You may be among the millions of generous donors who have discovered the power of a donor advised fund (DAF) to streamline and simplify your charitable giving. But have you ever wondered what happens if there is a balance in your fund at the end of your lifetime? Where will that money go? Who decides how the money is used? Just like for the rest of your estate, planning for your DAF is an important consideration.
Once the account owner has passed away and can no longer “advise” how and to what amount their donor advised fund supports charities, the DAF could become an “orphaned donor advised fund.” Essentially, orphaned donor advised funds are unrestricted assets of the sponsoring charity. While the DAF sponsor must use it for charitable purposes, the sponsoring charity chooses where to support.
Exactly how orphaned donor advised funds are used depends upon policies of the sponsoring charity. DAFs arranged with traditional community foundations often have well-established grantmaking programs and are versed in the needs and trends in their communities. Many of the national DAF programs sponsored by financial services firms have grantmaking programs to ensure distribution of orphaned donor advised funds, while others maintain a list of favored organizations to receive distributions.
Check with your DAF sponsor to learn about your options. Depending upon their policies, you may be able to:
- Name one or more successor advisors for your DAF.
- Distribute your DAF to one or more new donor advised funds.
- Provide a standing recommendation for final grants to one or more charitable organizations to zero out the fund balance.
- Establish a program of recurring grants, much like an endowment.
- Transfer the DAF assets to a “field of interest fund” from which the sponsoring charity can make grants within broad categories.
We applaud you for having the wisdom and foresight to make use of a donor advised fund to manage your philanthropy.
To learn more about how you can include Massachusetts General Hospital when it comes to succession planning for your DAF, please contact our Office of Planned Giving at mghdevpg@mgh.harvard.edu or 617.643.2220.
