June 22, 2022

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.