As the end of the year approaches, FJC CEO Sam Marks interviewed FJC Board Member, Neal Myerberg, Principal at Myerberg Philanthropic Advisors, who consults with charitable organizations, foundations and philanthropists.  A transcript of the conversation, edited for length and clarity, is below.

Please note that FJC does not offer tax advice; any prospective donor should seek the advice of a qualified estate and/or tax professional to determine the consequence of his/her gift.

It’s a time of real uncertainty in the markets, with equity markets down for the year, plus rising inflation putting downward pressure on bond prices.  At a time when many donors are seeing their portfolios decline, how should donors think about year-end giving?

There’s no question that investors may not be feeling as flush as they did in prior years.  That said, long-term investors may still have capital gains from securities they bought many years ago.  It’s worth asking the question to their tax attorneys or planning professionals.

It’s also good to remember that cash and appreciated stock aren’t the only assets that can be donated.  FJC has accepted real estate, cryptocurrency, illiquid or lightly traded stock in advance of an IPO.  These items can take a bit more lead time for be approved by FJC’s board committees, so I’d definitely encourage reaching out to Sam or Regina soon if people are looking to make these donations before the end of the year.

Are there any tried-and-true rules of thumb that philanthropically minded families should keep in mind, even in a down market?

Regardless of what the market is doing, it’s always a good time to plan.  You might review your account documents and make sure that you have Successor Recommenders identified. And maybe it’s a good time to involve those successors—family members, the next generation—in your giving.  Some donors engage in a family-wide “strategic plan” for their philanthropy. FJC encourages this and can even allow some or all of the costs of strategic consultants to be paid with funds in a donor’s DAF account.

For so many donors we work with, philanthropy is part of their legacy.  Whether they are identifying beloved organizations for final distributions, or setting up a Board-designated fund to live on in perpetuity, FJC is really committed to meeting its donors where they are and creating a customized solution for them. 

Could you offer one or two planning techniques that could be highly impactful for increasing our donors’ philanthropic capacity? Any little-known tactics that you wish more DAF account holders would consider?

FJC’s donors probably know that the Treasury Department has reinstated annual required minimum distributions for people who have inherited Individual Retirement Accounts. This is basically a reinterpretation of 2019’s Secure Act, which eliminated the “ten-year stretch”.  In plain language, this means that under this change someone inheriting an IRA who does not fall into the category of exceptions has to take all Required Minimum Distributions (RMDs)–and pay taxes on them—within 10 years, instead of over their whole lifetime. 

IRA owners that want their beneficiaries to receive benefits for life are interested in considering other alternatives.  One solution may be to direct distribution of all or a portion of the IRA to a charitable remainder trust (CRT) after the lifetime of the IRA owner.  The trust would be constructed to make fixed rate payments to one or more beneficiaries for life. Thus, the beneficiaries of the IRA owner would not be limited, as direct heirs of the IRA, to a ten-year payout. At the end of the term of the CRT when all beneficiaries have passed away, the remaining assets may be distributed to a family DAF for recommendations by the next family generation; e.g. the children or heirs of the lifetime beneficiaries of the CRT.

Anything you’d like to highlight about our ever-changing tax code?

While the estate and gift tax unified credit continues to increase year-by-year, the provisions governing annual increases will sunset at the end of 2025.  Beginning in 2026, the unified credit will drop to approximately $6.2-6.5 million ($5 million base in 2010 indexed for inflation through 2025) or such amount as shall be enacted before then to govern estate and gift taxes from and after January 1, 2026.  In addition, the maximum federal gift and/or estate tax rate may increase from 40% to 45%., Taking advantage of the current unified credit amounts ought to be considered in estate planning by the end of 2022 and over the following three years. 

By Sam Marks

For some of our donors, charitable giving is motivated by more than tax benefits. For these donors, the philanthropic impulse is a calling, as critical to their sense of self and legacy as their professional lives. While donors may open a donor-advised fund (DAF) account with us as an individual, we often engage with a whole family system, or work with them to consider longer time horizons than just their own lives. 

When It’s a Family Affair

“My daughter’s sense of responsibility started with coat drives and food drives at her school,” one donor told me. “But encouraging her to support the causes she cared about with donations really focused our conversations about her values.” This donor set up a Young Philanthropist account, a specialized DAF account intended for individuals of college age or younger. These accounts lower the barriers to entry by decreasing their minimum start-up contributions (only $1,600, compared with the standard $5,000). 

Another donor told me that life events inspired their family’s philanthropic activities. “For both of my kids, we set up Collective Giving accounts when they got married,” she said, referring to a variation of a DAF account that allows multiple donors to pool their grant dollars. “We let their wedding guests build up this charitable resource as an alternative to just ordering something off the registry.” For both couples, the CGAs have evolved over time into their own family DAF accounts that have continued to be a mechanism for supporting their favorite nonprofits.

As with any DAF account, contributions to Young Philanthropist accounts and Collective Giving accounts are tax-deductible at the time of donation.

DAF accounts can be a philanthropic resource for families too. We have countless donors that engage family members as additional recommenders on their accounts, allowing, for example, their adult children access to all or a portion of their account to experiment with grantmaking. One family has set up a “master account” for the matriarch, with sub-accounts for each adult child that she funds at least once a year. For this family, dinner-table conversations veer into impromptu “foundation retreats” where topics of conversation include theories of change and grantmaking strategy. “It can get quite lively,” the donor told me. 

For some families, a professional philanthropic consultant may be called for. Families are complex systems and have dynamics that require some conversation, and at times moderation, on the road to determining a philanthropic strategy. As consultant Lauren Katzowitz Shenfield told FJC during a recent webinar, “The conversation always starts with values,” she explains, “because that underlies the entire practice of philanthropy.”

Fun fact: In many cases, FJC will allow donors to pay some or all of their philanthropic consultant fees from their DAF accounts!

Planning a Legacy 

Conversations about DAF accounts often start with questions of estate planning and tax efficiency, and evolve into questions of legacy: what our donors want to leave behind when they pass on. Our standard account-opening documents invite new donors to consider successor recommenders who can inherit their recommendation privileges, and of course donors may also list charities that can receive final distributions upon their deaths. 

Take the case of Karen Heine, who was dedicated over her lifetime to demonstrating how humans might integrate more harmoniously with nature and wildlife, even in urban settings. During her life, Ms. Heine established a conservation easement on her property: a voluntary, permanent contract whereby the landowner gives up development rights of a property in perpetuity, in return for tax benefits. Ms. Heine enjoyed a decades-long relationship with Colorado Open Lands, the nonprofit that stewarded the preserve, and the organization was one of several that received a significant grant upon her death.

In certain circumstances, FJC has also taken on the responsibility of carrying on the legacy of our donors. The Helen Rehr Fund was established as a board-advised fund in 2013, to honor the legacy of Ms. Rehr, who revolutionized and standardized the field of social work in her role as Chair of the Division of Social Work at Mt. Sinai. The organizing documents of the fund account requires the Board of FJC to “identify worthwhile projects determined by FJC to be used for social services, research, or training projects all to enhance health and mental health care for vulnerable populations within the State of Israel and the City of New York.” The most recent grant provided $100,000 to New York Lawyers for the Public Interest (NYLPI), working in coordination with program partner Community Access to advocate for New York City to establish a non-police response to mental health crises.

What are the special circumstances around your family and legacy? Contact CEO Sam Marks to start a conversation by reaching out 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.

It’s well known that donor-advised fund (DAF) accounts allow donors to recommend grants to nonprofits of their choice. But donors can also recommend how funds are invested. FJC’s Chief Financial & Investment Officer Regina Rodriguez discusses the unparalleled customization available at FJC, and how our imaginative donors are taking advantage of it, in the following informative Q&A session. (This interview has been edited for clarity.)

Q&A With Regina Rodriguez, FJC’s Chief Financial & Investment Officer

Q: Like the assets of other nonprofit institutions like university endowments, the assets held in DAF accounts grow tax-free. What investment options are available to your account holders?

A: For most of our donors, the core menu of investments we offer provides a good range of choices. We offer a variety of low-cost mutual funds that are offered by traditional financial institutions like Vanguard, Bernstein, Janus, and others. These options include stocks (both U.S. and international), bonds, money market mutual funds. Donors have different levels of risk, different time horizons for their giving, and many of our donors can identify an investment allocation from our menu that suits their needs. We can provide donors with historic performance metrics of these core products against industry benchmarks, and the Investment Committee of our Board of Directors is constantly reviewing the menu to see if we need to make adjustments to the menu.

Q: But I gather some donors prefer to order “off the menu”? 

A: Yes, we’re able to respond to all kinds of requests. In fact, we were founded back in 1995 by donors that wanted to create a flexible, nimble sponsor of DAFs, and a big part of that meant the ability to be maximally responsive to donors that wanted to take a more customized approach to their investments.

Q: What are some of the ways donors customize their investment approaches?

A: We have donors that want to align their accounts with a particular investment approach that mirrors their or their family’s assets. In some cases, donors’ accounts are invested in alternative investments, such as hedge funds or private equity, or even illiquid assets, like shares or interests in privately held companies. For other donors, it’s less about esoteric investment products, and more that they want to maintain a relationship with a trusted advisor. They want to see their assets in their account invested in a similar way to their personal assets, and they want their advisor to have full visibility of their DAF accounts alongside their other personal brokerage accounts. 

Q: What about impact investing?

A: A lot of donors find their way to FJC because of our longstanding commitment to impact investing, in particular our Agency Loan Fund investing option. We’ve been doing that even before impact investing was “a thing”! 

The Agency Loan Fund is one of the options on our core menu, and donors can choose to invest some or all of their account holdings in it. We pool these funds together and use them to make bridge loans to nonprofits. Loans from the Fund help nonprofits of all kinds manage their cash flow, bridge public sector commitments, acquire property for affordable housing or community facilities. The donors earn a competitive risk-adjusted return, while their funds are being invested in the service of nonprofit missions. Plus, the pooled nature (and our other funding sources) means that donors invested in the Loan Fund don’t have to sacrifice liquidity, and funds are always available if they want to make a grant.

We can also respond to donors who want to customize their account investments with an eye toward impact investments. For example, we worked with a donor that wanted to invest in a career impact bond, supporting a number of training programs that are upskilling workers. We also helped a donor refinance the mortgage of the nonprofit Tenement Museum, which involved purchasing a bond issued by the City of New York and changing the terms so that the museum was obligated to pay interest-only for five years. That one was complicated to get done, but it had a great impact on the organization, which was stabilizing itself coming out of the pandemic.

The donors that work with us typically want to go beyond ESG investing (although we offer products that can do that too); they want to actually invest in nonprofits and help them achieve their missions.

Q: If a donor wants to customize their investment approach, how do they get started?

A: Reach out to speak to us about it. We love getting these calls!

Typically, it’s donors with larger accounts (usually above $1 million) that will be allowed this level of customization. Also, anytime a donor wants to do something that’s not within our standard investment menu, we have to seek approval from the Investment Committee of our Board of Directors to ensure that the investment approach is consistent with our fiduciary role. The Investment Committee is a sophisticated (and committed) group of professionals, so we can usually arrive at an answer relatively quickly.

Also, when there’s an investment advisor or manager that works with multiple donors, we can consider that $1 million threshold in the aggregate. We’ve established a number of these formal, institutional Alliance Relationships, where the firms see FJC’s boutique approach as adding value to their client relationships.

Q: What else should people know about what’s possible with DAFs?

A: DAFs have a reputation for being somewhat standard-issue mechanisms for achieving modest philanthropic goals (like annual giving or memberships at religious institutions). They don’t have to be this way! We’re amazed by the creative ideas some of our donors come up with, and we welcome these opportunities to do something for impact that’s new and different. 

We’re Here to Help

Are you ready to customize your investment approach? Or do you still have questions about how to take advantage of donor-advised funds? Our FJC team is here to help. Reach out to us today at (212) 714-0001 or Marks@fjc.org. 

About Regina 

Regina Rodriguez joined FJC in December 2019 as the Chief Financial and Investment Officer. Regina’s journey began in public accounting, performing audits for clients in an array of industries, which include financial services, manufacturing, and real estate. After joining EisnerAmper, Regina discovered her true passion for the non-profit industry by auditing many of New York’s top cultural, educational, and religious organizations. During a period of changing reporting requirements and regulations, Regina collaborated with the New York State Society of CPAs Foundation for Accounting Education and Philanthropy New York to present seminars and tailored trainings to both financial and non-financial professionals with the goal of making the technical content understandable. Since leaving public accounting, Regina has served as Controller for the Solomon R. Guggenheim Foundation and Director of Finance for the Long Island Children’s Museum. Regina graduated Magna Cum Laude with a Bachelor’s degree in Accounting from Adelphi University. She holds a CPA license in the state of New York and serves on her local school district’s Audit and Budget Committees.

By Sam Marks

The biggest names in donor-advised funds (DAFs) are the philanthropic arms of large financial institutions, and their size and scale make them an efficient solution for the retail philanthropist. But for the discerning donor who is looking to take a more personalized and customized approach to their philanthropy, a boutique approach may work better. Here are some reasons you might find a smaller, more nimble DAF sponsor appealing. 

1. You want to donate something weird. 

DAFs will typically accept donations of cash and marketable securities, but some philanthropists have complicated estates where it may be advantageous to donate other appreciated assets. We’ve seen donations of real estate, cryptocurrency, illiquid or lightly traded stock. Maybe you’ve got an idea that we haven’t even considered yet. 

2. Your dollars just can’t quit your advisor.

Oftentimes setting up a DAF account means opening an account at another financial institution, and choosing off a standard list of investment options. If you’ve got an advisor you’ve worked with who’s delivering results, why not bring them along to manage the funds in your DAF account? Our investment committee has approved many of these arrangements, and donors appreciate allowing their longtime advisors to have full visibility into their philanthropic accounts.

3. You’ve had enough of automated responses.

You’ve got questions. Or detailed instructions for grants that matter for the relationships you’re managing. Or there’s an issue you need to troubleshoot with your account. Why fill out an online form letter or put in a support ticket when you can just talk to somebody? Our staff is available during East Coast business hours, and we respond promptly to all emails and phone calls. We’re available to troubleshoot or respond to curve balls, like the occasional rush approval on a grant. 

4. Managing your private foundation has gotten too annoying.

We’ve opened accounts lately from a number of family foundations that have found the administrative burdens of operating a private foundation onerous: the tax filings, audits, compliance. For many years, they resisted closing down and converting to a DAF because they believed they would lose the flexibility and customization. But working with a boutique DAF means not having to make those trade-offs, and they’ve found they can retain many of the benefits of their private foundation (even their name!) while working through a DAF.  

5. You want your philanthropy to go beyond grantmaking.

If you’re deeply invested in the nonprofits you care about, you may learn about the particular challenges they face in operating their businesses. They face many cash-flow challenges that a standard business faces: financing contract receivables, jump-starting capital projects, investing in growth. But the credit options available to nonprofits are very limited. We’ve worked with a range of donors who have used their DAF accounts as 0% interest revolving lines of credit, bridged capital campaigns, made impact investments, even refinanced a nonprofit’s mortgage.  

6. You want to create a scholarship or award program.

In general, it’s not easy to make philanthropic grants to individuals, but we’ve got a long history of setting up scholarship and award programs that do just that. There’s a fairly involved process to get these approved by a committee of our board. (We have to make sure that the process is fair, nondiscriminatory, and aligns with philanthropic purposes, applicable regulations and whatnot). We can be pretty hands-on to co-create these types of programs.

7. You want to guide your giving with expertise. 

Our board and staff span many worlds from finance and law, to nonprofit practitioners of many types. We’re available to our donors and stakeholders that want to brainstorm, think out loud, and co-create. We have also worked with donors that want to engage philanthropic consultants, strategic advisors, or other experts that can enhance and deepen their philanthropic work. 

8. You want to rally others to your cause through a funder collaborative.

We’ve had a number of donors choose us because they have aspirations beyond just using a DAF account for their own philanthropic goals. They want to bring their community along with them, tap additional resources and expertise—or sometimes just celebrate a life event like a wedding or graduation by creating a philanthropic fund. Our Collective Giving accounts provide efficient ways to pool resources and host funder collaboratives.

9. You want to engage your family or next generation in your giving.

Family dynamics can be challenging, but the mechanics of setting up your family with DAF accounts doesn’t need to be. In addition to adding additional recommenders and successor recommenders to their accounts, donors find it easy to create multiple accounts or sub-accounts for their friends and loved ones. Some also take advantage of our Young Philanthropist accounts (with minimum balances as low as $1,800) to engage their teen or early-adult children. 

10. You view philanthropy as a relationship business. 

There are nearly one thousand foundations you can go to set up a DAF account, and though there may be slight differences among them, the technical aspects of them will be nearly identical. The intangible differences will be on the people side—the sensibilities, experiences, and skill sets that animate the organizations. We invite you to get to know us, and learn why small can be beautiful when it comes to sponsoring DAFs. We look forward to sharing our passion for this work with 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.

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.

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.

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.

2. 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.

3. 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: 

• Deploy their dollars as low-interest loans (examples: Supporting Afghan resettlement; 0%-interest line of credit to help a domestic violence organization)
• Contribute non-traditional assets (examples: Bitcoin; Real estate; Illiquid (or lightly traded) stock in advance of an IPO)
• Utilize impact investing (examples: Career impact bond, Refinancing the mortgage of the Tenement Museum)

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.

Many of our donors have reached out in recent days to ask about how to support humanitarian efforts underway in the unfolding crisis in Ukraine.

Below are some eligible 501(c)(3) nonprofit organizations that are active in the region. 

Note for our donors: FJC has recently upgraded its donor portal, so you will need to update your password this first time you use it.   Please use the EIN numbers provided to search for these organizations in the donor portal.

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Razom for Ukraine (EIN 46-4604398) was founded on purely volunteering efforts of Ukrainian Americans in NYC during the 2013-14 Revolution of Dignity in Ukraine.  Razom has maintained an open Emergency Response project since the Russian annexation of Crimea in 2014 where they mobilized to procure medical and tactical supplies to the eastern front.  They picked up this project again in 2020 at the start of the COVID-19 pandemic to fundraise for, procure, and deliver medical supplies across covid hot spots in Ukraine.  Since 2014, the Emergency Response fund has always remained open for donors so that they were in a position to act swiftly in support of Ukrainians in crisis situations.

United Help Ukraine (EIN 47-1837509) is working to provide life-saving individual first aid kits (IFAKs) containing blood-stopping bandages and tourniquets and other emergency medical supplies to the front lines and is cooperating with other emergency response organizations to prepare humanitarian aid to civilians that might be directly affected by Russia’s attack.

The Ukrainian Congress Committee of America (UCCA) (EIN 13-6219868) has developed a relief fund to support  provision of vital humanitarian aid to Ukrainians.  UCCA is a non-profit, non-partisan community-based organization that has represented the interests of Ukrainians in the United States since 1940.  With a National Office in New York City, a bureau in Washington, D.C. and dozens of local grassroots chapters throughout the United States, UCCA’s staff and a nationwide network of volunteers advocate in the name of over 1.5 million Americans of Ukrainian descent.

The International Rescue Committee (EIN 13-5660870 is launching an emergency appeal to help support displaced families in Ukraine with critical aid.  Since the International Rescue Committee (IRC) was first founded at the request of Albert Einstein in 1933, our global team of more than 17,000 staff have helped people upended by conflict and crisis to survive, recover, and regain control of their lives.

HIAS (EIN 13-5633307) is closely monitoring the situation in Ukraine and neighboring countries and is responding with emergency humanitarian assistance to those who are displaced.  HIAS team members are on the ground right now in Poland and Moldova to assess the humanitarian situation and determine the appropriate next steps. Closer to home, HIAS is advocating in the US for appropriations to fund the humanitarian response, as well as Temporary Protected Status (TPS) for Ukrainians..

UJA-Federation of New York (EIN 51-0172429) hosted a webinar on March 1, 2022 featuring nonprofit practitioners who will provide real-time information on the Ukraine Jewish community.  The webinar will feature two organizations active in Ukraine: American Jewish Joint Distribution Committee (JDC) (EIN 13-1656634) and the Jewish Agency (JAFI) (EIN 23-0053483).  The webinar is available here.

In anticipation of possible changes to U.S. Tax Code, FJC CEO Sam Marks interviewed FJC Board Member, Neal Myerberg, Principal at Myerberg Philanthropic Advisors, who consults with charitable organizations, foundations and philanthropists.  A transcript of the conversation, edited for length and clarity, is below.

Please note that FJC does not offer tax advice; any prospective donor should seek the advice of a qualified estate and/or tax professional to determine the consequence of his/her gift.

Sam Marks: We know that changes the U.S. tax code may be coming, but we still don’t know which policy proposals will become law.  Should FJC donors be planning for a future that’s still uncertain?

Neal Myerberg: Yes.  While we still don’t know many of the details, the general shape of the coming tax reform is coming into focus.  There is a lot that FJC donors can do in 2021, particularly as it relates to charitable giving, that could position them well for 2022 and future years.

Sam Marks: So, what do we know and what don’t we know?

Neal Myerberg: As of October 2021 there are still some key differences between the Biden Administration tax proposals and what’s under discussion in the U.S. House of Representatives.  We can expect a lot of horse trading and negotiations in the coming months. The U.S. Senate will also play a role in tax legislation.   

So the exact details are still to be determined, but there are a few areas where it appears that consensus is emerging in terms of what may become law next year.

The first relates to income tax rates.  Proposed changes include raising the top individual federal income tax rate to 39.6% from its current level of 37% and extending the 12.4% portion of the Social Security tax — which is shared by employers and employees — to earnings over $400,000. Currently, wages up to $137,700 are subject to the tax.  Biden has also called for the federal capital gains rate to rise to 39.6% for taxpayers with income over $1 million. Currently, wealthy investors face long-term capital gains rates of up to 20%.  The House is proposing different rates and mechanisms, but their proposals also anticipate increased tax rates.

So there seems to be consensus from DC policymakers that income and capital gains rates are likely to go up. 

The second major change we can anticipate is to the estate tax.  The Biden Administration would eliminate the step-up in basis, which allows heirs to receive assets valued as of the date of death as basis for subsequent sales. Instead, any capital gains from the sale of inherited assets would be subject to tax using the decedent’s basis which if it were to be implemented would require wealthy households to make significant changes to their estate planning.  The Administration also proposes to reduce the amount that an individual can transfer free of estate and gift taxes from $11.7 million (in 2021) to $3.5 million for transfers at death and $1 million in lifetime gifts.  The tax rate above the exempt amount may be 40% or higher.  Again, the House plan differs considerably (and does not advocate eliminating the step-up in basis), but it also proposes reducing the exemption level from $11.7 million to $6 million, among other changes.

 The specifics are still uncertain, but it seems clear that more families will be subject to the federal estate tax, and probably at higher rates.

Sam Marks: So given that these changes are coming, what planning ideas should families be exploring with their advisors?

Neal Myerberg: I have four general planning suggestions.

One, harvest long-term capital gains before the end of 2021.  If you have appreciated assets, whether it’s publicly-traded stock or something else, you may want to take steps to realize those gains before the end of the year. Donating them to charity may also make sense for some families. Donations may be outright or to establish various life income vehicles.

Second, accelerate receipt of income before the end of 2021. If you have a bonus or deferred compensation that you can take in 2021 instead of next year, that may be advisable.

Third, apply some of all of the current unified gift and estate tax credit ($11.7 million) before the end of 2021 to particularly remove appreciating assets from your estate.  There are a variety of ways to accomplish this including the use of a charitable lead trust to pass assets generationally at low gift or estate tax costs.

Finally, and this may be relevant to donors at FJC, consider using a Charitable Remainder  Trust (CRT) for succession planning.  This is particularly relevant when planning for after-life transfers of IRA assets which are now subject to the 10-year withdrawal rule for most beneficiaries.  The remainder interest in the CRT can be designated for the family’s donor advised fund at FJC.

Key practitioners forming a new model of community media ownership reflected on a critical milestone: the acquisition of 24 local newspapers in Colorado by the National Trust for Local News (NTLN).  Staff from NTLN and its financing partner FJC discussed the origins of this unique partnership during a breakout session at the Public Media Development and Marketing Conference, which was hosted and sponsored by The Google News Initiative.  [VIDEO]

The acquisition of Colorado Community Media (CCM) represents a first-of-its-kind partnership to preserve local mission-focused community ownership. The Colorado News Conservancy, a public benefit corporation jointly owned and operated by NTLN and The Colorado Sun, acquired CCM, an independent, family-owned group of 24 community newspapers and websites.  The acquisition was financed with a $1.5 million loan from FJC, alongside a coalition of local and national impact investors. 

Chris Jansen, the Head of Local News, Global Partnerships at Google, framed the conversation, describing this acquisition as “unlocking a new path forward for acquiring—and financing transformation of—local newspapers, and bringing in both local and national funders.”  He said that the innovative partnership attracted the interest of the Google News Initiative, which aims to help journalism thrive in the digital age and is a seed funder of NTLN. 

Asked about the origins of NTLN, co-founder Elizabeth Hansen Shapiro said that she and her co-founders intended to create an organization that was “like a nature conservancy for local media.”  The media landscape has evolved rapidly in recent decades, putting strain on traditional news business models.  She noted that public broadcasting companies had benefited from a combination of pooled investment along with technical assistance, and NTLN was formed to provide a similar series of supports to preserve trusted local news titles.  The acquisition of CCM is a model that NTLN intends to replicate across multiple markets across the United States.

Lillian Ruiz, NTLN co-founder and Managing Director for Portfolio, described how local newspapers can benefit from increased operational and business discipline. “From our expertise, partnerships and relationships, we can elevate the operational soundness, the efficiencies in how local newspapers look at innovation and revenue experimentation, and give [local newspapers] the headroom to get there. That’s where we see our opportunity and impact.”   She also noted the role of impact investment in the model.  “Patient mission-aligned capital is necessary for these organizations.  When we’re talking about community media, it’s completely necessary.” 

Sam Marks, Chief Executive Officer of FJC, noted the underwriting challenges in financing the acquisition, since NTLN was a start-up nonprofit without significant assets to provide collateral for the loan.  FJC was able to get comfortable making the loan because three funders provided guarantees: The Colorado Trust, Gates Family Foundation, and American Journalism Project.  Mr. Marks noted the replicability of this approach to other new mission-based industries.  “Private foundations typically spend down around 5% of their assets per year on grants; the rest of their balance sheet could theoretically be put to work as guarantees for innovative structures like this, where it’s something new and impactful but the actors don’t have the balance sheets to stand it up.”

Mr. Marks noted that many local newspapers are being acquired by private equity firms whose profit motivations can run counter to the mission of having a thriving, well-resourced, independent press. “Philanthropy and the nonprofit sector working together can figure out governance and financing [approaches] to make something that works for the public interest.”  

A video of the webinar can be found at this link.