• Depending on the charitable purpose of the DAF, below market investments—if selected—are exempt from the traditional regulations regarding prudent investor requirements.
• With a lower administrative cost level than that of most foundations, DAFs make it possible to spend more funds on due diligence and research to help ensure an effective impact strategy.
• If a donor selects a DAF provider with expertise in a certain area, the process is simplified, frictionless and extremely cost effective.
RSF Social Finance started its donor-advised fund in 1984 as part of its strategy to provide impactful organizations with a variety of funding options and investors an opportunity to engage in whole portfolio activation. Managed within RSF’s Liquidity Portfolio or Impact Portfolio, donors invest their assets in alignment with RSF’s mission of transforming the way the world works with money.
Although the majority of grantmaking from DAFs is donor-directed to specific charitable organizations, a unique feature for donors with RSF is the option to make a grant to the RSF Seed Fund. This discretionary fund provides small grants (between $500 and $5,000) to seed new initiatives that further the field of social finance, or address issues in one of RSF’s three focus areas: Food & Agriculture, Education & the Arts, or Ecological Stewardship.
Another option makes it possible for financial advisors to work closely with clients to craft an impact strategy that is unique to their interests, focusing on particular issue areas or geographies. ImpactAssets’ Giving Fund gives DAF owners access to private debt and equity funds from top impact investing fund managers, and individual debt and equity deals, like the investments made by Seth Goldman.
The Giving Fund has investment options with a range of risk and return across various asset classes so that financial advisors can help clients identify impact investments that fit within their portfolio and customize the impact approach for each client.
The Tide Foundation’s DAF option gives advisors of progressive donors access to the broad range of work that Tides does to support existing social change efforts or even launch their own project. Tides donors have initiated and made significant investments in film related projects, including The Story of Stuff, Taxi to the Dark Side, Amreeka, and the production company Chicken and Egg Pictures.
DAF providers that offer impact investing enable clients to both maximize their giving dollars and make the greatest positive impact possible.
Tim Freundlich is president of ImpactAssets, a nonprofit financial services firm that increases the flow of capital into investments that deliver financial, social and environmental returns. Its impact investment strategies, donor advised fund and knowledge resources provide a dynamic platform for wealth managers and the clients they serve to advance social or environmental change through investment. ImpactAssets seeks to shed light on—and drive capital to—the field’s most promising organizations and initiatives, helping to build the field of impact investing.