Questions to Ask Before You Open Any Charitable Account

Opening a charitable account can feel like opening a bank account: fill out a form, pick a name, done. But a donor-advised fund, or any similar charitable account, is really the start of a long relationship with the organization that holds it.

Once you give, the gift is irrevocable. You cannot move it back if you are unhappy. So the questions you ask before you open the account matter more than the ones you ask after.

Many sponsors do let you recommend a grant from one fund to another sponsor's DAF, which can serve as a way to move. But policies vary, it takes time, and it is not the same as getting your money back. Choosing well at the start is simpler.

Start With the Right Kind of Account

Before you compare sponsors, make sure the tool fits. A donor-advised fund is a giving account held by a public charity. A private foundation is its own separate charity with its own board, filings, and rules. Some families simply give directly and need neither.

If you are unsure, that is a good first conversation with your CPA. The rest of this article assumes a DAF, though many of the questions apply to any charitable account.

It is also worth asking why you want an account at all. Some people want a place to give appreciated stock. Some want to give in one year and grant over several. Some want a simple way to involve their children. Knowing your reason helps you weigh the answers you get.

Questions About Cost

Every sponsor sets its own terms. Ask plainly and get the answers in writing.

1. 1

   What Is the Minimum?

   Some sponsors require a few thousand dollars to open. Others require much more, or none at all.

2. 2

   What Are the Fees?

   Ask about the administrative fee and any fees on the investment options, and whether they fall as the fund grows.

3. 3

   What Is the Minimum Grant?

   Many sponsors set a smallest grant size. It matters if you plan many small grants.

Questions About Gifts and Grants

These shape how the account will actually work for your family.

The answers vary more than people expect, even among well-known sponsors.

• What can I give? Cash and public stock are common. Business interests, real estate, and other assets vary widely.
• How long do grants usually take, and how are they sent?
• Does the sponsor have its own guidelines about which charities or causes it will fund?
• Can grants go to churches and ministries overseas, and what extra review does that take?
• Can I give anonymously, or choose what the charity sees about me?
• What are the investment options inside the fund? Values can rise or fall, and any growth stays in the fund for charity.

Questions About the Long Run

The questions people forget are about what happens years from now.

1. 1

   Who Can Succeed Me?

   Ask how successor donor-advisors are named and how long they may keep recommending grants.

2. 2

   What If I Go Quiet?

   Many sponsors have an inactivity policy. Ask what happens if no grants are made for a few years.

3. 3

   What Happens at the End?

   Ask where the balance goes if no successor remains, and whether you can name charities in advance.

Look Before You Leap

None of these questions are suspicious. They are simply wise. Scripture has a short proverb for exactly this kind of moment.

A good sponsor will be glad you asked. If an organization is vague about fees or policies, that tells you something too.

Write the answers down as you go. When you compare two or three sponsors side by side, small differences in fees, grant minimums, or succession policies become much easier to see.

If you are married, have both spouses in the conversation. The account will likely outlast one of you, and both of you should understand how it works and who can recommend grants.

And ask about values. Some sponsors, including faith-based ones, have clear guidelines about which kinds of organizations they will and will not fund. Knowing those guidelines up front avoids a surprise the first time you recommend a grant.

Things That Stay the Same Anywhere

Whichever sponsor you choose, a few things generally hold true, because they come from federal law rather than any one organization.

They are worth knowing before any conversation, so you can tell the difference between a sponsor's policy and the law itself.

• The gift is irrevocable, and the sponsor legally owns and controls it.
• You recommend grants. The sponsor makes the final call.
• Grants go to eligible charities, never to individuals, and cannot give you more than an incidental benefit.
• The deduction, if you itemize, generally comes when you give to the fund, not when grants go out.

Kingdom Portfolios is not a DAF sponsor. We never receive, hold, or move charitable dollars, and a fund always lives with the sponsor its donor chooses.