Many donors have a sense, even if just in their gut, of the causes and specific charities they want their philanthropic dollars to fund. All of that is meaningless, though, if they can’t be confident that those wishes will be carried out.
An article in today’s Wall Street Journal highlights the difficulties of carrying out donor intent. In “Staying True to Donors’ Wishes Beyond the Grave,” author Anne Kadet cites several instances where the New York Community Trust must steward very specific donor wishes. At times, this means trying to understand how a donor’s wishes should be interpreted in changing times – and long after the benefactor has passed away.
Doing so can be challenging. Ms. Kadet’s article opens with a story of a man who died in 1944, and the steps people today – who, it seems, did not know the original benefactor – took to see if his initial donor intent, which was to support “poor and elderly married couples” could be expanded in the wake of rising number of older, needy non-married couples.
The Community Trust is no doubt well-intentioned in taking these steps. It is true that some funds can become so restricted that there simply are too few beneficiaries for too many dollars. Yet attempting to imagine a donor’s wishes so long after they have died is fraught with peril, particularly when those involved with such decisions were not engaged with the donor’s thinking during life.
If the idea of having your charitable intentions reinterpreted after your death worries you, spend time in your charitable planning not just defining what your donor intent is, but also the how and who – what means of paying out the resources will you use and who will ultimately oversee how those funds are doled out.
Three key elements to achieving the how and the who:
1. Drive the right vehicle
You have choices in the vehicle driving your charitable legacy. These include a private foundation, a donor-advised account, charitable lead trusts, charitable remainder trusts, or a bequest in your will. Each has its own advantages, drawbacks, and tax implications. Each also creates different parameters for how and when dollars are given out. Charitable lead and remainder trusts both will have a pretty fixed path once established, whereas a foundation or a donor-advised fund offers the ability to designate successors to guide your charity. It is important to remember, too, that, like any complex journey, you might need multiple vehicles to fully protect your intent.
2. Bind it in writing
Once you’ve established guidelines stating your charitable intent, work with your attorney and/or financial advisor to put it in writing. Consider sharing the appropriate documents – all or in part – with relevant parties, be they heirs, trusted friends, or charitable beneficiaries. At a minimum, ensure the right people know that you have outlined your intent and expect it to be followed.
3. Shut it down
This may be the most important step to head off eventual drift away from your donor intent: Limit the life of the charitable vehicle you establish. Spending your charitable capital within 25 years of your death diminishes the chance your money will support causes with which you disagree. Not only will your donor intent be protected, but your money will be making an impact with the causes you hold dear even sooner.
Cause-related donor-advised funds such as DonorsTrust offer one way to limit the ability for your donor intent to veer too far from a set mission. Successor advisors of an account at DonorsTrust, for example, will never be able to use your charitable dollars to fund causes that run counter to the principles of limited government. Clients are also asked to write a donor intent statement so we can further understand the limits you have on your giving, and to set a sunset period of 25 years or less after death.
You certainly don’t want future generations guessing at how to fulfil your wishes as times change. Leave those decisions to people you trust or to institutions that have the necessary guardrails in place to keep from straying far from your plans.
Further Reading: For more ideas on how to protect and preserve your charitable legacy, download the 8 Steps to Securing Your Donor Intent.