As a leader within this sector, we have long been a part of these conversations, providing guidance and helping to summarize which giving approach(es) may be best based on one’s goals, values and passions. It’s important to note that choosing one approach to giving does not mean you can’t pursue the others or even use them together to maximize efforts.

For instance, working with more than 2,000 private foundation clients for over two decades, we’re in a unique position to witness the remarkable diversity of resources, personalities, interests and influences that exist in this vast melting pot of philanthropy. We have observed five common approaches to giving taken by private foundations in their quest to make a difference.

1. Checkbook Philanthropy: The simplest way to give. You write checks to your charities of choice, often at year-end in response to annual appeals or to help in a crisis or disaster. This type of giving doesn’t require evaluation or reporting from the recipient.

2. Strategic Philanthropy: With this proactive giving approach, you’re in the driver’s seat for determining the problems you want to address and how to solve them, rather than reactively supporting initiatives driven by a charity. This approach also involves robust reporting so you can measure your charitable impact. Ideas: Make grants and loans to charities, start a scholarship program, conduct research, or establish a food pantry.

3. Trust-Based Philanthropy: Giving in this way means you view your grantees as the charitable experts. You grant them unrestricted funding, trusting them to deploy your support most effectively. You’re also more transparent in your communication and you streamline your reporting requirements so grantees can focus on what’s really important – achieving charitable impact.

4. Venture Philanthropy: With this exciting and results-driven approach, you partner with your grantees as if they’re business startups seeking investment. Not only do you grant them funding, you work with them hands-on to tackle a challenging issue that may or may not be achievable. The risk is higher than other charitable pursuits but if successful, the reward is impactful.

5. Disruptive Philanthropy: Take this route when you want to shake up the status quo and tackle a longtime problem in a bold new way. It’s about questioning previous attempts to solve the problem and funding ambitious, high-risk efforts for a solution. Innovation, creativity and collaboration are key to this approach’s success.

In short, foundation giving can take many forms – and it can evolve over time as your goals and resources change.

Questions about your approach to giving?
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The post Effective Altruism and Examining Different Approaches to Foundation Giving appeared first on Foundation Source.

Bull markets can create significant built-in gains for investors. Liquidating those positions would result in capital gains tax, but those can potentially be sidestepped with in-kind gifts to charities and foundations. Those gifts can be larger as a result, creating a bigger impact. However, it’s important to note that the tax benefits can vary significantly depending on the type of asset donated.

Consider this example with publicly traded stock: Let’s assume a donor to a private foundation has 100 shares of stock with a current market value of $10,000 and an original cost basis of $4,184, resulting in a capital gain of $5,816. If the donor were to sell the shares, the capital gains tax would total $1,163 (assuming a 20% rate), leaving just $8,837 available for the donation.

But transferring those publicly traded shares directly to a charity or foundation allows the donor to contribute the full $10,000 amount without any tax consequence—about 13.2% more. Additionally, individual donors may be able to claim a tax deduction for the full market value of the donated shares—depending on their tax situation.

While publicly traded securities typically offer the most favorable tax treatment, other types of appreciated assets can also be used for in-kind gifts, including real estate and privately held business interests.

For instance, donations of non-publicly traded assets will typically limit the donor to a cost basis deduction (as compared to a fair market value deduction), so the tax benefit may be less substantial than with publicly traded securities.

2. Harvest Capital Losses

While it may seem counterintuitive in a rising market, there may still be opportunities to harvest capital losses. Even in a bull market, there are bound to be some companies and sectors that lag. Selling underperforming assets can lock in losses, which can be used to offset gains elsewhere in the foundation’s portfolio.

For example, if a foundation has a stock that has decreased in value from $10,000 to $8,000, selling it would result in a $2,000 realized loss. If the foundation has another asset that appreciated by $2,000, they can offset that gain with the loss. By potentially reducing the foundation’s overall tax liability, more funds can be freed for charitable purposes.

3. Manage MDRs

Under IRS rules, a foundation must pay out roughly 5% of its prior year’s average assets, known as the minimum distribution requirement (MDR), each year. Accordingly, when assets increase, the following year’s MDR will increase in tandem, which could potentially strain a foundation’s resources as it evaluates the best methods of deploying the additional capital.

However, bull markets are also an opportunity to manage foundation assets for the long term. Foundations can take advantage of their growing portfolios by strategically over-granting in strong years to create a buffer for leaner times. By distributing more than the required 5%, foundations can keep the amount above the MDR in reserve for up to five years. These ‘credits’ can be used to meet the MDR in future years, which can be valuable in down markets, alleviating the need to sell part of the portfolio at a loss to meet the MDR, which can potentially eat into the corpus, or principal, of the foundation.

Want to see the rest of the list?
Check out our complete resource.

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*https://www.cnbc.com/quotes/.DJI
**https://www.cnbc.com/quotes/.SPX

The post 5 Things Private Foundations Should Consider in a Rising Market appeared first on Foundation Source.

Similarly, foundations can shine the spotlight on inspiring and effective work of their grantee partners; in doing so, they can draw more attention to solutions that are being employed to address community problems.

So how can foundation’s use their voice to move the needle in their community and on priority topics? They can develop communications strategies and deem them an essential part of their strategic toolbox.

A thoughtful communications plan can help a foundation:

• reinforce its values
• further its mission
• increase efficiency
• enhance grantee relationships
• amplify grantees’ good works
• increase support from other funders and decisionmakers

Our Philanthropic Advisory Services team works closely with our clients on how to deploy effective communications. When developing a communications plan, here are some best practices to keep in mind.

Define Communication Goals
Before diving into specific tactics, a foundation should step back and define what they want to achieve through communication. These goals should align with the foundation’s overall mission and objectives but focus specifically on how communication can support and amplify their work.

For instance, is the focus on looking to raise awareness about a particular issue a foundation addresses, such as education or environmental sustainability? Does the foundation want to build a network of like-minded organizations and funders to collaborate on large-scale initiatives? Do they need to clarify their funding application process to grantees? Or perhaps the aim is to establish itself as a thought leader in a specific sector, providing valuable insights and guidance to others in the field.

By clearly defining its communication goals, a foundation can ensure that all efforts are aligned and purpose driven.

Articulate Priorities
Consider the time it takes to review funding requests. The process can become laborious if a foundation receives an abundance that don’t align with its charitable mission. The more clearly they articulate their priorities – what they will and won’t fund – the better that grant-seeking nonprofits will be able to determine if the foundation is the right fit for the type of work they do. Ultimately, the foundation will receive more targeted and appropriate requests and increase efficiency.

Share Expertise
A private foundation can be a catalyst for change, not only by financially supporting its chosen causes but also by shaping the conversation around related issues. One of the most effective ways for a foundation to use its voice is by sharing their sector expertise. For example, if a foundation has deep knowledge in tackling climate change, they may consider publishing opinion pieces, problem statements or research findings that highlight the challenges and potential solutions in this area. In doing so, they’ll position their foundation as a thought leader in the field and, if they target these communications to an audience of other funders and decisionmakers, they might also gain additional support for their cause. To reach a wider audience, they could feature the resources on their foundation’s website and share them through a newsletter or social media platforms.

Showcase Grantees
A foundation’s voice can also help bring attention to the important work that their grantee partners are doing in the communities they care about. This is one of the most powerful ways to maximize charitable impact. By showcasing grantees’ successes and challenges, not only does a foundation validate and celebrate them, but they also may inspire other funders to take notice and support them as well.

Consider highlighting grantees’ work through case studies, success stories or interviews that are featured on a foundation’s website and newsletter. Spotlight them through social media and press releases to reach an even larger audience. Be sure that the foundation’s content explains why the work is essential and how it’s making a difference. In doing so, the foundation will help build a broader understanding and support for the good work it’s funding.

Engage With Other Funders
Collaboration is key in philanthropy, and strategic communication can be instrumental in fostering productive relationships with other funders. Regularly updating other funders on the foundation’s work, either through direct outreach or perhaps networking events, can possibly lead to new partnerships. Sharing insights and lessons learned can also help build a sense of community among funders, leading to more coordinated efforts and amplified impact. When other funders see the results a foundation is achieving, they may be more inclined to join forces, providing additional resources for the causes they champion.

Use Communication Tools
To successfully convey a foundation’s work and goals, try some or all of these tactics:

Website. A foundation’s website is likely the first place people go to learn about their work. Make sure it’s up-to-date, easy to navigate and rich with content that showcases the foundation’s impact and expertise. Consider adding a blog and news section to regularly share updates and insights. Not sure where or how to get started? Foundations can take advantage of customized, cost-effective website services that are built and hosted for them.

Newsletter. A well-crafted newsletter is a useful “push communication” tool for keeping their target audiences informed and engaged. Regular updates on the foundation’s work, grantee achievements and sector insights can help maintain interest and build a loyal following.

Social Media. Platforms like Facebook, LinkedIn, Instagram and Threads offer powerful ways to reach a broad audience quickly. Use one or all of these channels to share news, highlight grantee work and follow and engage with other thought leaders in the foundation’s field. Social media is also a great way to drive traffic to a foundation’s website, grantees’ websites and other resources.

Press Releases, Op-Eds and Pitches. Rally applicable news media to publicize the foundation’s initiatives. Send them press releases, op-eds and compelling pitches to pique their interest and secure coverage.

By defining clear communication goals, a foundation can serve as an influential voice for their grantee partners and maximize the foundation’s impact. Whether it’s sharing expertise, promoting grantees’ work, or engaging with other funders, thoughtful communication can help a foundation achieve its mission, effect meaningful change and advance philanthropy.

Elizabeth Wong is Head of Philanthropic Advisory Services for Foundation Source.

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The post Using a Foundation’s Voice: Advancing Philanthropy Through Communications Strategies appeared first on Foundation Source.

Give What You Can and Consider Other Ways to Offer Support
The stories about big bet contributions can intimidate “mere mortal” funders, but don’t let them. Not all philanthropists can make seven-digit donations, but don’t worry. You’ve got other ways to help. Be sure to explore them. In his insightful op-ed, Big Bet Bummer, Kevin Starr, CEO of Mulago Foundation, humorously refers to his organization as a “medium” bet giver. Choose what level of funding makes sense for you, and then consider other forms of support you can provide.

Develop Partnerships With Nonprofits You Support
Meaningful support beyond the dollars is rooted in authentic partnership. Consider collaborating with your chosen nonprofits to assess their needs in these areas:

• Skill-based expertise. Do they need help with a business plan? Growth plan? Outreach?
• Network building/introductions. As funders frequently ask nonprofits to diversify their funding sources, can you help your grantees expand their network of support through introductions, testimonials and references? For example, in 2023, our client of 17 years, The Kendeda Fund, concluded 30 years of more than one billion dollars in grantmaking. They notified their nearly 40 grantee partners about their plans to sunset well in advance. They also provided concrete support for weathering the change by creating a program to help the grantees establish operating reserves or essentially “rainy-day” funds. This gave both the grantees and The Fund greater confidence about the grantees’ financial stability after Kendeda was no longer in the picture.
• Strategic planning. What pace of growth is sustainable for your grantees? How far should they extend beyond what they currently do and what they’re capable of doing well today?
• Near-term financials. How are they funding their current projects? Can they implement the work with the funding they have? Do they need more? What can you do to help?
• Long-term financials. Are they poised to increase capacity and grow so they can scale and accomplish more? If so, would multi-year funding (instead of a one-time contribution) be most useful in the face of planned growth?
• Communications. Let’s say a nonprofit is poised for growth and has reserved some of its current funding to expand its work. Can you help it converse with funders who are accustomed to supporting only organizations that are “on the brink” (about to run out of operating money)? Can you help to convince these funders that in order for nonprofits to plan beyond one fiscal year at a time, they need reserves as well as ongoing support?

Be the Best Partner Possible
How can you be an optimal partner to a nonprofit? Consider these tips:

1. Start With Respect and Build Trust
Begin with the assumption that nonprofit leaders are knowledgeable and experts on what their organizations and communities need. This is a strong way to get a partnership off on the right foot. From there, you can enter into dialogue, listen, learn, and build trust.

2. Be Transparent
When contributing to an organization, whether your support is large or small, be transparent and communicate your intentions clearly. Is your contribution a one-time opportunity, or would you consider future requests? Are you open to a multi-year conversation instead of a one-time donation? Providing specifics helps an organization plan and operate more strategically.

3. Open Your Rolodex (what is that?)
Some of you know what we mean. For others, think Contacts. No single funder can do it alone. In this context, spread the word about the good work your nonprofit partners are doing. And, when it makes sense, consider introducing them to other potential funders. Helping nonprofits expand their networks is one of the most valuable things you can do to assist them with building a sustainable future for themselves.

Consider again The Kendeda Fund during their sunsetting process:

“In many cases, we started becoming advocates for [our grantee] partners with other funders. Knowing that our dollars were going to go away, we wanted to make sure we could use the bully pulpit of being a funder to help show and highlight the great work that all these partners were doing with other funders.”

With or without the ability to make seven-digit contributions, all philanthropists can deepen their connections with the organizations and communities they support. Doing so may be the best big bet you can make.

Want to learn more about giving?
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Have a Question?
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Elizabeth Wong is Head of Philanthropic Advisory Services for Foundation Source.

The post Big Bets Beyond the $$$: How Philanthropists Can Offer Meaningful Support to Their Nonprofit Partners appeared first on Foundation Source.

Why Give Now?

Traditional estate planning might call for bequeathing a substantial portion of your resources to philanthropic purposes upon death. Plenty of financial planning arguments can be made to support this approach (maximize wealth first, give later…) but what these plans overlook is the experience of giving now and the role that a philanthropist can play in shaping the impact of their own philanthropy.

Leaders make critical choices about how to run their businesses, parent children and engage friends, family and community…and they have the opportunity to see the effect of these decisions in real time. When it comes to deploying a substantial proportion of one’s wealth for charitable purposes, why would you leave it to an uncertain future when you have the chance to influence the impact of your support during your lifetime? Giving while living introduces the fulfillment of philanthropy, the opportunity to shape one’s giving and the ability to understand what can be accomplished with intentional decisions. It also provides the chance to share that philanthropic vision with others, whether peers in the funding community who can also offer support, family members, or those who may lead this philanthropic work in the future. And, finally, an often-overlooked benefit of giving now is witnessing the excellent work of nonprofit leaders, the people who dedicate themselves to improving the lives of others, who work diligently to identify lasting solutions, and who ultimately deploy philanthropic resources for community benefit.

There are many creative options for how to give, and private foundations offer the most flexibility and creativity for giving. For example, in additional to making grants, you can award scholarships and prizes, engage in impact investing by issuing program-related loans and making mission-related investments, or conduct direct charitable activities like starting a shelter for victims of domestic violence or running a tutoring program for children in need. Learn more ways that you can give with a private foundation.

Why Give More?

In the face of urgent and growing social needs across the globe, why would individuals and institutions with means choose the slow lane for the difference they can make in improving the lives of others? Intractable problems often require bold innovations and solutions, and the latter depend on aggressive support rather than incremental funding that lags behind need.

It is easy to view the work of the Bill & Melinda Gates Foundation and its funding counterparts as otherworldly: we don’t have the resources they do, we can’t do that kind of thing, etc. Perhaps…but this may be missing the point. The inspiration any funder can take from BMGF and others is the ambition to effect change in a way that aligns with your values, your foundation’s priorities or the needs of your neighborhood. It is not about giving as much as them, but giving as much as you can and daring to challenge old problems with new solutions.

The goal here is to aim high, bend those spreadsheets to your will and extend giving as much as possible. In this case, inspiration comes from an entirely different end of the financial spectrum. In the face of worsening global poverty, individual remittances are on the rise. People with arguably few financial resources (certainly when compared to philanthropists or funding entities) are finding it within their power to send money home to their families: to give and to give now.

Look also to your own funding peers. Over the course of more than 10 years, Foundation Source has found that its foundation clients persistently give more than the minimum that is required by the IRS. In 2021, for example, smaller foundations gave 19.2% of assets in response to the COVID-19 pandemic.

What Can Our Support Achieve?

Also in his 2024 letter, Suzman emphasizes that a greater proportion of high-net-worth giving goes to elite universities and cultural institutions than to addressing urgent societal needs. He commends philanthropists who either do both equally (adopting what he calls “yes, and” philanthropy) or who prioritize current and pressing needs over all else.

Rather than considering this an either/or decision, identify urgent needs in your priority program areas and geographies and incorporate support for these issues into your giving plan alongside support of existing cultural or educational institutions. Identify the funding gaps that Suzman discusses in the context of your own giving. Discover where your resources can have the greatest impact.

The choice to give now and to give more means that your support can help address urgent needs, accelerate solutions and prevent the worsening of systemic community problems. Where you choose to deploy your dollars is entirely your own decision; there is, however, no question that maximizing your support of urgent needs will help to mitigate and, ultimately, eliminate intractable social challenges.

Next door and across the globe, societal hardship is abundant. No matter the size and scale of your giving, you can make a difference by taking bold steps to maximize and accelerate your charitable donations. Aim high and hit the fast lane.

Elizabeth Wong is Head of Philanthropic Advisory Services for Foundation Source.

Want to learn more about giving?
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The post Give Now and Give More to Meet Urgent Needs: An Inspiring Call from the Gates Foundation appeared first on Foundation Source.

To learn more about NGOsource and their dedication to the program’s history, growth and vision for the future, checkout their website that marks their 10-year anniversary.

Want to Learn How We Support Other Types of Advanced Grantmaking?
Whether you’re interested in making grants-to-individuals or program-related investments, take a few minutes to learn more about how we support private foundations with an upcoming live presentation.

You May Also Like…
Don’t miss our Advanced Grantmaking Trends report and see what our CEO had to say when speaking with Family Wealth Report.

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In this benefit case study, Cameron Marsh, senior consultant at Nucleus Research highlights how private foundations can benefit when services and technology are in lockstep.

“Our findings showed a reduction in third-party spending and a decrease in time spent completing manual, administrative work,” said Cameron.

To hear more about the findings get the full benefits case study>>

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The post When Services and Tech Are In Lockstep, Foundations Benefit appeared first on Foundation Source.

I believe that the foundation model is not only sound, but essential to a strong culture of philanthropy in the U.S. And I believe it is a field that is ripe for technological and process innovation that will help keep foundations at the forefront of giving for generations to come.

In particular, I think now is the time to make financial advisors and wealth management firms active partners in the establishment and operation of foundations for their high-net-worth clients. And that is what I hope to help accomplish as the CEO of Foundation Source.

Efficiency and Accessibility: Making Foundations Integral to Financial Planning
I joined Foundation Source because the company is already solving problems foundations face: managing the inherent complexities of operations in an efficient manner. For more than 20 years, Foundation Source has outsourced world-class expertise to foundations, and has designed a digital interface that helps individuals and families solicit and issue grants and keep on top of day-to-day administration.

Where I see opportunity is to lean into the technology to make running a foundation even more turnkey, and to partner with advisors and wealth management firms so that the process of opening and running a foundation is more accessible and efficient.

I believe this will have three important effects on the world of philanthropy:

• First and perhaps most importantly, I hope it will make giving an integral part of financial planning. This is a tremendous service to clients since it brings all their goals – personal investment goals, legacy planning and giving – into alignment. A family’s values and vision are a part of all of these. It also empowers advisors to engage with their clients in a new and deeply personal way, increasing the value of the service they provide and keeping more assets under a single umbrella.
• Second, lowering overhead and complexity barriers will mean more families and individuals can reasonably set up a foundation. The table stakes for setting up a foundation will drop, from the roughly $2-5 million initial contribution many experts consider the floor today to as little as $1 million, expanding the universe of potential benefactors for whom a foundation is a viable giving option.
• Third and most practically, it will make foundations themselves more efficient, reducing overhead and leaving more assets available to make the world a better place.

What Integrated Wealth and Philanthropic Planning Looks Like
Our team is already engaging with wealth management firms, banks and other financial advisory businesses to deploy Foundation Source technology as part of the advisor dashboard. In the future, advisors at partner firms will be able to look at a client’s overall financial picture – including giving – and help with foundation investments and transactions just as they do a client’s retirement accounts.

On the client side, Foundation Source’s user-friendly and efficient foundation dashboard will be the interface clients and families will use to solicit, manage and respond to grants, and keep on top of the foundation’s reports and overall status. This solution may be white labeled as part of the partner institution’s offering.

In the future, we will also be exploring how Foundation Source’s technology can be used to manage donor-advised funds (DAFs), a popular giving solution that are easy to set up and have low reporting requirements. DAFs are not only an option for those who aren’t good candidates for foundations, but also are a supplemental giving tool used by many who do have foundations.

Philtech – Philanthropy Tech – Is Part of a Continuum of Change
Wealthtech has been transforming personal finance for generations. It took stock trading from the realm of Wall Street specialists and put it in the hands of everyone. It made the everyday processes of banking as easy as pushing a button on your smartphone. Loans, mortgages, taxes, accounting, even giving to an individual charity – all of these fields have been profoundly democratized using SaaS approaches.

I hope that by engaging with advisors and wealth firms, we can help take the technological advancements Foundation Source and other foundation management providers have made and make them more broadly available.

These changes won’t take place overnight, but I believe what we are doing will elevate giving and philanthropy to the same level as investing and retirement planning: An integral part of everyone’s financial plan, for the good of their legacy and for the good of the world.

Questions in the Meantime?
Whether you’re just starting your philanthropic journey, want a better, easier way to run your foundation or are looking for ways to best support your charitable clients, you likely have questions—lots of them. We’re here to help! Schedule a call with us or reach us at 800-839-0054. Together, let’s #begiving.

The post Executive Insights: How Advisor Engagement Can Empower Philanthropy and Foundations appeared first on Foundation Source.

• Tips for How and When to Donate During a Crisis: provides a guide to navigating the giving season in a year filled with natural disasters and humanitarian crises, suggesting strategies for balancing immediate and longer-term support.
• 5 Giving Strategies for Sophisticated Investors: details five creative strategies that the savviest philanthropists use, often with guidance from professional advisors, to achieve tax-wise social impact.
• Philanthropic Community: Advice From Your Peers – this special compilation asks foundation leaders for the piece of advice they most want to share with other philanthropists to find meaning and success in giving.
• Be Giving: a new podcast series that explores the incredible impact charitable giving can have on individuals, communities and the world at large through compelling conversations with notable guests and experts. The podcast is available through Apple, Google, Spotify or the web.

Check out the 2023 full guide.

Want to learn more about the ways we support private foundations?
Looking for an easier way to manage a foundation or want to start a foundation? Our philanthropic specialists are here to help! To learn more, schedule a call with us or reach us at 800-839-0054. Together, let’s #begiving.

The post Giving Tuesday: Resources To Maximize Your Year-End Giving appeared first on Foundation Source.

2. Carry-Forward Distributions Create a Cushion in Underperforming Years
In years when a foundation distributes more than 5% of its assets, it can roll the excess amount forward for up to five years and apply the amount to help meet the MDR in years it may want to distribute less from the endowment for financial or strategic reasons. For instance, in years when markets overperform and you anticipate a higher distribution in the following year, it can be a good idea to prepare by boosting distributions in the current year.

3. Program-Related Investments Give Foundations Flexibility for Giving
Grantmaking isn’t the only way that foundations can support charitable work. They can also use program-related investments, or PRIs, to support public charities through loans and loan guarantees, or make equity investments in for-profit organizations that align with and advance the foundation’s charitable mission. Some PRI dollars may be recoverable and recycled into additional distributions without depleting a foundation’s asset base, further maximizing a foundation’s impact. Best of all: PRIs count toward MDRs.

4. Foundations Can Grant Directly to Individuals or Families
In addition to giving to a nonprofit to provide aid to individuals or families, private foundations can also give directly to individuals or families who fall in certain charitable classes. Grants to individuals (GTIs) allow foundations to be responsive and get aid directly to people facing hardship and emergencies, such as natural disasters. It also facilitates gifts to people who aren’t connected with a nonprofit and who might not otherwise receive aid. Other types of GTIs are scholarships and prizes. While some GTIs may require advance IRS approval, the following three conditions can help you remain compliant: no strings attached to them; they don’t go to a disqualified person, such as a foundation insider; and the foundation creates a mechanism to get the word out about applying.

Want to See the Rest of the List?
See all six unique strategies in the full Differentiated Giving Kit.

Looking for More Foundation Strategy Insights?
Check out our other resources on the blog!

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The post 6 Effective Strategies for Private Foundations You May Not Know About appeared first on Foundation Source.