The Minneapolis Foundation talked recently with David Horan, a Twin Cities wealth advisor with nearly 30 years of experience helping individuals and families achieve their financial goals. Horan talked about the circumstances in which Donor Advised Funds can be a great fit for clients—and how his own family got connected to the Foundation.
Foundation: How did you first learn about the Minneapolis Foundation?
Dave: About 20 years ago, I had a client—a family—that established a fund at the Foundation, and I got to know a little bit about what the Foundation meant to them. Then a best friend of mine died young, and my wife and I decided to establish a Donor Advised Fund at the Foundation in his name in 2001. We let that fund grow for years and eventually disbursed it to the Open Arms Home for Children in South Africa, an organization we thought would honor him appropriately. Professionally, my team now probably has half a dozen clients with Donor Advised Funds at the Foundation. And in the past year, my wife and I have established a new fund in our name.
In what circumstances would you advise a client to consider setting up a Donor Advised Fund?
As we’re doing wealth advisory work with our clients, we’re looking at all the big-picture stuff. We invariably bring up things like college tuition and retirement. But we also ask, “Are you charitably inclined?” If so, we ask clients what that looks like for them.
In many instances, our clients have started Donor Advised Funds because of an event in their lives that results in a big tax year. Maybe they normally give away $20,000 a year—but they’ve already done that and it’s December. If they put $100,000 into a Donor Advised Fund, they don’t have to make the decision today about where it’s going, but they can get the tax write-off this year when they need it. Now they have some time to think about where they want that $100,000 to go. It might just go toward the next five years of their normal giving—or it might support something else.
Why do you refer clients to the Minneapolis Foundation?
We can set up Donor Advised Funds at UBS—you can set them up wherever. But for clients in the Twin Cities metro area, we tell them that the Minneapolis Foundation is just about as affordable as anyone else out there, and they provide phenomenal resources. Whether you’re interested in learning more about ways to give, going to a conference, or developing a relationship with one of the Foundation’s Philanthropic Advisors, that’s all there for you.
The Minneapolis Foundation may not be the best fit for everyone, but it’s a great fit for many clients. The best fits are families that want to put some energy into learning about the community or what their dollars can do, beyond what they’ve traditionally done. Even for people who don’t get overly engaged in the Foundation once they’ve created a fund, it’s often still a good fit because the Foundation is part of their community. There’s a pride in ownership that comes with that.
Can you give an example of a client who has done something really innovative with their giving?
We’ve worked with one family for many years that has set up several funds at the Foundation. This family has been strong supporters of an organization in town that recently made some big changes and needed another infusion of capital. The family was a little reluctant to make another big grant. They had already made many grants, and they really wanted to make sure the organization was working as hard as it could to be a successful business. We approached the Foundation with that concern. As a result of that conversation, we created an arrangement in which the Foundation took money from the family’s Donor Advised Fund and gave it to an intermediary group that made a loan to the organization. The organization had to pay interest with the idea that, ultimately, the money would be paid back to the Donor Advised Fund. In the long run, the client decided to turn the loan into a gift, but that was after two or three years of the organization proving that it could step up and operate as a business instead of just having their hand out for donations.
David Horan is a Senior Vice President – Wealth Management at UBS Financial Services.