A half million accounts exist in donor advised funds in America today. They hold in excess of $125 billion in assets waiting to be distributed to operating charities across the country. And a common complaint about DAF accounts is that they aren’t granting a large enough share of those funds.
Each and every one of these accounts has a succession plan indicating what is to happen to the moneys in the account upon the death of the account advisors. Think of the succession plan as the naming of a beneficiary for the account: what charity(ies) will receive a grant or what person(s) will carry on the advising rights on the account in the future? This is an unrealized opportunity with huge upside potential for account advisors, charities and DAF sponsors to materially increase the public good across America (and even around the world).
- DAF account advisors – review the succession plan on file with your DAF sponsor periodically. Know that many DAFs allow designating both individual(s) and charities as successors. An advisor can maintain a family legacy AND also help a charity.
- Charities – you need to know every donor who is supporting you through a DAF grant. What better way to demonstrate your long-term charitable vision and its alignment with your donor’s philanthropic legacy than to engage in a discussion about his/her succession plan? Your charity could be named the beneficiary of 1, 10 or even 100% of the DAF account. Whatever the percent, it eventually means cash in your coffers.
- DAF Sponsors – think about establishing a required percentage distribution to operating charities on each account succession plan. For instance, if a small 10% of all account succession plans were required to be dispersed to non-profits, that would ensure that $13b would be going to the public good (using a simple view at the value of funds in DAFs today). That’s real money.
DAF account succession plans – an opportunity to be realized.