Last December saw the launch by Community Foundation Silicon Valley (CFSV) of two unique partnerships with financial institutions – The Portola Group and The Citigroup Private Bank. Clients of these institutions can establish donor advised funds at supporting foundations to CFSV and make philanthropic gifts through the community foundation, but their funds will still be managed by The Portola Group and Citigroup.
In order to do this, both Portola and Citigroup have established ‘supporting foundations’ within CFSV, ‘The Portola Group Foundation’ and ‘Meaningful Assets’ respectively.
‘Supporting’ foundations ‘support’ CFSV, which means that the funds they hold support CFSV’s mission. Unlike donor advised funds, supporting foundations have their own boards, which are responsible for all grantmaking and investment decisions. In the case of the Portola Group Foundation, two out of the three board members are appointed by CFSV, the other by Portola. In the case of Citigroup’s foundation, Meaningful Assets, CFSV appoints four out of seven board members.
The key point for Portola and Citigroup, explains CFSV President Peter Hero, is that financial management firms want to nurture relationships with their clients. ‘It’s not just that their assets may leave otherwise, it’s that they want to be seen as smart, strategic advisers – they know the community foundation, they’ve vetted it, the community foundation will affirm and maintain their values. They’re not abandoning their clients, they’re entrusting them to a known entity.’ ‘We want to help our clients to become as strategic and sophisticated about their philanthropic investments as they are about their personal investments,’ says Claire Costello, Head of Philanthropic Advisory Service for The Citigroup Private Bank.
In the case of The Portola Group, which is a Californian institution, it’s to their advantage that CFSV should be very visible as a partner because the community foundation is so well known and respected locally.
On CFSV’s part, they needed to be sure that the new foundations would maintain their philanthropic values, and that their clients really were interested in thoughtful, high-impact grantmaking. Peter Hero is clear that CFSV is not in the business of providing a philanthropic cheque-writing service. If that’s what people want, they can open donor advised funds at Fidelity, which basically provides no philanthropic advice. ‘It’s a place to park the money until you’re ready to give it out, and while we welcome the chance to work with any donor, we don’t see that as mainly our business. We see our business as being in relationships where we can add value through the professionalism and knowledge of our staff.’ Surprisingly, CFSV’s fees are no higher than Fidelity’s.
The actual mechanics? Portola and Citigroup clients need a minimum of $100,000 and $250,000 respectively to create a donor advised fund with either of the two supporting foundations to CFSV. CFSV will work with other community foundations in the US and around the world, and with other intermediary organizations, to identify suitable organizations for them to support. If the amount in the fund falls below minimums, it may become a discretionary fund of the supporting foundation, which means it can use them in any way it chooses to support its mission.