Broadening the Philanthropic Tools You Offer Your Advisory Clients

By Sam Marks

One sentiment I hear most often from clients and their advisors is: “I didn’t know DAFs could do that!” In fact, DAFs are incredibly flexible vehicles, and in the hands of the right client (with the support of the right DAF sponsor), the possibilities for making a positive philanthropic impact are nearly limitless. 

Benefits of Donor-Advised Funds

Most advisors consider donor-advised funds (DAFs) to be fairly standard products suitable for clients with modest philanthropic assets and goals. At its most basic application, a DAF is a simple, tax-efficient, and cost-effective investment account that provides a client with a way to support their favorite charities. Donations to DAF accounts are tax-deductible, and the proceeds can be invested to grow tax-free. Donors can recommend grants to basically any 501(c)(3) nonprofit organization at the time and cadence of their choosing.

As a boutique DAF sponsor, FJC has a 25-year track record of co-creating innovative solutions that respond to the creativity and bespoke needs of our donors. We’ve accepted illiquid assets: vacation homes, stock or limited partnership interested in privately held companies, and cryptocurrency. We’ve allowed donors of a certain size to “order off the menu” in terms of how their DAF accounts are invested, approving investments in hedge funds or alternative investments. And we’ve created opportunities for our donor accounts to “do good while doing well,” putting their investments to work as bridge loans to nonprofits, which earn a competitive risk-adjusted return while helping organizations achieve their missions.

And when clients come to us with innovative ideas about how to deploy their philanthropic dollars, that’s where we really shine.  

Philanthropic Case Studies

One donor opened up an account with us for the express purpose of creating a 0%-interest revolving line of credit for her favorite nonprofit. The donor had been a longtime supporter of Brighter Tomorrows, a domestic violence organization on Long Island. As she developed a relationship with the executive director, she saw the stress she was under managing the organization’s cash flow, in the face of oft-delayed State contracts. So we worked with the donor to create a revolving account to bridge these payments and recycle her philanthropic dollars.  

Another one of our donors refinanced the mortgage of the Tenement Museum. The donor was a longtime fan and supporter of this vital organization that has been researching and telling the stories of immigrant New Yorkers for the past 25 years. During the early days of the COVID-19 pandemic, their visitors (and attendant revenue) dried up, but the museum carried significant fixed costs due to its mortgage, which cost the museum $585,000 per year. Working with the donor and the Tenement Museum, FJC purchased the organization’s mortgage bond and changed the terms to 1% interest-only for five years. By lowering the interest rate and removing the burden of paying monthly principal payments, we provided a financial lifeline to the museum, saving the organization $2.5 million in interest costs over five years.

Our donors come up with all kinds of ideas: they make impact investments in career impact bonds; they issue Request for Proposals (RFPs) to identify best-in-class nonprofits; they tap strategy consultants to help them fine-tune their giving; they develop scholarship and award programs; they collaborate with other funders to maximize their impact; and they create their legacies. Whether it’s a complex transaction or a newfangled idea, FJC is there along the way.  That’s the reason why some family foundations are closing up shop and transferring their assets to DAFs at FJC. They can get all the flexibility and utility of a private foundation with less of the hassle and cost.

Partner With FJC to Offer More

It’s these innovative approaches that have made us the DAF of choice for advisors that want to offer up that “something extra.” Why send your clients to open accounts at a large, impersonal DAF sponsor where their questions and concerns are answered by robots or phone trees? Your clients are accustomed to best-in-class service and performance, so why not align your firm with a boutique DAF that offers them that same experience? We consider advisors like you much more than just referral sources, but true allies and partners in this work. We can provide complete visibility into their clients’ philanthropic assets, and in many cases, the ability to retain investment advisory services for assets held at FJC. (See more about our Alliance Relationships on our website.)

With all that we’ve done, we haven’t even scratched the surface of what’s possible with DAFs. Bring us your most imaginative clients, and we can discover the leading edge together.

If you’re interested in hearing more or you’re ready to partner with FJC, get started by reaching out to us at (212) 714-0001 or Marks@fjc.org

About Sam

Sam Marks is the Chief Executive Officer of FJC – A Foundation of Philanthropic Funds, a boutique foundation of donor-advised funds dedicated to helping you make your philanthropy work harder through flexible, creative, and customizable strategies. Sam works with imaginative donors and nonprofits to amplify their work and passion, providing unparalleled personal service and the expertise to execute complex transactions, all so that their clients can make the world a better place. His desire is to align his clients’ goals and needs with support for important nonprofits that are making a difference in the world so their wealth can be deployed for positive change. 

Sam has a bachelor’s degree from Brown University and a Master in Public Policy from the Harvard Kennedy School. Sam’s deep experience includes his role as executive director of the New York City office of Local Initiatives Support Corporation (LISC NYC), a community development financial institution that supports local champions to advance equitable development of historically underinvested neighborhoods. He has also acted as Vice President at the Deutsche Bank’s Community Development Finance Group, and director of housing development at WHEDCo in the South Bronx. Earlier in his career he founded Breakthrough New York, a youth development program. Sam is a third-generation New Yorker, married to a third-generation Brooklynite, with two sons. He has great affection for the culture and art forms New York is known for, from film to comic books to many genres of music. To learn more about Sam, connect with him on LinkedIn.

A Modest Grant Amplifies a Life’s Work in Peacebuilding

An inaugural post in FJC’s new series, “Why I Give…And How,” gives voice to some of our most committed and imaginative donors. The author is the Director of Columbia University’s Program on Peacebuilding and Human Rights.

By David L. Phillips

I recently made a small grant from my account at FJC to benefit school children in Northern Syria. The grant provides supplies for schools and students, including notebooks, pens, pencils, white boards, teaching materials and visual aids such as maps and social studies materials.

My personal assistance through FJC is part of a broader effort to rehabilitate Syria’s education sector, which was ravaged by war. In 2011, Syrian forces targeted Kurds for being pro-western. In 2014, ISIS killed and displaced thousands. Arabs, Kurds, Yezidis, Christians and Turkmans came under the control of ISIS, which used kidnapping, beatings, rape, torture to terrorize local residents.

The plight of these defenseless victims is reminiscent of my family’s experience with pogroms in Belarus at the turn of the 20th century. Their experience with persecution and flight inspired my life choices and career path.

“Strategic philanthropy, even modest amounts, can help meet the basic needs of students…It won’t stop the war, but it can restore hope and rebuild academic institutions”

Columbia University’s Program on Peacebulding and Human Rights (PBHR), which I direct, studies conflict conditions and recommends ways to prevent violence and hold perpetrators accountable. Iraq and Syria have been my focus for 30 years. In 1988, I interviewed Iraqi Kurds in Halabja who survived Saddam Hussein’s chemical weapons attacks. This meeting inspired a lifelong commitment to Kurdish issues, as an academic, a think-tanker, and foundation executive. I’ve also served as a U.S. official, acting as a Senior Adviser and Foreign Affairs Expert at the State Department during the Clinton, Bush and Obama administrations.

I learned firsthand that the U.S. can be a force for good – but not always. In January 2018, Turkey’s President Tayyip Erdogan spoke with Donald J. Trump, demanding that U.S. troops withdraw from northern Syria and give Turkey’s armed forces free reign. Erdogan views Kurds as surrogates for the PKK, an armed Kurdish group that has been struggling for greater Kurdish cultural and political rights since the 1980s.

The US gives deference to Turkey as a NATO member. If Turkey applied to join NATO today, its application would be summarily rejected because it is Islamist, anti-American, and profoundly hostile to human rights. I’ve been a witness to Turkey’s crimes, providing testimony on human rights violations by Turkey to the U.S. Congress, the British House of Commons, the French Senate, and the European Parliament.

During fact-finding trips to North and East Syria, I saw that many schools were destroyed, targeted directly and systematically. All of the educational institutions were closed down. The only schools that survived benefitted from Turkish protection. However, Turkey’s involvement came with a cost. The Turks forced extremist Islamist practices on the population. “Official” schools function like madrasas, imposing Islamist education and indoctrinating youth.

Many traumatized Syrians experience frustration, despair, and anger. They risk becoming a lost generation. Survivors of torture and gender-based violence need psychosocial care in addition to school supplies.

Providing educational materials is supported through a small grant I made through FJC grant to a local NGO. “One child, one teacher, one book, one pen can change the world”, said Malala Yousafzai, the Nobel Peace Prize recipient.

“Focusing on public policy is important, but individual needs must not be forgotten”

Through Columbia, I’m also focused on the big picture, providing educators with training on teaching methodologies for children who have experienced trauma, displacement, family problems, and learning difficulties. “One pen” is part of a broader effort undertaken by PBHR to foster stabilization and post-conflict reconstruction in Syria. Focusing on public policy is important, but individual needs must not be forgotten.

Working with educators and students is a small yet practical step to address the plight of Kurds, Yezidis, Armenians, Syriacs and Arabs affected by the conflict in Syria. It won’t stop the war, but it can restore hope and rebuild academic institutions.

Strategic philanthropy, even modest amounts, can help meet the basic needs of students. Linked to enhancing the overall education sector, it can also serve as a model as governments consider their role in peacebuilding. PBHR’s involvement sends a message: The plight of Syria’s children is not to be forgotten. Healing the world starts with one child at a time.

(Note: Donors can support war-affected Syrians through the FJC’s Global Village Fund. Please contact Meghan Hudson at Hudson@fjc.org for more information.)

customizing Your Giving Home Donation

Customizing Your Giving: Getting Creative with What You Give

The Power of the Personal Series: Ideas and Inspiration from a Boutique DAF Sponsor

By Sam Marks

As tidying guru Marie Kondo is fond of saying, “Letting go is even more important than adding.”  While Ms. Kondo generally refers to purging overfilled closets of possessions that no longer “spark joy,” the same principle may apply to those looking to simplify estates or assets through philanthropy.  

As a boutique sponsor of donor-advised funds (DAFs), FJC has worked with a number of donors that have sought not just to simplify, but also transform their non-cash assets into a philanthropic resource for good in the world.  

How We’ve Made a Difference

Most people think of DAFs as simple, efficient, and cost-effective investment accounts that provide savvy philanthropists — of all sizes — with a way to support their favorite charities. Donations to DAF accounts are tax-deductible, and the proceeds can be invested to grow tax-free to maximize a donor’s giving capacity. But when donors and DAF sponsors bring all their creativity to the table, the benefits of a DAF can go beyond simple and efficient.

One of our favorite examples of creative giving comes from Georgette Bennett and Leonard Polonsky, who worked with FJC to transform a vacation home in Aspen, Colorado, into a portion of their $12 million grant to the New York Public Library. The family donated the Aspen property to FJC, which then sold the real estate, generating the proceeds that covered a portion of the grant. The grant to the library supported the creation of Polonsky Treasures Exhibition, a permanent display of rotating items from its extensive research collections, including an original copy of the Declaration of Independence, Christopher Columbus’s letter to King Ferdinand II advising him of his discovery in the New World, the Gutenberg Bible, and original sheet music from Beethoven and Mozart. The opening of the exhibition, “A Cabinet of Wonders,” was covered last year in The New York Times.

At FJC, our imaginative donors have contributed all kinds of assets: limited partnership interests in private companies and even illiquid or lightly traded stocks in advance of a liquidity event like an initial public offering. We have also received cryptocurrency. In these cases, donors eliminated the capital gains taxes they would have paid on these assets (increasing their charitable giving) and received a tax deduction for the fair market value of the assets.  

Important Considerations When Contributing Illiquid Assets to a DAF

Since FJC does not give tax advice, we encourage you to work with your estate planner, tax attorney, or someone with expertise related to your particular situation. Second homes or investment properties that have appreciated in value may be great candidates for gifting to a DAF, particularly if the owner has benefitted from depreciation deductions. Other assets aren’t so simple. For example, gifts of art or other types of tangible personal property are governed by IRS rules regarding the amount of the deduction. Gifts of closely held stock need documented valuation, particularly if the corporation intends to repurchase the shares from FJC as part of the family’s estate and succession planning.

Keep in mind that when providing a tax receipt for an illiquid asset, FJC will simply describe the asset; it will be up to you as the donor to provide a Form 8283 to the IRS for tax deductibility purposes. Also, don’t wait until New Year’s Eve to reach out to us—these donations may be a bit complex and require some lead time (the donations mentioned above required the approval of certain committees of our Board of Directors, whose role is to ensure that we are in compliance with all IRS and regulatory statutes).  

Discover the Potential of a DAF for Your Philanthropic Endeavors

Neal Myerberg, a philanthropic advisor and longtime Board Member of FJC, put it best when he said, “We get excited when a donor brings us an idea for a different kind of asset to contribute to their account…. These are some of the more challenging and inspiring transactions we handle on behalf of our donors.”

With the right imagination and expertise, your DAF sponsor can act as a kind of Philosopher’s Stone, transforming lead into philanthropic gold. If you’re ready to see how FJC can make a difference in your giving, reach out to us at (212) 714-0001 or Marks@fjc.org.

About Sam

Sam Marks is the Chief Executive Officer of FJC – A Foundation of Philanthropic Funds, a boutique foundation of donor-advised funds dedicated to helping you make your philanthropy work harder through flexible, creative, and customizable strategies. Sam works with imaginative donors and nonprofits to amplify their work and passion, providing unparalleled personal service and the expertise to execute complex transactions, all so that their clients can make the world a better place. His desire is to align his clients’ goals and needs with support for important nonprofits that are making a difference in the world so their wealth can be deployed for positive change. 

Sam has a bachelor’s degree from Brown University and a Master in Public Policy from the Harvard Kennedy School. Sam’s deep experience includes his role as executive director of the New York City office of Local Initiatives Support Corporation (LISC NYC), a community development financial institution that supports local champions to advance equitable development of historically underinvested neighborhoods. He has also acted as Vice President at the Deutsche Bank’s Community Development Finance Group, and director of housing development at WHEDCo in the South Bronx. Earlier in his career he founded Breakthrough New York, a youth development program. Sam is a third-generation New Yorker, married to a third-generation Brooklynite, with two sons. He has great affection for the culture and art forms New York is known for, from film to comic books to many genres of music. To learn more about Sam, connect with him on LinkedIn.

Special thanks to FJC Board Member Neal Myerberg for ideas and feedback during the writing of this post.

Origin Story

A Foundation Evolves To Keep Pace with Its Innovative Donors

By Sam Marks

In the early days of the COVID-19 pandemic, one of our most imaginative donors called me with a stumper: Had a donor-advised fund (DAF) account ever been used to refinance the mortgage of a nonprofit organization?

The donor was a longtime fan and supporter of the Tenement Museum, a vital organization that has been researching and telling the stories of immigrant New Yorkers for the past 25 years. He had read a story in The New York Times documenting the organization’s significant financial distress (“A Museum Devoted to Survivors Now Faces Its Own Fight to Live,” April 24, 2020).  As a result of the pandemic, their visitors (and attendant revenue) dried up, but the museum carried significant fixed costs due to its mortgage, which cost the museum $585,000 per year.

Working with the donor and the Tenement Museum, we purchased the organization’s mortgage bond and changed the terms to 1% interest-only for five years. By lowering the interest rate and removing the burden of paying monthly principal payments, the transaction provided a financial lifeline to the museum.

“We are paying $2.5 million less out of pocket for debt service over these five years,” explains Annie Polland, the Executive Director of the Tenement Museum. “This has bought us time to figure out how we manage through this pandemic year, but it also freed us up to think of creative ways to operate.”

Who We Are

The founders of FJC could never have imagined this particular use of DAF accounts, but they always imagined we would be a home for creative donors. FJC was started in 1995 because of the limitations of the donor-advised funds (DAF) available at the time. As donors themselves, our founders were looking for more creative philanthropic solutions. They were business-savvy professionals who wanted their philanthropy to be just as sophisticated as their day jobs in law, business management, and finance. 

Our founders believed that by more aggressively investing their philanthropic funds, they could grow their accounts and be able to provide even more support to their favorite charities. They knew there had to be better ways to invest than the low-yield, low-risk money market funds that were typical of the industry. They also understood that nonprofits were also businesses with unique needs, which could be met with bridge loans, revolving funds, and other vehicles. So FJC was created as the foundation that could do all the creative things its donors wanted, not only for their own charitable goals, but also for the nonprofit sector as a whole.

What We Do

Today, we are a responsive, customizable foundation of donor-advised funds that offers all the flexibility of a private foundation but with less hassle and cost. We continue to be on the leading edge of philanthropy as many of the innovations created by FJC are now standard in the industry. 

We work with three distinct types of stakeholders:

  1. Donors: We work with high-net-worth individuals and their advisors, foundations, and others to come up with personalized solutions for their philanthropic needs, whether donor-advised funds, collective giving vehicles, fiduciary investment accounts, or something else.
  1. Emerging nonprofits: We fiscally sponsor nonprofits that do not have their own 501(c)(3) tax-exempt status, providing operational support to collect tax-deductible contributions and disburse grants and vendor payments.
  1. Established nonprofits with financing needs: We provide bridge loans to nonprofits to manage their particular cash flow challenges from city or state contracts or other timing issues. 

This breadth of stakeholders allows FJC to be maximally responsive to donors. But we can also bring them the best ideas for what nonprofit organizations need in order to be effective. We’re nonprofit practitioners at heart, and empowered with all the expertise and technical skill of the financial sector.

The Donors We Serve Best

The landscape of DAF sponsors has evolved over the past 25-plus years, and there are now over 1,000 sponsors of donor-advised funds available, ranging from community foundations to nonprofit arms of large financial service companies. But just as the choices of philanthropic partners have proliferated, so has the range of possibilities for what philanthropic dollars can do. Our donors are finding it’s more urgent than ever to have a partner that can execute their most ambitious ideas. 

Our most imaginative donors have kept abreast of the way the financial industry has evolved, such as the entrance of new currencies (like Bitcoin), new strategies (like ESG and values-aligned investing), and greater awareness of the impact of direct investing in nonprofits or social ventures. 

The sky’s the limit, and the more imaginative the donor, the more we at FJC can do. Our donors look to us to act as a point of financial intermediation between the nonprofit sector and the investing world. 

Donors at FJC can: 

Our best donors apply as much passion, thoughtfulness, and creativity to their philanthropy as they do to their work lives. We are increasingly seeing more interest from donors with larger accounts, or who want to transfer a private foundation’s assets to a boutique DAF, so they can take full advantage of our nimble, creative approaches. 

We offer high-touch, concierge services that our clients know they can rely on. We are always available by phone or email to troubleshoot issues or execute complex ideas.

My Own Journey

I joined FJC as CEO in 2019, compelled by the notion that philanthropy could be creative, addressing the needs of both donors and nonprofits. 

I began my career as a nonprofit practitioner, at nonprofits in the areas of youth and community development. I’ve also worked for a number of financial firms that intersect where money meets mission: a Wall Street bank (Deutsche Bank’s philanthropic arm) and a community development financial institution (LISC). My experience has shown me that the vital work of the nonprofit sector is built just like any other business. They depend on managing risk and steady cash flow to operate. They rely on a broad range of revenue sources, whether it’s public sector contracts, foundation grants, or individual contributions.

With creativity, commitment to mission, and business savvy, philanthropic dollars can have an impact far beyond just making contributions.

I was drawn to FJC because of the sophistication of our board and staff. We are able to customize solutions and implement creative ideas that come from donors, nonprofit partners, and clients. The industry has evolved, the sector has evolved, and FJC has evolved. Through it all, we have maintained our commitment to sophistication, customization, and our ability to bridge imaginative donors with the nonprofit practitioners who need their support.

The FJC Difference

If you’re ready to experience the FJC difference, we’d love to hear from you! Get started by reaching out to us at (212) 714-0001 or Marks@fjc.org.

About Sam

Sam Marks is the Chief Executive Officer of FJC – A Foundation of Philanthropic Funds, a boutique foundation of donor-advised funds dedicated to helping you make your philanthropy work harder through flexible, creative, and customizable strategies. Sam works with imaginative donors and nonprofits to amplify their work and passion, providing unparalleled personal service and the expertise to execute complex transactions, all so that their clients can make the world a better place. His desire is to align his clients’ goals and needs with support for important nonprofits that are making a difference in the world so their wealth can be deployed for positive change. 

Sam has a bachelor’s degree from Brown University and a Master in Public Policy from the Harvard Kennedy School. Sam’s deep experience includes his role as executive director of the New York City office of Local Initiatives Support Corporation (LISC NYC), a community development financial institution that supports local champions to advance equitable development of historically underinvested neighborhoods. He has also acted as Vice President at the Deutsche Bank’s Community Development Finance Group, and director of housing development at WHEDCo in the South Bronx. Earlier in his career he founded Breakthrough New York, a youth development program. Sam is a third-generation New Yorker, married to a third-generation Brooklynite, with two sons. He has great affection for the culture and art forms New York is known for, from film to comic books to many genres of music. To learn more about Sam, connect with him on LinkedIn.