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New DAF Enables Donors to Fund Individual Researchers

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High-net-worth American philanthropists increasingly want their charitable dollars to make a difference they can see and measure, and it behooves wealth managers to find ways to help their clients and ones they hope to attract achieve their goals.

The Chronicle of Philanthropy recently reported that younger donors in particular want to promote immediate change, especially by accelerating the pace of scientific discovery. Many achieved their wealth in just this way, it noted.

Benefunder, a hybrid 501(c)(3) foundation and tech startup, has introduced a donor-advised fund to which, it says, advisors can direct their wealthy clients who want to support research in areas of their interest.

The Charitable Innovation Fund, like any DAF, allows a donor to set up and name a tax-deductible fund, and establish and implement a planned-giving strategy. Beyond that, it connects donors with researchers, and enables them to build up a portfolio of those they wish to individually fund, as in this sample proposal.

Benefunder supports a research portal, which it says is the largest in the U.S., with some 600 top researchers who are working in life sciences, new technologies, the environment, and arts and humanities. 

“By directly funding researchers, donors are assured maximum impact for every dollar they give, instead of just writing a blank check to a charity and never knowing where that money is actually going,” Christian Braemer, Benefunder’s co-founder and CEO, said in a statement.

Benefunder said the DAF can help advisors target potential clients with major wealth events as a means of engaging the next generation of wealth, and attract new ones who are charitably inclined.

Funding Innovation

In its statement, Benefunder laid out several trends it said had prompted the launch of the DAF.

Citing a U.S. Trust study, it noted that 98% of wealth clients donate to charity, but only 40% are satisfied with the results.

In 2013, DAF account contributions peaked at more than $17 billion.

Meanwhile, it said, academic research, which has accounted for about half of all new wealth creation in the U.S. since World War II, has seen public funding plummet over the past decade. Sequestration in recent years has exacerbated the problem.

At the same time, other countries, such as China and South Korea, have significantly boosted funding for research.

Benefunder has set out to reduce the innovation deficit, which is centered around funding research and moving it to market, by providing philanthropists an opportunity to fund what matters to them.

“Now is the time for goals-driven philanthropy to incorporate diversification, asset allocation and planned giving, creating a new and much needed dynamic in this space,” Braemer said.

“Research needs to be in everyone’s funding portfolio because it affects every possible philanthropic cause.”

— Check out How to Get the Most Out of a Donor-Advised Fund: Vanguard on ThinkAdvisor.


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