3 things your clients should know when they create their charitable plan

July 24, 2017

1. Where your clients create a charitable fund matters. It's not just about low fees. 

Many people plan for their donor-advised fund to carry on their legacy after they die – and continue to support the issues, nonprofits and communities that are important to them.

That is why it is so important that your clients carefully consider what type of institution at which they open a fund.

It's no secret that community foundations like BCF are competing against gift funds connected to large financial institutions. These funds often boast lower administrative fees and can be very attractive to donors, especially if they already hold assets at those institutions.

What happens, though, when your client wants to ensure that their donor-advised fund will benefit the causes they care about long after they die? Those large gift funds, unfortunately, do not have robust legacy options. Often, a donor must determine if a national fund has a field of interest or a specific geographic focus area (like Baltimore) to carry on grantmaking after the fund holder dies. And, in many cases, if a fund falls below a certain balance, it is added to the gift funds general account and granted to charities across the country.

When your client chooses to open their fund at a local community foundation like BCF, they get access to personalized donor service unmatched at the large gift funds. Our legacy options are extensive. We can work with your client to ensure their fund agreement specifies how their fund will be used after they die. Our grantmaking experts are deeply knowledgeable about local needs and can help ensure that grants will be made exactly as your client intends. 

2. Your clients should consider designating a purpose for their charitable legacy – not just a specific organization.

Clients who open a donor-advised fund during their lifetime often make grants to specific organizations and then desire to help those organizations through a bequest in their will. If the bequest is directed to the organization’s endowment, it can provide lasting support. But what happens as organizations close, or their missions evolve? How will that gift be used?

Whether your client wants to make a lasting difference to one charitable organization or several, BCF can help. A legacy gift to an endowed designated fund at BCF will generate annual distributions to the charity or charities your client specifies. And should any of those organizations close their doors or change their mission, BCF will redirect the distributions to another similar organization. That’s how your client’s charitable intent can truly be carried out in perpetuity.

3. Wherever your client plans to direct a significant charitable gift or bequest, they should talk to the organization about their capacity and needs.

You can help to ensure that your client’s legacy gift makes the biggest and most effective impact by opening a dialogue between your client and the organization.

Some organizations, for example, cannot handle a huge gift, so it’s best to discuss the gift in advance and allow the organization to plan. This helps both your client and the organization avoid what’s known as the “golden handcuffs” phenomenon in which a donor attaches specific requirements or requests to the gift that the organization may not have the staff to carry out, or does not align with its strategic direction.

By talking with organizations, you and your client can also learn their capacity to accept gifts. Smaller organizations often have a difficult time accepting some types of gifts, like personal property, real estate or even publicly-traded stock. In that case, your client can create a donor-advised fund at BCF using those assets, and then use that fund to benefit the chosen organizations.

Want more info on giving? BCF offers content specifically designed to help you work with your clients on charitable giving.

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