Practice Management

Amid flood of donor-fund assets for Haiti, a plea to stay the course

Non-profits ask advisers to consider nation's rebuilding needs over next five years

Jan 24, 2010 @ 12:01 am

By Lisa Shidler

Wealthy individuals have been directing their donor-advised funds to contribute to Haiti relief efforts, and advisers are meeting with clients to help them set up long-term plans to aid the stricken nation.

Through Friday, the Fidelity Charitable Gift Fund, which runs the largest donor-advised fund, had received orders to disburse $8.8 million from donor-advised funds to organizations providing relief for Haiti. The Vanguard Charitable Endowment Program sent nearly $3 million to 20 organizations, and the National Philanthropic Trust's donor-advised fund sent $300,000.

Total donations to help Haiti had exceeded $355 million by late last week, according to The Chronicle of Philanthropy.

The House of Representatives last Wednesday passed a bill that gives taxpayers the option of claiming a charitable deduction for contributions to Haiti on either their 2009 or 2010 tax returns, as long as the contribution is made before March 1.

While the short-term efforts are vital, non-profit groups are trying to persuade advisers and investors not to lose sight of Haiti's long-term needs.

"COMPLEX GIFTS'

“We're suggesting complex gifts, which are being spearheaded by advisers and specialists,” said Samuel Connor, director of philanthropic services for Save the Children. “This isn't a cookie-cutter approach.”

His organization held a conference call last week for advisers outlining the group's five-year plan for Haiti, dubbed, “Haiti: Build Back Better.”

Non-profit groups said they are leaning on advisers because in past emergencies, such as Hurricane Katrina, donors were generous during the immediate post-crisis period, but the actual rebuilding has taken years.

Some 78% of Americans who set up long-term charitable vehicles and trusts do so on the recommendation of a financial adviser, according to the National Philanthropic Trust.

Donor-advised funds, which are non-profit entities that may be managed by a fund company, disburse money to charities suggested by the donors. They are particularly useful as vehicles for emergency relief because the money is accessible immediately.

“I do hope donors and advisers are thinking long-term,” said Eileen Heisman, chief executive of the National Philanthropic Trust. “If they're feeling a sense of urgency now, it's hard to tell them, "Stop.' But you also need money to rebuild buildings; you need long-term planning.”

In fact, Bruce Boyd, an adviser with Arabella Philanthropic Investment Advisors, is telling clients, nearly all of whom already have made donations to Haiti relief, to hold off on making more-sizable gifts.

“When Haiti drops from the front pages, people's interests will wane, and what people really need help in is long-term support,” he said. “We're telling our clients to be thoughtful on holding back so you can help with the long-term recovery, because that will be ignored by so many people.”

Ted Contag, an adviser with Thrivent Financial for Lutherans, whose group manages about $75 million in assets, works regularly with his clients on charitable giving. Right now, about 60 of his clients have donor-advised funds.

In recent years, when clients had appreciated stock, he encouraged them to donate it to such a fund so they would get a tax deduction and not be taxed on the appreciation of the stock.

He anticipates he'll have discussions with clients this year about making donations to help the Haiti relief efforts.

Having those continuing discussions with clients throughout the year is important, said Yale Levey, a principal at Next Generation Wealth Planning LLC. (Mr. Levey declined to say how much in assets his firm manages.)

“You want to make information viral so they can assess that information on a real-time basis and include clients and share experiences together,” he said. “For an adviser, it shows that you care.”

Lauren Katzowitz Shenfield, a philanthropic adviser with Philanthropy Advisors LLC, also has been in close contact with her clients. She works with clients who have a number of charitable vehicles, including foundations and donor-advised funds. She's setting up meetings in the coming months to discuss grants her clients want to make to organizations that are helping out in Haiti.

Donors through Fidelity's Charitable Gift Fund are also thinking past the immediate crisis, said Sarah Libbey, its president.

“Donors have already earmarked these donations,” she said. “They can continue to grow a portion of their account balance for a funding need in the future.”

GOAL IS MITIGATION

Ben Pierce, executive director of the Vanguard Charitable Endowment Program, said his organization has set up a separate account, dubbed the Sustainable Disaster Recovery Fund, which now has about $150,000 in it. The fund is planning to disburse $25,000 in grants this summer to organizations whose missions are to improve disaster preparedness.

“This is aimed at long-term mitigation rather than the immediate bread-and-water needs,” he said.

Melanie Schnoll Begun, managing director of philanthropic services at Morgan Stanley Smith Barney LLC, said her department sent out an e-mail suggesting non-profit groups that clients and advisers could consider contacting if they're interested in making a sustainable impact on Haiti.

Even smaller organizations such as The Lutheran Community Foundation are seeing assets directed to Haiti relief. The foundation, which manages about $180 million in assets and oversees 3,000 donor-advised accounts, has directed about $40,000 to Haiti efforts in the past week, said Chris Andersen, its president and executive director.

“When a situation occurs like Haiti, they can use their fund to respond to changes, passions and situations they want to support,” he said.

E-mail Lisa Shidler at lshidler@investmentnews.com.

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