All About Estates

Philanthropic Ghosts

Some donors want their wishes understood and spirit felt long after they are gone. This impulse is part of a long tradition that has found expression in restricted gifts, charitable trusts and private foundations. It’s Halloween. Let’s review three approaches to philanthropic haunting.

1. Donor Recognition Many medieval European churches have records of gifts made, often by will, on the condition that prayers are offered in the memory of the donor. These intercessions for a spirit that may need help finding its way through purgatory were scheduled on a weekly or even daily basis. Despite promises of perpetual devotion, the prayers typically stopped within a generation. In modern terms these were unrestricted use gifts with burdensome recognition clauses that collapsed with the indifference of time. Donors beware — or be realistic.

2. Restricted Gifts Gifts restricted to purpose are another matter. Restricted gifts can legitimately dictate a particular activity or purpose. Sometimes the donor aims to greatly increase the funding to a program or activity. Sometimes the charity is thrilled; sometimes not. Occasionally these gifts are for purposes that the charity no longer undertakes or designates a department that has been merged or closed.

The complexity arises because the gift restriction imposes a trust that cannot be varied without a cy prés application to court. More often than not these gifts are renegotiated with executors or family (a pragmatic but technically illegal solution if there is no variation clause in the will) or become combined with other funds over time and get used for higher priorities. The ghost is present but may have limited effect.

3. Gifts with purpose to an intermediary charity. Perhaps the most effective way to ensure a donor’s wishes is to use an intermediary charity, such as a donor advised fund. This creates a dynamic structure that makes annual grants, demands accountability and can even change charities if the purposes are not met. Our experience with Aqueduct Foundation is that having active checks and balances ensures a balance of the donor’s vision and charity priorities. It is not quite ruling from the grave, but the donor’s spirit and intent are present and there is the flexibility to assess and support ongoing charitable priorities.

About Malcolm Burrows
Malcolm is a philanthropic advisor with 25+ years of experience. He is head, philanthropic advisory services at Scotia Wealth Management and founder of Aqueduct Foundation. malcolm.burrows@scotiawealth.com