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Donor choice, part 5 – Financial firms target donors

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[Editor’s note: This is the last of five stories looking at choices facing donors.]

By Todd Cohen

Financial firms have posted big growth in philanthropic services, and borrowed strategies from community foundations, including more strategic consulting to wealthy clients.

Merrill Lynch, which manages $4 billion in charitable assets for 6,000 individuals and $22 billion for 32,000 institutions, already has signed up 32 community foundations for a donor-advised program it launched in February, and is ready to enroll another 50, says David Ratcliffe, director of the Merrill Lynch Center for Philanthropy and Nonprofit Management.

And the firm is offering consulting services to help clients with $10 million or more in net worth have a greater impact with their philanthropy.

To expand services to individuals and professional advisers, Fidelity a year ago launched its new service, which handles automated administrative and financial functions for wealthy clients who create private foundations.

Individuals face a “fragmented” market of financial institutions, accountants, lawyers and other professional advisers they often need to help run their private foundations, says Andrew Tappe.

Since it launched its back-office services for private foundations a year ago, Foundation Source has signed up more than 70 foundations with $160 million in assets, and is negotiating with another 75 foundations with $350 million, says Doug Mellinger, vice chairman and founder.

The $500 million-asset Minneapolis Foundation teamed up with Foundation Source so it could offer donors the additional option of creating private foundations, says Chris Langer, the foundation’s vice president for communications.

Also providing back-office support is the $500 million-asset National Philanthropic Trust, which takes gifts directly, like a community foundation, but also handles donor-advised-funds for big financial institutions like Bank of America and JPMorgan Chase.

While philanthropies and financial institutions compete with one another, donor demand for more options will generate more cross-marketing among philanthropic and financial institutions, says Eileen Heisman, president of National Philanthropic Trust.

“We also compete with ignorance and conspicuous consumption,” she says. “My competition is not the Silicon Valley Community Foundation. My competition is getting donors who are sitting on assets and get them off the dime.”


Other stories in the series:

Part 1 – Philanthropy market diversifies [10/6/03]

Part 2 – Need spurs philanthropy market [10/8/03]

Part 3 – Donors shop to meet needs [10/13/03]

Part 4 – Service fuels philanthropy [10/20/03]

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