The Global Rise of Gift Account
Mark Finser, Chair of RSF Social Finance in the United States has been instrumental in the growth of RSF’s Giving Accounts. Today over $45 billion is held in Donor Advised Giving Accounts in the US. I interviewed Mark for his insights into how these Giving Accounts work.
Julia: Can you tell us about RSF and how it started?
Mark: We started in 1984 and had two parts to the foundation – a saving and lending side, and shortly after, we started Giving Accounts. A close friend wanted to close her private foundation and make donations via RSF. She transferred these funds to us and then nominated a long list of her favourite charities that she wanted to donate to. It grew from there. Today RSF hold over $170 million in total assets.
Over the years we’ve connected with a lot of successful organic food companies, and others in our three mission areas, through our finance arm. When some of these businesses started they allocated shares to a Giving Account, at a time when their shares had no value. Then when the company went public or was sold their Giving Account received a windfall.
Julia: What are some of the benefits of operating a donor advised fund (DAF)?
Mark: As our original donor found, it’s a pain in the neck to do all the administrative work managing a private foundation. Unless you have multiple millions of dollars to donate, US regulators suggest there is no point establishing your own private foundation.
A Giving Account partner carries out the administration work, checks charitable status, writes grant letters, tracks where the funds are spent and reports back. There is also the opportunity to be anonymous, as some people don’t want to be publicly known for having deeper pockets – especially in a small community.
At RSF, there is also a menu of different investment options so clients can choose how their funds (or assets) are invested. Some accounts earn a return, tax-free, giving the donor advisor more funds to donate in the longer-term.
Julia: What are some of the unique ways you have seen people give?
Mark: When you first set up your Giving Account the money leaves you and you make a sacrifice. The second time you donate (when you advise which charities to support) the feeling of sacrifice is removed and creates a sense of freedom for a donor, which encourages strategic and objective giving. There are so many wonderful and flexible ways for these DAFs to work.
One donor didn’t want to make the decisions of where the funds should go. So she brought her favourite charities in a particular interest area together in a room and let them collectively decide how to allocate a lump sum. Over the years this has formed a sense of community and camaraderie between the charities. This has now inspired a number of what are called ‘Shared Gifting Groups’ around specific topics around the US (more can be read about this on at rsfsocialfinance.org). DAFs can also be set up to leave a gifting legacy or can be used as an educational tool. We have one family who get their children to find a need in their community each thanksgiving. Before their family meal they each nominate a small gift for the year from their Giving Account.
We also operate field of interest funds, where both small and large givers can contribute. A community of people interested in local food and agriculture in New Zealand, for example, could collectively donate to this area. You would find the charities to support, and donors would see the impact they are making through an annual report.
There’s also an opportunity for people to leave bequests and continue to support charities close to their heart into the future.
Julia: What does the DAF landscape look like now in the US?
Mark: There are now many brokerage firms that have created charitable trusts to manage the assets in DAFs. They manage these funds (and earn fees) until someone is ready to donate these assets. The problem is that so many of these funds invest in ways that are in direct conflict with the values of the donor.
In comparison, at RSF 100% of our investments are missionaligned. Funds “sitting” in DAFs can also be recycled through investments in social finance projects while awaiting distribution, and in the process earn a social return.