GivingMarket/DonorAdvisedFunds

Michael—Just having a sense from our conversation the other evening about your vision with GivingMarket. Your idea called to mind Donor Advised Funds (DAF). These are a burgeoning giving vehicle for philanthropists, and have empowered people with less money to have more control over how it’s invested (in some cases) and how it’s given. We launched one during my time at The Rotary Foundation, and I did a lot of research on them and the marketplace, and on the people who were giving to Rotary via a DAF.

Anyway, here’s basically how they work: The donor opens a DAF with a nonprofit; the gift can be in stocks, appreciated securities, bonds, or cash, and the gift is irrevocable. The donor gets an immediate tax deduction for the gift. This sets up a DAF account for the donor. So they have this pot of money that gets invested so the money grows (hopefully). They can add to this pot and make it bigger. The only way they take money out of the pot is to give donations to organizations from this pot. Each non-profit that has DAF accounts has different stipulations on what happens to the funds after the person dies (usually a percentage goes to the nonprofit and the donor decides to which organizations the remainder is disbursed).

This vehicle has ballooned in popularity among nonprofits because it gives donors more options and control over how their legacy is distributed without the hassles of setting up a private 501(c3) organization—the nonprofit administering the DAF for the donor deals with all the tax hoo-hah.

Also, big money managers like Fidelity and Vanguard have their own DAF programs. Fidelity Charitable Gift Fund and Vanguard Charitable Endowment Program are the names. These are 501(c3) organizations in their own right. (In fact in the largest nonprofit lists Fidelit's Charitable Gift Fund has been in the top three for the last few years.) The difference for donors with these is that the donors can decide how the money is invested when they make the donation (donors usually can’t do this when setting up a DAF with, say, a community foundation—the money is invested according to the foundation’s board’s directives, etc.), and the donors can disburse the monies from their DAF account online via the Internet (they could do this at Rotary, too), which made it really easy for those into using the WWW.

My research showed that DAF minimum accounts sometimes were as small as $1,000 and the high end was $25,000 minimum. Towards the end of my time at Rotary (September of 2003) I was seeing more and more DAF programs at organizations and more and more DAF programs with lower minimum levels. I was seeing some of the small community foundations in smaller towns having lower minimums, and some larger organizations that were really decentralized (an example of this would be the American Red Cross) having lower minimums, as well.

I don’t know what all this means for your GivingMarket idea. All I know is that the DAF is a kind of model to look at. Also, I’m not sure how individuals would give more than $10,000 to another individual on GivingMarket and not involve tax implications when the recipient is not a 501 (c3). I know I can gift somebody $10,000 during a calendar year and it’s considered a gift. More than that the IRS comes and tickles you and the recipient.

Also, not sure what I can offer to GivingMarket space as someone wanting to help philanthropists focus on where and how they want to give and identifying the right recipients for them. Space to discover and listen, creating relationship with the potential recipient and research to identify the recipient is what I can offer. I am working on how to market that as I find my way in a new way of working.

That’s it for now. I hope this is helpful. Let’s talk again soon. --MarlaTofle?

''Thanks, Marla. This is fantastic. I posted the other SF Chronicle info to MicroPaymentsGrowth?. --MichaelHerman