Karen Heath-Wade, Chief Business Development Officer for American Endowment Foundation, joined Julie Cooling, Founder and CEO of RIA Channel, to discuss the benefits of donor-advised funds for advisers and their clients.
Over 30 years ago, American Endowment Foundation established one of the first donor-advised funds. Donor-advised funds allow financial advisors to help clients execute their philanthropic intentions. Advisors who have charitable conversations can better understand their clients’ values. Donor-advised funds allow advisors to add value to the processes of wealth planning, legacy planning, and estate planning. Donor-advised funds are lower-cost and easier to administer than family foundations.
In a donor-advised fund, the donor makes an irrevocable gift, but there are no annual minimum distribution requirements. In contrast, family foundations are required to distribute annual gifts of at least 5% of assets.
The American Endowment Foundation estimates that only 10% of advisors have a charitable conversation with their clients. Many advisors are unaware of the size and beneficiaries of their clients’ charitable giving. Some firms or custodians can white label donor-advised funds, giving the advisor a branding opportunity.
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