Bequests With Purpose

Date: February 1, 2013 Author: aque Categories: Latest News

At Aqueduct Foundation, donors are increasingly naming charitable purposes rather than individual charities in the deeds of their personal foundation or donor advised fund. This is particularly true with legacy funds, which are planned today and funded in the future, typically with a gift by will or bequest.

There are a variety of reasons for specifying charitable purposes. They range from the immediate and practical to the long-term and strategic. Here are three we have encountered:

1. Uncertainty about beneficiaries. The donor wants to complete her will, but feels she needs time to decide on specific charities and projects. An Aqueduct legacy fund with a purpose is often easier to define. The will is executed and legal certainty achieved but there is flexibility to define charitable interests after the will is signed.

2. Supporting root causes served by small charities. Small charities do great work, but they have inadequate funding and human resources. A charity that is effective today may be struggling tomorrow, or even out of business. Naming a charitable purpose is broader than a specific charity and ensures the root causes are advanced through the best charity/ies operating at the time the grant is made.

3. Stimulating innovation. A long- and medium-term fund with a targeted purpose can grant to stimulate funding for neglected causes. For example, a fund for a neglected disease can promote research through a targeted competitive granting process to a number of organizations. Or a challenge grant structure could be used to unlock other funding. When there are few charities addressing a cause, strategic granting plan can help generate activity.

Legacy funds guided by charitable purposes need to be well conceived and documented in order to be effective. Aqueduct frequently supplements the formal documentation with a precatory “biography and vision” document. It is also essential that the host foundation has strong granting systems and a tradition of discretionary decision making. These are points of pride for Aqueduct Foundation.

Malcolm D. Burrows Toronto 1-866-216-2116

Rosaline Chan Vancouver