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Donor choice, part 2 – Need spurs philanthropy market

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[Editor’s note: This is the second in a series of stories looking at choices facing donors.]

By Todd Cohen

Why donors pick one philanthropic vehicle over another often depends on factors such as tax and family needs, and the control they want.

Malcolm A. Moore, a partner in the Seattle office of law firm Davis Wright Tremaine, says his clients choose a variety of strategies, mainly private and community foundations.

While some clients may pick a particular strategy because they already have ties to a specific institution, Moore says, “more frequently it’s a choice between a private foundation and a donor-advised fund or community foundation, and it largely swings in most cases on the amount involved.”

And community foundations themselves offer services ranging from donor-advised funds and charitable remainder trusts to handling gift annuities and gifts of art and real estate.

Private foundations, community foundations and national donor-advised-fund programs all let donors convert personal charitable capital to grantmaking capital, says Eileen Heisman, president of the $500 million-asset National Philanthropic Trust in Jenkintown, Pa.

Donors using any of those vehicles can take tax deductions, which can be bigger with public charities such as community foundations or national donor-advised-fund programs than with private foundations, she says.

Deductions can total 30 percent of adjusted gross income for gifts of donated securities to a public charity, for example, compared to 20 percent at a private foundation, while deductions can total 50 percent for gifts of cash to a public charity, compared to 30 percent at a private foundation.

And individual donors frequently use more than one philanthropic strategy.

“Almost every family that I ever worked with gives through multiple vehicles,” says Deborah Brody Hamilton, senior program director for the National Center for Family Philanthropy in Washington, D.C. “What’s important is the giving, not necessarily the vehicle.”


Other stories in the series:

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

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

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

Part 5 – Financial firms target donors [10/27/03]

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