Direct Donor Choice
Friday, January 15th, 2010
Why depend upon others to give away your money?
Umbrella organizations and Donor Advisor funds are not always your best choice.
There is a fact that donors need to understand when they give their donation to organizations such as the United Way, Community Foundations or use Donor Advisor Funds. The donor is immediately making the following decisions: pay an administrative cost beyond their control; management of the donation is made by others; decision making on the amount of the donation is made by others; decision making on who receives the donation is made by others; how the funds are given when distributed is made by others; and giving others the right to keep part of the donation, since the nonprofit is a 501 c 3, to build a larger reserve/endowment using part of the donation.
The donor is selecting to pay administrative costs twice. The organization that receives the initial funds uses a portion and then the nonprofit who receives an award usually uses a minimum of 10% for administrative purposes. Said portion is not always the sum of the whole donation since the holding organization is not required to disburse 100%. Most organizations keep a portion of the donation to increase their reserve/endowment including a portion of the return made from investing the donation.
A fact not published or stated is that as these organizations build their staff, their salaries and infrastructures their assets grow. There is a conflicting aspect to these organizations as a donor mission. Is the donor acting to support the organization or to support a cause in the nonprofit community?
As a donor specify and restrict your donation for the intent you want, including its growing investment return if you wish it to grow. If you wish all of it to be spent then you should expect a bottom line accounting of what the money was spent on.
Give directly as an individual, corporate foundation or outsource the foundation or giving campaign to a firm, but cap the expenses. You may even use a fiscal intermediary to help a new cause. You should set the parameters.


