Fundraising Tip
Donor-Advised Funds and the Satisfaction of Pledges

When a donor contributes to a donor-advised fund, that contribution becomes immediately deductible even though no charity has received a contribution. If the contribution is in the form of appreciated assets, the donor also avoids capital gains taxes. Note that this same tax benefit is available to donors who do not liquidate the assets before gifting them, but rather allow the tax-exempt charity itself to sell the asset.)
As the name indicates, a donor can advise on the ultimate disposition of the contribution, but cannot actually control it. In practice, however, these funds will much more than likely accede to the donor’s wishes and direct the ultimate contribution to the chosen charity.

The Internal Revenue Service and a number of state courts have taken the position that contributions from a donor-advised fund cannot be used to satisfy personal pledges to public charities. Doing so can be considered conferring a financial benefit on the individual (i.e. the favorable capital gains tax treatment) and could subject the donor and the institution to penalties, up to and including revocation of tax-exempt status. Unfortunately, it is not clear that proprietors of donor-advised funds are adequately alerting clients of this restriction.

So remember, “current tax regulations prohibit the use of distributions from donor-advised funds to satisfy outstanding personal pledges.”

-- This statement is courtesy of TW&B client Northland College in Ashland, Wisconsin.

TW&B Hosts Independent Schools “Chat”

On January 8th, a small group of independent school representatives braved snowy conditions to attend an informal chat over a boxed lunch with Ward J. Ghory, Head of School at the University School of Milwaukee (insert photo and link). This event is part of an on-going series of “chats” at Ter Molen Watkins & Brandt.

Ward described how his board of trustees and staff led a highly successful $45 million “Next Generation Campaign,” which, among other things, enabled construction of two important buildings on the school’s campus. Using a two-phased model enabled campaign leaders to keep the interest of school parents - who are the largest source of support for most independent schools - engaged, leading to many first-time major gift donors.

Ward also reflected on his own role in the campaign and the inevitable challenges of initiating the drive when he was still a relatively new member of the Milwaukee community. His openness and modesty made for a lively and intriguing discussion among our invited participants.

Clearly, there would be more successful campaigns if the not-for-profit world included more CEOs like Ward Ghory, and we thank him for spending such a productive and enjoyable afternoon with us.

LIST OF PARTICIPANTS:

Alec Fraser
Partner, Michael Best Friedrich LLP (representing Shorewood Public Schools, Milwaukee)

Shelley Greenwood
VP of Institutional Advancement, The Latin School of Chicago

Pamela Jordan
Head of School, The Chicago Academy for the Arts

Maureen Kelly
Director of Development, Old St. Mary’s

Beth Wittbrodt
Associate Director of Development and Alumni Relations, University of Chicago Laboratory Schools

Nora Kyger Leads the DLC’s Annual Fellows Program

TW&B Senior VP, Nora Kyger, has assumed leadership of the Development Leadership Consortium’s Annual Fellows Program. The Development Leadership Consortium was originally founded in 1994 by Chairman Clyde Watkins, and became an independent 501c3 in 2009.

The 2009-2010 DLC Annual Fellows class has 17 members from a wide array of Chicago-based institutions, both small and large, from social service (Youth Organizations Umbrella) to higher education (University of Chicago). Throughout the year, members attend presentations and engage in informal discussions with civic and senior development leaders as well as heads of corporate and private foundations, to learn about the philanthropy world and to develop a peer-group. Speakers in the 2009-2010 schedule include:

Lloyd A. (Chip) Fry III
Vice Chair, Fry Family Foundation and Director of Development, The Chicago Community Trust

Susan Himmelfarb
Founder, Himmelfarb Group

Jennifer Rosenkranz
Senior Program Officer, Michael Reese Health Trust

Alice Sabl
Philanthropist and Volunteer

Jill Selzer
Vice President Institutional Advancement, WBEZ

Judith Stockdale
Executive Director, Gaylord and Dorothy Donnelley Foundation

Nikki Will Stein
Executive Director, Polk Bros Foundation

To recommend a future participant, please contact Nora Kyger (nkyger@twbfundraising.com); to find out more about the DLC, please visit www.chicagodlc.org

Spotlight on Prospect Research

During these times of imposed budget reductions and ongoing cost cutting, development managers usually look first to those areas that are not direct cash-generators. This often takes a toll on important long-range and quality-related investments, including prospect research. Holding open a staff research position, or reducing the frequency or depth of research projects can reduce current outlays, but how do you know the cost? And how do you know whether you are getting the best return on the investment that you are able to make? TW&B Adjunct Counsel Erin Jung is a highly experienced manager in the field prospect research, and can help you answer these questions and more through a quick assessment of your research program.  Additionally, she can prepare research profiles on a prospect-by-prospect basis at very reasonable prices. Link to Erin's website at www.jungresearch.com