For people using giving vehicles like foundations or donor-advised funds---which is the majority of high-net-worth donors---figuring out how much to grant out of these vehicles is difficult.
First, coming up with your objectives is important. Do you want to build up the account over time with donations? Do you want to have it remain in perpetuity and pass on the management of it to your family? Or, do you want to have this account spent down over time for immediate impact?
Whatever the answer, coming up with a financial plan to grant out certain amounts each year is vital. Once you have your goals and a plan, it doesn’t stop there. From time to time an opportunity arises to make a bold grant that can be life-changing for your community, or a grant that will further your philanthropic mission but will take more of your resources than anticipated.
When these opportunities present themselves, it’s important to weigh your options. Sophisticated philanthropic financial planning software can show you the impacts of these potential large opportunities on your future granting from the account and put everything into perspective.
Tools for this important work have been a much-needed missing gap in the financial industry for years. PhilanthPro Solutions, a Toronto and Los Angeles-based software company founded by wealth manager Nicholas "Nick" Palahnuk, conducted research into the problem with a group of
philanthropists and advisors.
Common problems surfaced such as the lack of tools to financially plan for philanthropy. One advisor put it this way, “To be honest, right now, we don’t necessarily use traditional planning software or anything to solve for this… each foundation does it a different way, and most of them are doing it on Excel.”
A philanthropist remarked, “What our commitments are, I’m keeping track of that in a spreadsheet. But what I’m not thinking about at all is all the other stuff other than the basics. So, accounting for inflation, and accounting for
investment returns and market fluctuations, and all these things that will affect how much our foundation dwindles over time.” Another philanthropist, “Customizing our goals and making a plan are things we need to get better at. We’ve been very reactive to requests, and I would really love to get to a place where we are planning more. Where right now, there’s no plan really. We’ve just tried to support whatever we can.”
PhilanthPro set out to build a suite of tools to address the problems they uncovered in their research. Read about visionary advisor and software designer Nick Palahnuk and PhilanthPro here:
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