Financial Perspectives: Insights from Investment Professionals

CHATS: Philanthropy in Wealth Management & The Impact of Donor-Advised Funds

• CFA Society San Francisco

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On this episode of Financial Perspectives: Chats, we'll discuss how donor-advised funds (DAFs) revolutionizing the philanthropic landscape in America. Join us as we sit down with Alyssa Heath - Chief Operating Officer & Director of Social Impact at Fire Capital Management – and Pamela Doherty - Senior Director of Gift Planning at The San Francisco Foundation to explore the mechanics and impact of DAFs. 

Holding nearly $230 billion in assets and boasting an annual payout rate of over 20%, DAFs are changing the way donors think about charitable giving. Discover why these funds are gaining attention and how they are becoming a cornerstone in modern philanthropy. We delve into potential regulatory changes and their broader implications, while also discussing strategic approaches for wealth advisors to integrate philanthropy into client conversations. 

Whether you're a seasoned donor, a wealth advisor, or simply curious about the future of philanthropy, this episode offers a comprehensive look at how DAFs are engaging multiple generations and reshaping charitable giving.


If you'd like to learn more about the show, have a topic or speaker to suggest, or would like to leave us a comment, email podcast@cfa-sf.org.


This podcast is produced by CFA Society San Francisco, a not-for-profit professional association, providing professional learning and career resources to over 13,000 investment industry professionals worldwide. To learn more about CFA Society San Francisco, visit our website or connect with us on LinkedIn.

The information contained in this podcast does not constitute financial or investment advice. Please consult your own financial advisor for information concerning your specific situation.

Lindsey Helman:

Hello and welcome to this month's chat segment of the Financial Perspectives podcast. Our chats episodes feature dynamic conversations between industry experts from some of our recent and most popular webinar recordings. This month, you'll hear a discussion on donor-advised funds from Alyssa Heath, Chief Operating Officer and Director of Social Impact at Fire Capital Management, and Pamela Doherty, Senior Director of Gift Planning at the San Francisco Foundation.

William Reynolds:

Good afternoon everyone, and thank you for tuning in today. My name is William Reynolds and I am a member of CFA Society San Francisco and part of the Young Leaders Council. It's with my pleasure to welcome you to our edition of the Wealth Management Webinar Series, Philanthropy in Wealth Management - a conversation about donor-advised funds. I would now like to introduce my friend colleague and our moderator for today, Alyssa Heath. A is the COO and Director of Social Impact at Fire Capital Management, a boutique investment management firm providing private wealth management, multifamily office and foundation OCIO services. Since joining the firm in 2019, she's been working with FCM's clients to support them in achieving their impact and philanthropic goals. Prior to FCM, Alyssa worked with the philanthropic sector, most recently serving as the Executive Director for Golden Bridges Foundation. Alyssa, I'd now like to turn the floor over to you.

Alyssa Heath:

Thank you Will, and thank you to t CFA Society of San Francisco for hosting this event and inviting us here today, and thank you to everyone tuning in. We are here today with Pamela Doherty, senior Director of Gift Planning with the San Francisco Foundation, and so we're here today to discuss the rise of donor advised funds, also called DAF. We'll discuss what they are, how they work, the recent trends and criticisms related to staffs, and more. Pamela has been with the San Francisco Foundation, one of the nation's largest community foundations, for the last seven years and focuses on building relationships and strategic partnership with prospects, donors and professional advisors. She works closely with individuals, families, businesses and private foundations and with their legal, financial and wealth advisors.

Alyssa Heath:

Ms Doherty has 30 years of experience in the philanthropic arena and prior to joining the San Francisco Foundation, she spent seven years as a nonprofit consultant, served as the CEO for the Carondelet Foundation and was the founding executive director for the Center for Planned Giving at the Community Foundation for Southern Arizona. She holds a master's in public health and is a certified life coach as well. So let's get started, Pamela. It's great to see you.

Alyssa Heath:

So over the last decade, the rise of donor-revised funds have really changed the philanthropic landscape and the way that donors many of whom are likely clients of those attending the webinar today engaged with their allocations of wealth and charitable giving. So we'd love if you could just start by setting the stage of the donor advised fund landscape, and then we can launch into our discussion from there.

Pamela Doherty:

That sounds good, thank you. I'm so happy to be here with you and Will today and CFA Society, and so what I'm going to do is share my screen. I've got about 10 minutes of content, of PowerPoint to set the stage, and then you and I can continue on with our discussion, so let me share my screen.

Alyssa Heath:

And just a reminder, as Pamela's setting up the PowerPoint, you know, as you have questions, please feel free to put them in the Q&A chat and we'll get into them at the end, towards the end of the discussion.

Pamela Doherty:

All right, hold on. Okay, all right. So we talked about what we're going to cover, and so I just want to spend a few minutes setting the table, if you will. I'm going to talk a little bit about philanthropy in the US, because I think that's an important backdrop. Then I will hit the highlights of donor-advised funds. I'll talk to you a little bit about their scope and size, and then I'll give you a brief overview of the mechanics of DEFs, just to make sure that we're all on the same page. I do want to touch a little bit on donor advised fund sponsors, and then I'll say a little bit about why DAFs are getting so much attention, and, if we have time, we can talk further about that in our discussion.

Pamela Doherty:

Okay, so I think it's important to know that Americans, by and and large, are considered very generous and philanthropy has always been a really important part of our society, part of a democracy, part of our society, part of a democracy, and so Americans give a total of almost $500 billion, gave almost a total of $500 billion in 2022. And obviously that's lagging In philanthropy. We have very much lagging statistics. So 2022 is really the most recent year we have. So 2022 is really the most recent year we have. It's important to know that individuals make up the largest section of philanthropy. Sometimes, I think others may have a sense that corporate giving or foundation giving is a large part, but if you combine individuals and bequests, which are counted separately, they make up the largest swath.

Pamela Doherty:

Here are some stats for donor advised funds For those of you who are not familiar and don't have a sense of the size and the scope contributions into donor advised funds are really tremendous and it's a really fast-growing segment of philanthropy. The number of donor-advised funds, or DAFs, is almost 2 million. Total assets you can see on the screen almost $230 billion, with an aggregate payout that exceeds 20% annually. So, unlike private foundations, donor advice funds do not, by law, have a legal requirement to pay out every year. Private foundations, as you know, 5% DAFs don't have that requirement and yet the aggregate for national DAFs is 20% annually. I will say that all of these numbers are impressive and huge in terms of the breadth, of size and scope, but charitable giving in the US has actually declined over the past few years. There was a spike during the pandemic and so people really rallied and contributed more to charity. Granted more out of donor advised funds In 2022,. I don't have to tell this group we had a volatile stock market, and I will say that activity into donor advised funds is often very much tied to how the stock market is doing.

Pamela Doherty:

People can contribute all sorts of assets into donor advised funds, the most common not surprising being cash, but, of course, appreciated securities. There is no limit to the amount that someone can contribute into a donor advised fund, and certainly no limit in terms of the amount that can be subsequently granted out. Our CFO here at the San Francisco Foundation kind of jokingly says that this is the only environment where she could work, where we celebrate the fact that more sometimes goes out the door in a given year than what comes in, and that's because, when you work at a community foundation, like I do, one of our key indicators of success is making sure that charitable dollars get out into the communities that they're intended to serve. So what I'm wanting to illustrate with all of these facts and figures is that donor advised funds, within the context of philanthropy, really have the potential to make an impact. Your clients are very much engaged in philanthropy, and so what I want to say to you as a professional advisor, if you're not already. I hope that you take notice.

Pamela Doherty:

With respect to philanthropy, you know I've worked in the nonprofit arena for 30 years and I do so because I think philanthropy is a really important tool for social change, and so there's like this intrinsic value right that comes with philanthropy. But when you're a professional advisor, engaging in conversations about philanthropy and harnessing the popularity and the interest that your clients have is definitely, in my opinion, in my experience and observation, a really good strategy right for advisors to engage. We know from the data and you probably know this better than I that as wealth gets transferred from generation to generation, the potential to lose that family as a client is great right, and so one of the ways to retain that relationship with that family or that client is to engage them where they are, and where they are is most probably in philanthropy in some ways. Okay, so I'm going to take a step back now and just talk a little bit about the mechanics. So let's start with the definition.

Pamela Doherty:

What is a donor advised fund? It is a charitable giving vehicle administered by a public charity. It is created to manage philanthropic giving on behalf of individuals and families and organizations. I also work with municipalities and other nonprofits and so it's not just something relegated to the individual or the couple. You can have a donor advised fund if you are a corporate entity, if you're the city of San Francisco, like where I, you know where many of us on this call live, many of us on this call live. In the financial setting it's often called an account, we call it a fund, which is a legal definition.

Pamela Doherty:

Okay, so how does the donor advice fund work? So if you don't know, a donor which is again an individual or a corporate entity or municipality, or a corporate entity or municipality makes a contribution, using a variety of different assets, to a fund, qualifies for an immediate tax deduction in the year that it is given. And because they're giving to a public charity, they are qualifying potentially, depending on their circumstance, for deduction at the highest level. And when they establish their fund, they are electing, within the bounds of that public charity, that organization, that is, the sponsor they're electing how those funds will be invested, potentially to maximize their gift and grow over time. And I'm going to say a little bit more about how that works at the various DAF sponsors in a moment or shortly. But at a community foundation, we have our own investment pools and we work with our donors on their time horizon for giving and we help them select the pools that support their objectives In our world. We have impact investing options as well. We have program-related investment options as well, but for many, donors would like to maximize their giving and see it grow so that they have additional dollars to grant out over time.

Pamela Doherty:

So immediate deduction, the year that the gift is given to a public charity and then time without any requirement to make strategic decisions and grants at a later date. And in most cases, donors are using an online platform and a portal that's very much automated so that they get the money out the door in a timely manner when they are ready. I will say that there is a myth sometimes that donors abuse the donor advised fund times, that donors abuse the donor advised fund, that sometimes donors think of it as a tax shelter to warehouse money and that potentially, money languishes in donor advised funds for who knows how long. And when I say it's a myth, it's because at least community foundations have a policy that requires donors to be active. It's pretty flexible, but we are working closely with donors to get a sense of what their vision is and what their strategies are and we help them create those strategies. We try to inspire and encourage donors to be active At a community foundation because we are a grant maker and we work with thousands of charities. We have great information to share with donors about the organizations doing good work in the place that they call home. So Give Grow Grant is pretty much your standard formula for donor advised funds, no matter where that fund has been established.

Pamela Doherty:

I want to give you just a little bit of history, because I don't think that people realize that DAFs really didn't come on the scene until the 90s. But the first donor advice fund supposedly was created in the 1930s through the New York Community Trust, one of the oldest community foundations in our country. By the way, there are about 800 community foundations across the US and so if you're calling in from somewhere other than San Francisco or the Bay Area, you've got a community foundation near you and I would say that as a professional advisor, that community foundation is likely a great resource for you and your practice, not to mention your clients. So then in the 90s, fidelity got permission from Congress basically to start their own public charity, their own donor advised fund offering, and that's when donor advised funds really hit the map in terms of not only the commercial providers or sponsors, but also community foundations. The IRS codified it in 2006, and it's only today that they are coming out with regulations related to the law that passed in 2006. And if we have time, we can talk a little bit about those regulations and how they might affect you as advisors and how they might affect others in the space. So I want to quickly touch upon the different types of DAF sponsors, because those of you who are working in the financial industry, I'm guessing you are potentially at a firm that either works with a commercial provider or you are at a firm that offers DAFs yourself, and so all of these sponsors are public charities, right 501c3 public charities. They each approach their mission as a public charity a little differently.

Pamela Doherty:

I think in the donor advice fund and the philanthropic space there's room for everyone. They play slightly different roles. So commercial funds in particular have lower minimums to establish a fund. So some of them that I'm aware of it's $5,000 to start a donor advice fund. At my community foundation it's $10,000, and I know other community foundations and other single-issue charities sometimes have higher thresholds. Single-issue charity refers to sometimes educational institutions like Stanford has a DAF program. Others I know in the past, like United Way, has had a DAF program and other Jewish federations that kind of thing.

Pamela Doherty:

A community foundation offers donors who want to establish DAFs an opportunity to be part of, as the name would imply, a community. So we try to promote philanthropy, we try to educate our DAF holders, we try to have opportunities for them to learn about the most pressing issues of the region so that they can keep that in mind when they're recommending from their DAF. They get to talk to other fund holders, they get to exchange ideas, they get to go into trainings and learn. And so if you are in a position as a professional advisor to recommend a direction to your client, you need to understand, in my opinion, what makes that client tick, what would make that client excited, where that client could really feel connected. And I will tell you, as someone who sets up the donor advised funds at my foundations, it is often people that people are coming because they want to be part of something larger and they want to interact with others. And a community foundation, no matter where that is we've got several in the Bay Area, but again they're across the country A community foundation is a great place to be for those types of donors, whether they had a windfall right, they went public and now have this money for philanthropy that they don't know what to do with, or whether they're like a seasoned veteran and just want to be, you know, in the circles of other philanthropists and everybody in between.

Pamela Doherty:

Commercial deaths, in my view, are a great place to be. If you care about really super low fees, you don't need the customer service and the philanthropic advising that's offered at community foundations and if you kind of look at your philanthropy or your DAF as like a charitable checkbook and you're kind of just worried about the transaction, then in my opinion, a commercial donor advice fund might fit that bill. Okay, just a couple of benefits. So benefits for the donor or the client or your client. Donor advice funds are flexible, meaning again, you get to set it up and we take care of all the paperwork right. So you really only are giving to one charity and so you get that one charitable deduction and that one receipt that you have to keep track of, because there is no tax event when grants go out the door. And for most staff providers, the portal that I referred to outlines all of your giving history, outlines all of your grants, kind of keeps everything organized for the donor. Again, the tax deduction, depending on the client's circumstances, happens in the year that they contribute to the donor advised fund. But they have time to make the decisions about where to distribute those funds, which we call grants, later on down the road.

Pamela Doherty:

It's a great platform for family philanthropy and it's also known sometimes as an alternative to a private foundation. And you know many of you know that a private foundation can be costly with respect to administration. You have to have a board, you have to have all sorts of compliance and it's not something that you set and forget. A private foundation requires a lot from you know, the family behind it, depending on whether they can hire staff or not. A donor advice fund kind of is that miniature version, and so families often engage with one another around a donor advice fund and then one of them is named the primary advisor and that's the person who can recommend the grant out. Recommend is a word that I'm choosing intentionally, because that is the law. The donor has relinquished control over the asset by making a charitable contribution, getting that tax deduction, and it is the DAF sponsor who has the ultimate power to approve that grant and, by and large, that DAF sponsor will absolutely approve that grant. I will say, at the San Francisco Foundation and many community foundations, we have a policy against approving grants to known hate groups. But other than that, donors are free to support the nonprofits that they care about, whether it's where the community foundation or that public charity is located, whether that's across the country or around the world.

Pamela Doherty:

Community foundations, because they play other roles and serve as grant makers themselves, have a lot of information to share with donors about where they might potentially give. We have values that we're very clear about. We're trying to make our home a better place for everybody, and so sometimes that really jibes with a donor or one of your clients, and so that might be how you would differentiate where you send that client. And, as I mentioned before, a donor advised fund or philanthropy in general, offers you as an advisor a benefit other than the reward that you get in your heart from being part of philanthropy. It is a great opportunity to build and retain relationships. I will say a very tangible benefit is that in some circumstances, a financial advisor and investment or wealth manager can manage the assets held in a DAF outside of the pools of that sponsoring organization separately managed funds program, which means that a donor can ask us to work with their advisor and you get to retain those assets under management rather than sending them out the door to the pools of the community foundation or the deaf sponsor. We work with you to continue to invest and manage those funds and be part of an equation and I think that that is, you know, a great benefit if that works out for everybody. Some advisors really need that incentive and other advisors don't feel that that's important, and no judgment. I think whatever works for the client-advisor relationship is great.

Pamela Doherty:

I'm going to just end on this slide because I know we want to get into discussion, but donor advice funds over the last few years have certainly been getting increasing attention from a variety of different vantage points. First of all, philanthropists in and of themselves are calling on their colleagues and their peers peer philanthropists to make sure that they distribute money from their donor advice funds in a timely manner. There is a couple who are well-known philanthropists who started a movement called Half my DAF, meaning they want people to accelerate their grant making and give out half of their DAF in a shortened period of time. There are critics in the philanthropic arena who again think that donors are kind of sitting on money, or that DAFs are competing with nonprofit organizations, or that DAFs hide the identity of philanthropists and that it's potentially a place to fund nefarious nonprofits. And all of that is potentially true in some ways and I think we as community foundations need to look at those hard questions.

Pamela Doherty:

We as community foundations are open to reform and doing things differently. Bills that have been proposed in recent years that actually community foundations fought because we thought they were poorly written and sort of like, based on certain premises that actually did do not hold up when you're, when you're in it and in terms of how donor advice funds actually work. And then the IRS recently has come out with new regulations based on that Pension Protection Act of 2006 and are now more narrowly defining or defining in more detail what is the donor advised fund and who is an advisor. And one of their definitions potentially jeopardizes that ability for community foundations to have separately managed funds and outside investment advising and managing. And I'll just kind of leave it at that in case we want to talk about it further.

Pamela Doherty:

But you know, stay tuned, there's a lot swirling out there. I think that in our industry we think that there is some room for improvement. We think that you know, placing regulations and unnecessary rules on things can have potentially unintended consequences that we don't want to see in the field. But I think you know we definitely are keen to move this forward because donor advice funds are not going away and so we need to make sure that they're working the way that they are intended to work. So with that I will stop sharing and happy to discuss anything you wish Alyssa. And back to you.

Alyssa Heath:

Well, thank you, pamela, for setting the stage there and getting a clear picture of what is the donor advised fund landscape. Let's dive a little deeper. I think you know perhaps where you just left off, actually talking about the proposed IRS regulations for donor advised funds, I think everyone here would be interested to know. Just in the last few weeks, they held a public hearing to discuss its plan to regulate donor advised funds, so it's very topical and many of those today here in the audience are likely investment advisors. Can you go into a little more detail about how actually these new potential regulations could impact them or others in the space?

Pamela Doherty:

And you touched a little bit on the Community Foundation piece, and so we'd love to hear more about that have been swirling around out there with respect to required minimum payouts or the identity of donors at a fund level, or requiring that DAFs have a certain life cycle. These are things that have been in the news and have been talked about by lawmakers, and none of that has been addressed by the IRS. What they're doing right now is just further defining what is a donor-advised fund and who is a fund advisor and fund advisors. In most cases, we think of fund advisors as the donor who sets up the fund and who recommends the grant, so they are the advisor to the fund. As you might imagine, per the law, an advisor cannot derive any benefit from that role, right? So the fund or the grant cannot be used to satisfy any pledge or debt or purchase a ticket or pay any expense, right, so the advisor cannot have any benefit.

Pamela Doherty:

Well, these proposed regulations are suggesting that now an outside investment manager is an advisor, and so if that is true, then that advisor cannot derive any compensation from being connected to the fund, and that basically kind of torpedoes this idea that a community foundation can retain, per the donor's way, affect the commercial funds. This is just something that is because of the way we work. It's something specific to community foundations, and we think that that is a problem because it certainly puts us at a disadvantage when we have the potential to work with an ultra high net worth individual who has a long standing relationship with a financial advisor that we, in turn, would like to continue to honor and for all of us to be at the table.

Alyssa Heath:

Yeah, absolutely so, like you said. I mean, I think we'll have to stay tuned to see how things pan out, but hopefully there'll be a world in which you know this can still be a more general definition of a donor advised fund advisor, but we'll see. Thank you for that, and you know you also touched on how donor advised funds could be a good avenue to encourage family philanthropy. I'd love to hear you know in your experience how that may be an example of how ADAPF has served as a way for one of your clients to get you know their family members involved, or how an advisor might be able to go about that.

Pamela Doherty:

Yes.

Pamela Doherty:

So, unlike a private foundation, you know, dafs, as I mentioned, are a bit more streamlined and don't have those compliance issues, don't require a board board, have greater benefits in terms of the deduction of gifts, but it is a vehicle where families can come together to make collective decisions about how to distribute money from a fund and support the organizations that they care about.

Pamela Doherty:

At a community foundation, every fund holder at least at ours, every fund holder is assigned a philanthropic advisor, and that person can often play a key role in meeting with a family and helping them coalesce around a vision for their fund. That person can help the family integrate the interests and the perspectives of the next generation, who may come along and view the world and philanthropy quite differently than their parents or their grandparents who came before them, and so a donor advice fund is a great way sometimes to help people have, you know, cooperate around giving. It's a great way to teach younger people how to become a leader, how to have a sense of responsibility, civic engagement. Again, sometimes these are families that are ultra high net worth and they have to learn how to make informed decisions, how to deal with the sometimes very real pressure that comes with having so much wealth and the obligation that their family may or may not feel to distribute that wealth.

Alyssa Heath:

Thank you for that and I think you know, like you said before, it's a great opportunity for families to come together on their philanthropy and also a good potential way for advisors to engage with their clients. So with that, I'd love to hear you know what are some of the opportunities for you know advisors and their, for us as advisors, really to get engaged when it comes to donor advised funds. You know, what have you found to be helpful to incorporate philanthropy into a practice for an advisor who may not already be engaging in philanthropy and, you know, even bringing up the topic of donor advised funds with their clients?

Pamela Doherty:

Yeah. So I think you know, a lot of times as wealth advisors you're talking to your clients about what their vision is for the future or for their family, and I think that's the time where it could be easy to ask about philanthropy and the changes they want to see in the world, or the kind of world they want their children to grow up in, or what keeps them up at night, or the most pressing issue that they think we as a society face, or just what their passions are. I think you know I'm not a professional advisor, but I think that that makes sense to be part of the larger planning conversation, and there are all sorts of studies and data where clients have wanted their advisor to bring up philanthropy but their advisor has not, and so you should check out the reports, I think, on how clients feel about their advisor bringing up or not bringing up philanthropy, and I, you know I don't see too often where people are offended at least in my line of work when you're bringing up philanthropy or, in my case you know, a charitable gift or a potential, you know, contribution, and so I think that there are ways to incorporate it into conversations very naturally, and I would say don't worry about the right words, just get started, because, as I tried to demonstrate, americans are prone toward generosity and philanthropy, and so it's unlikely that you're going to take someone aback when you bring it up. I will say that it's also a way to continue to engage with your client, especially if we believe that the next gen really cares about social issues and social change and issues of justice. That's a way to retain that book of business.

Pamela Doherty:

One advisor that I know, and actually I think we all know One advisor that I know and actually I think we all know, was just saying the other day that he had a client to engage in a significant charitable gift and he followed up to see how that went. That's another touch point, another way to stay in contact, a way to demonstrate that you've heard what your client values and that you actually care and that you want to be part of right, that whole endeavor or solution.

Alyssa Heath:

We couldn't agree more. I mean, with us at Fire Capital, that's something that we really like to bring in from the start of a conversation with a client so that if you start those conversations about their values from the very beginning, you know it's easier to one, you can get to know them as their full selves and have charitable giving be a part of the whole picture as you're working with them. Do you find that comfortable? Yeah, we find it comfortable, I know, but it is something, for example, that some advisors may have in-house more of that expertise than others.

Alyssa Heath:

So I think you know, perhaps that's a great way to lean on others in the community, like someone like yourself, and in a community foundation to be able to bring that expertise in, if that's not something that perhaps an advisor is comfortable talking about in depth.

Pamela Doherty:

Absolutely. I don't think that any advisor needs to be an expert. You know there are actually a lot of technical vehicles and techniques and that is why you know you all work with other advisors as well, and someone from a particular community foundation is, you know, another. That relationship with the community foundation is like another tool in your toolbox, you're. If you refer someone to a community foundation, you're referring. You're not like showing refer someone to a community foundation, you're referring. You're not like showing a preference for a particular charity, right? You're like referring to yet another philanthropic resource, right? That can help your client get where she wants to go.

Alyssa Heath:

Yeah, definitely, and so let's take a question from our Q&A here. We've got one coming in asking about the current IRS rules on the maximum tax deduction that an individual can receive for contributing to a donor-advised fund in a given year, and can these deductions be spread out over multiple years if it's over the IRS maximum?

Pamela Doherty:

Yeah, donor-advised funds have higher limits for charitable deductions than private foundations, and it's 60% of AGI to a public charity and 30% to private foundations. And then there's a five year carry over right, depending on that person's tax situation. So either you know, there again is another advantage, I think, for a private foundation.

Alyssa Heath:

Thank you, and another one here are there any differences between the types of activities that a donor advised fund can engage in versus a private foundation? So you know, perhaps that can be a little bit of what might, what a client might choose when faced with the decision of opening a donor advised fund versus a private foundation.

Pamela Doherty:

Yes, that's a good question and, as you know, obviously I've been singing the praises of a donor advised fund and holding it up as an alternative to a private foundation, and there are many benefits and reasons to look to adapt.

Pamela Doherty:

However, a private foundation does offer other benefits, which is to say that a private foundation can employ people and members of a family and for some families that's important that family members have a paid position or get compensated for the family board retreat, and that's just not something that's allowed with a donor advised fund and that might be important to a family to be able to cover expenses or to give somebody a job as executive director, the 5% payout requirement that you have with a private foundation I don't know if there's a benefit, but one of the differences that that 5% can also be used to cover private foundation expenses, whereas that that is not a premise that exists with a donor advised fund.

Pamela Doherty:

Um I I think there's certainly more donor control with a private foundation than there is with a donor advised fund and for some that might be important when you flipping back. When you have a DAF you can make grants and remain anonymous, whereas a private foundation you have your 990 and all of that's visible, whereas with a DAF it's not a separate tax entity, right? So it just rolls up under the 990 of the sponsoring organization. So a private foundation is its own separate taxable entity.

Alyssa Heath:

Right. So it's really dependent on what the client's objectives are and, like you said, that'd be something that would be on a case-by-case basis that you'd understand by having a deeper conversation on.

Pamela Doherty:

For sure, and it's not uncommon that I get calls about people who want to unwind or terminate private foundations, and pouring it over into ADAPT provided that their organizing documents allow for, that is certainly an option. Some private foundations also have donor advice funds, and so it's not necessarily an either or proposition. It just depends on the donor or the client's objectives.

Alyssa Heath:

Well, this just went so quickly and here we are already almost at time, so I just wanted to you know before we close. Thought it'd be helpful. If you know, people in the audience today wanted to continue to learn about philanthropy and donor advice, funds, you know. Do you have any resources that you could recommend?

Pamela Doherty:

Yes, for sure. So, besides getting engaged with your local community foundation and we're going to send out the PowerPoint and I'll have my contact information on it. So if you want to follow up with me, if you need more information, I'd be happy to respond to you. But in addition to that, I know here in the Bay Area we have, for example, a plan giving council, northern California Plan Giving Council. That is an organization both for professional advisors and for nonprofit development people who want to come together to learn sort of more of the technical aspects of philanthropy. That's a great resource.

Pamela Doherty:

I would say get engaged in philanthropy yourself. Think about opening your own donor advised fund. A lot of employers have matching funds that make it a little bit easier to set up your own fund. It'll give you some experience on how that all works. I think there are a lot of great websites out there, a lot of advisor networks out there. For example, we have an emerging advisors network. A lot of organizations have professional advisors councils and they're a great way to learn about philanthropy and interact with your peers and have conversations.

Alyssa Heath:

Well, thank you. I think that we've all learned a lot more about donor advice funds today and have some practical tips on how to incorporate philanthropy into our practice. And so we, you know, at the end of the day, we all want to better serve our clients, and also a great way for us, as individuals, to become more engaged as well by potentially having our own donor advised fund. So I wanted to thank you, pamela, and for everyone who submitted questions today, and for tuning in and I'll pass it back to you, will.

William Reynolds:

Thank you, Alyssa, and again thank you Pamela and the San Francisco Foundation. Really insightful stuff. If anyone has any questions, please feel free to reach out to anyone that's on the call and thank you again for joining us today and have a great rest of your afternoon. Thank you.

Alyssa Heath:

Thank you, bye-bye.

Lindsey Helman:

Thank you for listening to this month's chat segment on donor advised funds. Chats is a monthly segment featuring audio from our recently recorded webinars airing on the second Tuesday of the month. To view the video recording of this episode and discover additional society webinars, visit the CFA Society San Francisco YouTube channel.

Lindsey Helman:

Join us next month for our regularly scheduled Financial Perspectives podcast episode airing on the last Tuesday of the month, and make sure to send in a message to the show using the link at the top of each episode description or by emailing podcast@ cfa-sf. org. We'd love to hear what you think of our new chat segment or any suggestions on future topics you'd like us to cover. Thank you for being a dedicated listener.

Lindsey Helman:

This podcast is produced by CFA Society San Francisco, a not-for-profit professional association providing professional learning and career resources to over 13,000 investment industry professionals worldwide. To learn more about CFA Society San Francisco, visit our website at cfa-sf. org or connect with us on LinkedIn..

People on this episode

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Tanya Suba-Tang

Host
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Lindsey Helman

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