Aligning Portfolio Income with Your Giving Objectives
The Concept Endowment Portfolio Creates Income for Giving
Our team’s focused application of Endowment Model investing, used with great success by the world’s most sophisticated institutional investors, can provide the giving-minded investor with steady streams of substantial portfolio income that are easily and automatically directed to the causes they wish to impact.
Our clients retain control of their investment capital while giving monthly from their portfolio income. They can redirect their giving should an organizations they chose ever depart from the mission or values that originally attracted the donor or where the efficacy or ethics of the organization has fallen into question.
And since Endowment Model investing was developed by multi-billion dollar university endowments to generate cash flows for operations in all market climates, our clients can be confident that investments are properly aligned with the overarching purpose of giving in a consistent, enduring manner.
The Stewardship CHALLENGE: Making Impact, Maintaining Alignment, Keeping Control, While Fostering Growth
When those of substantial means wish to give it’s not as simple as one would think. The two main avenues for giving, large one-time donations and time-based pledges, both have inherent flaws from the donor’s perspective.
When large one-time donations are given, the organizations receiving them give donors their full attention and express strong appreciation. Sincere reflection of appreciation may last forever, but normally fades fairly quickly. The stewardship concern for large one-time gifts centers on control. In reality, most organizations, even charitable ones, change over time , meaning that original gifts may no longer be used to meet the donor’s objectives.
Until now, the most common way to address these concerns has been to seek assurances that the organization receiving funds will remain substantially similar and funds will be used as originally intended. Essentially, this represents an exchange of control for trust, which is rarely ideal.
Donors considering a large gift also worry about efficacy. Once the money is given, there is no longer an opportunity to grow it or possibly create a larger gift for the future. As a result, giving is often delayed until death in the belief that eventual impact will be greater because investors can more effectively grow the money while still alive. The message to good causes is often, “be patient, I’ll give you even more later”. This not only delays the impact that excellent organizations could make, it robs the donor of the joy of seeing their hard work impacting causes they care about during their lifetime.
For those who have inherited substantial wealth, avoiding a mistake that diminishes or even ruins family legacy is often a primary concern. By partnering permanently with the wrong philanthropic organization a once great family brand can be inextricably bound to something mismatched in quality or intentions. The responsibility that comes with substantial wealth should not lead to an unequal yoke of conflicting values.
The solution to these challenges for many is to give money over time – in essence a promise to give. While this keeps control with the donor, an important improvement, time-based giving also requires ongoing planning and administration on the part of the donor. As giving aims change over time, being left to administer and rationalize numerous giving commitments can quickly become a burden, robbing the donor of the joy that should accompany giving.
The Third Way to Impact: Controlled Gifting From Your Portfolio
Thanks to Investor’s Impact a new option has emerged. Our concept begins with the creation of a customized endowment model portfolio specifically designed around your giving aims. From an investment perspective, you will look much more like an institution than an individual. You maintain control of your financial resources, and you benefit from experienced, ongoing investment advice.
Most importantly, your money does the giving, automatically, as long as you wish. We design portfolios that fund multiple giving commitments, perhaps even funding your personal foundation, on quarterly or even monthly frequencies. This alignment between investing and giving can create the peace of mind that comes from better stewardship.
The Investor’s Impact becomes clear through enduring giving from investment income and growth. We believe achieving optimal alignment between capitalism and philanthropy creates greater, immediate and long-term impact and helps individuals increase their impact today – and tomorrow. Better stewardship creates a path to greater legacy.