Fidelity's donor advised gift funds distribute over $1 billion in 2007. Via Tactical Philanthropy. Fidelity has over $5 billion under management in these accounts and takes a .06% management fee on accounts up to $500,000, lower on larger accounts. What is that in real money? Say $50 million in management fees? Philanthropy is big business. I was recently called on by two Community Foundations in Dallas. One had hired Charles Collier to do a presentation on Wealth in Families. It was so successful that donors are now asking for help on thinking through their vision, values and finances. The Community Foundation is nonplussed since they are not staffed for that role. The other Community Foundation rep brought a sales kit and explained to me at length how donor advised funds work. (Something I have understood for 20 years.) Unless Community Foundations add more more value, and emphasize relationships, local presence, and ideals, they will find Fidelity and other financial intermediaries tough competition. Still, we are all in this philanthropy business together, as Candidia reminds me, for the good of humankind. It probably does not matter who is the intermediary, whether for profit or nonprofit, large or small, local or national. It is all Wealth Bondage, after all; or if you prefer the more decorous phrasing, it is all one big social capital market, after all.
Added later: Jeff Trexler responds here.
I've heard this from a couple of people recently. There was an article in the Puget Sound Business Journal from a local community foundation about this very issue.
Posted by: Jason | February 28, 2008 at 09:06 PM
What is the unique value proposition for a community foundation? What can it do that a for-profit intermediary, like Fidelity or Foundation Source, can't?
Posted by: phil | February 28, 2008 at 11:09 PM