By Ken Nopar, VP-Senior Philanthropic Advisor

Nearly every week, donors or their advisors contact AEF to inquire how or whether they, their friends, or family members can transfer donor advised fund (DAF) accounts they had established at other DAF sponsors to AEF. This happens frequently in the first quarter of each year as donors had rushed to open DAF accounts elsewhere at the end of the previous year.

Moving MoneyThis process is quite straightforward. After their advisors establish an AEF DAF for them, the donors simply recommend a closing grant from their former fund sponsor to their DAF at AEF.  AEF is not a perfect fit in all situations since AEF can only work with donors whose financial advisor manages the assets in the AEF DAF account. In the past several years, close to $200 million in DAF assets have transferred to AEF.

Some of the primary reasons for the increasing number of DAF transfers include:

  1. Donors wanted their financial advisors to manage the assets in their DAF accounts since their advisors’ performance was better than the investment options at other DAF sponsors.
  2. Donors wanted their DAF assets to be invested similarly to those in their other accounts, and their advisors have much greater investment flexibility with AEF than with other DAF sponsors.
  3. Donors’ advisors were not able to manage the assets at the other DAF sponsors at all, or were only able to at very high amounts.
  4. Donors opened DAFs elsewhere on their own or in a rush at the end of the year, and did not realize that they could have opened one through their financial advisor.
  5. Donors’ attorneys, accountants, or friends may have suggested another DAF sponsor that may not have been ideal.
  6. Donors were concerned about privacy and did not like that the private-label DAF featured the name of the bank or wealth management firm the donors work with, thus alerting the charities that received the donors’ DAF grants that the donors may have substantially more to donate.
  7. Donors established a DAF at their previous bank or wealth management firm before they started to work with their current advisor, and they were not aware that the DAF could be transferred to AEF.
  8. Advisors had left firms that offered a private-label DAF, or the advisors’ new firm used a different custodian, and the advisor could no longer work with the former DAF sponsor in either situation.
  9. Donors wanted to consolidate multiple DAF accounts into their DAF at AEF.
  10. Donors were not able to make grants internationally or to other areas within the USA, or were prohibited from making grants to charities outside the more narrow mission of the other DAF sponsor.
  11. Donors were unable to name successor advisors at the other DAF sponsor and the account must terminate at their death.
  12. Donors wanted to be able to donate many types of assets such as privately-held stock, insurance, cryptocurrencies, or real estate that AEF can accept, while the other DAF sponsor could only accept gifts of cash or publicly traded stock.
  13. Donors were limited in how much they could grant each year from their other DAF account.
  14. Donors were required to grant a high percentage of grants back to the other DAF sponsor during their lifetime or at death.
  15. Fees were higher at the other DAF sponsor.
  16. Donors encountered service and execution issues at the other DAF sponsor.

Though these transfers make up a relatively small percentage of the new assets that are donated to AEF, the number of DAF transfers to AEF will continue to grow for these and other reasons.

At American Endowment Foundation, we look forward to helping donors and advisors determine the best strategies for their charitable giving. Please contact us or call at 1-888-966-8170 with any questions.