Sunday, December 8, 2013

Know Thyself When Setting Up a Philanthropic Vehicle

Having the will to do something philanthropic is the first step in giving back to the community.  The next step is to decide what philanthropic vehicle may be best for you.  This is where "knowing thyself" comes in.  If your personality and life circumstances are such that you are willing and able to spend time and money administering your philanthropy, setting up a private foundation can be the best option for you. 

This means that you will have to spend money to have an attorney develop Articles of Incorporation and By-Laws to form the structure of your foundation.  You will also have to develop Guidelines for focusing your grants to worthy causes. It also means that you will have the responsibility to handle the essential accounting matters involved.  That is, it will be necessary to arrange and pay for an annual independent audit done by a reputable CPA of how your philanthropic funds have been spent.  Likewise, your CPA will have to fill out and file the required Form 990-PF annually to fulfill the IRS's requirement for a public accounting on how the  tax-exempt funds in your foundation have been used to promote the public interest in some manner. These also need to be filed with the State Attorney General's office in the state in which you reside. Furthermore, you will be required by the IRS to spend 5% of your foundation's assets each year in grant-related activity.

Furthermore, you will need a Board of Directors to help guide your foundation, and meet one or more times a year for the allocation of the grants you and your Board decide to make.  If your foundation is of a very substantial size, you will probably need to employ some level of staffing to handle the daily administration of your foundation. None of this is bad. I merely mention these above points to illustrate the fact that establishing an independent  private foundation involves a serious commitment of time as well as funds and other resources.

Another option for accomplishing your philantrohopic interests is to consider setting up an endowed Donor Advised Fund at a local community foundation.  This vehicle is designed for people who do not have the  inclination nor the personal time to devote to administering their philanthropic interests.

Community foundations are a special kind of public charity vehicle designed to make philanthropy hassle-free whether the amount of funds you are donating is large or even very small.  With this option, the community foundation has a very simple procedure with very little paperwork involved for establishing your endowed Donor Advised Fund.  Once established with a usual minimum of $10,000 or $20,000 (and no maximum), for a very small fee (often in the 1% to 1.5% of assets range), the community foundation will handle any and all necessary required legal, accounting, and reporting. Presently, there is no requirement by the IRS to spend 5%  annually of your Donor Advised Fund's assets for grant-related activity.  Neither is there a need for staffing your Donor Advised Fund.  Furthermore, there is no Board of Directors required. You can make all the decisions yourself on which organizations should receive the largesse that you have placed in the Donor Advised Fund by simply submitting a form to the community foundation's staff stating where you would like a donation from your Donor Advised Fund to go. It is that easy!

So, think about it.  Know thyself.  How involved can you be or do you want to be in the actual administration of your philanthropy.  The choice is up to you. No matter your choice, there are options available to you to fit your choice.

Tuesday, September 24, 2013

Philanthropy as a Social Investment

When we think of the word "philanthropy" it's natural to associate it with "charity" - and that it is!  BUT, it is much more!

Whether one's philanthropy is expressed in small measure or in a large amount, the principle is the same.  A $100 donation to a local men's homeless shelter is no different a social investment than a $100,000 contribution to your alma mater to fund an endowed scholarship for worthy and exceptional students. While the amounts are very different, their intent is the same --a SOCIAL INVESTMENT.

When we speak of  making a "social investment" we mean that we are making a financial commitment to an endeavor that is intended to make a difference of some kind  -- be it in individuals, in a community or in an organization whose mission is to make a difference.  Making a difference is what it's all about!

So, the next time you think of making a contribution to a charitable cause, remember you are practicing SOCIAL INVESTMENT!

Monday, September 2, 2013


The practice of active philanthropy involves a team approach no matter how you look at it.  On the one hand there are those who possess the financial recources necessary to make things happen.  On the other, are those non-profit, community benefit organizations that lack financial resources in and of themselves to accopmplish their mission but that have the programatic, service delivery expertise to get the job done.  One without the other does not work.

 The nexus or  intersection of these two entities is what makes philanthropy work.  This tagteam approach, as I call it, is at the heart of philanthropy.  It is 180 degrees opposite of the traditional view of philanthropists holding the power and "graciously" and charitably" granting largesse to humble, supplient grantees.  The keyword for this tagteam, nexus approach is PARTNERSHIP!  Yes, the intersection of financial resources and service providers meets at PARTNERSHIP.  This perspective places both parties on an equal playing field because they are two critical parts of a whole - the whole being "getting things done".  They need each other to accomplish their respective missions. Consequently, philanthropy should never be about exercising power but about the practice of developing partnerships for everyone's benefit!

Tuesday, July 30, 2013


Did it ever occur to you how negative the term “non-profit” is in describing those organizations that toil in the vineyard of community service?  If it hasn’t, it should.  If you are employed in any aspect of community service you should actually take offense at this manner of identifying the important work you do in such a crucial part of our society.

          As you know, there are three main areas in our society that enable it to function – the for-profit sector, the government sector, and that all-important third sector that deals with all aspects of community service.  The first two have a positive ring to them.  There is no doubt in identifying their true purpose because the word signifying each of them is likewise descriptive and to-the-point.  Not so with “non-profit sector”.  This term is at the same time negative, non-descriptive, and fails to tell us what actually takes place.

          A truer moniker to describe this all-important sector should be the
“community benefit” sector.  It is more positive in its message and distinctly describes exactly what it does.  For such a large and important part of our society that does so much good in so many areas such as human services, health, science, the environment, education, and arts and culture, among others, accurately describing the vineyard is the least that can be done!