In a recent announcement, billionaire Eli Broad, former chairman of insurer SunAmerica Inc., and his wife, Edythe, pledged to donate 75 percent of their wealth to philanthropic causes during and after their lifetimes. “Philanthropy is unbelievably rewarding, and we hope others will also realize the benefits of being active, engaged philanthropists,” their statement read. The Broads’ actions are highly commendable, responding to “The Giving Pledge” initiated by Warren Buffett urging the super rich to charitably gift their fortunes. While multi-billion dollar pledges grab attention, indications are that generosity abounds at levels far below the mega wealthy. Even as the country slowly recovers from the recession, donations to the country’s largest charities grew rapidly in the first quarter of 2010 compared with the same quarter last year, says a study in The Chronicle of Philanthropy. As the economy continues to strengthen, my instincts as a Los Angeles area non-profit executive for the past 25 years leave me optimistic that Americans will continue to dig deep into their pockets to help the less fortunate. Tough economic times also have not dampened Americans’ traditional enthusiasm for donating their time to worthy causes. More than 63 million Americans volunteered last year, some 1.6 million more than in 2008, according to a report by the federal Corporation for National and Community Service. This represents the largest single-year increase since 2003. When current conditions lift – and assuredly they will – I have confidence that most well-managed local non-profit organizations will have weathered these financial cross-currents with the help of dedicated supporters and volunteers and the circumstances will leave survivors better positioned. My optimism is based upon my career experience, as well as instincts about human nature. In times of communal crises, there is a need for strong leadership. Fortunately, Southern California possesses committed business and civic leaders, in both the for-profit and non-profit sectors, who have historically stepped up to meet the most critical situations – social issues and fundraising alike. Look no further than the region’s continued emergence as a nexus of world-class health care, anchored by institutions including Ronald Reagan UCLA Medical Center, Children’s Hospital Los Angeles and Cedars-Sinai Medical Center, to name just three that collectively have raised billions of dollars in previous capital campaigns. I have personally witnessed how acts of charitable largesse in emergencies can make a difference. After the 1994 Northridge Earthquake, while serving as development officer at Northridge Hospital Medical Center, I watched as individuals, businesses and foundations alike reached down deep – often despite devastation of their own – to aid strangers with needs even more vast. For those Angelenos with the financial wherewithal and desire to maintain philanthropic support during these times, creating a donor-advised fund (DAF) is an alternative to giving directly to a charity, as well as simpler and less expensive than creating a private foundation. A DAF enables benefactors to give assets – cash or stock, most often – to a central source, such as a community foundation or a charitable-gift fund run by investment management firms, and to receive an immediate tax deduction. According to a recent Wall Street Journal article, a number of philanthropists are shutting down their private foundations and turning to DAFs. Ordinarily, appreciated assets are used to create DAFs. However, in difficult economic circumstances, donors holding depreciated securities can sell them, write off the loss to the maximum extent allowed by law and donate proceeds to a DAF – and still receive the charitable tax deduction on the remaining assets used to create the fund. The contribution is an irrevocable gift and is used to establish a fund in the donor’s name. Donors can recommend and distribute grants at any time to a limitless range of non-profit causes. Through both earnings on the investments and additions to principal balances, these funds can continue to dispense gifts to charities over time. In addition, since the money is already in the account, donors can continue to distribute from their funds in good times and bad, thereby gaining insulation from economic downturns. Locally, donors can establish DAFs at community foundations – including my employer, the Jewish Community Foundation, or the California Community Foundation – or through commercial asset-management firms such as Fidelity Investments and Charles Schwab Corp., among others. Fees and minimum-balance requirements (ranging from $5,000-$25,000) vary, as do giving and investment rationales. Charitable-gift funds at investment-management firms generally offer more investment options than community foundations. However, community foundations, driven by different motivations, employ philanthropic experts and offer consulting resources, such as helping donors identify worthy charitable causes to support, advising like-minded philanthropists how to collaborate in areas of mutual concern, and assisting donors in engaging their children in philanthropy. Dan Rothblatt is a Valley Village resident and senior vice president of philanthropic services at the Jewish Community Foundation of Los Angeles.
