Insights & Resources Resources for Philanthropy

Choosing a Giving Vehicle

What’s a good personality fit for you?

A TYPICAL SITUATION

You have a heart for giving back and are thinking about whether or not you should establish a vehicle for your philanthropy. There are many options: a private foundation, a donor advised fund with a financial institution or community foundation, a supporting organization, or any number of trust or annuity options.

Maybe you’re considering a giving vehicle because of tax, estate planning or financial considerations. Or simply because the family would like to organize, focus and start to engage other family members in an existing giving process. There may also be pressure from your family’s accountant, family office or estate planning attorney.

Before you make a decision, it’s important to go beyond the technicalities and spend time exploring what makes sense for your family’s “personality.”

THINKING BEYOND THE TECHNICALITIES

After you’ve heard the (often technical) advice and recommendations of your professional advisors, there are considerations to be made that are unique to you.

While it’s important to understand the tax, estate planning, and financial reasons for establishing certain giving vehicles, it is just as important to understand how a philanthropic vehicle may or may not be a good fit for the goals and the personality of your family.

WHAT DO WE MEAN BY “PERSONALITY FIT”?

The reality of working within the confines (e.g.: administrative, cost, legal structure) of a philanthropic vehicle is different depending on the type of entity. For instance, a donor advised fund with a community foundation may be hassle-free from an administrative perspective, but if you want to control your investments you may face obstacles.

Alternatively, if you decide to set up a private foundation because the control and autonomy are pros for you, you may find the required frequency of meetings and entity filings outweigh the pros.

SEARCHING FOR A FIT: QUESTIONS TO CONSIDER

There are a number of questions you can ask yourself to determine what is both a good technical fit and a good personality fit.

Overarching questions include the following:

  • How will this vehicle provide a platform for me to achieve my goals related to giving strategy, investments and family involvement?
  • Are the features of this giving vehicle, like legal structure and level of autonomy, in line with my personality?

These additional questions can help determine if a new giving vehicle is needed:

  • What am I trying to achieve with a giving vehicle?
  • What is working about my current giving process? (What do I like about it?)
  • What isn’t working about my current process? (What do I want to change?)
  • How do I want my family to be involved?
  • How do I want the impact I make to look?
  • What is the timeframe for my giving plans?
  • How much time do I want to spend on my giving (including administrative tasks)?
  • Are impact investments and grant-making alternatives important to me? (e.g. social impact investing, program-related investing, etc.)
  • How much professional advice do I seek in my giving, and how do I feel about paying for this advice?

As you consider your options and answer questions specific to your situation, you may find there is one type of giving vehicle that is right for you and your family. Alternatively, you may find that setting up a giving vehicle is not necessary at this time, so you will continue with a personal check-writing approach.

MOVING FORWARD

Your Threshold Group advisor is available to explore these questions with you.

We also partner with Sarah Hopper of Sound Philanthropy, LLC to meet the philanthropic planning needs of our clients. Sarah has over twelve years of experience working with families to help them develop their giving goals and plans, discover their passions, and thoughtfully engage the younger generation in the process.