• When another firm provides the back-office service for a private-label DAF and the service is poor, clients may attribute the poor service to their bank or wealth management firm, thus potentially jeopardizing the entire relationship
• Some firms’ private-label and exclusive DAFs are unable to accept donations of complex assets that other DAF sponsors can.
• When advisors only offer one DAF solution, especially if it is private-labeled, clients may search for and select another DAF sponsor, which leaves the advisor unable to manage those important charitable assets
• Some clients do not wish to work with a local or faith-based DAF sponsor that the advisor typically recommends
• Some donors wish to hold certain donated stock or other assets within their DAF account, yet some DAF sponsors do not allow this and will require immediate diversification or liquidation
• Some clients and advisors prefer working with a DAF sponsor that is portable.
Most clients still want their advisors to manage the assets in their DAF accounts, but they often prefer to have choices, both in how the assets will be invested as well as determining which DAF sponsor is most appropriate. More frequently these days, advisors and clients are aware of various DAF sponsors besides their own firm’s, so if advisors are still able to manage their clients’ DAF assets at an outside DAF sponsor, this option may benefit both the advisors and their clients.
As always, it is important for advisors and their clients to fully evaluate all the features, benefits and flexibility of any DAF they elect to utilize. And when advisors discover another DAF may be a better choice or more flexible than the one originally selected, assets in a particular DAF can always be granted to and transferred to the other DAF.
Ken Nopar is the vice president and senior philanthropic advisor for American Endowment Foundation, the country’s sixth largest and leading independent donor-advised fund. AEF works with donors and their financial, legal and tax advisors in all 50 states.