What Does Independence Mean?Submitted by American Endowment Foundation on July 31st, 2023
Many advisors take pride in their independence, and that is one of the main reasons clients work with them. For 30 years, AEF has also prided itself on its independence and has partnered with advisors and donors who seek an independent DAF sponsor.
AEF is fortunate to have grown to 14,000 donors, nearly $7 billion in assets, and a strong balance sheet which has allowed it to focus on its one mission of helping donors and their advisors achieve the clients’ charitable goals.
What does independence mean? Many DAF sponsors claim to be independent, and in many aspects, they technically are since they are non-profit organizations. Though many advisors share that AEF’s independence is one of the primary reasons why they prefer to partner with AEF, they sometimes inquire how they can best explain AEF’s independence to clients and colleagues as compared with other DAF sponsors. Some of the following questions may help explain the difference:
- Does the DAF sponsor welcome the role of the financial advisor in selecting and managing the donor’s investments? Or does the DAF have limits or restrictions on the account size before allowing the advisor to make financial management decisions?
- Does the fund sponsor offer only a predetermined pool of funds, many of which are the fund offerings of a related company?
- Is the donor advised fund custodian-agnostic, or is it beholden to a specific financial platform? Is it portable and can advisors and donors move their DAF accounts to a different DAF sponsor?
- Is the DAF sponsor affiliated with a for-profit firm or have outside investors?
- Is the DAF sponsor connected with a financial services company that may compete with the financial advisor?
- Does the DAF sponsor advertise or market its service directly to donors, thereby bypassing financial advisors who otherwise could manage their clients' DAF assets?
- Is the mission of the DAF sponsor purely to facilitate its donors’ charitable giving? Does it have its own programmatic interests? Is its primary goal to be profitable?
- Does the DAF sponsor have a mission that is limited to supporting a specific cause, geographic area, or charity?
- Does the fund force donors to grant a certain percentage to a specific cause, charity, or to the DAF sponsor itself during their lifetimes or at death?
- Does the DAF sponsor provide legal, financial, or tax advice that may conflict with the donor’s advisors?
By judging claims of independence through these questions, potential donors and their trusted advisors can best determine the independence of different donor-advised fund sponsors.
At American Endowment Foundation, we look forward to being evaluated by the 10 questions listed above. Contact us or call 1-888-660-4508 to determine if our independence can be of service to you.