- What is a Donor Advised Fund (DAF) and how does it work? A donor advised fund (DAF) is a charitable giving vehicle administered by a sponsoring organization such as Morgan Stanley Global Impact Funding Trust, Inc. (MS GIFT), a public charity that is tax exempt under 501(c)(3) of the Internal Revenue Code of 1986. DAFs are structured to manage charitable donations on behalf of individuals, families, and organizations. Contributions to a DAF are invested in line with Donor preferences and have the potential to grow tax-free, thus enabling the Donor to recommend grants to a variety of charities over several years. The final decisions on grant recommendations are made by the MS GIFT Board of Directors.
- Is there an initial contribution minimum to open an account? A Donor’s initial contribution to an Account must consist of cash or other assets acceptable to MS GIFT, valued at no less than $25,000 in the aggregate. All contributions to MS GIFT are irrevocable and nonrefundable. Contributions and all related future earnings, including any income and appreciation thereon, become the property of MS GIFT. When making a contribution, a Donor cannot impose any restriction or condition that prevents MS GIFT from freely and effectively using the contribution. There is no minimum account balance to keep an Account open with MS GIFT.
- What type of assets can I contribute to MS GIFT? Donors may make irrevocable and nonrefundable gifts of cash, marketable securities, freely transferable restricted stock and exercised options. Other non-liquid “complex” assets such as real estate, closely-held business interests, life insurance, artwork, and other collectibles may be accepted at the discretion of the MS GIFT’s Board of Directors.
- Can I contribute privately-held business interests to MS GIFT? Contributions of privately-held business interests are reviewed and accepted on a case-by-case basis. Please contact your Financial Advisor, Private Wealth Advisor or email email@example.com for more information.
- Can I make contributions to MS GIFT from my retirement savings accounts? Donors may make their DAF account a beneficiary of a retirement savings plan account, such as a 401K plan or an Individual Retirement Account (IRA), but will not receive an immediate tax deduction for doing so. Additionally, Donors cannot roll over a required minimum distribution from an IRA to a DAF account on a tax-free basis.
- What are the investment options for MS GIFT Account? There are two investment programs for MS GIFT Accounts: Morgan Stanley Smith Barney Select UMA and Portfolio Management programs. MSSB Select UMA program: The Select UMA Program is a unified management account program in which MSSB acts as an investment adviser. Donors may recommend that the funds in the Account be invested across one or more traditional risk-based portfolios, two Investing with Impact portfolios, and a money market. While your Financial Advisor will not have investment discretion with respect to the specific assets held in the portfolios, you (and, to the extent you deem appropriate, your Financial Advisor) will have the ability to recommend how funds held in the Account will be allocated across the risk-based portfolios. MS GIFT, Inc’s Board of Directors has the sole responsibility and authority for investing the Fund’s assets. Portfolio Management (PM): The Portfolio Management program has firm approved Financial Advisors that create customized discretionary investment strategies for high net worth individuals and institutional clients. Portfolio Managers are a select group of Morgan Stanley Financial Advisors who are qualified by the firm to manage client assets based on training, experience and commitment to client service.
- Does MS GIFT have an impact investing option? Yes. The Investing with Impact Pools within the Select UMA program utilize highly regarded third-party investment managers with demonstrated experience in generating positive environmental and social impact alongside potential market-rate returns. In addition to generating positive environmental and social impact, the impact pools are well-diversified and risk-aware. Select UMA’s eligible investments include separately managed account strategies, mutual funds and exchange-traded funds (ETFs).
- Is there a minimum grant amount? Yes. The minimum grant amount is $250.
- Can I recommend grants to foreign charities? Yes. MS GIFT exercises “expenditure responsibility” over the recommended grant. This process, which is mandated by federal tax law, requires MS GIFT to exercise reasonable efforts and establish adequate procedures to see that the grant is spent solely for the purposes that it is made.
- What information does my charity receive with my grant recommendation? The charity will receive a letter from the board of MS GIFT with the date, description, and purpose of the grant. The letter includes the name of the Account, or Donor as specified during the grant recommendation process.
Donor Advised Funds: A Way to Manage Your Giving
There’s more to charitable giving than you may realize. Here’s one method that may be tax-efficient and can help maximize your impact.