Common Tax Reporting Errors Made By Private Foundations on Their 990-PFs

This article by Chief Legal Officer, Jeffrey D. Haskell, J.D., LL.M. of Foundation Source, provides great information to help your clients avoid potential issues with Private Foundation filings.

I hope you find it useful.




Evaluating The Health & Performance of Your Favorite Charity

In my discussions with philanthropists about their previous giving experiences, I often ask how they determined if the recipient organizations were healthy and high performing. The answers often include, “I didn’t really know” or “I trusted them because so-and-so served on the board”, or “they’ve been around for years”, etc.

Now, imagine someone asked that same question about an investment firm. I assure you, the aforementioned answers would be entirely unacceptable.

For strategic philanthropists who approach charitable giving like investing, having evidence that an organization is high performing and healthy is critical to decision-making. No savvy investor would choose to back a company without research.  And likewise, no savvy donor makes a major investment in an organization prior to conducting a thorough analysis.

The most complete and predictive evaluations of non-profit organizations are conducted by professional and experienced researchers. They understand the non-profit sector and employ proven methods to analyze key characteristics of high performing and healthy organizations.

Focusing on an organization’s overall health and performance, not just the financials, ensures a holistic assessment of its ability to deliver and sustain desired impact over time.

Using third party evaluations from professional researchers provides donors with conflict-free evidence that informs their giving decisions and increases the potential for maximum philanthropic impact.

If you want to learn more about how evaluations can take your philanthropy to the next level, let’s talk!



Women’s Philanthropy: Following in Mary Elizabeth Garrett’s Footsteps – She Made a Difference, Not Just a Donation

As you know, March is Women’s History month in the U.S. It’s the perfect time to reflect on our past in ways that inspire our future. For me, one of the most inspiring and significant philanthropists in our country was Mary Elizabeth Garrett.

Mary was a strategic philanthropist before the phrase was even conceived! She used her intellect, position in society, wealth and network to advance higher education for women. She accomplished this at a time in American history when women did not have the right to vote nor were they provided opportunities to attain advanced degrees, most especially in the sciences and medicine.

Ms. Garrett was the favorite child of railroad tycoon, John W. Garrett. Mr. Garrett, a member of Johns Hopkins University’s board of trustees, often brought Mary to various business meetings with the likes of Andrew Carnegie, J.P. Morgan and Cornelius Vanderbilt. Mary would later use the lessons from these interactions to become one of the most strategic and successful philanthropists of her time.

When her father passed away, Mary became one of the wealthiest women in America. It was then that she began her philanthropic journey.  Disturbed by the lack of serious college preparatory schools for women, Mary leveraged her resources and her network of other wealthy heiresses to establish Bryn Mawr School in Maryland.

At Bryn Mawr, young girls studied modern and classical languages, history, math, English, science and physical education.  While these topics are common areas of study today, in 1885 when the school opened, this curriculum was cutting edge for girls.

Another philanthropic accomplishment of Mary’s was opening the doors to a formal medical education for women.  Ms. Garrett and her friends approached Johns Hopkins in 1887 with a gift of $35,000 (equal to $899,000 today) to establish a coeducational school of science. Unfortunately, this offer was rejected!

A couple of years later, the school was in an unenviable financial position, which caused a delay in opening its new medical school.  Mary and her friends saw an opportunity to leverage their philanthropy and advance women’s education.

They approached the trustees again and offered to provide the funds needed to open the medical school, but in return, it had to begin admitting qualified women.  The trustees accepted the terms and the gifts, totaling $500,000 (equal to $12,800,000 today), making Johns Hopkins the first modern medical school in America.

The impact of Mary’s two main philanthropic investments is certainly present with us today. According to a Kaiser Family Foundation study, in 2011, women made up 48% of those graduating from medical schools across America.  This is due, in part, to the vision and passion of Mary Elizabeth Garrett and her friends.

Are you ready to follow in Mary’s footsteps?  I would love to know what kind of impact you want to see with your philanthropy.  Contact me and let’s talk.

Preserving Donor Intent with a Well-Constructed Gift Agreement

One of the most important things philanthropists can do to preserve donor intent is to enter into a gift agreement with leaders of the recipient organization. I recommend that EVERY significant gift be accompanied by a detailed gift agreement.

Gift agreements set appropriate expectations and create mutual understanding between the donor and the organization. In addition, they provide guidance to current and future leaders regarding the use of the gift. For donations to a large institution, gift agreements should be signed by the donor, the President of the organization (or designee) and the President of the supporting foundation.

Typically, the recipient organization or it’s foundation will provide donors with a draft gift agreement using their approved format, which may vary depending on the level of sophistication of staff, governance and gift acceptance policies.

In my experience, University foundations are most likely to have comprehensive and detailed gift agreement formats. Keep in mind, these formatted gift agreements are written from the perspective of the recipient organization and often seek to limit restrictions on the gift, which may or may not be in alignment with donor intent.

Gift agreements include multiple elements. The most important components are 1) a detailed description of how the donor wants his/her gift to be used and 2) a summary of the intended impact the donor wishes the gift to produce. This is often called a “Purpose” statement within the agreement. Other key elements could include, but are not limited to, the following:

1. Amount, term and type of gift – including payment schedule for pledges
2. Type of asset/s to be gifted
3. Description of how changes to the agreement will be addressed
4. Description of all fees and fee schedules associated with the gift (gift fees, management fees for endowed funds, etc.)
5. For endowed or quasi-endowed funds – Description of investment policies, payout rates, distribution schedules, management structure for investments, reporting cycles, etc.
6. Donor Recognition – including preferences for anonymity or details regarding public recognition, for example, naming of facilities, programs, positions, etc.
7. Impact and financial reporting schedules – description of how and when the donor would like to be informed about the use of the gift
8. Alternate use of funds statement – description of how the donor would like their gift to be reallocated should the original purpose no longer be practical or possible to carry out

For all gift agreements, it is prudent to consult with a philanthropy advisor prior to signature to make certain donor intent is fully reflected in the agreement and to avoid any misunderstandings. If you have any questions or would like more information about writing a well-constructed gift agreement, call or send me an email…I’d enjoy the opportunity to help!