Post Topic: Philanthropy

Dec 21st

Philanthropy Services Success Story: Passing the Torch 

Navigating family dynamics and supporting legacy continuity

Before his passing, Mike, the patriarch of the Sumner* family, and his wife Laura, who were the President and Director of the family’s foundation, had been discussing how to get their three children involved in the family’s charitable giving. Unfortunately, Mike passed before he could see that vision through. However, Laura and their daughter Amanda, who became Director in place of her father, were still committed to getting the other two siblings on board.

“Knowing that the younger siblings were very busy with young children of their own and demanding jobs, the trustees didn’t want to put undue pressure on them to take a more active role.  So they asked me to speak with them to gauge their level of interest and availability,” says Channing L. Grigsby, vice president of Philanthropic Services for Whittier Trust. “They wanted to make sure that those who were not involved currently had an opportunity to speak candidly. Having an open conversation with an unbiased professional, who will be free from preconceived notions and the pressures of family relationship dynamics, can help alleviate any pressure the stakeholders might feel to engage.” 

Promoting Family Cohesion

Often, having a project—such as family-driven philanthropic endeavors—can draw a family together. In some cases, having a third party involved can offer an objective perspective and help ensure that everyone’s voices are heard without bias. Grigsby had gotten to know her clients, Mike and Laura, well over the years, so she understood that the goal was always to bring the whole family together through their charitable giving. The Sumner family is naturally tight-knit. In fact, two of the Sumner children moved closer to home when their dad fell ill. 

To get to know everyone’s unique perspectives, Grigsby set up separate calls with the two other grown Sumner children, Marcus and Michael. On the calls, she discussed their life situations, other time commitments, goals, as well as the level of involvement, if any, that they wanted to have in their family’s charitable organization. By speaking with them individually, she helped them feel heard and know that they had their own advocate on the team. 

“The Philanthropic Services team at Whittier Trust promotes family cohesion and creates opportunities for family members to show up, feel empowered and take on a role if that’s their wish,” she says. 

As it turned out, both siblings wanted to be more involved in the family’s philanthropic giving foundation by taking officer roles. “Both Michael and Marcus wanted to take on a role and felt that their deceased father would have wanted that, too. They also felt it was important for the Foundation to promote family unity,” Grigsby says. “This was a great outcome and the President and Director [mom Laura and sister Amanda] were thrilled about it.”

Facilitating a Smooth Transition

Once their intentions were established, Grigsby coordinated a call with all family members. Marcus became the secretary and Michael became the treasurer, which were roles Whittier had assumed, as part of their private philanthropic services, prior to Mike’s passing. The Whittier team discussed what responsibilities the positions came with to make sure all parties were in the know and on the same page. They also spoke about what Whittier Trust’s function would be in supporting the family moving forward. 

“In our role as administrator, we are here to help make things run smoothly and alleviate the day-to-day tasks so the family can focus on the giving and the foundation’s goals. For example, during the meeting, I took the notes and then went over them with Marcus,” Grigsby explains. “This gave him a chance to learn the strategy and process for minute-taking so he would have a better understanding of his role as secretary. Then I offered to review his draft minutes and share comments before they were finalized for signature.  He is now a pro! 

Gribsby and the team at Whittier have watched as the Sumner siblings have settled into the foundation, knowing that Mike would be proud of his children and pleased with how the family is working together and supporting each other. “It was wonderful to see both siblings wanting to be involved and stepping into their new roles nicely,” says Grigsby. “At Whittier, we always have our clients’ best interests at heart. It’s great that it worked out for this entire family to be involved in their charitable trust. If they hadn’t, though, we would have stepped in to fill any holes as needed.”

*Names have been changed for the privacy of our clients.

Dec 7th

How to Discuss Wealth and Values With Your Family

Steps to jumpstart these important discussions about legacy 

Wealth and values play a starring role in family philanthropy, whether through a private foundation or a Donor Advised Fund. However, wealth and values conversations can be daunting to undertake for some families. “For fear of being divisive or difficult, many families avoid the conversation completely,” says Ashley Fontanetta, vice president of Philanthropy Services at Whittier Trust. “Even those who are willing to go there often simply don’t know where to begin.”

Communicating is the only way to move forward with furthering the legacy of a private family foundation, though. “The first step is to take a step—any step—to start the conversation,” says Fontanetta. She outlines some helpful steps for families to begin or advance their talks about wealth and values.

1. Select the right place and time.

Important dialogues like these need time and space to develop and aren’t a one-and-done type deal. When the goal is to open up and share heartfelt values and beliefs, talking face-to-face can feel intimidating. Instead, consider opening up the conversation by speaking side-by-side while on a walk or during a car ride, which can dramatically decrease the feeling of being an interviewee on the hot seat. 

From there, you might consider holding a distraction-free weekend retreat for legacy planning or simply setting aside an hour or two during a holiday gathering, such as Thanksgiving, to further the discussion. These invaluable moments will add to the depth of family bonding and create a more collaborative forum for defining the tenets of legacy, particularly as it applies to charitable giving.

2. Give everyone the opportunity to be heard.

When setting the stage for communicating about legacy, it’s important for younger generations to feel their voice is valued. This is a time to put aside family hierarchy and give everyone an opportunity to share their viewpoints. Without wholeheartedly inviting all family members to share equally in the conversation, one can’t expect involvement or buy-in from the younger generations.

3. Break the ice with a set of thought-provoking questions.

Arriving at a place of thoughtful reflection will bring out the right mindset and temperament for going deeper into family values. Start out the discussion with open-ended questions that allow each individual to share their own thoughts and feelings, such as: 

  • What’s your greatest accomplishment? 
  • What opportunity would you want others to have? 
  • What was the most significant event of your childhood? 
  • What was the world like when and where you grew up? 
  • What does “wealth” mean to you? What are the challenges, opportunities and responsibilities it brings? 

Despite familial closeness, everyone might be surprised at each other’s answers.

4. Work with an expert.

You don’t need to go at it alone. If you’re having difficulty with the steps above, Whittier Trust can help facilitate the conversation about legacy as a neutral third party. Working with a private philanthropy services expert to provide a framework or bring the dialogue to life can move families past the first obstacle of getting started. In the long run, following an organized plan or engaging a facilitator to guide these key discussions around family philanthropy and family foundations can pay off. 

Remember that most breakthroughs don’t happen overnight but rather are the culmination of many small steps forward. At a minimum, family members should agree to participate in these discussions and strive for a mutual understanding that considers the perspective of each generation and allows room to adapt to future realities. Whichever way you choose to begin this wealth management journey, breaking the taboo of talking about money and values will enrich the legacy of a family.

Nov 30th

Philanthropic Giving is Personal & Your Plan Should Be Too

Customizing your charitable giving plan is a game changer

When someone makes the decision to give back, it’s almost always motivated by a desire to make a difference and, hopefully, to make the world a better place. For those stewarding wealth through a family foundation or charitable trust, having a customized plan is vital to achieve your goals and to make planned giving seamless and sustainable for your lifestyle. 

Far from a one-size-fits-all approach, Whittier Trust approaches each client relationship individually, tailoring a plan to suit. For some, that might mean working just with the Philanthropic Services team. For others, it could involve engaging all five of the divisions (Family Office, Philanthropy, Investments, Trust Services, and Real Estate and Alternatives) to build an overarching strategy to manage various investments, create tax efficiency within your financial landscape and more. Often, it even involves doing research to chart a new course if that’s what the client needs. 

Case in point: A few years ago, a client expressed interest in giving to educational causes, but she wanted to think outside the box of college preparation. She realized that there was a void and opportunity in vocational schools. “It wasn't an area our client had given to in the past, so our team did all the research, vetted organizations and met with potential grantees,” says Whittier Trust Client Advisor for Philanthropic Services Amanda Buntmann. “Our client knew she could trust us to make sure her charitable giving was done properly and with the most impact.” 

Whittier Trust designed a boutique service to support families with their critical, often transformational, work for good, exemplified by more than 65 years of serving clients on their philanthropic journeys. Here are some of the key benefits of a customized approach: 

Personalized Service

You and your family enjoy a dedicated Philanthropic Advisor and Grants Manager to focus on your needs and interests. “A low client-to-advisor ratio allows us to get to know the families, and the things they care about, as individuals,” Buntmann says. “We make sure we really listen so we can tailor everything we do to their needs.” 

Cost-Effective Resources

Whittier Trust’s fees are based on the specific scope of services you require, so you’ll never pay for more than what you need. Outsourcing typically costs less than hiring your own foundation staff or maintaining office space, so more of your valuable foundation resources will go toward making a difference in the philanthropic causes that are important to you. 

No-Hassle Foundation Administration

Whittier can handle the less exciting parts of running a foundation, such as compliance, grantee research, grants management, board support and general administration. Taking these burdens off of your to-do list, your family is free to focus on the things you enjoy, like awarding grants and interfacing with grantees. Outsourcing lets you avoid the headache and potential liability of managing staff and handling payroll, hiring and firing, insurance and more. 

Advisor Integration

When you engage us to manage your foundation’s administration, your other advisors, such as accountants and lawyers, are free to do the work for which they specialize, saving their time and your money. Plus, as part of Whittier’s wealth management services, giving to philanthropic causes can be financially advantageous to your overall estate plan. Our team can seamlessly liaise with our other departments to help steward your wealth and legacy according to your goals. 

Expert Advisory

Philanthropy is what we do, and we make it our business to know the nuances of the issues your foundation faces. We’re experienced in managing a broad array of philanthropic vehicles and, for clients with more than one, we can ensure seamless coordination between them. We are completely comfortable with alternative assets; our unique donor-advised fund platform offers the flexibility of accepting and holding real estate, private equity and closely held stock, provided there is sufficient cash flow to support grants and fees. And our customized approach to portfolio management allows us to design a personalized ESG strategy, if desired, to help you align your philanthropic assets with your values.

Collaboration for Greater Impact

Because each professional foundation administrator manages a varied portfolio of philanthropic entities, Whittier Trust advisors are uniquely positioned to introduce clients to other philanthropists whose missions overlap. Collaborating on grants often enhances their impact. 

No matter what your planned charitable giving goals are, having a customized approach is a smart way to get there.

Nov 3rd

Choosing Wisely

How to focus your philanthropic activities for maximum impact

If you’re starting your journey toward philanthropic giving, either because you’re launching something new or because you’ve inherited a role in a family foundation, all of the options for charitable contributions can feel overwhelming. From environmental causes to poverty relief—and everything in between—the options are endless. Rather than trying to help every good cause, it makes sense to hone in on specific areas to maximize your impact. 

“When our clients come to us wanting to start their philanthropic journeys, we help them focus on creating a mission statement,” explains Whittier Trust Client Advisor for Philanthropic Services Amanda Buntmann. “It helps bring everyone together around the same issue area. It’s a key step to figure out what everyone cares about and what's most important to them.” Sometimes that’s easier said than done, since many causes might pull on your heartstrings. Here are some ways to get started. 

Identify Your Highest Values

There are an almost endless array of values most of us aspire to, and the things that we care most about may change and evolve over time. Often, Buntmann and her team will share a deck of cards with more than 75 values—such as innovation, integrity, courage, freedom, dignity and much more—to help clients cultivate their plan. 

Take heart: It’s not uncommon that family members disagree on at least some of the specific focus areas but most can find a few core values that define and motivate them. Once these values are identified, choosing focus areas and grantmaking philosophies becomes easier.  

What Motivates You? 

The National Center for Family Philanthropy put together a helpful Philanthropic Purpose Primer, designed to ask questions that spark ideas for developing a charitable giving focus. Buntmann and her team often talk through some of these questions to help understand what philanthropic causes make clients tick. Some questions are: 

  • What motivates me to be generous? Why do I care? 
  • Who were my role models for generosity when I was young? What did I learn from them? 
  • What life experiences have inspired my philanthropy? 
  • What am I grateful for now? 
  • What is my definition of wealth with responsibility? What is the purpose of our wealth? 
  • Beyond money, are there other resources I have given or could give? 
  • How would I like to be remembered? 

Partner Up 

Trying to identify an area of focus for your charitable contributions alone can feel overwhelming. That’s why hands-on help from a team of experts can be invaluable. When a new client comes to Whittier Trust, the team spends time getting to know them and asking questions about their lives and interests. 

For example, one client, Vanessa, expressed interest in animal welfare. But when Buntmann went to lunch with her and her Whittier client advisor, she asked Vanessa about her favorite pastimes, and her eyes lit up as she talked about her love of reading and her sprawling home library filled with books. Her passion for reading and literacy prompted Buntmann to set up a site visit with a local nonprofit dedicated to building libraries in lower-income communities. “The library wasn't open yet, but local kids were coming to see it. The joy on their faces prompted Vanessa to pursue the goal of funding a library herself,” Buntmann says, which allowed her client to make a meaningful contribution to a community in her home city. While she’s supporting other causes as well, this is the one that pulls on her heartstrings. “Working in private philanthropy services, you have to keep digging and get to know people to understand what they're passionate about,” Buntmann adds. 

Once you’ve identified your values and the causes that motivate your philanthropic endeavors, it’s important to establish procedures and guidelines to streamline the process. The philanthropy services team at Whittier Trust can provide the strategy and support to help you get there. That may involve engaging other departments at Whittier Trust to implement tax efficient investing or other wealth management services to maximize your legacy and reach. Regardless of your goals, you’ll always have a team around you that is wholly committed to helping you achieve them. 

Nov 2nd

Best Practices for Successful Families

Establishing a family office is a holistic family wealth management solution

Traditional models of wealth management focus solely on the portfolio. This model is flawed, however, as it doesn’t take into account the entire family picture. Seventy percent of family wealth doesn’t transition to the next generation due to a lack of both preparing the wealth for the family and preparing the family for the wealth. 

“Families often don’t have an orderly way to pass on their wealth, but the odds of failure are too large to ignore,” says Lauren Peterson, Senior Vice President, Client Advisor at Whittier Trust in Family Office services. “It is important to ready heirs for the transition to be good stewards of the wealth that is to come.”

Here, Peterson explains the integrated approach that creates sustainable best practices for successful families.

Establish a Family Office or Engage a Multi-Family Office

Establishing a family office is a holistic approach to wealth management and legacy that guides, supports and educates heirs for a more successful wealth-transfer rate. “A professional family office will engage with a family to support investments, values and the next generation,” says Peterson. 

While the older generation can certainly create a single-family office themselves, there is a lot of heavy lifting to do, which might not be appealing at this point in their lives. “Our clients often turn to Whittier Trust for our expertise. We are a multi family office with expert professionals working with similar families who have complex needs who need guidance to meet their goals,” says Peterson, who notes that unlike other firms that might have 100 families per advisor, Whittier has a Client Advisor and support team with unlimited availability for families or less. A team might consist of a Senior Advisor, Junior Advisor, Analyst, Senior Portfolio Advisor and other team members in real estate, philanthropy and more as needed.

Another unique aspect of Whittier’s family office services is that while a Senior Advisor may work with the parents, a Junior Advisor is assigned to younger family members so that everyone can feel comfortable working with someone closer to their age to get support, training and guidance. 

Create a Holistic Governance Structure

Once team members have been selected based on the family’s needs, the family office team then does a deep dive to look at all aspects, from financial documents to family dynamics. “We revise any governance structures, work with their CPA and legal team, look at all their documents and discuss it with the family so that they know what their documents say and mean,” Peterson says. 

Many of the clients Whittier works with have been CEOs or business owners and are used to creating a strategic plan. The goal of the family office is to help clients put together a structure and family strategic plan that lasts multiple generations. “We help them look at their family as a family business including all aspects, such as the legal structures, financial statements, operating companies, and if necessary, different entities. We often review the different agreements for profits split amongst family members,” says Peterson. “We do this to ensure quality communication and transparency among all stakeholders, as this build family continuity.” 

She adds that this process typically involves creating a family constitution that includes the family’s values, who makes the decisions and goals for how the family will interact together now and well into the future. Peterson and her team work to give every family member a voice and family unity, which may include coordinating a family retreat and/or training about the purpose of a family office.

Promote Family Harmony

One of the most important ways to promote family harmony is communication and for everyone to know their roles and responsibilities. “We like to involve the entire family—both bloodline and spouses. The family will tell us how much they want their kids or family members to know, but we make a concerted effort to make unifying decisions,” says Peterson. She notes that this often includes the parents accepting the input of their heirs without giving up their mission and values, as well as spouses being able to weigh in on what they want for their children.

Another popular way families choose to promote harmony is by focusing on philanthropy. “Establishing philanthropic giving goals through a family charitable trust, foundation or donor advised fund can be a way of facilitating good family dynamics and to work together to create a long-term family mission,” Peterson says.

Prioritize Education for Long-term Sustainability

Many heirs have had no direct experience with family finances or in making decisions about their family’s wealth. Therefore, the Whittier team does a lot of work to help prepare children to become good stewards of their family’s wealth. This can go as far as providing a deep dive talent assessment and looking at hard and soft skills to determine the roles that will be a good fit for each individual, in addition to educating them about those roles.

“Education and communication are the two solutions to prepare the next generation,” Peterson says. By establishing a family office and following these best practices, a family can transition wealth successfully and prepare heirs for wealth and maintaining the family legacy. 

“When families come to us, they stay for generations. We’re a long-term relationship company,” Peterson says.

Oct 12th

Mission: Philanthropy

Bringing the philanthropic goals of the past and present generations together 

Many Whittier Trust clients have a family foundation that has been in existence for multiple generations. The foundation may have been set up by great-great-great grandparents who determined its mission and values. Fast forward three or four generations and a lot has changed. The Whittier Philanthropy team’s goal is to provide continuity for the original mission and values while engaging the current generation in the family’s overall giving legacy. The following are a few ways to accomplish this.

Facilitating Clear Communication

It’s not unusual for multigenerational families to encounter differences of opinion on philanthropic choices for their family foundation. Unfortunately, a conversation between generations with differing viewpoints may turn argumentative on its own. This is where Whittier brings value as an outside, neutral party. 

“We often work with all family members on the common goal of making sure all voices are heard and valued and at the same time perpetuating the mission of the foundation,” says Haley Kirk, CAP®, vice president and client advisor for Whittier Trust’s Philanthropic Services, who explains that her team always starts with educating the whole family on the history of the foundation and its mission.

“We can have one-on-one conversations with each family member so that everyone feels that they are given the opportunity to speak freely,” she adds. “We listen to individual opinions and then work them into conversations with other family members.”

In addition to conversations, the Whittier Trust Philanthropic Services team recommends establishing a family website as a good practice for clear communication. The site can feature the history of the family, how they came into wealth, the mission of the foundation and the causes it is supporting.  

Engaging and Aligning Interests with Causes

Parents might be uncertain how to pass their philanthropic interests on to their children and how they can support their kids in finding their own charitable passions that still align with their own. “Because the majority of foundations have the goal of lasting in perpetuity, it is imperative that we involve and prepare the next generation,” Kirk says.  

While philanthropic goals may vary from person to person, Whittier works with parents and their adult or adolescent children to find the common root. For instance, one current hot topic is climate change and a hypothetical example is a family where the parents don’t believe in climate change yet their children feel passionately about helping the environment. “Perhaps because of weather changes, animals are suffering and the family can all agree to help animals, so the grant could be to combat that issue and not specifically focused on climate change,” Kirk says.

Developing a Foundation Associate Board

The development of an associate board when family members reach a designated age is a great way to involve the younger generation in a family foundation. The Whittier team encourages boards to create younger advisory boards that are allotted a small amount of money to give away as a group. “It is an opportunity for them to pick a cause they care about and present it to their family, and gain life skills like public speaking and presenting, research and fact-gathering, and financial evaluation, in addition to supporting something they are passionate about,” says Kirk. 

Preparing to Hand Over the Baton

At some point, it’s time to get adult kids more involved to ensure the continuation of the foundation. This was the case for a Whittier client where the older generation (mom and dad) were running the foundation without their four grown children’s involvement. A strong-willed person, the mother didn’t have faith in the kids to follow what she wanted to do with the foundation. 

“We encouraged the parents to invite their kids to start listening in on board conversations,” Kirk says. Before the first board meeting, however, the parents had a scheduling conflict. “Instead of rescheduling the meeting, we suggested that it move forward and see how the kids would do on their own.”

The result was that the younger generation were very focused on choosing grantees that fit within the foundation’s mission. “It was pretty special.  Seeing that the kids hadn’t spun out in an entirely new direction inspired trust; the parents were able to feel more relaxed about the idea of sharing control with them and one day turning over the reins completely.”  

Sometimes all it takes for families struggling to bring the philanthropic goals of the past and present generations together is some outside guidance and support to get started on the right foot.

Oct 10th

Foundation Administration

What an executive director needs for success behind-the-scenes

Oftentimes families appoint a family member to be the executive director of their foundation. This is perfectly legal and makes sense, as that person can be the voice of the family, promote the mission of the foundation within the community and surface appropriate grantmaking opportunities as part of their job. However, there are several administrative duties that must be performed, some complex, which the family might not know about or in which the executive director might not be well-versed. Additionally, as a foundation grows, there are other considerations.

One example is the story of the English family who came to Whittier Trust after its matriarch had passed away. She had been running the family’s foundation and decided to appoint her granddaughter to the executive director position before her passing. The granddaughter, along with the other family board members, were managing a relatively small foundation of around $3 million. However, upon the grandmother’s death, the majority of her estate was left to the foundation. The foundation now had a much larger annual payout requirement to meet and the family was feeling a bit overwhelmed. They wanted to make sure they were in compliance with all applicable regulatory requirements and wanted to take a more sophisticated approach to the foundation’s investments.

Whittier Trust helped the English family to establish an investment policy statement, diversify their portfolio and align their investments with their values. They also took over several key back-office tasks to set the executive director up for success so that she could continue doing what she does best: representing the foundation in the community and focusing on its philanthropic strategy.

Bookkeeping and Accounting

Keeping the books in order can be a large undertaking. “Whittier Trust takes this off the executive director’s shoulders by preparing quarterly and annual financial statements for the foundation, issuing checks and maintaining the files needed for tax preparation and audit purposes,” says Haley Kirk, CAP, vice president and client advisor for Whittier Trust’s Philanthropic Services.

Preparing Grant Agreements

When an executive director or one of their family members comes across a nonprofit they’d like to support, Whittier Trust can handle the administrative work to review the organization. It was vital for the English family’s executive director to be involved in the community and to support her family’s mission. Instead of being bogged down by back-office work, such as preparing grant agreements, her time is primarily spent meeting with nonprofits learning about what they want to do and their goals. “For example, she’ll send me an email that says she wants to grant $30,000 over 3 years, and ‘Haley, please compile the needed details and grant file to complete the donation,’” says Kirk. “And we get it done.”

From there, Kirk’s team interfaces with the nonprofit to collect the EIN, run a charity check to make sure it can qualify for the grant, get their contact information and create the grant agreement, which may include a grant report requirement. As the date of the report nears, they make a phone call to remind the charity about the report’s deadline. When the next grant is due to the nonprofit, they reach out to the executive director to keep her up to date, as well as send the check. What’s more, Whittier can facilitate multi-year grants and schedule and monitor any subsequent grant reports that the family would like to see.

Tax Preparation

In addition to handling bookkeeping and accounting, Whittier interfaces with the foundation’s CPA to provide any documents needed for tax preparation. 

If a California-based private foundation or charitable trust earns or receives over $2 million annually, it is required to have an audit the following year. “It can be hard to track that number so we keep an eye on the $2 million threshold for our clients,” says Kirk. “If the foundation requires an audit, Whittier then works with the auditors.”

In the case of the English family’s grandmother’s estate, part of the money came in shortly after her passing, then a larger sum arrived. “They might not have realized that they were going over the audit threshold but we could see that on our end. Because the books were clean and up to date, everything was on track for the audit and the executive director and family Board members did not have to worry,” Kirk explains.

Board Meeting Facilitation

Corporate foundations are required by law to have one board meeting every year. “The team at Whittier Trust can stay on top of this so that it doesn’t become a cumbersome process,” Kirk says. This includes all of the logistical planning, such as scheduling the event with multiple parties; preparing the materials, such as proposals, financials and reports for review at the meeting; and taking meeting minutes so the executive director can focus on leading the meeting.

Central Office Funnel

All mail can run through Whittier Trust, which can serve as the central office for a foundation. Using Whittier’s address rather than the family’s reduces the burden on the executive director to triage all that mail. “We can screen out requests that aren’t a fit with the foundation’s mission or guidelines and politely decline them on behalf of the family,” Kirk says.

Initially, the English family was concerned that by giving Whittier the reins to take over the foundation’s administration they would lose some control and not be able to do what they wanted. It ended up being the opposite. Without the burden of administrative tasks, the executive director can now spend more time as the public face of the foundation, which means attending more events and meeting with nonprofits.  Partnering with Whittier Trust has allowed her to thrive and alleviates the worry of liability due to a misstep along the way.

Sep 6th

6 Considerations Before Starting a Private Foundation

These essential questions will inform the direction of your charitable giving endeavors.

The first thing to know about starting a private foundation is that it’s not your only option when it comes to philanthropic giving. A donor advised fund (DAF) is another popular grant-making entity available to you. “The entities are very different in terms of legal structure and governing rules, but you can name your DAF with ‘Foundation’ in it and the public won’t know the difference,” says Ashley Fontanetta, vice president of Philanthropic Services at Whittier Trust.

A DAF must be housed by a sponsoring organization that holds authority with respect to final grant-making decisions, however they take grant-making direction from those named as advisors to the fund. A private foundation can be established as a corporation or charitable trust and offers more control for the donor. If you start out with establishing a foundation and then change your mind, you can transfer assets to a DAF later on. However, once a DAF is established, the assets within it are irrevocably there. 

“There are numerous things you can do with a foundation and can’t do with a DAF, and vice versa,” Fontanetta says. 

The following are six questions to ask yourself when deciding on the most compatible path for your charitable goals.

1) How much time do you have to put into your philanthropic causes organization?

Every private foundation that is established as a corporation must have an annual meeting, recorded minutes of that meeting and a tax return filed. “At the very least, you have to convene once a year. If that’s a problem for your family, then a donor advised fund would be the better choice since it does not have a meeting requirement,” says Fontanetta.

2) Who is going to be involved in managing it?

Typically, the board of directors of a private foundation is made up of family members. The board has a fiduciary responsibility to the foundation, such as paying attention to financial statements and attending the annual meeting. A family member might even find a career path as the executive director of the foundation. “Family engagement could be a big reason for setting up the foundation in the first place, and the formal push to get together annually and compensating board members or an executive director might be welcome,” Fontanetta says. However, if you prefer a less time-consuming, low-key approach, a DAF is a better choice since it doesn’t have any of those requirements. “It can essentially just sit there until you’re ready to make grants,” says Fontanetta.

3) What kinds of grants would you like to make?

A DAF is more restrictive in that you can only grant funds to another 501(c)(3) public charity. With a foundation, you have the flexibility to make a grant to another private foundation or to a for-profit entity (after completing additional diligence), in addition to public charities. 

4) What experiences do you want to have?

Experiences that are of a reasonable cost and are in line with your foundation’s mission and charitable purpose are deemed “qualified” to be paid from the foundation itself. For instance, you might envision further education and a salary for the executive director, an annual board retreat, travel stipends for meetings and site visits, hiring a consultant to create a website about your foundation and its charitable giving. “If these things are part of what philanthropy looks like for you, establishing a private foundation is the right path, as you cannot pay for any such expenses from a DAF,” Fontanetta says.

Another financial consideration with a foundation is the required 5% of average asset value distribution to charitable purposes each year. “This 5% includes grants but also certain expenses. Anything that is related to your charitable purpose and not spent on investment management can apply,” says Fontanetta. With expenses calculated, she suggests asking yourself “Will I be able to make the charitable impact that I intended?”. If not, then a DAF might be the better choice.

A DAF does not require a minimum annual distribution or tax return. 

5) Which assets will you contribute?

The IRS offers the highest level of charitable deduction for donations to public charities which include DAFs. Fontanetta provides this example: If real estate is contributed to a private foundation, the amount you are allowed to deduct is going to be limited to the cost basis, which is likely lower than the market value is right now, and a percentage of your adjusted gross income (AGI). Alternatively, if you contribute that same real estate to your DAF, the deduction will be based on the fair market value of the property and a higher percentage of your AGI. “This is a massive difference in a lot of cases,” says Fontanetta. One consideration might be to maintain both a private foundation and a DAF. The DAF could receive certain assets such as real estate to maximize your tax deductions.

6) If you decide on a DAF, what kind of sponsoring organization works best for you?

It is necessary to select a sponsoring organization, such as a financial institution or community foundation, to house your DAF. Fontanetta notes that not all DAFs are similarly situated. It’s important to look at options in both a community foundation and a financial institution to find the best fit for your needs. Depending on the type of assets you want to contribute or how long you’d like your family to advise grantmaking or what investment options are available, one option will stand out as a better fit for you. With regard to fees, it’s important to understand both the administrative fee as well as the investment fee, which are often separate. 

Whittier Trust provides a unique offering for DAFs. While we do not maintain public charity status, we partner with a best-in-class community foundation that allows us to invest assets for our clients and maintain the primary role of interfacing with the client and grantees. “With expertise in estate settlement, real estate, private equity and other complex investments, this capability allows Whittier clients more flexibility to contribute and manage alternative assets within their DAF,” Fontanetta says.

If you’re not sure if a private foundation or donor advised fund is right for your situation, the Philanthropic Services team at Whittier will help you understand the differences between the two and advise on which direction is the best for your family.

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Jul 26th

It’s a Match

Whittier Trust has a team of more than a dozen dedicated professionals responsible for protecting and growing all of our charitable clients. The passion these skilled matchmakers have for the philanthropic field is never more apparent than when they have the opportunity to connect Whittier Trust nonprofit endowment clients to Whittier Trust grant-making clients. Philanthropic clients often seek out the team’s expertise when looking for well-run charities that align with their goals and missions. Similarly, Whittier Trust’s nonprofit clients trust the team to help identify new qualified revenue sources. The diligent members of Pegine Grayson’s team explore all possible options and make special note when values, interests and visions for the future align between clients.

Whittier Trust Senior Vice President and Director of Philanthropic Services, Pegine Grayson, and her group never guarantee more than a personal and thoughtful introduction. However, they can offer exclusive visibility into certain nonprofit and grantmaking clients. Connecting these dots can be critical for grant making foundations and donor-advised funds that don’t publicize their efforts or existence through social media or websites. The insights and relationships the team has with their clients allows for more informed decision-making and can help save valuable time. The team is happy to provide win-win scenarios on a regular basis.

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Mar 28th

Whittier Trust Presents: Philanthropy as a Strategic Tool for Family Legacy & Continuity

Whittier Trust presents an overview on how to build a family foundation that will provide a strong family legacy while maintaining continuity. This webinar offers insight on how to formalize a family foundation, the different roles each generation of your family plays, how to use grant-making as a positive training tool and other helpful best practices.

The discussion incorporated real-life scenarios to show how:

  • Philanthropy can be an excellent training ground for NextGens to learn about financial and business analysis.
  • Engaging in philanthropy can offer a safe and neutral space for young family members to demonstrate responsibility and acumen.
  • Intentional philanthropy goes beyond doing good for your community, and how it can strengthen interpersonal ties, bridge generations and build a family’s legacy.
  • After the sale of a family business, formalized philanthropy provides a reason to meet, collaborate and promote shared values.

Whittier Trust’s Ashley Fontanetta, Vice President, Philanthropic Services; Channing Grigsby, Vice President, Philanthropic Services; and David Shaw, Publishing Director, Family Business Magazine, provide an overview and best practices for NextGen philanthropy and family continuity.

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Whittier Trust Company and The Whittier Trust Company of Nevada, Inc. are state-chartered trust companies, which are wholly owned by Whittier Holdings, Inc., a closely held holding company. All of said companies are referred to herein, individually and collectively, as “Whittier”. The accompanying materials are provided for informational purposes only and are not intended, and should not be construed, as investment, tax or legal advice. Please consult your own investment, legal and/or tax advisors in connection with financial decisions and before engaging in any financial transactions. These materials do not purport to be a complete statement of approaches, which may vary due to individual factors and circumstances. Although the information provided is carefully reviewed, Whittier makes no representations or warranties regarding the information provided and cannot be held responsible for any direct or incidental loss or damage resulting from applying any of the information provided. Past performance is no guarantee of future results and no investment or financial planning strategy can guarantee profit or protection against losses. These materials may not be reproduced or distributed without Whittier’s prior written consent.

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