A Candid Conversation about
DONOR ADVISED FUNDS
Many donors want to make a greater impact on organizations and causes that matter most to them. That’s why many choose a Donor Advised Fund as their go-to charitable giving tool. DAFs are also a great way for donors to leave a lasting legacy of giving for their family and community, for generations to come. We sat down with Jonse Young, director of philanthropic services at Grand Rapids Community Foundation, to learn more about this unique giving tool. ASHLEY RENÉ LEE: FOR THOSE WHO ARE NOT FAMILIAR WITH DONOR ADVISED FUNDS, CAN YOU EXPLAIN WHAT THEY ARE AND HOW THEY WORK? JONSE YOUNG: Donor Advised Funds are charitable funds established with an entity such as Grand Rapids Community Foundation. The assets are turned over to the Community Foundation, we invest and grow them, and then we help advise donors and their families on where they should direct grants according to their interests. A: DO MOST DAF FOUNDERS COME TO THE COMMUNITY FOUNDATION KNOWING EXACTLY WHERE THEY WANT THEIR DOLLARS GRANTED? J: It varies. We have donor advisors who say, “I know that I want to support these specific organizations. Please make these grants.” Other donors have a set list of their favorite organizations, but they also welcome our community knowledge of who else is doing great work in the areas they are passionate about. Lately, we have noticed that many donor advisors really lean on us for recommendations. They say, “I am charitably minded, but I am not necessarily connected to any particular organizations. I know that, as a community foundation, you are able to make that connection for me. I have established a DAF because I want to benefit from your community knowledge.” A: WHAT IS THE BENEFIT OF GIVING TO A DAF AT THE COMMUNITY FOUNDATION VERSUS GIVING DIRECTLY TO ORGANIZATIONS?
For more information about Donor Advised Funds, please contact Jonse at 616.454.1751 x108 OR jyoung@grfoundation.org
J: A DAF is good for anyone who is charitably minded but just a bit busy doing life. Families who want to pass on the tradition of philanthropy often choose DAFs, because the next generation can advise beyond the fund founder. Also, a DAF is a great giving strategy for people with a liquidity event. Perhaps they’ve sold a business, inherited funds or, because of other income, need to donate a certain amount of money for tax purposes. If that certain amount is at least $25,000—our minimum amount to start a DAF—then we can help them establish a fund, and they can get an immediate tax deduction. We keep in contact with professional advisors who may introduce us to clients who might benefit from the services the Community Foundation offers. A: HOW DO DAFS HELP CREATE A SENSE OF LEGACY FOR DONORS AND THEIR FAMILIES? J: We talk to donors about things that matter to them individually. Many want to leave a legacy of giving, so we talk about how that transfers to their children or other family members. We talk with families about their family values and mission statements, and we help them stay on target with their philanthropy. Each year we provide them a report that shows their focus areas for the year. We ask, “Does this align with what we talked about initially in terms of your charitable goals and your family values?” They can either say, “Yes, that works,” or “No, I think I really want to do more of this, because I really want my children to understand the value of supporting education, the environment and the like.” A: WEST MICHIGAN IS A VERY PHILANTHROPIC COMMUNITY, AND WE HAVE THIS LONG LEGACY OF GIVING. HOW DO DAFS PLAY INTO THAT COMMUNITY LEGACY? J: DAFs play into that legacy in many ways. Most notably, DAFs can do good now, but their impact can be felt in perpetuity. When a DAF advising period ends, such as when the last advisor successor dies, then the funds usually go into the Community Foundation’s unrestricted Fund for Community Good. This allows the Community Foundation to address ever-changing community needs by way of its competitive grantmaking process. That speaks to legacy and ensures that philanthropic dollars are always there for our community. A.R.L.
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PARTNERS in community | 9
J: The DAF is sort of like a one stop shop. Once the funds are here and a donor says they want to make five grants this year, they can just do all of that in one sweep if they want to. It’s a convenience. Also, the Community Foundation has more access to due diligence than many donors have and can take a deeper dive to vet organizations. We do this work for our donors, so they know their funds are supporting a viable organization.
A: WE KNOW THAT THE COMMUNITY FOUNDATION OFFERS MANY WAYS TO GIVE AT DIFFERENT LEVELS OF INVOLVEMENT. WHAT TYPE OF DONORS OR COMMUNITY MEMBERS ARE DAFS A GOOD GIVING STRATEGY FOR?