Donor-advised funds (DAFs) represent a large portion of many community foundations’ annual fundraising revenue and often a large part of their overall funds. In some cases, as much as half of a community foundation’s total assets are held in these accounts.
DAFs allow donors to reap immediate tax benefits when they irrevocably contribute cash, stocks, property, or other assets into accounts that will be used for charitable purposes. Despite some controversy, the accounts have grown exponentially with the rise of commercially affiliated nonprofits that offer them. These include national groups like Fidelity Charitable, the second-largest grant maker in the nation. Often such organizations offer lower management fees than local nonprofits.
So how do community foundations — grant makers that serve cities or regions throughout the country — compete with the giants?
In large part, they pick up their phones and hit the streets to connect with local professional advisers — those who help the wealthy manage their money. The Chronicle spoke with officials at several community foundations about how they maintain relationships with these professionals to attract more donors who want to start DAFs. Here is their advice.
Build a Committee
The Boston Foundation has seen how lucrative it can be to make inroads with estate attorneys, financial planners, and wealth advisers. Roughly 44 percent of the foundation’s new DAFs are the result of referrals from advisers. The accounts make up about 60 percent of the foundation’s assets, so it’s hard to understate how important such referrals are.
The foundation has institutionalized some of its relationships by building a committee of 20 local professional advisers who meet quarterly with foundation staff to talk about DAFs and other giving options the nonprofit offers. Often, committee members recommend the foundation to their clients as an avenue for philanthropy.
The committee also has provided critical advice, said Paul Grogan, chief executive of the foundation. For instance, the committee members helped settle a question among foundation employees over how much the organization should focus on reducing management fees. Instead of being fixated on fees, committee members said, the foundation should work to clarify the type of work it does in the community and how it can help donors make sound charitable decisions.
“You would think their message would be ‘you gotta get the price down,’ but it isn’t,” Mr. Grogan said. “They kept exhorting us to do a better job in explaining just who we are and what our contribution is — that’s the value added.”
Meet With Advisers Regularly
Development staff with the Baltimore Community Foundation regularly meet one-on-one with financial advisers, said Ralph Serpe, vice president of development. Mr. Serpe said he and others also encourage advisers to visit the foundation’s offices to learn more about giving options, including DAFs, or to go over issues that the nonprofit is focusing on. He said many employees also attend association meetings for local professional advisers to make new contacts. Up to 70 percent of new funds come through referrals from professional advisers each year, he said.
Christy Butler Eckoff, director of gift planning at the Greater Atlanta Community Foundation, said she meets with three or four different advisers each week, and also holds “lunch and learns” for groups of advisers to explain what causes the foundation supports and the accounts and services it offers. She said about 90 percent of new DAFs are referred by professional advisers. “It’s kind of the route that’s worked for us,” she said.
Show Them What You Do
Mr. Serpe said he also invites advisers to see the work that the foundation supports in the community. “They are members of the community, too; they are not robots. And they really want to see firsthand the impact that organizations are having,” he said.
Ms. Eckoff said her foundation works with a local Jewish Federation and United Way to offer professional advisers a yearlong educational program that highlights various causes and needs in the community. She said advisers working in the 23-county area the foundation serves can apply.
The group of about 20 advisers meets five times throughout the year — including taking a three-hour bus tour showcasing the Atlanta Beltline project, a network of parks, trails, and transit lines under development on an old railroad corridor circling the city, Ms. Eckoff said. Parts of the project have been supported by the community foundation, and the tour highlights how the development is improving local communities.
Market Your Services as a Premium Product
Foundations need to highlight the services they offer clients that big, commercially affiliated charities cannot provide.
Ms. Eckoff said she and her staff emphasize to professional advisers that they know the Atlanta community well, including which nonprofits are reputable. The foundation also has a good track record offering advice to families on their giving, she said.
“We are a tool to help them serve their clients,” she said. “We can be their philanthropic experts.”
