Donor-advised funds aren’t one-size-fits-all.
Where do you turn first when you go shopping? If you need to buy a new camera, a bookshelf, some cereal, a DVD, and a new pair of pants – all in one shopping trip – then you probably turn to a big box store.
But if you want to buy your bookshelf from a local vendor, or if you first want to discuss your camera purchase with a sales person as equally passionate about photography as you, then the big box store probably won’t help you much.
Fortunately, when it comes to shopping, there is no one-size-fits-all solution. The diversity of the marketplace creates specialized stores which appeal to many customers by offering them what they specifically are looking for.
When people first think of donor-advised funds, they naturally turn to the national funds – the big box stores of donor-advised world. Many charitable givers find alternatives by “buying local” with a community foundation, and still others engage with a mission-driven fund that shares their principles and interests.
Let’s take a look at the three types of donor-advised funds:
The national donor-advised funds – Fidelity Charitable, Vanguard Charitable, National Philanthropic Trust, etc. – are easy to set up, can be largely administered online, and often, thanks to their very high balances, are able to offer competitive fees. They are unbound by geographic or issue focus areas. All of this has been an important factor in the rise of donor-advised funds in the past decade, and these funds have helped many charitable givers be more strategic in their giving. Though there are only about 42 national providers, this type of fund houses the highest number of accounts nationwide.
For those with a strong affinity for their geographic region, community foundations offer a way to give through a provider that shares that passion and focus. The regional knowledge they bring can be helpful in targeting funds for specific local uses. Community foundations also play an important role in local leadership. This type of fund provider has the highest average account size, and fees can range widely.
Mission-driven fund providers (also called cause-related or single-issue funds) are similar to community foundations, but instead of being bound geographically, they are bound by an issue, institution, or faith. Mission-driven funds are like that local boutique store that can give customers the specialized experience they seek. Funds exist that focus on international giving, ideologically-guided giving, religious-oriented giving, and for many other causes. Mission-driven fund providers have the highest payout rates among the various types of providers – 33.2% compared to 18.2% for community foundations and 21.1% for the national funds. The higher payout rate suggests this type of fund is good for donors keen on putting their charitable dollars into action quickly towards a cause they believe in.
A Fund for Liberty Lovers
Your conservative and libertarian clients may be particularly interested in using a mission-driven fund to protect their charitable interests. Such donors are often wary of community foundations thatthey might perceive as having a liberal bent. They have similar concerns about establishing a private foundation, which, after their death, might drift away from principles of limited government, personal responsibility, and free enterprise. National foundations can get the job done, but lack the deep understanding of the particular groups that such a donor might want to support.
DonorsTrust was founded in 1999 specifically to be such a specialized mission-driven fund: one that serves a national community of liberty-minded donors. We seek to safeguard the charitable intent of donors dedicated to the ideals that sustain a free society.
DonorsTrust’s donor-advised fund clients are actively committed to the principles they believe in. Our clients have granted out more than $800 million over the past sixteen years. More than three-quarters of those grants went to liberty-minded organizations, groups that promote private solutions to public policy concerns, and institutions that cultivate the next generation of liberty advocates. In addition, DonorsTrust also offers a “one-stop-shop” for broader charitable giving, with millions given to medical, civic, arts, and religious organizations as well.
Liberty-minded donors find DonorsTrust can help in many ways.
Do you have clients that would be a fit for DonorsTrust?
If you have clients that lean to the right on the ideological spectrum, include DonorsTrust among the donor-advised fund options you share with them.
Would you like an information packet on DonorsTrust? To have us rush you additional information, click here.
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