FundSvcs Community

 View Only

  • 1.  Gift of an endowment that is self-managed

    Posted 02-13-2025 01:25 PM

    If a donor wants to make a gift of an endowment to us, but with the stipulation that the corpus will be held at an investment firm that they own, it would result in management fees being paid to the donor to manage the fund. This feels like a conflict of interest that we'd want to avoid, and that we should address in our Gift Acceptance Policy.  Is there a rule or law (or even best practice language) that you can direct me to that would help us clarify why we wouldn't allow this?



    ------------------------------
    Gwen Donev
    Gustavus Adolphus College
    gwendonev@gustavus.edu
    ------------------------------


  • 2.  RE: Gift of an endowment that is self-managed

    Posted 02-13-2025 01:31 PM
    While the IRS has ruled that a donor can offer investment advice, I do not believe they can actually control the investments or make money off those. In fact, I suspect these requirements would violate the IRS tenants regarding donor control.

    I think you need to bring in Counsel and the CFO for this discussion.

    John

    John H. Taylor, Principal
    John H. Taylor Consulting, LLC
    2604 Sevier Street
    Durham, NC     27705

    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987




    Original Message


  • 3.  RE: Gift of an endowment that is self-managed

    Posted 02-13-2025 04:05 PM
    Gwen, the most straightforward problem is private benefit - if the donor gets significant benefit from managing this endowment, and this is a condition of the gift, that's an impermissible private benefit. 

    You might also check your investment policy, which likely requires some committee to independently approve your investment firms, as part of the overall fiduciary duties of your board. UPMIFA issues are relevant here too, such as avoiding conflicts of interest with donors that will unduly influence investment decisions. 

    It may be that after due diligence, these issues are ameliorated -- the investment fee is not substantial, the board and investment committee are comfortable with the investment fund, a competitive analysis shows it's a good deal -- but it certainly must go through a process. 


    Isaac Shalev
    Data Strategy Expert
    Sage70, Inc.
    (917) 859-0151
    isaac@sage70.com

    Schedule a 30-minute consultation now:




    Original Message


Related Content