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Free Analysis: Donor Advised Funds & Private Foundations

We’ve read so much about the proliferation of Donor Advised Funds, it made us wonder how Private Foundations are faring. While donor advised funds now outnumber private foundations in the U.S., private foundations still offer many advantages, especially surrounding legacy and control.

  • Control over Board appointments.
  • Control over investment strategy.
  • Control over the selection criteria used to make grants, program related investments and grants to individuals.
  • Ability to offer stipends to family members or other members of the foundation Board of Directors.
  • And, all of this control is passed on to the donor’s heirs.

According to the Internal Revenue Service the majority of private foundations hold assets between $1 million and $5 million, and more than half of all U.S. Foundation were formed in only the past 12 years.

Whether your passion is for social needs, the arts, education, health care or the environment, Rodman & Associates helps you engage in the conversations that can bring you, and your legacy, into focus.

Have you ever wondered if a donor advised fund, a private foundation, or a combination of the two could work for you?  We’re offering a free custom analysis.

Let us know your priorities in 8 short questions, and we’ll recommend a fit for you.

What Donors Would Like You to Know

Advice from the Pros

If you are reading this post, you care about effective philanthropy. Have you ever wondered what advice major, multi-generational philanthropists would give to those beginning their philanthropic journey? We did, so we asked a few.

We spoke with 4 donors, all the second or third generation in their family to be involved in significant philanthropy. They come from across the country—Washington State, Connecticut, Oklahoma and Texas—and all are leaders in their communities and involved in the causes they support. Their philanthropy often meets immediate community needs, but health care, the arts, education and faith-based initiatives rise to the top in their sector giving. Some give in partnership with their spouse, others lead family foundations. All are experienced, thoughtful, generous and wise and have achieved significant change through their philanthropy.

We reviewed their comments, looked for synchronicity and found a few consistent themes. We hope their advice will help you achieve more targeted, authentic and enduring support.

  • Remember Whose Money It Is—Do your homework and speak to what the donor cares about, ask the right person, don’t become dependent on a few large donors.
  • People Give to People—Make sure all your stakeholders give and that all maintain an excellent reputation in the community, what’s going on ‘inside the tent’ matters to donors.
  • Communicate Clearly—The nonprofit mission, a well-defined need, a solid financial model, and clear future objectives must be addressed and effectively communicated.
  • Follow Through and Follow Up—After receiving the donation, regularly communicate the ongoing impact, sustainability and scale of your initiative, let them know you are good stewards of their investment and keep saying thank you.
  •  The Wallet Follows the Heart—Engage the donor in both short and long-term planning, explain why meeting this need, even if small, is important and is a generational effort that will endure over time.

The blurring line between profit and philanthropy

We hear a lot about triple bottom line companies. We recently had the opportunity to see one in action.

Former Austin nonprofit executive, Leya Simmons, and her husband Tunç Samiloglu, a successful and serial software developer, and their company have built a fundraising database called BetterUnite.

BetterUnite is receiving a lot of attention as it is provided completely free of charge to nonprofit users.  At the end of any transaction, donors are asked to consider an optional tip of 5% to BetterUnite, capped at no more than $20. Amazingly 98% of users to date have chosen to do just that!  This revenue model means that BetterUnite is in the fundraising game with you. When you succeed at raising money, so do they.

The founders’ vision is to make this a true community partnership: they are listening, learning and responding to local Central Texas nonprofits before taking their product national very soon.

The platform facilitates multiple fundraising efforts with

  • Text to Donate
  • Event Management (including Ticketing, Table Management and Team Management)
  • Auction Management (Silent, Live and Online)
  • Crowdfunding, Peer-to-Peer, and/or Team Fundraising
  • A robust online donor management CRM with multiple user support
  • Recurring Payments and Membership Management

It is cloud-based and integrates with other commonly used software solutions such as

  • MailChimp
  • Constant Contact
  • Emma
  • Salesforce
  • Eventbrite
  • QuickBooks Accounting
  • Sage Accounting

This is quite honestly one of the best fundraising solutions we have seen for small to medium nonprofits. And with feedback from our local Austin nonprofit scene, it is getting better all the time!

Please let us know if your nonprofit is interested in learning more.

Pillars of Impact: Need, Outcomes, Scale & Revenue

Pillars of Philanthropic Impact

Modern media is full of articles, blogs, research papers and enthusiastic descriptions of new ways of engaging in philanthropy. Often described as ‘social impact investing’ or ‘social venture capital’ the focus has moved from individual or foundation philanthropy to groups of entrepreneurs making a collective investment in a cause, sometimes expecting a return on that investment. Much of this change in perspective comes from young, successful business entrepreneurs entering the philanthropic space and bringing with them the governing principles and language used by successful startups.

Four pillars are often seen in this modern view. They are not new, they have been part of the philanthropic landscape for decades, but they have risen more firmly to the top of the conditions and expectations for giving. The first is a documented need, not just one that tugs the heart, but a clearly documented threat that is, or could be, damaging to a population or environment. Next, measurable outcomes are expected to be identified as goals at the outset of the initiative with ongoing research to confirm them. Third is an organization’s ability to scale their efforts to address larger populations over time. Finally, nonprofits seeking funding are increasingly expected to have earned revenue as a component of their model and not be entirely dependent on contributed income. Sometimes this revenue expands the effort, sometimes it may reimburse the funders for all or part of their initial investment.

In most cases, these expectations are value added to the sector, bringing discipline and clarity to the work and creating pillars to measure and prove impact. To illustrate, a global health nonprofit will quantify the need for vaccinations in a country by showing the percent of the population suffering from communicable diseases for which vaccines are available. They will then calculate their timeline to scale the delivery of their services, for example providing vaccinations first to one village, then five, then a region or even a nation. The nonprofit will predict the anticipated outcomes in the reduction of disease and document the actual outcomes to prove success. Finally, the organization will seek revenue from those who are able to pay, for example governments or hospitals, to insure the initiative can reach those too poor to pay, the underserved individuals and villages.

A caution is that modern philanthropy will increasingly be focused on initiatives that inherently conform to this Four Pillars model, while leaving behind needs that are too desperate, small, messy or difficult to attract funding. We hope the next generation of successful innovators and entrepreneurs will help us solve these problems as well.

Rodman & Associates is pleased to be a partner in these efforts, large and small.

2018 Rodman Report provides philanthropy stats, trends among local businesses

An annual survey of Central Texas companies found that most maintain a strong emphasis on corporate giving, with philanthropy budgets that increased from 2016 to 2017.

The 2018 Rodman Report details that and other results from a survey of businesses of various sizes and industries. This marks the fourth year in a row that Austin-based philanthropic advisors Rodman & Associates have conducted the Survey of Corporate Giving, the only study of its kind that addresses Austin and the surrounding area.

2018 Rodman Report

The survey compiles statistics and sets benchmarks measuring how much, and in what ways, Central Texas companies give to nonprofits. Lisa Rodman, founder and principal of Rodman & Associates, said the results prove valuable for businesses to understand how their giving compares to others in the community, and for nonprofits to see how their needs align with the giving priorities of Central Texas businesses.

A few highlights of the Rodman Report include:

Who spearheads giving: The survey identifies the departments or positions most likely to be philanthropy decision makers at companies, and this year those results were matched to company size. Hint: the likely decision makers at small companies are not the same as those at larger corporations.

What they donate: Companies are most likely to provide monetary donations and employee volunteer hours as methods of giving (77 percent for both). Group volunteering is encouraged in 72 percent of companies.

Whether they track volunteer hours: Though the number has been gradually trending upward over the past few years, only 36 percent of respondents said their company tracks volunteer hours. Tracking volunteer hours is a great way for companies to help measure this aspect of their contribution year over year.

Rodman said the good news for nonprofits is that corporate philanthropy is strong in Central Texas – and it continues to trend in the right direction.

“More than two-thirds of survey respondents said their companies have philanthropic/giving budgets; and the majority of those budgets increased last year,” Rodman said.  She added, however, that some methods of engaging employees in philanthropy decreased, indicating that business leaders need to be mindful of supporting employee efforts.

“I believe the single most effective way to encourage employees to be more philanthropic is to provide a corporate match,” Rodman said. “This benefits the employer because it ties corporate support directly to the causes that are important to the employee base.”

The results in the Rodman Report are drawn from the responses of 134 Central Texas companies that participated in an online survey between January 19 and February 10, 2018.

The Rodman Report is available at RodmanReport.com, along with an infographic, “Central Texas:  Corporate Giving by the Numbers.” Rodman & Associates encourages the public to freely share and distribute the report and its data, especially among business leaders, employees, and nonprofit board members and professionals.

Are we doing our homework?

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America is the most generous nation in the world, with nearly 1 million charities receiving public support. A few key motivators prompt our giving—our personal experience with an organization, a bricks and mortar presence, and the belief the organization will endure for the long term. Americans are the most generous to their churches, universities and hospitals, with 62% of annual giving to religion and education alone.

But what about all the other needs? And the worthy new initiatives? How do we make informed choices and ensure our giving is meaningful, effective and truly impactful?

Statistics indicate we could do better in researching and assessing our philanthropy. Less than half of all donors, 41%, do research into charities before they give and fewer than 1/5 assess the effectiveness of organizations in the same sector. Compare this to over 69,000,000 sources listed in a Google search to help us “Pick the Best Smartphone”.

Resources can help, like the Stanford Social Innovation Review, for information about how all sectors can be more impactful, and Charity Navigator for non-profit ratings and background. Two books, Give Smart: Philanthropy that Gets Results, by Thomas Tierney and Joel Fleishman and Giving 2.0: Transform Your Giving and Our World, by Laura Arrillaga-Andreessen can take philanthropists to a higher level of informed choice and impact. Here in Austin, you can see non-profit listings by focus area at I Live Here, I Give Here.

Are you interested in learning more about effective philanthropy? Rodman & Associates can support you in your aim to apply best practices, conduct individualized research and assess outcomes of the non-profits in your area of interest and prioritize future gifts. Let us bring our years of experience and multiple resources to these important tasks.

Some Good News in the Tax Bill

Here comes the New Year, and with it the new tax law. Reviews tell us that as the nation ages, the new law shifts many benefits to younger families. But there is a special tax break available just for seniors, passed by congress in 2016, and it doesn’t go away in the New Year. In fact, the newly signed tax bill makes it even more advantageous.  It’s called a qualified charitable distribution and only applies to Individual Retirement Accounts (IRAs).

Did you know that if you are 70 ½ or older and taking mandatory distributions from your IRA, you can convert these withdrawals from taxable income into a tax-free event? When you donate your IRA distribution directly to an eligible non-profit as a charitable contribution, the event is not taxable as income and it may even lower your total Adjusted Gross Income.

If you do not need your IRA assets to support your current or future living costs, this may be your best charitable giving strategy going forward.  The exemption is good for up to $100,000 of IRA assets annually.  That’s a big benefit! Especially if, with the new, higher standard deduction, you may no longer be itemizing your charitable gifts.

Also, consider that IRA assets increase the tax liability for your estate after your death. By distributing these assets to charity during your lifetime or as part of your estate planning as a charitable rollover, you can eliminate the taxes on these assets.

At Rodman & Associates, we would be happy to work with you, and your financial advisors, to strategize sequential gifts to the charity or charities of your choice. By using IRA assets for your giving, you can help dreams to come true for the causes you support, during your lifetime and beyond.

See, Santa does come to visit, even to seniors!

Is 2017 the last year you take a Charitable Tax Deduction?

We will not know for certain until the final vote, but it appears we may have only a few weeks remaining to get in front of expiring tax provisions. Both the Senate and the House version of tax reform include an increase in the standard deduction, while eliminating many other deductions. That means in the future, fewer people will benefit from itemizing their deductions, such as charitable donations.

Below we offer a few key charitable strategies to consider before the close of 2017:

  • If you have made a multi-year pledge, pool the pledges made toward upcoming years and give now.
  • Ask a charity if you can pre-pay for annual subscriptions or memberships in advance.
  • Establish a Donor Advised Fund and contribute as much as possible.
  • In the future, it may make sense to “bunch your donations”, e.g. make your charitable gifts every other year in order to increase the amount and get them over the standard deduction threshold.

And in closing, here is a few ideas for family gifts that include deductions. Contribute to an IRA for your adult children who have earned income, but do not yet have available assets to contribute to retirement. Contribute to the education foundations where your children or grandchildren attend school in their names. Invite family members to make a joint giving decision, complete with a family visit to the charity you wish to support.

Sometimes Charity Begins at Home

Whenever we sit down to visit with new clients about the most important things for them to pass down to the following generations, we hear about values, faith, family stories and life lessons. Occasionally we hear about a personal possession with a strong emotional value. Inevitably it takes a while to come around to financial assets and real estate.

What is money for?
How do you view your wealth?
What is your obligation to the younger generation, and to the world at large?
Top of mind for many of Rodman & Associates’ clients is “how do we raise charitable offspring”?

Philanthropy is a powerful tool for strengthening family ties. This Thanksgiving season, let charity begin at home.

Wondering where to start?  Actively seek volunteer opportunities that allow the entire family to participate:

  • Hold a family-wide garage sale and donate all the proceeds to charity
  • Form a Family Giving Circle with a group of friends: each family contributes a pre-determined amount to the pooled fund and working together, over the course of a few weeks, determine where that money will go
  • If you are fortunate enough to have a Turkey Trot in your community, sign up as a family today
  • Clean your neighborhood park, greenbelt or school yard
  • Deliver meals or pizza to an affordable housing complex; it  is nice to include a gift card to the neighborhood grocery store for those favorite items and treats.

www.createthegood.org offers a feature that allows you to search for volunteer activities by zip code and time frame. Be sure to apply the Family Friendly filter!

 It is not what we say about our blessings, but how we use them,
that is the true measure of thanksgiving
.  –W.T. Purkiser

Gary Cooper

I’ve known Austin’s Gary Cooper for years, as a fine man and an effective community activist. Recently I learned that as a youth he received a full college scholarship from a successful businessman he was referred to by a newspaper editor who had interviewed Gary at his inner-city high school. Gary knew this was a gift he should pay forward and when the time came, he chose another fine young man, David Reyna, as his recipient. (Read David and Gary’s story here )

Gary had known David since he was 5 years old, when his mother began working for Gary. Gary has funded David’s dental care for several years, and now is paying college tuition, housing and transportation for David as he pursues his dream of becoming a petroleum engineer. Gary is also introducing him to engineering professionals and community cultural events to expand his vision and encourage his aspirations. I asked Gary to lunch so I could learn more about this compelling philanthropic story. I learned much more.

Gary had a hardscrabble youth. He had multiple stepfathers, earned his own way from an early age, was forced to leave home while still in high school and endured a mistaken arrest and near imprisonment in his late teens. But other experiences shaped him as well: a Hispanic family that made room for him to come live in their already crowded home, a stint as a VISTA volunteer with farmworkers in California, as well as service and leadership during the early years of the AIDS crisis after he tested positive for HIV himself. What did Gary learn from his experiences? “It is in the act of giving that we find grace,” he told me. Grace—that deeply mysterious word that helps explain how we are able to endure in the face of the unendurable.

Then he added, “I believe we find our own courage in the act of encouraging and helping others.” Giving to others makes us more whole, it makes us strong, it makes us brave enough to confront the difficulties of our imperfect lives. Generosity has advantages for the other, but profound advantages for the self as well.

In closing, Gary let me know he is now challenging his former classmates at North Dallas High by offering a matching grant to provide services that help the school’s current students have a rich extracurricular experience in spite of the burden of poverty and in some cases, homelessness. Then he smiled and said, “People tell this story like I am so good, so generous. That’s not it. The truth is that through this experience I am having the best time of my life”.

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