Have money, want to donate: How best to achieve our goals?
March 31, 2016 7:34 AM Subscribe
Some family members and I have money that we would like to pool together to support a shared, lifelong value: the promotion of animal welfare. At least for the near-future, we have ruled out starting our own charity and are, thus, more interested in giving sizeable financial support to existing charities. But what is the best means of doing this that would also achieve some of our other aims?
We have been thinking of starting a family foundation via which we could make awards/grants to animal-welfare-related charities. The primary reasons for starting a foundation -- as opposed to simply handing over wads of cash to charities whose values align with ours -- is to:
(a) have more control over how the money is used (for example, we would want the charities to specifically do X with the money, not Y);
(b) have a public vehicle/platform through which to promote our animal-related values; and
(c) to have a shared means of making meaning in our everyday lives and, perhaps, to have more of a lasting legacy (we are the last generation; no kids will spring forth from these loins).
For the sake of answering this question, assume we are in the US but not necessarily bound by one particular state or another (as we are in different locations). Also assume, of course, that we want to maximize the money we can donate to the charities: so less for uncle Sam = more for the charities.
Firstly, is the underlying assumption in 'a' incorrect: I have read a bit about "restricted versus unrestricted" donations, but am not clear on whether the former are really (legally) allowed/binding and, further, if the IRS will count them as a true "donation". That is, is it possible to simply make personal donations to a given charity and have some reasonable amount of control over how that money is spent? E.g., perhaps we want the money used to further develop their X program only, and not be used for program Y or to pay staff; or perhaps we would like them to use the money to initiate a program of X, which they don't currently have. If we could indeed make "restricted donations" (that are binding and, further, don't have negative tax implications for either us OR the recipient), we would consider doing that instead of starting a foundation (and forego achieving aims 'b' and 'c' in order to avoid the work involved in starting and running a foundation).
Similarly, I have read a bit about donor-advised funds and community foundations, but it isn't clear that they would allow us as much control/oversight as we would like (sorry, we are a family of control freaks and have some very specific ideas of how we would like our money used). But I have only read a little about their general characteristics and don't really have a grasp of how they work in real life.
tl/dr: So, what should we do?
Make personal donations? Restricted only?
Start a foundation?
Do something (and what specifically?) with a donor-advised fund?
Do something (and what specifically?) with a community foundation?
Do something else entirely??
[Note that we aren't presently interested in charitable remainder trusts, charitable lead trusts, or pooled income trusts]
Advice would be gratefully received from those of you who have faced a similar dilemma AND those of you who work(ed) for a charitable organization and understand the ins/outs of the various options. Thank you.
We have been thinking of starting a family foundation via which we could make awards/grants to animal-welfare-related charities. The primary reasons for starting a foundation -- as opposed to simply handing over wads of cash to charities whose values align with ours -- is to:
(a) have more control over how the money is used (for example, we would want the charities to specifically do X with the money, not Y);
(b) have a public vehicle/platform through which to promote our animal-related values; and
(c) to have a shared means of making meaning in our everyday lives and, perhaps, to have more of a lasting legacy (we are the last generation; no kids will spring forth from these loins).
For the sake of answering this question, assume we are in the US but not necessarily bound by one particular state or another (as we are in different locations). Also assume, of course, that we want to maximize the money we can donate to the charities: so less for uncle Sam = more for the charities.
Firstly, is the underlying assumption in 'a' incorrect: I have read a bit about "restricted versus unrestricted" donations, but am not clear on whether the former are really (legally) allowed/binding and, further, if the IRS will count them as a true "donation". That is, is it possible to simply make personal donations to a given charity and have some reasonable amount of control over how that money is spent? E.g., perhaps we want the money used to further develop their X program only, and not be used for program Y or to pay staff; or perhaps we would like them to use the money to initiate a program of X, which they don't currently have. If we could indeed make "restricted donations" (that are binding and, further, don't have negative tax implications for either us OR the recipient), we would consider doing that instead of starting a foundation (and forego achieving aims 'b' and 'c' in order to avoid the work involved in starting and running a foundation).
Similarly, I have read a bit about donor-advised funds and community foundations, but it isn't clear that they would allow us as much control/oversight as we would like (sorry, we are a family of control freaks and have some very specific ideas of how we would like our money used). But I have only read a little about their general characteristics and don't really have a grasp of how they work in real life.
tl/dr: So, what should we do?
Make personal donations? Restricted only?
Start a foundation?
Do something (and what specifically?) with a donor-advised fund?
Do something (and what specifically?) with a community foundation?
Do something else entirely??
[Note that we aren't presently interested in charitable remainder trusts, charitable lead trusts, or pooled income trusts]
Advice would be gratefully received from those of you who have faced a similar dilemma AND those of you who work(ed) for a charitable organization and understand the ins/outs of the various options. Thank you.
You should update with how much money you are talking about -- that's going to matter for sure in terms of things like how much the overhead costs of the various options eat into your donating.
posted by Perplexity at 8:06 AM on March 31, 2016 [2 favorites]
posted by Perplexity at 8:06 AM on March 31, 2016 [2 favorites]
we would like to pool together to support a shared, lifelong value: the promotion of animal welfare
This may sound snarky, but I mean this is all seriousness - please consider whether your desire to micromanage what you support is a detriment to your actual goal. No charity is going to be 100% effective or perfectly mold to each donor's desires. Wanting to add all kinds of requirements will possibly have a net negative effect than if you just let them do what they do, even if 5% of your money ends up spilling into supporting programs that you don't think are effective. Find a charity that's 90% good in your mind, support them, and try to get a family member or two into their board or whatever to help keep things on track and steer projects towards ones you think are good.
and have some reasonable amount of control over how that money is spent? E.g., perhaps we want the money used to further develop their X program only, and not be used for program Y or to pay staff
Trying to dictate how they fund their employees is not reasonable. The money is going to to eventually be pooled and distributed anyway, adding overhead just adds misery and feels like it's more about giving your family power rather than helping animals. My girlfriend works in grant based research where they have to do stupid sneaky things because person A is only funded to work on project X, but they really need their help for 2 hours on project Y. And Project Z needs 100 pieces of widget M, which Project Y has surplus of, but they can't officialy just give them to them or even record a loan, so things get done off the books. Adding bureaucracy rarely solves problems.
posted by Candleman at 8:41 AM on March 31, 2016 [12 favorites]
This may sound snarky, but I mean this is all seriousness - please consider whether your desire to micromanage what you support is a detriment to your actual goal. No charity is going to be 100% effective or perfectly mold to each donor's desires. Wanting to add all kinds of requirements will possibly have a net negative effect than if you just let them do what they do, even if 5% of your money ends up spilling into supporting programs that you don't think are effective. Find a charity that's 90% good in your mind, support them, and try to get a family member or two into their board or whatever to help keep things on track and steer projects towards ones you think are good.
and have some reasonable amount of control over how that money is spent? E.g., perhaps we want the money used to further develop their X program only, and not be used for program Y or to pay staff
Trying to dictate how they fund their employees is not reasonable. The money is going to to eventually be pooled and distributed anyway, adding overhead just adds misery and feels like it's more about giving your family power rather than helping animals. My girlfriend works in grant based research where they have to do stupid sneaky things because person A is only funded to work on project X, but they really need their help for 2 hours on project Y. And Project Z needs 100 pieces of widget M, which Project Y has surplus of, but they can't officialy just give them to them or even record a loan, so things get done off the books. Adding bureaucracy rarely solves problems.
posted by Candleman at 8:41 AM on March 31, 2016 [12 favorites]
The amount is going to influence the answers greatly. If you have $20K a year, you can do a restricted grant. If you have $200K, you can set up several smaller options. If you have $2 million, you start thinking of a foundation that produces grant revenue and has program staff, etc.
(a) have more control over how the money is used (for example, we would want the charities to specifically do X with the money, not Y);
This is done via the MOU or funding grant you set up with the charity. Depending on the size of the grant and their own policies, you can pretty much set and push your own requirements. The charity will negotiate back and if you chose a good charity, please listen to their requests.
(b) have a public vehicle/platform through which to promote our animal-related values; and
Through a paid advocate on staff or through funding advocacy campaigns or through funding organisations with similar values? If you are running your own platform as a foundation, you have an active program and are essentially starting an advocacy charity and that means you need staff or to outsource competent staff.
(c) to have a shared means of making meaning in our everyday lives and, perhaps, to have more of a lasting legacy (we are the last generation; no kids will spring forth from these loins).
Put some time into working out your mission values and board rules up front then so you don't get a cousin who decides they want to fund Cause X and manage to wrangle the board into that. This means having clear conversations about money and values with everyone involved.
And for the love of all, do not appoint a family member for the legal or accounting stuff. Hire an external paid person to do that. Just don't.
posted by dorothyisunderwood at 8:42 AM on March 31, 2016 [1 favorite]
(a) have more control over how the money is used (for example, we would want the charities to specifically do X with the money, not Y);
This is done via the MOU or funding grant you set up with the charity. Depending on the size of the grant and their own policies, you can pretty much set and push your own requirements. The charity will negotiate back and if you chose a good charity, please listen to their requests.
(b) have a public vehicle/platform through which to promote our animal-related values; and
Through a paid advocate on staff or through funding advocacy campaigns or through funding organisations with similar values? If you are running your own platform as a foundation, you have an active program and are essentially starting an advocacy charity and that means you need staff or to outsource competent staff.
(c) to have a shared means of making meaning in our everyday lives and, perhaps, to have more of a lasting legacy (we are the last generation; no kids will spring forth from these loins).
Put some time into working out your mission values and board rules up front then so you don't get a cousin who decides they want to fund Cause X and manage to wrangle the board into that. This means having clear conversations about money and values with everyone involved.
And for the love of all, do not appoint a family member for the legal or accounting stuff. Hire an external paid person to do that. Just don't.
posted by dorothyisunderwood at 8:42 AM on March 31, 2016 [1 favorite]
I am a professional fundraiser. Your restricted gifts to a charity would absolutely be charitable donations and the charity would need to abide by the terms of the mutual gift agreement.
posted by all about eevee at 8:45 AM on March 31, 2016 [1 favorite]
posted by all about eevee at 8:45 AM on March 31, 2016 [1 favorite]
It is up to you to work with a major gifts professional and your financial advisors to come up with a gift agreement that is reasonable and works for both parties.
posted by all about eevee at 8:48 AM on March 31, 2016 [3 favorites]
posted by all about eevee at 8:48 AM on March 31, 2016 [3 favorites]
A donor advised fund sounds like it might fit. You can set it up with multiple donors and then make grants to any public charity in the US. You can also set it up to grant all of the remaining money to a pre-arranged set of charities when the last donor passes away.
posted by zrail at 8:48 AM on March 31, 2016 [1 favorite]
posted by zrail at 8:48 AM on March 31, 2016 [1 favorite]
I do scientific work for a non-profit animal protection organization. You don't have to start a foundation to tie your donations to specific tasks, although some choose to do so. Every organization, though, has staff who are much more knowledgeable about the ins and outs of these questions than I am. They're perfectly reasonable to ask.
Feel free to memail me.
posted by late afternoon dreaming hotel at 8:59 AM on March 31, 2016 [2 favorites]
Feel free to memail me.
posted by late afternoon dreaming hotel at 8:59 AM on March 31, 2016 [2 favorites]
I know that Best Friends has large donors that specifically support one project. Maybe it's a big improvement to a building or specific support for one or many animals.
They are very good at welcoming volunteers and donors so you could watch your money in action.
As well, Best Friends is the best. If you want contact info for the people that manage these kinds of relationships at Best Friends, Memail me.
posted by littlewater at 9:11 AM on March 31, 2016 [1 favorite]
They are very good at welcoming volunteers and donors so you could watch your money in action.
As well, Best Friends is the best. If you want contact info for the people that manage these kinds of relationships at Best Friends, Memail me.
posted by littlewater at 9:11 AM on March 31, 2016 [1 favorite]
I think it's wonderful that you are doing this! I work in development and a lot of this depends on how much money we're talking about. If it's Major Gift level (generally understood to be 100K to 1M), I recommend making an outright donation to a charity that you like. At Principal Gift level (1M+), look into building a program at a charity and then sustaining it by endowing it.
(a) have more control over how the money is used (for example, we would want the charities to specifically do X with the money, not Y);
The charity you choose will have a development officer/major gift officer to help facilitate your gift. Most charities want to be good stewards of your money and they are donorcentric, meaning they will listen to what you want and create a proposal based on that. The gift agreement will outline how the money will be spent and you can ask for a report of how it was spend.
(b) have a public vehicle/platform through which to promote our animal-related values
Consider helping a local org. pay for a marketing campaign to promote animal welfare.
(c) to have a shared means of making meaning in our everyday lives and, perhaps, to have more of a lasting legacy (we are the last generation; no kids will spring forth from these loins).
Something to think about if you build a foundation: who will do the granting when you have passed away? If you don't want the foundation to continue after your death, you'll have to disperse all of the money before then or "sunset" it. Not to say that it's impossible - foundations do it all the time.
That is, is it possible to simply make personal donations to a given charity and have some reasonable amount of control over how that money is spent?
100% yes, it's your money. If you're not sure of exactly what you want to do with it, ask your chosen charity for a wishlist or menu of options with price tags included. Building out and endowing a program is a wonderful way to leave a legacy.
A few notes:
I understand not wanting to pay for something that is already in place, but please reconsider saying that can't be used to pay for staff because that leaves a lot of monetary pressure on the charity. If you're making a transformational gift that is building a program, you will probably need to pay for the staffing. Some scenarios to think about: What if you want to build out an enrichment program for the animals, but the charity doesn't have the extra money to pay for a behavioral specialist to facilitate the new program? Or if you want to have staff go into schools and talk about animal welfare, but the charity doesn't currently have the staffing for this?
posted by pumpkinlatte at 9:14 AM on March 31, 2016 [5 favorites]
(a) have more control over how the money is used (for example, we would want the charities to specifically do X with the money, not Y);
The charity you choose will have a development officer/major gift officer to help facilitate your gift. Most charities want to be good stewards of your money and they are donorcentric, meaning they will listen to what you want and create a proposal based on that. The gift agreement will outline how the money will be spent and you can ask for a report of how it was spend.
(b) have a public vehicle/platform through which to promote our animal-related values
Consider helping a local org. pay for a marketing campaign to promote animal welfare.
(c) to have a shared means of making meaning in our everyday lives and, perhaps, to have more of a lasting legacy (we are the last generation; no kids will spring forth from these loins).
Something to think about if you build a foundation: who will do the granting when you have passed away? If you don't want the foundation to continue after your death, you'll have to disperse all of the money before then or "sunset" it. Not to say that it's impossible - foundations do it all the time.
That is, is it possible to simply make personal donations to a given charity and have some reasonable amount of control over how that money is spent?
100% yes, it's your money. If you're not sure of exactly what you want to do with it, ask your chosen charity for a wishlist or menu of options with price tags included. Building out and endowing a program is a wonderful way to leave a legacy.
A few notes:
I understand not wanting to pay for something that is already in place, but please reconsider saying that can't be used to pay for staff because that leaves a lot of monetary pressure on the charity. If you're making a transformational gift that is building a program, you will probably need to pay for the staffing. Some scenarios to think about: What if you want to build out an enrichment program for the animals, but the charity doesn't have the extra money to pay for a behavioral specialist to facilitate the new program? Or if you want to have staff go into schools and talk about animal welfare, but the charity doesn't currently have the staffing for this?
posted by pumpkinlatte at 9:14 AM on March 31, 2016 [5 favorites]
You may be interested in Animal Charity Evaluators. They do effective altruism-style assessments of how effective different animal welfare charities are. I'd advocate donating to the ones they recommend - they're likely to be much more effective than running your own charity.
For what it's worth, I give 10% of my income to charity, a chunk of which goes to Animal Equality (one of ACE's recommend charities).
posted by henryaj at 10:08 AM on March 31, 2016 [1 favorite]
For what it's worth, I give 10% of my income to charity, a chunk of which goes to Animal Equality (one of ACE's recommend charities).
posted by henryaj at 10:08 AM on March 31, 2016 [1 favorite]
Followup from the anon OP:
(1) When I mentioned not wanting to pay staff, what I was thinking about was trying to avoid our money contributing to outrageous CEO/management salaries (as can be seen in some HUGE charities). If the specific project we have in mind would require *additional* on-the-ground staff (or more time from *existing* on-the-ground staff), then of course some of the money would go to staffing costs.posted by LobsterMitten at 10:50 AM on March 31, 2016 [2 favorites]
(2) How much money are we talking? Well, it depends. If it were going to be a foundation, then we'd have to invest a sizeable chunk of change up front (and maybe add some other tranches as we age). We aren't among the uber-rich, so the initial investment would probably be a matter of hundreds of thousands (max maybe $600k). And we would probably have a sunset date, rather than set it up in perpetuity).
If, however, we just decide to donate directly as individuals, then I am not sure we would be giving out so much in one whack. It would be something we would probably do on an annual basis and in some proportion to the maximum we each could write off for tax purposes. So it would probably be in the region of $40-60k/year (and maybe to different charities each year).
(3) I can't imagine how the "restriction" idea we have in mind could ever be construed as benefiting some specific individual(s), so I think we would be safe on that front.
P.S. We know about Best Friends and have actually volunteered for them before. :)
Find a philanthropic advisor.
This is what they do. Help people be philanthropic.
posted by zizzle at 11:09 AM on March 31, 2016
This is what they do. Help people be philanthropic.
posted by zizzle at 11:09 AM on March 31, 2016
So it would probably be in the region of $40-60k/year (and maybe to different charities each year).
If you have a good relationship with each other and it wouldn't cause jealousy issues, it might be nice to let one family member per year work with a charity local to them to create a program or project that all of you could all help fund that year. It could be a good way to feel that the money is going to good use and get to see it in action, as well as being involved with the community.
posted by Candleman at 1:24 PM on March 31, 2016
If you have a good relationship with each other and it wouldn't cause jealousy issues, it might be nice to let one family member per year work with a charity local to them to create a program or project that all of you could all help fund that year. It could be a good way to feel that the money is going to good use and get to see it in action, as well as being involved with the community.
posted by Candleman at 1:24 PM on March 31, 2016
The idea of changing who receives the donations each year is a good, and common, one. It's great if the idea is to simply help out wherever possible. Which is noble!
If the intention is to affect legislative, regulatory, policy, let's just say structural change, organizations with full-time staff working toward clearly and transparently stated goals might be your best bet. These projects take years, and helping to stabilize financing streams that can otherwise be shaky from year to year does a tremendous service toward achieving the work needed to meet these structural goals.
posted by late afternoon dreaming hotel at 1:44 PM on March 31, 2016 [2 favorites]
If the intention is to affect legislative, regulatory, policy, let's just say structural change, organizations with full-time staff working toward clearly and transparently stated goals might be your best bet. These projects take years, and helping to stabilize financing streams that can otherwise be shaky from year to year does a tremendous service toward achieving the work needed to meet these structural goals.
posted by late afternoon dreaming hotel at 1:44 PM on March 31, 2016 [2 favorites]
CEOs for charities make a lot of money because CEOs make a lot of money. If you pay less, you may wind up with inferior staff. The best nonprofits aren't the ones that squeeze their staff to the utmost - they are conscious of work life balance and pay staff appropriately.
posted by momus_window at 4:50 PM on March 31, 2016
posted by momus_window at 4:50 PM on March 31, 2016
It sounds like you are thinking at the major gift level and not the principal gift level. I would say that you should make annual donations to a nonprofit or nonprofits of your choice. Work with a major gifts professional and your financial advisers to figure out what works for you and meets your needs.
Fundraising is all about finding the point at which your interests and the nonprofit's interests align. There's nothing wrong with placing restrictions on a gift. Unrestricted gifts are, in my view as a fundraiser, better because they keep the nonprofit in operation and allow it to continue to do its work, but they are often not where major donors want to direct their gifts because it isn't sexy or exciting to fund operating costs when you could fund a tangible and visible special project instead. I would recommend that you try to find a small number of nonprofits with missions that align with your interest, and begin to support their annual fund/unrestricted fund at whatever their leadership giving level is (usually it is around $1,000 or $2,500), while working with them on ALSO funding whatever special projects you have in mind. Your unrestricted gift will understandably be smaller than your larger gifts, but by taking a hybrid approach, you are also sustaining the important work of the organization as a whole and making an immediate impact on their ability to do their good work.
posted by all about eevee at 6:04 AM on April 1, 2016 [1 favorite]
Fundraising is all about finding the point at which your interests and the nonprofit's interests align. There's nothing wrong with placing restrictions on a gift. Unrestricted gifts are, in my view as a fundraiser, better because they keep the nonprofit in operation and allow it to continue to do its work, but they are often not where major donors want to direct their gifts because it isn't sexy or exciting to fund operating costs when you could fund a tangible and visible special project instead. I would recommend that you try to find a small number of nonprofits with missions that align with your interest, and begin to support their annual fund/unrestricted fund at whatever their leadership giving level is (usually it is around $1,000 or $2,500), while working with them on ALSO funding whatever special projects you have in mind. Your unrestricted gift will understandably be smaller than your larger gifts, but by taking a hybrid approach, you are also sustaining the important work of the organization as a whole and making an immediate impact on their ability to do their good work.
posted by all about eevee at 6:04 AM on April 1, 2016 [1 favorite]
Just saw this: why I wanted to make our first farm animal welfare grants on corporate cage-free campaigns, from the Open Philanthropy Project’s Farm Animal Welfare Program Officer, and remembered your question.
posted by Mr.Know-it-some at 12:30 PM on April 4, 2016
posted by Mr.Know-it-some at 12:30 PM on April 4, 2016
This thread is closed to new comments.
Organizations may or may not allow you to make restricted donations, and if you do make a donation for a restricted purpose, then the organization can choose to divert other funds that would have gone to that purpose for other needs. Basically, whether the organization wants to accept the restricted donation is up to them, and if the price is right you can work with the organization to determine the terms of the restriction.
I'm a little concerned by your example of not wanting your donation to be used to pay staff... that's how non-profit organizations work! Restricted donations can make a lot of work for charitable organizations.
Personally, I think the way to go is to find an well-run organization or small group of organizations that you trust and just give them money to spend as they see fit, but that might not be sufficiently satisfying for you.
I think what you can reasonably expect to accomplish with a family foundation that issues grants depends a lot not just on how much money you're putting up but on how much time you're willing to invest. Grant applications don't assess themselves. A foundation would, effectively, be starting your own charity.
posted by mskyle at 8:05 AM on March 31, 2016 [9 favorites]