The Association of Small Foundations is a membership organization for donors, trustees, employees and consultants of foundations that have few or no staff. Since 2005 they have published the “Primer Series” that includes brief papers on key topics of interest to small grantmakers. I’ll review two recently acquired titles here.
The primer Strategic Uses of Donor Advised Funds by Ruth Masterson (2010) explains how donor advised funds (DAFs) work and how foundations managers can use them to further their organization’s philanthropic goals. It also looks at the process of opening a DAF.
What are Donor Advised Funds? DAFs are “accounts held within and managed by another organization, namely, a public charity known as a sponsoring organization.” Then, on behalf of their donors, the sponsoring organization administers the account, holds and invests contributions, and makes grants from the accounts to other public charities.
One way a DAF can be used is for making grants outside of a foundation’s mission. While in practice private foundations are used for more strategic, mission-focused grantmaking, DAFs are ideal for “informal, responsive giving.” An example of this is in response to an international tragedy (like the recent Tsunamis in Asia, or the Haiti Earthquake). A U.S.-based foundation deeply involved with local issues wishing to contribute funding may not have the time to identify fitting intermediaries, so they set up a DAF account at a national sponsoring organization to identify suitable grantees.
Strategic Uses also highlights other ways DAFs can be utilized by small foundations, such as honoring a legacy, highlighting an important cause, or giving after a foundation has ceased operations to avoid penalty taxes upon closing shop.
The second primer is titled Getting to Impact Through Planning by Sara Beggs (2011). It introduces planning options for foundations looking to make the biggest possible impact with the resources at hand.
“Impact” is defined as “a significant positive effect” that usually is only carried out using thorough strategic planning. It rarely happens accidentally or immediately, and typically requires multiple grants and multiple non-grant activities for an extended period. This primer sets out a road map small foundation can use to align its operations and grantmaking to achieve such impact.
The author illustrates how to sync governance and grantmaking by outlining the strategy behind the funding of a college prep program (p. 31-32). For example, governance may want to invite an additional trustee with experience in this area; those with tax and legal responsibilities should review bylaws to ensure relevance; and investment managers may need to shift them for sufficient cash flow. On the grantmaking side, the work plan spells out the steps from discussing grant program details with staff and board through the creation of a web page to communicate guidelines to potential grantees.
The appendix to Getting to Impact includes an 11-page workbook that offers a framework for all planning needed to execute impactful operations and grantmaking at a small foundation.
Both Strategic Uses of Donor Advised Funds and Getting to Impact Through Planning are available at Foundation Center libraries under call number 510 ASF.
Related resources include the previously blogged book Managing Foundations and Charitable Trusts: Essential Knowledge, Tools, and Techniques for Donors and Advisors by Silk and Lintott (Bloomberg Press, 2011); it devotes an entire chapter to DAFs. For impact planning in foundations, try TCC Group’s Maximizing Foundation Effectiveness: Aligning Program Strategy, Organizational Capacity, Strategic Planning, and Performance Assessment to Achieve Success.
--Rob Bruno
Catalog/Reference Librarian
The Foundation Center--New York
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