as a philanthropic savings account, is that the money in that donor advised funds is no longer part of my estate, okay, but it is earning, you know, it is invested by Vanguard and Vanguard funds that I select. And so there’s the ability for that to accumulate over time. So what this graph is trying to represent, is this idea that the amount of charitable impact is actually above and beyond just the dollars that I contribute directly, because there’s a potential for that to grow over time. Okay. So the, you know, the last thing I wanted to share with you guys, were a few tips. You know, from my experience as a donor advised fund donor, and working with quite a number of different non profits. You know, donor advised funds are subject to a variety of rules around how they operate. One of the most essential rules is this idea that, you know, I can’t get any, I can’t, even though I am the person making the recommendation, ultimately, the donation is coming from Vanguard, and therefore, I can’t make a pledge

and fulfill it with a grant from a donor advised fund, because that would be fulfilling a commitment that I have made as it relates to it. So if you’re an organization that asks for pledges, you know, let’s say you’re doing a capital campaign, etc. When you’re dealing with someone who has a donor advised fund, all you really have to do is change your language. Okay, instead of asking them to make a pledge, ask them to make a commitment to recommend a grant to the organization, and it can be a multi year commitment. In terms of that. Another tip that I have, which, you know, I is that, you know, I think oftentimes there’s a little bit of confusion around when you get a donation from Vanguard, and I was the grantor about who is the actual donor. Okay. And so very often, I will get a thank you letter that says, yeah, thank you for making your donation. Okay. And to read the letter, you would, you know, doesn’t doesn’t acknowledge the fact that it came via donor advised funds. Now, there may be a few donors who liked that, because in theory, you could try and use that as a demonstration of a gift that you’re not really entitled to claim. But the correct way to recognize that donation is to thank me for recommending the grant, but that the donation has actually come from Vanguard. And it’s a simple thing to do within a software product like DonorPerfect or up on most fundraising systems, because of the idea of being able to have a soft credit and being able to establish one person as the donor and soft credit to another person, or I know some of our customers will actually record you know, the, they’ll have a donation record for me for my donor advised funds. And they’ll note and acknowledge that that donation came from there and recognize that with with a different donation letter, another thing that many people don’t know and understand about donor advised funds, at least Vanguard and I assume that Cindy, if you correct me if I’m wrong about others, is that, you know, Vanguard allows me to set up a a recurring grant request. So, you know, I actually believe it or not this morning before I came into the office. My wife said you know that there was an organization that we support that is That’s a multi year project that they’re working on. And I went online this morning and set up a, a five year payment, gift schedule request for the grant. And in the same way that recurring gifts are wonderful from the perspective of improving donor retention, same idea with a donor advised fund gift. And so certainly you can consider asking someone like me, who may be you know, is making gifts through a donor advised fund, whether I might consider making a multi year grant recommendation. And the last point that I would really make as it relates to donor advised fund donors is that you should certainly think about them as having the potential of being major donors. Okay. Even if you know, you’re getting a $500 gift, I think some Donor Advised Funds even have slightly lower minimums, perhaps $250. It’s a very good indicator, as Cindy indicated, that this is someone who’s maybe taking a more strategic view of philanthropy. And I can, you know, speaking, for myself, I you know, I’m happy to engage with nonprofits that I support to help them understand why I use a donor advised funds, what my thoughts are, you know, one of the other things that’s important to realize about a donor advised fund is that there are multiple options at your desk. For people who are, who have a donor advised fund, I could establish a charity as the recipient of all those remaining funds upon my death. In my particular case, I’m trying to teach my children the value and importance of philanthropy, so I’m more likely to transition the remaining assets to them so that they can continue to be philanthropic through this wonderful tool and device. So, yep, we’ve covered a lot already. And I know we’ve gotten a lot of questions. So let’s turn and try and answer a few of those.

Okay, I have a few right here. So one of them, is there a maximum number of nonprofits that you can give to annually through Vanguard charitable? No, there’s not. So we have donors that will make one grant a year to a charity, you know, there’s possibility that they’ve been growing the account to give a major gift to one of their nonprofits, or you can give to 50 or 60. Back,

you know, so I intended to mention it, but, you know, I’ve had my donor advised fund for a little less than 10 years, okay. And over those 10 years, I’ve given to about 70 different nonprofits, and made almost 300 separate individual donations, you know, over that period of time, but again, that may, as you pointed out, some people have a more narrow and targeted approach.

Right, right. And another question Is there is there a minimum distribution annually from a donor advised fund, so unlike a private foundation, where they must give out a required minimum distribution of 5% on an account by account basis, with within Vanguard, charitable, you know, doesn’t have to give out anything in a given year, he could wait a year or two, if he’s trying to develop a philanthropic plan. But see, we talked about the 21 and a half percent distribution from the donor advised funds. So, you know, in any given year since our inception for 19 years, we’ve given between 15 and 20%, through Vanguard charitable, but the average across donor advised funds 21%. So you can see there that donors are giving every year. So I think they’re looking at us as on an aggregate. So on an aggregate, we have promised the IRS that will give out 5% of our fund at Vanguard charitable, but we clearly give out much more than that through the generosity of our donors,

which is one of the things that also again, makes it nice as a donor that you’re not you have more flexibility in terms of how you can use it. You know, one of the questions that several people have asked is about the idea of how they can identify donors who have, you know, when they get a contribution from Vanguard, how, how they, how they can identify who the donor is. So you If I can speak to it, I think from my perspective, and then I’ll let Cindy speak to it. So when when I make that donation, you know, there is an option if I want to make my gift anonymous. Okay. And, you know, I don’t choose to do that. And I think you indicated that the vast majority of Vanguard donors don’t choose to make it anonymous. And in fact, I can also even suggest how I would like the gift to be recognized whether I want it to be from the Schoenberg family trust or from Doug and Lisa Schoenberg, or the Schoenberg family, etc. Obviously, Cindy can’t necessarily speak for all, all donor advised funds, but you know, why don’t you speak generally to the issue of pseudo anonymity and or the ability to, to learn who donations so

like I said, 95% of our donors are giving and giving a name of who’s sending the grant. So we do give them a lot of options where they can give their fund name, or they can even you know, you’ve got a lot of people that are using donor advised funds, like it’s a private foundation. So you may have a family of, you know, two brothers that have each have five siblings, and they may even have kids. So you may have 15, people involved in one donor advised funds, they have the opportunity to name one person, that is the recognized individual that sending the grant, they also have the ability to do the grant in honor of someone or in memory of someone. And all of that is listed in the payment that is that we send to you to the nonprofit. So we will send a check on behalf of the donor. And we send a letter that’s included with that check that has the donors wishes on it. So if that letter comes into a development office with a check, and whoever, whatever department is going to within the charity, that letter needs to go on to the department. So that department knows exactly who to thank, you know, and who to recognize for having given that grant? I think that’s a that’s a really good question.

So So another question that seems to be being asked by a few different people in different ways, really has to do with this idea of, you know, figuring out quick Vanguard is the right person to speak to or things along those lines. I think it relates to, you know, what is oftentimes a common misperception I think. So, in my case, and in most cases, Vanguard is is not making decisions about where these assets go, Okay, I’m making them you know, I am the account owner and the decider about, you know, this philosophy. So, you shouldn’t, in general, may not be a bad idea to try and develop good relationships with people who help donors at donor advised funds, but I don’t look to Vanguard to say, hey, what would be a really good charity for me to,

to give too, right. And that might be a little bit different for nonprofits in that they work often with Community Foundation. So Community Foundation’s within them do have an offer donor advised funds, but Community Foundation’s also offer a lot of other things. They have filled up interest funds, and they have the ability to, you know, take donors through their community. And if they’re interested in something very specific in that community. You know, a community foundation may recommend some nonprofits that are going on in that community. A national donor advised fund like Vanguard, charitable Schwab charitable fidelity, charitable, we are just that we are only offering a donor advised fund, we all remain cost neutral. So your relationship, you want the relationship you have to be with the donor that’s sending the assets through their donor advised funds, not necessarily the donor advised fund. The only thing I can say about the nonprofit’s relationship with the donor advised fund is on the grant side. You know, we may have a question about a grant. Like I think there was a question up there about you know, can you get any personal benefit, so, can you give to a charity that is having a, an event and you get a table at the event, so that That’s not fully tax deductible. So our grants team is going to look at that because the donor has gotten the charitable tax deduction, when they put the assets into bank, our charitable, all the assets going out of Vanguard charitable have to be that same type of tax deduction. So if our grants team takes a liquid a grant, and has a question about whether this is fully tax deductible, or if the donor is going to get a benefit back, we’re going to reach out to the nonprofit and talk to you about it. So if we can work together to streamline that process, that’s the benefit of your donor and the benefit of our donor. So we definitely want to work closely together on that grant side, for sure. You know, and

I’ll make another little chip as it relates to it, because I have had situations where, you know, there was an event, and I was asked, you know, would I be a sponsor, and entitled me to a table or whatever it was, and I have done that through my donor advised fund. But what I’ve said to the nonprofit is, yes, this is a donation, I got that thing, you know, I cannot receive any direct benefits back. So to the degree that I’m going to attend the event of buy tickets separately for the event, that said, a wonderful thing that you could do, you know, is to perhaps if if a donor did that to say, you know, you’ve been such a wonderful supporter of our organization, we’d like to give you two tickets to the event. As long as there’s no quid pro quo involved. That’s, that’s an allowable transaction. And it really is a way to sort of, you know, build that connection with the donor and recognize that, you know, there are some things about how they’re choosing to give that may not fit into your traditional model of sponsorship and things along those lines.

So things can be worked out, like our grants team can work with the nonprofit, and we are feeling like nonprofits are getting more savvy about grants that are coming from a donor advised fund, and separating that out or when they’re getting a nice donation from a donor, simply inviting them to the event. Invite them that was a nice donation. Thank you, we would love for you to come with them. They’re just gonna go nation even a long time to

come. Yeah. All

right. And then there are a couple of questions about grants that we deny, I can tell you that 99.9% of the grants that go out, go out that grants that are asked or requested go out there, very few are denied. It’s mainly about, you know, if the nonprofit is still in good standing with the IRS, meaning that they’ve done their nine that you know, could put their 990 in to the IRS for the last three years. You know, there’s very, very few times have we denied a grant outright, it could be about that personal benefit that the donor is getting benefit back. I mean, a donor certainly can’t give to their University Athletic Department and receive football tickets for the, you know, for the whole fault. So some of those things are where we will stop that. But the donor then ends up trying to choose how to donate that grant in a different way to the university. And then somebody asked about if we deny grants in the with a legacy option. So when a donor establishes a donor advised fund, we do ask them right at the onset to set up a legacy plan. And if their legacy plan lists nonprofits, we we will vet those nonprofits here and now. So if there is any trouble, we could go to the donor right then and there and tell them that that you know, that nonprofit is not in good standing or something that’s actually never happened. But we do that those nonprofits right right now. So the donor is all set with that legacy plan.

You know, one of the other questions that I saw someone has asked was advice about, you know, how to speak to donors about their donor advised funds and what to talk to him about. You know, and I think in general, my advice is, first of all, to the degree that you know, that someone has a donor advised fund and and is a supporter of your organization. You know, I would not object at all, to, you know, be asked fairly directly about it, you know, when and why do you choose to use your donor advised fund, as opposed to making donations direct Actually, you know, what are your thoughts about, you know, the disposition of the remaining assets? And, you know, I prefer, you probably asked me that question when I’m a little bit older than I am today. But so, you know, I think that that’s fine. And I do think that a nonprofit has the opportunity, in many, many cases, to be a source of a certain amount of expertise to donors. So, you know, I think at this point, I’m a pretty knowledgeable doe, donor advisor, and maybe Cindy can correct me if I’m wrong, as it relates to, well, it’s a combination of things I’ve had one for, you know, a while we’ve done a few of these sessions together, so I’ve learned a fair amount in that process. And obviously, you know, our business is very much nonprofit focused, I’m interested in that side of it as well. But, you know, many, many donors don’t fully know and take advantage of the ability to donate appreciated stuff, you know, many people just make a straight cash donation to a donor advised fund. Nothing wrong with that. But there is that potential for them to increase their effectiveness, or I’m sure many of you do get direct donations of stock from a donor. And, you know, I at least would have welcomed a nonprofit that said to me, Hey, I know you want to give us the stock, and we’re really appreciated. But have you ever thought about, you know, setting up a donor advised fund and doing it to it, you might even describe, oh, why haven’t donor advised funds, and it could make your processes and life easier, as well as that for the donor? And it’s, again, part of building that connection and relationships? So those are a few ideas of how I might like to be engaged around that kind of conversation?

Yeah, I think that’s good to hear. And I can tell that there are some questions about how can we find who these people are that have donor and advised funds? How can we tap into that market, which I understand your interest there? And, you know, I would say that if I ask, you know, ask, just like, you have donors that are giving from private foundations or donors giving through their checkbook, you know, there are donors that are giving through their checkbook that do also have donor advised funds. So, you know, sometimes you’ll have a forum where you say, you know, check this box, if you have included us in your will, you know, you could always add something like check this box, if you have a donor advised fund. Or if you have a donor that’s giving securities, and it’s, it’s kind of a problem for them, or it’s not so easy, you may, you may recommend a donor advised fund it, you know, makes you look, you know, savvy and all the giving vehicles that are out there, and that your interest is in helping your donor find the best way and easiest way to get their assets to the nonprofit. You

know, and one other comment that I will make, I mean, you know, again, there’s no directory of who these 238,000 people, you know, are, but there can be things that might be an indicator. So I know some of you use, you know, wealth screening services, or do research on on donors. And certainly, if you’re looking at and, you know, a record where you see someone has made a gift to an organization through the Schoenberg fower charitable trusts, you can’t be sure that that’s a donor advised fund, as opposed to an individual donation. But again, it’s a pretty good indicator that perhaps they’re using the vehicles and I often see, you know, roll calls of, you know, recognition lists, etc, that that might be indicators of that, well, you’ll

definitely see most often you’ll see charitable fund. So you won’t often see you know, the word Foundation, or the word endowment, or actually the word Trust, because least legally, that’s not what we are. So most Donor Advised accounts and in the word fund, so, you know, the Jones family Charitable Fund, Smith, family giving account fund, so that can give you an indication.

Yeah. And I guess I should point out right now, I mean, you know, there are a lot of you on this webinar, we’re getting lots of questions. It’s unlikely that we’re going to necessarily get to answer all of them here. We’ll try and answer certainly some more of as many of them as we can. What we may do afterwards is trying to synthesize some of these questions into frequently asked questions, and perhaps put together some written answers that we might be able to offer to people who are interested in. But that is not to say that we don’t want additional questions, because, obviously, these are great questions, and we’re happy to answer them. I see a question about, you know, what happens when a stock is donated to a donor advised fund? You know, I think in almost all cases, you know, the stock is sold, and, and, and converted into cash. Donor Advised. Organizations like better Vanguard charitable, are not really in the business of retaining and holding assets. That’s kind of the scenario that perhaps someone might create a personal foundation for things along those lines. But again, from my perspective, you know, that’s perfectly fine. One of the things that has been interesting, you know, we’ve tended to talk about donor advised funds as an efficient giving the vehicle for appreciated stock. But the reality is that there’s other kinds of assets as well, that can benefit from the same favorable tax treatment of eliminating capital gains, treatment, obviously not. So there are mechanisms today, that many donor advised funds for someone to give real estate to or artwork or things along those lines, again, it’s going to typically be in a model where it’s going to be sold and the proceeds become the asset and the donor advised funds. Stocks are probably the easiest cash and stocks are the easiest assets to deal with. But it is not exclusively restricted to that. Yeah.

And I’m also seeing a couple of questions that, you know, talk a little bit about, what, what interest areas are mostly being given through donor advised funds. There was also a question about do Donor Advised Funds use GuideStar? Or do they? Or do their donors use GuideStar? So with some of those questions, I may suggest, not that you have the capacity. I know, we are all nonprofits, and we’re at capacity and all the work that we have to do. But you know, if you have somebody in your offices that could maybe prove some of the donor advised fund websites, you could actually see we have a resource center where we list resources for our donors. GuideStar is a big one, because GuideStar lists all nonprofits across the United States. We also like Vanguard charitable, and I, I’m pretty sure fidelity just did one as well, you know, a survey to our donors, and you know, what their giving patterns were, who they were giving to how often they were giving. And that is on our website, our our thought leadership piece, that is the results of our survey is called an inside look. And you can find that on our website. And it does say that 35% of the funds going out are for Human Services. 25% is education. 12% is religion. 8%, civic 6% health. So it goes on from there. So you can find a wealth of information on the websites of donor advised funds to kind of learn more about their donors. And also the resources that we are suggesting for our donors. I mean, because our donors are being more strategic. They’re looking for that philanthropic consultative conversation. So we’re are trying to through the Resource Center, give them you know, some ideas of how they had that conversation with their family. What’s the best tool for them to gift, you know, that kind of thing. So you can find a lot out there on the website. Great.

Another question that I’ve seen, several people ask is really around the best practice or most appropriate way to record the gift. And presumably that would be within DonorPerfect or whatever tool you’re using for managing that. And it looks like, you know, the the question, some people were asking, was this a gift from an individual or is this a gift from a corporation or a grant or an entity? Well, you know, Now in truth within, you know, up, since that doesn’t, as far as I’m aware, have any material difference to anyone other than your organization, how you want to think about it, I’m not sure that it really matters, whether you thought of it and representatives an individual gift or an entity gift, I think that the, you know, and the other side of this is this question about whether to, you know, so you could have one donor in your database, that was Vanguard, charitable, okay. And you could record all these gifts as coming from Vanguard charitable, and then soft credit, the individual donors record, and since Vanguard charitable is not a, an individual, it is an entity, you know, you know, I would categories, categorize that, you know, that way, again, remembering that, you know, even though they are the conduit for those funds, they’re not the decider. So, you know, there’s no real requirement for you to provide them, like Vanguard a gift acknowledgement, I’m sure you get sent many of them, and I assume that for the most part, that’s completely unnecessary, even more to the point, there’s no real reason to invite them to your gala next year. Okay, or to send them you know, you know, a solicitation and things along those lines. So save your money. Okay, Mark, that record as one that doesn’t require that kind of communication, but me as the individual, you know, yes. Another way that you can absolutely do it and record it is, you know, if I always give through my donor advised fund, you know, or if I sometimes do, you can have a record for me, you know, that says that, you know, the Douglas Schoenberg charitable trust. And in that scenario, it’s all it is. It is me as an individual, I would consider that individual and record that donation there, again, recognizing that those donations are coming through this conduit, entity, pick cetera. So yep, that’s kind of my best advice for you. And obviously, to the degree that you’re a customer of ours, certainly, you can always, you know, there may be individual circumstances for you that might drive one preferred method or another. And I’ve encouraged you to speak to our support team, or I think I think we’ve created and if we haven’t, we certainly will create sort of a Best Practices Guide for donor advised funds and incorporate that into our client knowledge base.

Yeah, and there’s still some other questions about all the different donor advised funds and what you know, what are their minimum amounts and things like that they do vary pretty vastly. And it really kind of depends on the philanthropic wishes of your client. You know, you can open an account at some donor advised funds for as low as $5,000. Vanguard charitable is minimum is 25,000. There are some lower grant minimums as well. And Vanguard charitable like duck said, it’s $500. And you can you can also find that information out on all of the website. I did, I did see that there was a question about the fact that they’ve read something about, you know, donor advised funds are just a vehicle to hold the asset, and not get them on to charity. And I do want to respond to that because I think it is important to know that although this is a giving vehicle for people to receive a charitable tax deduction in one given year, and not have to disperse all of that out to charity at once it is allowing you you know, you’re not giving the charitable tax deduction to the donor. So a donor is being able to send it out to five different charities without having to, to, for the charity, to have to give them the tax deduction. We give them the tax section, but just know that yes, across the donor advised fund space 21 and a half percent of those dollars are going out to charity every year. And when you think about 70 billion sitting in donor advised funds, that’s a lot of money going out to charity every year. So you know, the donors are very generous. They’re just really strategic and very thoughtful.

Okay, well, we’re coming to the end of our committed hour so I’d like to just turn to wrap up. And as I said, we’ll try and figure out the best way to more broadly answer all these great questions. But we very much appreciate everyone’s

comments. Right? So let’s just do a couple of takeaways. And I’ll just take a minute to do this. I mean, you know, at Vanguard charitable and, and throughout the industry, we need to be looking at how best we can serve these donors. So, you know, engage your donors through a consultative dialogue, you know, understand, what are their drivers forgiving? What are their philanthropic goals? How did those goals intersect with their financial plans? You know, is it securities? Or do they have some special assets that they don’t need anymore? And they’re trying to figure out how you know, how to donate that, and they didn’t even realize they could donate it, you know, target your communications based on your donor segments. Think of how you might approach your donors with Donor Advised Funds differently than donors who primarily give to their checkbook. And, you know, think of how you want to communicate with donor advised funds, when they call with a question regarding a grant. You know, what is your process and timing for responding to them? How can you facilitate communication to resolve any issues that may arise? You know, like I said, before, we’re all looking to streamline the process with our donors, your donors and our donors. Think about that plan giving opportunity. That’s, that’s a very large opportunity for you. I mean, just like I said, you may want to, you know, include on your information forms where you put the checkbox this is a, you know, check here that you’re with were included in your will, you may want to ask them whether they have a donor advised fund in that area. You know, as we talked about earlier, philanthropy is evolving. And we all need to be able to adapt. So if nothing else, I hope you see that donor advised funds are not a gatekeeper between you and your donors. And reality, you know, the knowledge that your donor has a donor advised fund, it provides you with a treasure chest of information that you have the power to, you know, unlock.

All right, so we are out of time. Thanks again to Cindy and Doug for sharing your knowledge on these donor advised funds. As I mentioned in the beginning of the A, the recording will be sent of today’s session to all registrants and we’ll also work with Doug and Cindy to get written responses to the questions that went unanswered. And we’re also going to include a link for you to download our free ebook The nine facts every nonprofit should know about donor advised funds, so you’ll find some further information in there that may not have been included in today’s presentation. Vanguard would also like to send the attendees of this webinar information related to thought leadership relevant to nonprofits so if you prefer your email address is not shared with Vanguard for this purpose. Just please enter your email into the question box now. And thanks again for everyone for attending. Keep an eye out for the email with the recording and questions and our next expert webcast will be on November 19. Donors data and dollars benchmarks for your fundraising work. So again, you can look for an email to register for that in the near future. So thanks, everyone, and have a good afternoon.