More Mileage Series: Foundations & DAF's

Thanks for checking out our More Mileage Mini-series! Today, Kyle Cartwright, CAP® and Graham Pansing Brooks break down different giving tools, including Corporate Foundations and Donor-Advised Funds (DAFs), while sharing some best practices for companies to get the most mileage out of their impact strategy. It’s vital for organizations to use these financial tools in a way that places them in the best position from a financial, governance, and purpose-oriented perspective.

Questions? Contact us at hello@seachangeltd.com.

Listen to this episode here!

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[Kyle] Hey there. It's Kyle and Graham. Welcome back to the More Mileage Mini-series, a collection of bonus shorts as part of The Stream of Conscience Podcast. As co-founders of a business impact and philanthropy consulting firm, we encounter a lot of terms, concepts, and tactics that we think could use some demystifying.

[Graham] These episodes will be rapid fire. So don't hesitate to reach out. If you wanna learn more, find us on LinkedIn and at www.seachangeltd.com. In the last episode we've been talking about corporate social responsibility or, or CSR and its impact on business visibility among community clients and other stakeholders.

Today we're gonna be covering corporate foundations. So Kyle, let's dive into this a little bit. Explain to us a, a bit about corporate foundations. These things called DAFs or donor advised funds. Give us a breakdown.

[Kyle] Yeah, I think it's, it's just worth kind of laying out a number of different ways that companies are able to give, whether it's from the balance sheet or through more formalized structures.

So most companies, when they start out again, you know, they're using the, the balance sheet, maybe they're giving from revenue profits. But there comes a time, uh, for a lot of businesses where it makes sense to craft a more formal structure to either offload or to just add a, an additional layer of intentionality and governance to.

To their practices and what a couple of different solutions we'll talk about today is the, you know, what can encompass kind of the corporate foundation, um, which can either be a, a legal entity as a, a private foundation, which is a 501c3, private charity, private foundation, not a public charity.

Like you would think of a traditional 501c3, or a donor advised fund, which I think are actually kind of an underutilized tool in a lot of cases. And they're a very valuable tool that really. It allows a company to remove a lot of the administrative, burden of the, the traditional private foundation, corporate foundation structure, but allows them to really, I think, gain the benefit a lot of the benefits, uh, alongside it.

So, so you start to touch on this a little bit, but why would an organization decide to go down this path of creating a corporate foundation, private foundation or a DAF.

Yeah, I think it's, you know, when, when a company is starting to think about scaling up their, their giving, um, there can also be, you know, in some, in some cases where there's a family, family, you know, family business, it might make sense to, uh, for the family and the business, in conjunction to consider, you know, if there's a taxable situation or kind of legacy planning, succession planning, there's, there's oftentimes, some great ways to do some financial and tax planning through these types of tools.

It's also, you know, it's a great opportunity to add a layer of branding and you could even say prestige, um, alongside an increase of strategy and thoughtfulness and intentionality and accountability around how we decide to give and where we do that.

[Graham] So for organizations, is there sort of a moment where, you know, the, the scale tips and, and it's important for organizations to start thinking about moving down this path or, you know what what's sort of the trigger point?

[Kyle] The indicators?

Yeah, yeah, yeah. It's gonna be different for every business. I mean, we've in our work dealt with, and, and served clients that have, you know, frankly, I, I think it's worth mentioning that a lot of our clients utilize all three of these mechanisms. Right. And so I, I guess I would say it's different for every business, but I think probably the indicator of a business that is utilizing these really well is one that is taking a thoughtful and strategic approach to their grant making.

But one that's also, um, you know, considering what are those stakeholders, what are, what are the values of our people, our community, our clients, are, are, uh, the various focuses of our business. So.

[Graham] Yeah. And you know, I think that that's a, that's a really critical piece there, Kyle, that you're, you're hitting on is that, that these tools and, and different strategies that we're talking about can be leveraged together in, in unison.

Right.

[Kyle] Mm-hmm.

[Graham] And so it's not, you know, you don't have to necessarily select one and, and stick to that, but there's, there's a lot of ways to get the most mileage out of. Your impact strategy and, and structures that you have going on, but you know, what are some of those key considerations for deciding whether to use one the other or all of the, the things that we've been talking about?

[Kyle] Or all three. Yeah. Well, without going into too much detail, I mean, there are certain permitted transactions, certain permitted contributions that are permitted, or I guess permissible within the corporate balance sheet that maybe aren't as permissible in some of the other environments. But I think that the, you know, the main consideration really is:

How much planning are you willing to put into the, the, the delivery of these important resources to community partners and to, you know, steward and acknowledge the, the stakeholders around the business? You know, there's the, the way I like to think of it, similar to our profit and purpose, the, you know, the flywheel, of those two is it's also, how do we, how do we use these tools, these financial tools to best position ourselves, both from a financial, but also from a governance and purpose, a purpose oriented lane. Um, and, and to add again, just some additional structure and strategy alongside some financial benefit.

[Graham] So, so certainly we've done some consulting along the, the corporate foundation side.

Can you give a couple just examples of, of either governance structures or, you know, best practices for how to, to best sort of implement or operate these types of, of, uh, structure.

[Kyle] Yeah, I think first and foremost, I it's it's, you don't have to identify the different structures. You don't have to say, you know, this are the, the corporation X, Y, Z donor advise fund did this last year.

And the private foundation of corporation X, Y, Z did all this last year. It's really unifying the branding and the, the, the, the visibility and the PR efforts of the whole right. It's kind of bringing, bringing the corporate intention and purpose, regardless of where the money is coming from, it's bringing that all under under one message.

Um, you know, there's certainly examples where there's a very intentional delineation between, uh, but I, but I think oftentimes, it makes sense to kind of bring those, those together.

[Graham] The rising tide lifts all ships, right? Yeah. Like it's trying to find ways to be able to get, again, the most mileage out of the, the good work that you're doing and finding ways to connect that back to the organizations themselves, you know, how do you, how do you provide those intersections or look for those opportunities for intersection between the various different components?

[Kyle] Yeah. Yeah. These and these structures don't have to be complicated. I mean, one, one example is: most companies think they want a corporate foundation, but they don't necessarily need the private foundation. I'd say the private foundation is probably the last step in this like evolution, if you will. And so if you, if you think you're ready to level up, so to speak from the corporate balance sheet, giving sponsorships and galas and things like that, go talk to your local community foundation.

That is a great first step to starting to think about. Okay. How do we add, you know, a new layer of accountability, intentionality governance. Frankly, you have some great experts, oftentimes within the, the local community foundation to understand what are the needs, what are the assets of your local community?

And then to, you know, be a partner in deploying needed resources.

[Graham] Yeah. I'd also say that, you know, if you're interested in learning more about this, you can certainly reach out to us at seachangeltd.com. Um, or you can drop us a line on our phones. Mine's (402) 430-6432.

Kyle?

[Kyle] And you can call me at (402) 430-1328.