For all of us at The Dallas Foundation, 2017 is bringing us two new presidents. One already has moved into the White House. The other will occupy a desk a few yards away from mine. That new president will succeed our longtime President and CEO, Mary M. Jalonick, who plans to retire this year after three decades with The Dallas Foundation.
Mary's leadership helped this Foundation grow in terms of assets, employees, programs and reputation. A transition team of current and former board members will oversee a national search for her successor. Mary plans to stay in Dallas and to continue to advocate for improved early education for all Texas children.
Meanwhile, we will continue to work to be a resource for you and your clients. Your recommendations helped us set new records last year. The Dallas Foundation received more in gifts in 2016 than ever before, $102 million. And because we received more donations, we could award more in grants – $81 million, to be specific. That's about a 50 percent increase over 2015.
Thank you for showing your clients how philanthropy can be both wise financially and rewarding emotionally. We are here to support you in that work and happy to brainstorm about unusual assets or unique citations. Our newly redesigned website, dallasfoundation.org, also hosts a number of useful tools for advisors. Please let us know how we can help.
All the best,
Gary W. Garcia
Table of Contents
- Why The Dallas Foundation?
- Simple Questions to Start Conversations about Legacies
- Illiquid Assets: Making Them Work for Donors and Charity
- For Women Clients, Consider a Gift Membership to our Women's
- Professional Advisors Seminar Draws Record Crowd
Dodee Frost Crockett and Jeffrey S. Hamilton are experienced professional advisors who serve on The Dallas Foundation’s Advisory Council and often discuss philanthropy with clients.
Crockett started with Merrill Lynch in 1980, and now is managing director/wealth management and senior consultant in the Merrill Lynch team of Crockett, McBride & Associates in Dallas. She is a Chartered Advisor in Philanthropy® and a Certified Divorce Financial Analyst™, as well as a Dallas Foundation donor.
Hamilton is senior counsel at Jackson Walker and also has earned the Chartered Advisory in Philanthropy® credential. His practice expertise includes wills, trusts, probate, federal gift and estate taxes, estate distribution and family settlements and nonprofit corporation formation documents and tax-exempt status application.
When appropriate, Hamilton and Crockett have referred clients to us, and we’ve worked together to develop charitable giving strategies tailored to each client’s unique situation.
Q: When do you raise the issue of philanthropy with clients?
Crockett: We are planning-focused advisors rather than transaction-focused. I want to help my clients with the ?why?’ and ‘what for?’ of their wealth, rather than just how to invest it. I look for ways to connect clients with the joy of seeing their wealth make a difference in their lifetimes. The Dallas Foundation gives me lots of connectivity to make those introductions.
Hamilton: I bring it up as a matter of course. About four or five years ago, I went through the Chartered Advisor in Philanthropy program, and it teaches you to look at the bigger picture instead of focusing purely on tax planning. The course helped me start conversations with clients about their philanthropic goals and the personal and social values underlying them. Even in the smaller estates, there may be an avenue for charitable planning. We always ask clients to plan for that scenario where the whole immediate family goes down in the airplane. In that context, are you really that close to your uncle, or do you have a church or a charity you care about? We do that not just with wills, but with life insurance and retirement account designations.
Q: Why do you refer clients to The Dallas Foundation?
Crockett: The key issue for me is their focus on the donor. The Women’s Philanthropy Institute [insert link to https://www.dallasfoundation.org/womens-philanthropy-institute.aspx], the family philanthropy education events, incubating Social Venture Partners for donors who also want to give of their business acumen -- all of these programs are evidence of that donor focus.
Hamilton: It’s the people. They take great care of our clients and have the depth of knowledge and the underlying heart for the cause. They’re always available as a resource even if we don’t use them to open a fund. On the estate administration side, we’ve run across charities we don’t recognize and can’t find, and Gary [Garcia] was able to explain their history and put me in contact with the appropriate person.
Q: Why are donor-advised funds a good charitable giving vehicle for many clients?
Crockett: I’ve had several clients who thought they wanted to open a family foundation, and they certainly had the wealth to do that. But I encourage them to start with a donor-advised fund and learn their own family philanthropic dynamic. The experience of working together with their advised fund caused some to realize that this [recommending grants] is the most fun part and they don’t need a family foundation and the administrative tasks that go with it. Or, the experience gives them the confidence to invest a much larger gift in a family foundation because they are ready for their roles and responsibilities.
Hamilton: Clients often lack an appreciation for the many landmines lurking in a private foundation structure. Early in practice, I was taught that clients can save big on up front costs and still achieve charitable goals through a DAF. For the client willing to give up control, they make sense in almost all cases.
To learn more about donor-advised funds and the difference between a private foundation and donor-advised funds, please click here.
Simple Questions to Start Conversations about Legacies
Colorado-based attorney Tim Belber was our featured speaker at several events in early March. He has decades of experience helping wealthy people think through their legacies, and offered several valuable insights and tips. Here’s a sampling of them:
- Professional advisors and their clients see things very differently. Most advisors say they talk about philanthropy with clients, but barely half of clients report they talk about it with advisors. About 80 percent of advisors thought clients would reduce giving if income tax deductions were eliminated; fewer than half of clients did. Professional advisors tend to talk about technical issues related to giving, while clients want to talk about philanthropic goals and interests.
- Change the language you use, Part I. Use impact instead of give away. “What impact do you want to have?” starts a very different conversation that “how much do you want to give away?”
- Change the language you use, Part II. Legacy doesn’t mean a name on a building. Legacy is what people think, feel and say about you when they hear your name. Use that definition with clients and then ask, “what legacy do you want to leave?”
- Clients who start but never finish their plans should understand they are creating a legacy: “Someone who doesn’t finish their plans is leaving a mess for their families.”
- Clients who made, rather than inherited, wealth often are troubled that their kids don’t appreciate all they have. Offer this perspective: “There is a difference between an immigrant to the land of wealth and being a native in the land of wealth. Immigrants appreciate everything. The kids are natives.”
Belber has developed a short workbook with four questions to help guide clients through issues related to family giving. He feels that talking about the bigger issues has made him a better advisor, and given his clients a reason to be loyal.
“There is a huge opportunity for people who are willing to talk to clients from the heart and then be creative,” Belber said.
For a copy of Tim Belber’s handbook, please contact Gary Garcia at 214-741-9898 or email@example.com.
Some assets, such as an interest in a partnership or commercial real estate, cannot be converted quickly into cash. But those illiquid assets still can make great charitable gifts.
For example, The Dallas Foundation worked with a family that owned 100 percent interest in multiple limited liability corporations and limited partnerships. These corporations and partnerships invested mostly in commercial real estate, finding properties that were free of environmental issues and owning them long-term. The family’s matriarch wanted these illiquid assets to generate a cash flow for herself and her children, and to produce income for long-term family philanthropy.
During the last week of December, her professional advisors approached The Dallas Foundation to see if we could help her attain both goals. Our staff recommended that the grandmother establish a donor-advised fund. She would be the fund’s primary advisor, and her adult children would succeed her after her death.
The more challenging issue was structuring the gift. Working with the donor, her advisors, our outside legal counsel and our gift acceptance policy committee, The Dallas Foundation was able to accept a partial interest in the limited partnership, and a partial interest in the LLCs. Those interests established the matriarch’s donor-advised fund, which generates about $1 million annually for grants. After her death, the fund will become a permanent endowment, ensuring her family’s philanthropic legacy.
Want to learn more about turning illiquid assets into charitable gifts? Please contact Rod Riggins, our advisor relations officer, at firstname.lastname@example.org
The Dallas Foundation’s Women's Philanthropy Institute (WPI) celebrated its 10th anniversary last year. It combines site visits and financial reviews with fellowship and box lunches. It’s an enjoyable, informal way for women new to Dallas, or interested in giving strategically, to learn about philanthropy.
Many people have turned into significant donors through the confidence they built up in the Women’s Philanthropy Institute,” said donor Dodee Crockett, a founding member of the institute and nationally respected wealth advisor. “They learned what to look for in nonprofit organizations. They asked better questions, and because they asked better questions, they became more confident in making larger gifts.”
Over the course of a year, WPI visits four or five nonprofit agencies. A week or so after each site visit, we meet at The Dallas Foundation office with a representative of the agency to review its finances and ask questions. We have a final luncheon in December, during which members vote to award a grant to one or more of the nonprofits we’ve toured.
If you have women clients eager to learn about philanthropy, consider giving them a “gift membership” to WPI. The cost is $100 per year. You will be helping them become more connected, satisfied donors.
For information, please contact Lesley Martinelli, director of donor services, at email@example.com.
Almost 140 accountants, financial planners, attorneys and others attended The Dallas Foundation’s annual seminar for professional advisors on February 3rd . The event featured Susan N. Gary, a professor at the University of Oregon School of Law. Bank of Texas was presenting sponsor.
Prof. Gary's remarks focused on the fiduciary’s role in social impact investing. Multiple analyses have shown that a socially responsible investment strategy can generate returns that meet or exceed returns from a more traditional investment approach, she said. Therefore, fiduciaries are not failing in their duties if they review investments through a socially responsible filter.
Prof. Gary also spoke about the responsibility of charities to be “prudent investors” of their assets. Regulations do allow charities to invest in instruments with lower returns if the investments further the nonprofit’s mission. She also described how nonprofits can modify donor restrictions on small endowments without a trip to court.
If you'd like a copy of Susan Gary's presentation, please contact Gary Garcia at firstname.lastname@example.org