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New fund minimums and fees

  • 1.  New fund minimums and fees

    Posted 11-13-2019 12:09 PM
    How are fees figured into your fund minimums? i.e. If $25,000 is your new fund minimum, does it have to be net your fees or does it just need to meet the minimum before fees are taken out? And if the former, can you share your policy's verbiage/website wording? 

    Thanks!

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    Amber Gichard
    Director of Fund & Gift Services
    University of Alaska Foundation
    argichard@alaska.edu
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  • 2.  RE: New fund minimums and fees

    Posted 11-13-2019 12:15 PM
    I gather you are talking about gift assessment fees?  Frankly, I suggest those not be assessed when donors give to endowments and, instead, take your fee as a percentage out of annual endowment earnings.  We can talk off-line about why this makes sense.  But it obviously avoids issues like this!

    I can safely say that every organization I have visited that did assess fees on incoming endowment gifts continued to require the donor(s) hit the minimum - so after all fees. A couple of the institutions I visited had exceptions to this rule for very large endowments (7+ figures and only after going through an exception request process) and allowed interest to make up the difference over time.  But the minimum still had to be achieved before the endowment was activated.

    John

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
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  • 3.  RE: New fund minimums and fees

    Posted 11-13-2019 12:28 PM
    I like the approach of taking fees out of the endowment earnings, though you still need to address what your fund minimums should be in light of your costs, irrespective of whether you charge those fees up front from the donor at formation, or at the back from the fund itself. It's like free shipping. You can offer it, but you need to raise your prices to pay for it.

    From a donor experience perspective, I prefer John's approach, which directs attention away from the fees and feels more like the 'Free Shipping' approach that gives you a bottom-line price.


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  • 4.  RE: New fund minimums and fees

    Posted 11-13-2019 01:45 PM

    I've not yet worked in a place that charges these gift fees; just the money management fee yearly. Are they ubiquitous enough now that donors don't balk at them?

     

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    Savannah College of Art and Design ®


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  • 5.  RE: New fund minimums and fees

    Posted 12 days ago
    UC Davis moved away from endowment gift fees 18 months ago and to the method JT described.  Before we made this move, however, we charged a 6% gift fee on all gifts, both endowment and current use.  We only required donors met our minimum gross of fees, not net, so the actual amount endowed was 6% less than the minimum.  

    Bill, JT can probably answer this question the best, but I think that these fees are pretty common but orgs are starting to move more towards the payout fee for all the reasons stated already.

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    Jessica LaBorde
    Assistant Vice Chancellor, Advancement Services
    UC Davis
    jslaborde@ucdavis.edu
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