Basics: Requesting a Grant from Your DAF

Basics: Requesting a Grant from Your DAF

Donor-advised funds offer many terrific benefits, but, at the end of the day, DAFs exist to facilitate one goal – making contributions to your favorite charitable causes. Understanding the processes involved in making those grants, both the seen and unseen, allows clients to more easily use their fund to advance their philanthropic goals.

On the surface, the process is simple. The account advisor, having funded the DAF account, submits a request to the fund provider (such as DonorsTrust) to make a grant of X dollars to Y charity.

Clients submit grant requests in multiple ways:

  • By using a straightforward grant request form that provides our team with the necessary details to review and process the grant;
  • By submitting an email to our private grants email address containing the crucial details such as the grant recipient’s name and contact info, the grant amount and the fund the grant would come from, the level of desired privacy, and other relevant notes or special designations;
  • By using our online client portal, through which clients can request grants, review past grants, and check their account balance.

These methods create a written record that ensures we have the necessarily details to begin the back-end work for approving and processing grants.  Should you submit your grant advice via email, you will receive a return email from us asking you to confirm that:

  • No individual is receiving a benefit as a result of the grant (this includes benefits such as tickets to an event, a membership that has a monetary value, or anything else that has a monetary value); and
  • That if made the grant will not satisfy a pre-existing pledge.

Our email may include other conditions for us to process the grant, and we may have additional questions for you as well.

The Unseen Process

Our grants team jumps into action after a client submits a request. Here is where donor-advised fund providers really add value to donors.

We begin by doing a due-diligence check of the recommended non-profit. We’re looking first to see that the group is an IRS-recognized, 501(c)(3) public charity. Donor-advised funds cannot, among other things, make grants to most private foundations, 501(c)(4) or 501(c)(6) organizations, political entities, or charities that have not yet received their IRS determination letter recognizing them as a tax-exempt entity.

Once that hurdle is cleared, DonorsTrust staff ensure that the group meets our internal approval requirements. In line with our commitment to private philanthropy and to limited government, we don’t allow grants to non-profits that take significant portions of their revenue from government nor to groups whose work undermines the advancement of liberty. A committee of our board of directors reviews all new grantees and those grantees which have had prior approval, but have not had any grant requests for several years.

Grants to approved grantees go out regularly by check (usually within 3 to 7 business days – though a grantee that is new to DonorsTrust may take longer) or, on occasion, by wire for an additional administration fee. We can manage further correspondence with the grantee and any additional due diligence as requested by our clients as needed.

The Benefits of Saying No

You’ll notice the language above discusses “requesting” grants. That’s because these are donor advised funds. The client receives advisory privileges with respect to a donor advised fund account. However, all amounts allocated to an account are general operating funds of DonorsTrust.

Only when (and if) DonorsTrust accepts your grant advice will we issue a grant. While, at your option, a grantee may recognize you as the person who recommended the grant made to it, DonorsTrust has sole legal discretion to issue grants from our donor-advised funds.

As long as the advice received is for a gift to a recognized publicly supported charity that falls within our mission, it is almost a certainty the grant will be made.

This basic review process would be similar at any donor-advised fund provider. At DonorsTrust, the process opens the door to an additional benefit we offer our clients: a strong commitment to protecting donor intent.

Sometimes, that means we turn down a grant request from a client. You might be surprised to learn that, by and large, our clients are happy when we decline a grant – it means we found information concerning a potential grantee they lacked.

During our due diligence, we occasionally discover that an organization takes more government funding that the donor realized. Other times, we’ll call the donor’s attention to an organization’s troublesome stances against free-market principles. Or we may find information that, while doesn’t lead to a firm “no,” we think the donor may want to consider as part of his decision, such as if the organization is going through a challenging leadership change or has been accused of mismanagement of funds.

Still wondering why having your grant advice turned down is potentially a benefit? Plenty of organizations offer donor-advised funds and the basic benefits all DAFs provide. Clients that use DonorsTrust or other mission-driven funds, however, want more than a simple service provider.

We offer a guiding mission and purpose that matches our clients’ interests. They look to us to both simplify and protect their giving so that their philanthropy stays in line with their own goals. And when the founding account holder is not available to protect their intent, DonorsTrust can step in and step up in their place, should they request that protection.

If you want to avoid the surprise of granting to groups out of sync with your commitment to liberty, consider a donor-advised fund with DonorsTrust. We exist to serve donors such as you.

About the Author

Peter Lipsett Peter Lipsett
Peter Lipsett is vice president at DonorsTrust. He also leads DonorsTrust’s Novus Society, a network of donors under 40 committed to growing their philanthropic know-how. He has a dual degree in political science and theater from Davidson College and finally got a practical credential with an MBA from George Mason University.

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