Arlene Cogen shares her guidance getting the largest contributions from donor-advised funds.
Arlene is a financial planner with more than 20 years of experience in the trust and investment services industry but also a considerable background in nonprofit fundraising and administration. She guided the nation’s 9th largest community foundation for over a decade and authored her book, Give to Live, Make a Charitable Gift that you Never Imagined.
Links:
*****Timestamped Highlights*****
(1:55) Arlene explains how her daughters inspired her to leave Wall Street and transition to a career in the nonprofit sector.
(5:40) How people transition from a “gain as much money as I can” mentality to a philanthropic one.
(6:40) How donor-advised funds make philanthropy easier, more fun, and provide anonymity.
(10:10) The three ways to get access to donors advised funds without knowing who the donors are.
(13:10) The importance of connecting to your local community foundation’s donor relationship team and respecting boundaries.
(15:15) Out of the box ways to cultivate and approach donor-advised funds.
(16:30) Things you should NEVER do while approaching a donor-advised fund.
(20:05) Arlene explains who your board members should be introducing you to.
Follow along with the Episode 132 transcript below!
Dolph Goldenburg: (00:01)
Welcome to the successful nonprofits podcast. I’m your host Dolph Goldenberg. When you think of fundraising for your nonprofit, what comes to mind first? Bake-sales. Well, I hope not bake sales, but grant writing, silent auctions, direct mail campaigns. How often when you think about fundraising, do you think about donor-advised funds? I really need to figure out how to crack those. So, today’s guest Arlene Cogan is sharing guidance on the best approach to take for your highest payout on donor-advised funds. Now our Arlene is a certified financial planner with more than 20 years of experience in the trust and investment services industry. She has considerable knowledge and background in nonprofit fundraising and development as well. And here’s why. She guided the ninth largest community foundation that’s the ninth-largest in the country for over a decade. And she is the author of the book give to live, make a charitable gift you never imagined. So please join me in welcoming Arlene Cogan as we learn how your nonprofit can benefit from donor-advised funds. Hey Arlene, welcome to the podcast.
Arlene Cogen: (01:30)
Hey Dolph, it’s awesome to be here with you and all your followers.
Dolph Goldenburg: (01:35)
So you spent 20 years in the financial services world on the business for-profit side. What on God’s beautiful green earth made you shift your focus to nonprofits?
Arlene Cogen: (01:49)
You know, it was really simple. I met the guy of my dreams. We had two daughters and gosh darn, I had worked on Wall Street for 20 years and I experienced the glass ceiling, sexual harassment and wage discrimination. And I did not want my daughters to have to deal with that BS. So when I went back to work after taking some time off to raise my daughters, I saw career coach and everything came up, philanthropy and benevolence and that. I looked at her and I said, okay, but how do you make money at that? Right? I’m in the for-profit world. Well, I quickly jumped back into the trust and an investment we’ll put instead of the large institutions. I went to work for a couple of regional trust companies and I work for five years trying to figure out if I am going into nonprofit, what does that look like? And I found a position with the Oregon community foundation working primarily with professional advisors and their clients.
Dolph Goldenburg: (03:08)
Very cool. And so how did you transition from working with professional advisors and their clients and to really kind of community foundation leadership and management?
Arlene Cogen: (03:20)
Well, when you think about it from the estate planning and professional perspective, if everyone left all of their money to charity, there would be no problems with estate taxes and all of this planning. And it was really funny because I had worked at, she reached it all co two days and then at the our estate planning council conference, I was wedge between them at the community foundation and really knowing from the trust and investment world that people do want to make a difference, but they get jammed up and they don’t know how to make that difference of uh, taking care of family, solving a financial problem and making that gift. So I wanted to break it down for people so anyone could understand on basic, digestible terms.
Dolph Goldenburg: (04:12)
Hmm. Nice, Nice. And I just have to reflect really quickly that, well, I know not every billionaire feels this way. There’s a lot of billionaires like Warren Buffet and Bill Gates that feel really strongly that, um, that not, that, that was being allowed to leave their billions to families really promotes inequality longterm. That it really promotes the injustice in the system that we so often see in our society.
Arlene Cogen: (04:37)
Yes, that is very true. It keeps them a preferred class and control of things. And it’s wonderful when you see people like Buffett and gates who want to give the 50 percenters who are giving at least 50% of their wealth away. We need more of them.
Dolph Goldenburg: (04:54)
Right. And, and, and I’ll say, and certainly again, this is true for Warren Buffet and, and I’m so impressed at him for doing this. He’s always been very clear that, you know, he’s leaving more than enough money to his wife if he should predecease his wife so that she will be comfortable for the rest of her life. But the vast majority of his billions of dollars will go to charity.
Arlene Cogen: (05:13)
Yeah. It’s a great place to be.
Dolph Goldenburg: (05:17)
Now. Now, how do, how do people move from the mindset of, okay, I’ve got to accumulate wealth and I have to accumulate as much as I can to the mindset of, okay, I’ve accumulated wealth, whether that wealth is $1 million or $1 billion, and now it’s time for me to give some wealth away.
Arlene Cogen: (05:37)
Well, you know, it has to do a lot with finding purpose and meaning and life, your self-actualization, Eh, for those of you who are familiar with Abraham, Mass Lau, he came up with our hierarchy of needs. And at the very top is self-actualization, which is where philanthropy lies. So I think after you’ve made whatever it is you make to get to the next step, there’s purpose and meaning. And that’s where philanthropy helps people find that purpose and meaning.
Dolph Goldenburg: (06:12)
Hm. Nice. And so, um, now let’s shift gears real quick. How do nonprofits find these individuals who’ve decided to, um, have purpose and meaning, but want to do it in kind of a covert way through, you know, what I needed to take a step back. Let’s talk about why donor-advised funds are kind of a covert way. Um, so maybe, maybe you could start with that and, and I might chime in a little bit.
Arlene Cogen: (06:41)
Donor-advised funds, first of all, are a fabulous tool for anyone who wants to be engaged in philanthropy in a bigger group of likeminded, like valued people. There’s a low cost to engage in a donor-advised fund with the community. But it really allows you all the fun of philanthropy without any of the aggravation of tax returns administration. You get the fun of grant-making and you let the larger community foundation or organization dealing with the administration, woohoo. It’s the best tool in the world that I do. Good job.
Dolph Goldenburg: (07:23)
So, so, so, so, so you and I are on the same page about that but, but admittedly I’m a little bit of a lefty and you, you might be as well. But, so there’s the other piece that I kind of wants to talk about as well, which is, so since your donor-advised fund does not have its own nine 90, there’s also not as much transparency about which causes you’re directing your donor-advised funds. Um, um, income too because it’s all kind of bound into one much larger nine 90 that probably includes thousands of donor-advised funds.
Arlene Cogen: (07:55)
Right. So and because it includes so many, like at the Oregon Community Foundation we had over, you know, thousand individual donor-advised funds. So when at the end of the year when they tell who is making the grants, they don’t know who the grant is from cause it’s all lumped together and it’s also a great tool for those private foundations want to make anonymous gifts. We would see a lot of private foundations creating a donor-advised fund so they could pass through money to an organization that they didn’t want the organization to know they had that much money, whether they sit on the board or be a volunteer. If this, you know, I remember doing this many times, if this hundred thousand dollars gift came across their table, this woman would have been looked at in a completely different manner and would never be treated the same. So that anonymity that you can have through the donor-advised fund is critical, whether you be a millionaire or a billionaire or have that private foundation want to run the money through to be anonymous. Right?
Dolph Goldenburg: (09:04)
And so, but from the nonprofit’s perspective, I think this also maybe presents some challenges because with foundations, you know, nonprofit can go down to the foundation risk, sorry, the foundation center and do research or you know, get a Guidestar subscription and do research and say, okay, here are the foundations and here’s the interests that these foundations have and let’s write a proposal for this foundation to build a relationship. Um, but with donor-advised funds, it’s not quite so easy. So how do nonprofits identify? For example, the donor-advised funds at a community foundation? And to make it maybe a little bit more, um, more specific, you know, let’s say I’m the development director at the, you know, at Portland’s largest homeless shelter and I’m like, wow, you know, the Oregon Community Foundation has one point $5 billion in donor-advised fund assets and I want to try to get a piece of it. How do I figure out how to approach those donor-advised funds without necessarily knowing who they are?
Arlene Cogen: (10:04)
There’s, I would say there’s three ways to get access to um, donors of the community foundation. The first one is, well, there are all kinds of indirect. The first one is through the community grants program at the Oregon Community Foundation. We had a community grant program that went out for applications twice a year and when they came back in, they were shared with donor advisors who had an interest in that category. For example, if you were into the arts and the arts organization made a proposal, they would share that in twice your packets they send to donors. That’s one way. Another way at the community foundation is at our annual luncheon, they would highlight a number of different non profits in the community. So to apply to get beyond that shortlist of 10 people and it rotates every year would be another great way to have access. And the third and final way is to write a one-pager about your organization, highlighting the impact and then share it directly with the donor relations team over at your community foundation. And now chances are slip it in the packet that goes out to the donors so they could see that information.
Dolph Goldenburg: (11:46)
I can say I love that. And, and this might actually be related to your third one, but one of the things I’ve always suggested also doing is, you know, most community foundations have program officers, which are the, you know, the folks that work with grantees. And if you’ve got a program officer and you’ve got a good relationship with them, even say, hey, we have this special need. Um, we get that it’s probably not good for your general fund impact grant, you know, process. Is there a donor-advised fund that you think might be interested in this? And then they kind of go as well to your, to your donor relations team and advocate on your behalf and say, Oh, you know, the homeless shelter really needs to buy a a hundred new beds because whatever, they had a bed bug issue and they can’t get the bed bugs out of the mattresses.
Arlene Cogen: (12:30)
Yeah. And that’s another way as well. There’s a lot of little nuance ways, but the important thing is to keep knocking at the door because that opportunity is there and you want to be visible.
Dolph Goldenburg: (12:41)
Well, so they know about. So one of the other challenges that I think nonprofits sometimes have with donor-advised funds, so if it’s a major donor or if it’s a foundation, once you get that first gift, you know how to cultivate either the foundation officers, the program officer at the foundation or that major donor. How do you, how do you cultivate the donor-advised fund when, when it’s anonymous and pretty much, you know, what you know is like your program officer’s name or the donor relationship team?
Arlene Cogen: (13:12)
Well, I think that’s when you start to look at real a, um, stewarding those donor relationship team officers. Cause there’s always going to be new donors coming in and you know, they’re gonna keep that person anonymous. That’s their job. Uh, we have to respect that, but that doesn’t mean you can’t cozy up next to those colleagues and make sure they’re spreading the word to the other people doing their job.
Dolph Goldenburg: (13:38)
Now and, and I think you’re right. It is absolutely their job to keep it anonymous. Every now and then though, um, you know, you will get, you’re just kind of a check out of the mail or checking the mail out of the blue for say $2,500 and you know, and it will say, you know, this comes from the, um, Jim and Jane Johnson Family Fund. And so now you know that it’s Jim and Jane Johnson. Um, is it ever appropriate for the organization to reach out directly to Jim and Jane Johnson and say, thank you so much for the, for the gift from your fund?
Arlene Cogen: (14:12)
Um, I would ask the community foundation representative but also if they gave their name, I would take that it says to reach out and they want to be acknowledged.
Dolph Goldenburg: (14:25)
Yeah. Okay. So, but so then also ask your, your donor relations or program officer, the Community Foundation, just so that you don’t burn that bridge and have them feel like, like you went around behind their back and tried to get more money.
Arlene Cogen: (14:39)
Yeah, of course. You know, we have to respect those boundaries because that’s an important part of our job.
Dolph Goldenburg: (14:44)
So do you have other ideas or thoughts about ways nonprofits, um, cultivate those donor-advised funds that are currently supporting them potentially to maybe get more money in the future or larger gifts?
Arlene Cogen: (15:03)
You know, just say always thinking creatively and out of the box. I would actually approach program or those donor relationships officers and offer to help create a program around that cause not necessarily the specific organization but the cause, whether it be animals, mental health, basic needs and see if you can create, have them create something real, bring your donors and now bring their donors of interests. I’ve seen that work before as well.
Dolph Goldenburg: (15:41)
Can, can you give us an example of that?
Arlene Cogen: (15:44)
You know, we’re in Oregon, a lot of people like the environment and we have a big donor who was very into the environment and outdoor schools and OCF ended up doing a big program around the environment. And every year they do and they bring together donors and other leaders in the nonprofit environmental knowledge. So really powerful work, and that leverages potentially additional gifts to other environmental organizations.
Dolph Goldenburg: (16:12)
Okay. Yeah. Now, what are some of the no’s, like, you know, what are some of the things that organizations should never do when approaching or cultivating a donor-advised fund?
Arlene Cogen: (16:32)
Well, first of all, never asked for a pledge, a written pledge from the Downer. If you know who they are because that is a separate legal binding position than making grants out of the donor-advised fund, which you are not an owner up because you have made a completed gift already. And you know, you know, I’m, my synagogue right now is in a capital campaign and I am going to be paying that during my donor-advised fund and they’re like, sign the paper. And I’m like, I can’t sign the paper. I’m like, you’ll just have to take my word big. No.
Dolph Goldenburg: (17:17)
Okay. So, I totally see that because it’s no longer your money. You’ve, you’ve given it and that’s why you got the tax deduction when you made the gift. Totally get that. What are some of the other no’?
Arlene Cogen: (17:29)
Having too many people advise on a fund and not having a clear focus and direction of the fund. I think there’s an advantage to working within your donor relations officer. Um, to make sure, and I’m, I’m just thinking for a second, you’re talking from the nonprofit, right?
Dolph Goldenburg: (17:53)
Yeah, yeah, yeah. Okay. Sorry about that. No worries. What are some of the other nodes out there?
Arlene Cogen: (17:58)
You know, be gracious, a touch a month, you know, don’t try and hound to anyone. No one really likes that. Just that you can cultivate them like any other, any other donor and the other allied professional attorney, etc. Be in their radar but not
Dolph Goldenburg: (18:22)
overwhelmingly so. Okay. So, um, you know, let’s say I, I’m the development director for the, for a theater. And so of course, I bet if you’re the development or director for theater whenever you go to another theater and see or performance, you undoubtedly, and I know none of us who have fundraisers who have ever, ever, ever done this. You undoubtedly look through the theater program book and what do you turn to first? You turn to the donor list and you don’t start with the $50 donors. You start with $25,000 donors. Right? And so what happens is you see like the Jane and Jim Johnson Family Fund at the Oregon Community Foundation. Is it okay then for me to reach out as the down director of this other theater? To the, um, to the community foundation and say, Oh, we’d love to pitch the Jane and Jim Johnson Foundation or fund.
Arlene Cogen: (19:19)
Yeah, that would not be cool!
Dolph Goldenburg: (19:21)
I see you. And I figured that would not be cool. That’s why I wanted to ask that question.
Arlene Cogen: (19:25)
I mean, you know, that’s taking, throwing darts, that’s throwing darts. But I would say if you’re a good development person, why not reach out directly, you know, their name, figure out how you could get introduced to them. Maybe not even through the community foundation. You know, you said you were LinkedIn fan and or Facebook, you know, how many degrees of separation are you right. Oregon tends to be small and I always joke around two degrees of separation. I could get to anyone in the state.
Dolph Goldenburg: (19:57)
Yeah. So what’s your but so, so would be cool then, for example, to ask your board if any of them know Jane or Jim and to invite them to a performance as guests. That would be cool.
Arlene Cogen: (20:11)
That would be expected, man. These board leaders need to lead by example. Come on.
Dolph Goldenburg: (20:17)
Yeah. So, and let me say, um, listeners can’t see it cause we’re, but we have video. I have two thumbs up right now. I agree. That’s expected of the board. Absolutely.
Arlene Cogen: (20:26)
And not only is it expected of the board to introduce you to other people on these donor rosters, but it’s also expected of the board that they introduced you to their attorney, their CPA, and their wealth manager.
Dolph Goldenburg: (20:41)
Yeah, absolutely. Because those are also good ways in a donor-advised aren’t they?
Arlene Cogen: (20:48)
Yes. And when I was at the Community Foundation, I brought in 30 to 40% of all of the statewide giving cause my sole purpose was advisers.
Dolph Goldenburg: (21:01)
Yeah. Yeah. I could totally see that. Um, well Arlene, I want to make sure that we have time for an off the map question and I think I’ve got, this one’s actually not so far off the map. This one might actually be on the map, but just the other side of it. So, so often I’ll be talking with an executive director or development director and I will kind of ask a question like, you know, they’ll talk about their major giving program and I’ll ask them, you know, well, you know, where, where are you a major, you know, which organization are you a major donor to? How do you like to be treated? And they’ll almost always reply to me, well, you know, there’s really no organization that I a major donor too. And so I’ll, I’ll kind of reply back. Not even a smaller organization where $1,000 is a major gift. And normally the response I get is, you know, I work in the nonprofit sector and I don’t make that much money. So yeah, not even a thousand dollar gift. Now my question to you, because I know that you are all about helping individuals figure out how they can make this amazing lifetime gift that you know will, will continue beyond their lifetime. So how can someone who makes a moderate-income say, working in the nonprofit sector still figure out over time how to establish some type of a fund that will live on beyond them?
Arlene Cogen: (22:21)
Oh, that’s a great question. And it’s really kind of simple to answer. It’s also in my book. So there, there are a couple of ways. The first is, um, endowing a gift. Let’s say that a person hasn’t made that major gift yet, but they give $100 a year to whatever that organization is in their estate plan. You’ve monkey take your annual gift and you multiply it by 20 and you get $2,000 and if you leave it $2,000 gift to that nonprofit as an endowed gift, that will in perpetuity give them that hundred dollars. Now, if they want to save money, they do a beneficiary designation out of an IRA. It’s the most texted vantage way to make that gift and it costs them nothing to do. So, they should do that. Every board member should do that. Number two is many community foundations have what’s called a step-up fund where you start with a lower dollar amount in each year for the next uh, two, three, five years, whatever your agreement is. You put in that amount of money to reach the minimum amount for grantmaking. Now when I was at the community foundation, I was like, this should be required for all board members. If they put in 5,000 a year for five years, now it will be one year into their second term on the board of a fund and they’ll get the full advantage of knowing how much fun it is to have a donor-advised fund and the difference they can make, they should all be doing it if they’re on the board lead by example.
Dolph Goldenburg: (24:14)
I love that and I’ll share with you that I like you. I think that’s one of the easiest ways for moderate-income people and you know, and, and maybe like you know, somebody who’s a social worker is not even $5,000 a year for a lot of community foundations. The minimum amount is 10, especially like community social change foundations. The minimum amounts. 10. So if you put away $1,000 a year for 10 years, boom, suddenly you have a fund that outlives you and at 5% it gives $500 a year for the next hundred years.
Arlene Cogen: (24:43)
And that’s significant. That’s a gift you never imagined.
Dolph Goldenburg: (24:46)
Right? Yeah, I’m right there with you Arlene. Completely right there with you. So now follow up the question. How can you, and I encourage most people in the nonprofit sector to think about making a life-changing gift like that?
Arlene Cogen: (25:02)
Well, I’m going to kind of approach it in two ways. One, as fundraisers, um, we are transcendence. So after Abraham Maslow died in 1990, they added three new levels to his hierarchy. The top one over self-actualization is transcendence. Transcendence, where we help other people. Self-Actualized. So we are at the top of the pyramid. Lucky us. But when you look at making that life-changing gift, it goes back to basics. It’s easier to ask for money once you’ve given it. It makes you feel good, you get something back from it. And what’s life-changing for you is not life-changing for a millionaire or billionaire or someone else. So it all has to be proportionate. But I can assure you when you make that gift, when I, I created my du, our family donor-advised fund after my mother passed away and we had the heartfelt conversation of what are you going to do with your inheritance? And it was very simple that creating a donor-advised fund to pass down those values, life lessons and stories was a key thing. And that has changed our family’s life. We made a huge, the biggest gift I ever made and my heart opened with joy and glee and our family came together. And I’ve seen this hundreds of times with families at the community foundation and if you want to have joy and bring closeness and fulfillment together, they’ll create a family fun man and just have the fun of philanthropy.
Dolph Goldenburg: (26:44)
Oh my gosh, Arlene. I love that challenge. What a what a what a great way for us to close this out. That’s incredible. As I promised. Not so much off the map but a great way to close it out. Arlene, thank you so much. Thanks for taking the time to enlighten us about opportunities for nonprofits with donor-advised funds as well as opportunities for nonprofit professionals to have that joy of maybe creating their own donor-advised fund one day, whether it’s through a windfall or whether it’s overtime. Now listeners who want to get in touch with Arlene can find her at arlenecogan.com now there you can learn more about her book give to live or you could also just go to Amazon and get it directly at Amazon.
Now if you live in an amazing place like Portland or Phoenix or New York that still has brick and mortar bookstores in the downtown sectors, maybe you could just walk down to your favorite bookstore and ask them if they don’t have it on the shelf to special order it. You might be doing others a favor cause I’d be willing to bet the order. Three, think of they’re going to sell the other two copies to other people. Hey Arlene, thank you so much for being on the podcast today. It has been a pleasure. Now, if right now you are, go googling donor-advised funds near me, don’t do that. Google your local community foundation, Google your social change foundation. Those are the folks who are much more likely to help you find your donor-advised funds. But if you’re busy googling that and you are not able to type in Arlene’s contact information, don’t worry. You can just go to successful nonprofits.com and from there you can get all of her contact information at our show notes.
Now I say this every week to your listeners, but I say it because it’s important. Please subscribe to this podcast and give us a rating. Now our review would also be incredibly awesome. I appreciate your time and letting me know of the information that we’re providing to you is useful to you and your nonprofit. So even if you don’t write a review, have you want more personal contact, reach out through successful nonprofits.com to me by email. I promise you I respond to every single person who emails me. Sometimes it takes me a few days, but who emails me from the podcast? Um, I also just want to say a fond farewell to Brianna Alon Ba. She has been our special projects coordinator and one of the driving forces behind the podcast for almost the last two years. Brianna knows that I feel this way about her. I could not continue this podcast during some of my busier periods without her driving it forward.
She has however left us so that she can prepare for law school. I know she’s gonna make a great lawyer one day and I’m, and I’m grateful to have been a small part of her journey. This is also a good opportunity to introduce our new special projects coordinator, Isaac Pritt. So he will soon become the driving force behind the podcast. When I say I’m busy, I’m just too busy to get the podcast out this week and Isaac will slow my roll and tell me no, we’re going to produce the podcast and it’s all going to be okay now that it, my dear listeners is our show for this week. I hope that you have gained some insight to help your nonprofit thrive in a competitive environment.
Disclaimer: (30:41)
I am not an accountant or attorney and either on or [inaudible] provide tax, legal, or accounting advice cause material has been provided for informational purposes only and is not intended to provide and should not be relied on for tax, legal, or accounting advice. Always consult a qualified licensed