1. Gifts From Donor-Advised Funds What Fund Development Professionals Need to Know
Clyde Kunz, presenter

2. Largest Charity in the USA?
Fidelity Investments Charitable Gift Fund
Became nation’s top charity (by contributions received) in 2016
Now the 2nd-largest grantmaker in the U.S. (behind Bill & Melinda Gates Foundation)
Currently holds $15.34 B in assets
Made $12.5M in investment management fees from its Donor-Advised Funds
Clyde Kunz & Associates LLC

3. Donor-Advised Fund (DAF)
First created in the 1930s, although Congress did not establish a legal structure for them until 1969
The term “donor-advised fund” not used by the IRS until the Pension Protection Act of 2006 (Pub. L. No )
Today, DAFs are holding more than $80B in assets; account for close to 6% of all charitable giving (more than $22.2B in 2015)
Clyde Kunz & Associates

4. Donor-Advised Fund (DAF)
From the IRS…..
“A donor advised fund is a separately identified fund or account that is maintained and operated by a section 501(c)(3) organization, which is called a sponsoring organization. Each account is composed of contributions made by individual donors. Once the donor makes the contribution, the organization has legal control over it. However, the donor, or the donor's representative, retains advisory privileges with respect to the distribution of funds and the investment of assets in the account.”
Clyde Kunz & Associates

5. Donor-Advised Fund (DAF)
A philanthropic vehicle established at a public charity (aka ‘sponsoring organization’):
National Charity (commercial-related)
Community Foundation
Single-issue Charity
Donor makes contribution(s) to the DAF
Donor receives immediate tax benefit
Funds grow tax-free within the DAF
Donor may then recommend grants from the DAF over time
Clyde Kunz & Associates

6. Donor-Advised Fund (DAF)
Donor may make additional contributions to the DAF
Once given, the DAF belongs to the recipient sponsoring organization (not the Donor)
Grants made to NPOs are grants from the sponsoring organization, not the Donor
Donor may not receive benefits as a result of recommending the grant
Clyde Kunz & Associates

7. How Donor-Advised Funds Work
Clyde Kunz & Associates

8. Growth in Number of DAFs
Under 100,000 in 2005
Clyde Kunz & Associates LLC

9. Growth of DAF Total Balances
Under 100,000 in 2005
Clyde Kunz & Associates LLC

10. Growth in Avg. Size of DAFs
Under 100,000 in 2005
Clyde Kunz & Associates LLC

11. A Philanthropic Trend?
From , total charitable giving increased at roughly 4% per year
For the same period, giving to DAFs increased at an average of more than 15% per year!
Clyde Kunz & Associates

12. Comparing DAFs & Foundations
From 2005 to 2015….
The number of Private Foundations (PF) grew 20% (from 67,736 to 81,802)
The number of Donor Advised Funds (DAF) grew 143% (from 110,673 to 269,180)
Avg. PF assets = $9.5M; Avg. DAF assets = $235K
PF payout = 5-6% annually; DAF payout = 20%+
Clyde Kunz & Associates

13. DAF vs. Direct Gift to Charity
Donor Advised Fund
Sponsoring Organization has experience receiving various types of gifts
Can make multiple contributions with just one securities trade
Tax-deduction is up-front; giving can be spread over time
Some DAFs may allow gifts to foreign charities
Administrative costs to a DAF
Giving can be anonymous
Direct Gift to NPO
Nonprofit may not be set up to accept securities, real estate, etc.
If giving to multiple NPOs, several transactions required
Must take tax deduction for gifts in the calendar year in which gifts are made
Gifts to foreign NPOs may not be allowed
No costs involved in making gifts
Anonymity not assured
Clyde Kunz & Associates

14. Comparing Sponsoring Orgs
National Charities (Commercial)
Community Foundations
Single-Issue Charities
Minimum investment
Low minimums
Low-to-moderate minimums
Varies
Fees
Low fees
(admin & investment)
Low-to-moderate fees
Investment options
Many investment options
Several investment options for most funds
Generally very limited
Endowments
Current philanthropy only
Both current & endowed philanthropy
Successors
May/may not allow for successor advisors
Allow succession
Grant-making
Allow grants to multiple charities
Generally restricted
Anonymity
As requested
May/may not be possible
Donor Advice
Provide limited (if any) local community info
Familiar with needs in local community
May be limited to NPO and its partner organizations

15. Grant Recommendations from DAFs
May not be made to individuals
May not be used to pay pledges donors have made
May not generate benefits to the donor
May not be made to private foundations
Are restricted to 501(c)(3) organizations, communities of faith, government agencies (such as schools)
Clyde Kunz & Associates

16. NPOs Need to Know….
Thank-you letters to donor should never contain “tax deductibility” information
Thank-you letters to anonymous donors can be sent to sponsoring organization for forwarding (commercial sponsors may/may not)
Recognition lists should read: “The [name of fund] held at [sponsoring organization]” (or similar language)
Donor benefits probably may be paid directly by donor
Clyde Kunz & Associates

17. Thank You! Kunz@cox.net ● 520-977-4019 ● www.ClydeKunz.com