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GrowYourPracticewithDonorAdvisedFunds
EricJoranson,JD‐MinnesotaPhilanthropyPartnersDanaJ.Holt,JD,RICP– ThriventFinancial
AGENDA
1.Background/Marketplace2.CaseStudies3.Resources
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DAFBackgroundSimple,Flexible,Affordable,Powerful
Whatarethey?
Whatareadvantages?
Simplicity
Affordable
PFAlternative
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MarketplaceTrend#1:
DAFsarethefastestgrowingcharitablevehicle.
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Source: 2015 National Philanthropic Trust, Donor-Advised Fund Report
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Source: 2015 National Philanthropic Trust, Donor-Advised Fund Report
DAFmetricsoverview
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2013 2014 % change
Charitable Assets $57.08B $70.70B 23.9%
Total Contributions
$17.23B $19.66B 14.1%
Total GrantDollars
$9.83B $12.49B 27.0%
Grant Payout $21.9B $21.9B 0%
Total # of DAF Accounts
218,993 238,293 8.8%
Average Size of DAF Account
$260,626 $296,701 13.7%
Source: 2015 National Philanthropic Trust, Donor-Advised Fund Report
DAFGrowthvs. OtherGivingVehicles*
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2013 2014 % changeDonor-Advised Funds
218,993 238,293 8.8%
Charitable Remainder Unitrusts
89,744 88,262 -1.7%
Private Foundations 79,616 82,045 3.0%
Charitable Remainder Annuity Trusts
13,494 12,459 -7.7%
Charitable Lead Trusts
6,456 6,414 -0.6%
Pooled Income Funds
1,295 1,267 -2.2%
* # of Funds
Source: 2015 National Philanthropic Trust, Donor-Advised Fund Report
MarketplaceTrend#2:
Professionaladvisorsaremajordriverforcharitablegiving.
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10Source: US Trust Study of the Philanthropic Conversation, October 2013
11Source: US Trust Study of the Philanthropic Conversation, October 2013
12Source: US Trust Study of the Philanthropic Conversation, October 2013
13Source: US Trust Study of the Philanthropic Conversation, October 2013
Trend#3:
Donorsaregivingappreciatednon‐cashassets.
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Whydonateappreciatedassets?
Estatetaxconversationreplacedwithincometaxandvaluesconversations.
Non‐cashassetsestimatedtobe4‐6x largerthanentirestockmarket.
FMVdeductionforlong‐termcapitalgainpropertywithlowestcostbasis.
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Trend#4:
Charitablegivingisgoodforbusiness.
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GrowPractice
Engagenextgeneration
Referrals
Cross‐sales
IncomeTaxDeduction
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CaseStudies
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Joe,afarmerinsouthernMinnesotaisreadytoretireandmovetoArizona.
Margaret,anattorney.Herdaughterdiedwhiletravelingoverseasandisnowstrugglingtofindawaytomoveon.
Timothy,aformertreasurerofmid‐sizecompanywithlargefamily,withspecificcharitablegoals.
Gus,92yearoldHNWwantstoinvolvehisfamilyinhislegacygiving.
FourDAFcasestudies
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Joe,thefarmerinsouthernMinnesotawhoisreadytoretireandmovetoArizona– Attorney“lightbulb”afterpresentationjustlikethis– Healthconcerns– Notletgoofland– Charitablemotivations– FFA– Wantstoexitbusiness– buthow?– Largeoperation– lotsofrealandpersonalproperty
Casestudy#1‐ Joe
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Casestudy#1‐ Joe Outcome– 5%FlipCRUTpourintoacharitablefund
Success– Incomestreamforlife;diversificationofconcentratedassetintaxefficientmanner
– DAFascharitablebeneficiary Challenge– Abbreviatedtimeline– %payoutrate,trustee,definingflipevent
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Casestudy#1‐ Joe PlanningOpportunities– FCRUTincomepaysfor:• LifeInsuranceforfamily• LongTermCareInsurance• LivingExpenses
– CharitableIncomeTaxDeduction:• ROTHConversion
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Margaret,anattorney.Herdaughterdiedwhiletravellingoverseasandisnowstrugglingtofindawaytomoveon.– Goals:Honordaughterandaugmentherlegacy– Stockrich,cashpoor.OwnedlotsoflowbasisMDTstock
– Troublenarrowingthenumbercharitiesshewantedtosupport
– Consideredseveralcharitablevehicleoptions,includingCRT,CGA,andaDAF.
Casestudy#2– Margaret
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Outcome– DAFfundedwithMDTstock
Success– Taxdeductionupfront– Avoidanceofcapitalgaintax– Abletodeferdecisionmakingonwheretosendgrantsuntillater
– MatchinggiftfromMedtronic Challenge– Nopledge‐making!
Casestudy#2– Margaret
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PlanningOpportunities– CharitableIncomeTaxDeduction• Off‐setpersonalsaleofMDTstock• ROTHConversion
– InversionAvoidance– NUAinfuture
Casestudy#2– Margaret
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Timothy,formertreasurerofmid‐sizecompanywithlargefamilyandspecificcharitablegoals.– Goals:• DAFasPFAlternative.• Makestockgiftsovertimetoreduceestate.• Estategift=amountoverMNthreshold
Casestudy#3– Timothy
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PlanningOpportunities– CharitableIncomeTaxDeductions• ROTHConversion• LIConversion
Casestudy#3– Timothy
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Casestudy#4‐ GusGus,92yearoldHNWwantstoinvolvehisfamilyinhislegacygiving. Outcome– CLATfundedwithapartmentbuilding– DAFfundedwithstock• Nextgenerationadvisors
Success– Estatereduction– DAFflexibletool
Challenge
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Casestudy#4‐ Gus PlanningOpportunities– ManagementofDAFinvestments– Strongconnectiontofamily
RESOURCES
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RESOURCES
MNPlannedGivingCouncil
LocalCommunityFoundations
CommercialGiftFunds
NationalPhilanthropicTrustDAFStudy
USTrustStudyonPhilanthropicConversation
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QUESTIONS
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THANKYOU
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