New Techniques for Engaging Younger Jewish Donors: Donor Advised Funds
by Robert Evans and Avrum Lapin
Publications across the Jewish spectrum raise the ever-present question: how to develop the “philanthropic gene” in the next generation of Jewish donors? Frequent contributions to eJewishPhilanthropy.com and other sources address this regularly, which we read with concern and attention. A recent editorial in The Forward even raised a serious question: “Will the Next Gen Give?”
As we scour the marketplace and look for ways to foster philanthropy, we have been drawn to a number of innovative programs that encourage parents discussing charitable giving with their children. The Jewish Communal Fund of New York seems to have developed one of the most intriguing efforts of its type in the United States. It was highlighted prominently in an article in The Chronicle of Philanthropy earlier this year where Donor Advised Funds (DAFs) were featured, especially as they relate to encouraging new, young donors.
Over the last few years, the popularity of Donor Advised Funds (DAF) has skyrocketed with donors of all ages, with a 77 percent increase in giving to donor advised funds in 2012.
Therefore, Jewish nonprofits would be wise to begin offering sophisticated DAF options to their donors in order to capitalize upon the current “trend” for these types of giving vehicles. By partnering with key financial institutions, Jewish nonprofits can create DAF options that benefit their members/constituents and also provide financial stability to the organization.
New Jewish Donors on the Horizon
Donor advised funds are generally available for many donors seeking to make intelligent, well-reasoned charitable choices. Today, DAFs are among the fastest growing and most flexible options for savvy philanthropists because this giving vehicle enables donors to receive assistance in making wise giving decisions at a very low cost for services and at low “entry points.” DAFs allow an individual (or a family) to create a special tax-deductible account through which charitable gifts can be suggested. Depending on the sponsoring organization, minimum amounts range from $5,000 to $25,000, significantly lower than creating a foundation or a supporting organization.
Smart DAFs have made the connection between lower entry points and the corresponding diversification of donors who may take advantage of this option, with one noticeable and increasingly common target audience: young donors.
Michelle Lebowits, Director of Fund Development for New York’s Jewish Communal Fund (JCF), sees young Jewish donors as a critical resource for sustaining the pipeline of Jewish philanthropy. Correspondingly, JCF heavily promotes its Children’s Giving Fund program, a charitable giving program that enables Jewish families to set up donor-advised funds on behalf of their children, grandchildren, or other minors to celebrate life events and establish a “culture of giving” for children starting at a young age.
“We’ve taken a very multi-generational approach to Jewish giving,” Michelle told us.
“We are engaging extended families in order to prepare the next generation of Jews to appreciate and celebrate philanthropy. We look to these young people for the future, and we believe it is our responsibility to teach them the importance of tzedakah and engage them in charitable giving in a thoughtful way.”
In support of this approach, Ellen Israelson, vice president of marketing and business development for JCF, created the “Jewish Communal Fund’s Guide to Giving: A Tzedakah Resource for Teens,” an attractive and packed set of materials that are descriptive and far-ranging and respond to a host of important questions.
Philanthropy for a Lifetime
By engaging grandparents, parents, children, and grandchildren, JCF is able to mobilize three or four generations of Jewish donors with one concentrated effort towards charitable giving. The minimum contribution to start a DAF with JCF in a child’s name is relatively low – just $1,800 – and adults have the option of transferring money from their own DAFs to start the fund. With the minimum annual grant distribution set at a mere $36, the fund offers families an accessible and low-impact way to begin teaching children how to donate to charity.
As the fund matures along with the child, disbursements can also increase, and when the child reaches age 18, the fund is automatically converted into a NextGen Giving Fund, and the child assumes full responsibility for recommending the annual charitable grants. Once the donor reaches age 30, the minimum for the fund increases to $5,000, which is a standard rate for most DAFs.
The relatively low threshold for these types of DAFs makes it possible for very young donors to designate part or all of the gifts they receive for their Bar or Bat Mitzvahs (or other Jewish life cycle events) for a fund that will be directed for philanthropic causes … Jewish or otherwise.
Andrew Stein, of New York City, is a JCF Board member who has encouraged his soon-to-be Bar Mitzvah son to “become a responsible donor.” Andy and his wife created a DAF for their son, Samuel, and along the way have initiated an on-going discussion about giving, charitable organizations, philanthropic causes that require support, and the essence of giving back to the community.
“Philanthropy is a concept that has been handed down in our family from my grandparents and parents and my wife, and I wanted to continue this with our son and daughter,” Andy said. “We have had a number of thought-provoking family conversations where we focus on giving [and we] expect this to become contagious with our son’s friends and their families.”
“The valuable lessons about volunteering and giving are our priorities,” Andy reiterated.
Promoting Philanthropy, Early and Often
At the Jewish Foundation of Memphis, which currently has no direct affiliation with the local Jewish federation, contributions to new or existing DAFs are also up significantly. Executive Director Laura Linder echoed similar sentiments about fostering multi-generational approaches to philanthropy. Her agency manages 250 DAFs, with 25 representing three generations of families working together to make “intelligent and well-reasoned charitable decisions.” Ms. Linder estimated that 80% of the organizations receiving dollars from the DAF’s they oversee are Jewish local, national, or Israel-focused nonprofits.
“Although the majority of our grant dollars support Jewish organizations, our donors – the majority of whom are Jewish and most of whom live in or near Memphis – also support the whole community and regularly recommend grants to be directed to non-Jewish agencies.”
They have created easy entry points for younger Jews, and today they offer teenagers who wish to enter into the world of grant-making a low-cost way to be involved, with a minimum of only $250 to create a special DAF.
“With the support of a local donor, the Foundation matches that total to start the account at $500. It is a good lesson in tzedakah, our approach stimulates giving by younger donors, and hopefully develops good habits for the future,” Ms. Linder said.
By creating an easy entry points to philanthropy for younger Jews, Jewish nonprofits that enable the creation of DAFs are promoting tzedakah and stimulating giving by younger donors, which will hopefully develop good habits for the future. We applaud Jewish nonprofits that are stepping in this direction, and encourage many more to do the same.
Please share other examples about innovative approaches designed to encourage philanthropy, especially by younger members of the Jewish community. The primary lesson remains constant, however, across the donor spectrum: valuable lessons are forever, and it’s never too soon to instill charitable giving as part of a young person’s role in our community.
Robert I. Evans, Managing Director, and Avrum D. Lapin, Director, are principals of The EHL Consulting Group, a fundraising consulting firm located in suburban Philadelphia. They are frequent contributors to eJewishPhilanthropy.com. The EHL Consulting Group is one of only 38 member firms of The Giving Institute. EHL Consulting works with dozens of nonprofits on fundraising, strategic planning, and nonprofit business practices and strategies. Learn more at ehlconsulting.com
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