Growfund aims to 'democratize' donor-advised fund model of philanthropy
On Tuesday, Global Impact launched Growfund, a new platform aimed at “democratizing” philanthropy by giving donors of any income level access to a tool commonly used by foundations and wealthy givers: the donor-advised fund.
The new tool allows anyone to put money into their own Growfund account and begin giving donations as they choose, something Global Impact describes as akin to having a personal foundation.
Growfund is particularly targeted toward younger donors as a way to cultivate and empower a future generation of donors.
Wealthy philanthropists and foundations have long used donor-advised funds, which serve as charitable savings accounts. The donor chooses a public charity, and then makes tax-deductible contributions to the fund. They can recommend grants when they are ready to disperse the money.
Minimum contributions have prevented smaller donors from being able to use the funds in the past. Growfund is looking to change that.
The idea for Growfund came from a variety of challenges that Scott Jackson, president and CEO of Global Impact, saw as he looked at the landscape for international nonprofit organizations, he said at that fund launch. While there were were more opportunities for individuals to give money, the nonprofit industry wasn’t providing new tools for donors or giving them a way to be more strategic with their contributions.
Global Impact’s research also indicated that large numbers of potential donors — primarily Generation X and older millennial women — weren’t being effectively tapped.
“We’ve got to grow the number of Americans willing to give,” Jackson said. “[Growfund] allows them to identify ways to grow their philanthropic savings and investments and be part of a community of donors and look at how they affect key issues over time.”
Growfund will be managed by Global Impact, a charitable investment group that manages other donor-advised funds. Global Impact’s experience serving as a fund administrator, moving money around, and distributing it to thousands of organizations each year helped defray potential start-up costs. There will be no brokers fees, though there is a management fee, Jackson said.
This isn’t the first effort to democratize different forms of giving or investing. The Calvert Foundation, for example, runs the online platform Vested.org, which allows anyone to make an investment of as little as $20 in their community.
But there are some things that differ with Growfund, including the fact that it can be linked to an individual’s payroll so that they can contribute much in the same way they would to a 401(k) retirement account.
Funds held in the Growfund account are invested and when a donor is ready, they can use the online platform to make their donations to one of the roughly 22,000 vetted organizations.
Charities not already on the platform can ask to be added, or donors can ask to add an organization, which would then go through a vetting process that includes checking an organization’s 501(c)3 status and their GuideStar data, as well as making sure they aren’t on any watchlists. If all goes well, new organizations can be added within a week.
Some large NGOs manage donor-advised funds on behalf of their donors already, so how they might make use of the platform remains to be seen. However, Global Impact, which works to raise funds for an alliance of about 130 international charities, including some of the world’s biggest, has been working alongside NGOs throughout the process and is helping them think through their own donor-advised fund strategies.
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