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Amending DAF gift

  • 1.  Amending DAF gift

    Posted 07-24-2021 10:31 AM
    Good morning, 

    We have a donor who would like to amend their endowment, which is straightforward.  However, they also want to change the purpose for their current use gift which was made through a donor-advised fund.  I found John Taylor's recommendation (copied in below) in another situation to notify donors when a purpose of a fund is amended.  Can we simply notify the DAF, or is there a more formal process where we have to get their approval?

    Thank you!
    Sylvia  

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    Posted 09-25-2020 10:46 AM
    If you intend to change the purpose of a scholarship, then you should notify donors who gave to the fund with a different purpose.  That is inherent in the Donor Bill of Rights.  While you will want to seek advice from Counsel, I do not believe you need to obtain explicit permission from those donors.  However, it would be best to write to them all - perhaps when you send them the annual stewardship report - announcing your intentions to make the change in the future.  That notification should provide a means by which any donor can contact you if they have "any questions or concerns regarding the change in purpose."
    I trust this was a "class" scholarship at the outset and not funded by a significant gift from a specific donor signatory on the endowment agreement.  If there were such a signatory, you would need to obtain their (or their heirs) written permission for the change.
    John
    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)


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    Sylvia Galen
    Assistant Vice President, Advancement Analytics
    The George Washington University
    sgalen@gwu.edu
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  • 2.  RE: Amending DAF gift

    Posted 07-24-2021 11:04 AM
    Sylvia, nice to see you!

    There isn't anything more that needs to be done.  We need to remember that when an individual recommends to a donor-advised fund to donate to a nonprofit organization, they typically also suggest how that distribution should be directed.  The letter you receive from the DAF will frequently mention that purpose.

    So, since the DAF is the legal donor, and since they told you how to use the gift, you need their approval to move the funds elsewhere.  Even if their award letter was unclear or specific, it's just good donor relations to let them know.

    Some DAFs also have restrictions in their policies on how their grants can be used.  That's just another reason why it is good to keep them in the loop.  And remember, the money does not belong to the individual you are working with.  It originally belonged to the DAF.  Only they can agree to a reallocation.

    John

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987