Tag Archives: brokers’ fees and commissions

Tsunami

[Note: This post was published as an op-ed in the Chronicle of Philanthropy on October 28, 2014.]

Each fall the Chronicle of Philanthropy publishes its “Philanthropy 400,” a list of the nonprofit organizations that raised the most money in the previous year. Last week’s publication of the 2014 Philanthropy 400 created a stir by sadly confirming what many of us have feared for the last several years: an inexorable takeover of the charitable sector by Wall Street.

Three of the top 10 fundraising organizations on the list are donor-advised funds (DAFs) affiliated with financial firms: Fidelity (No. 2), Schwab (No. 4), and Vanguard (No.10). A fourth organization in the top 10, the Silicon Valley Community Foundation, is also primarily a sponsor of donor-advised funds. Money is flowing into advised funds, rather than to nonprofits that provide actual services. This accelerating trend of warehousing philanthropic dollars is a deeply troubling trend for American philanthropy. Continue reading

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Self-Interest

My recent blog post, “Wall Street Muscles In,” certainly got some attention: my largest readership ever for a single post, and a record number of comments both in this space and on LinkedIn, where people from around the country (nonprofit executives and financial services folks, mostly) debated my indictment of the commercial gift fund industry.

The majority of the comments on these various sites were positive, but one individual accused me of unfairly impugning the integrity of the financial services industry. He wrote, “There is an undertone that those [financial] advisors using donor-advised funds are somehow unethical because they are wanting to hold onto money to manage. A good advisor will listen to his client/donor and find the best solution, whatever it is. If he or she is simply standing between the ‘real’ charity and the donor, of course, that’s improper, but I may have a little more faith in the advisory community than you.”

Indeed, my critic does have more faith than I in the financial advisory community. Continue reading

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