Year end is crunch time for financial advisors—clients are rushing to meet tax deadlines, finalize charitable contributions, and plan for the future. But what if you could help them do more than just check a box on their to-do list? Introducing strategies like donor advised funds, recoverable grants, and impact investments, you can help them reach their goals and turn their year-end efforts into a foundation for lasting impact. Here’s how to solve common year-end challenges and position yourself as a trusted partner in their philanthropic journey.

Challenge 1: “I want to set aside funding now for future giving but need a tax-efficient approach.”

Solution: Donor-Advised Funds (DAFs)

For clients looking to make a significant impact while addressing year-end tax obligations, DAF accounts are an ideal option.

What is a DAF:

• A DAF account is a charitable giving account managed by a sponsoring organization. Clients make a contribution to the DAF, receiving immediate tax deductions. The funds are later distributed to nonprofits and can be used for impact investing while in the DAF.
• Clients retain the ability to recommend how the money is invested and when and where it is distributed.
• There are more than 1.7 million DAF accounts, a number that has grown 3.2% in the past five years.

How DAFs Can Help:

• Common contributions to DAFs are appreciated assets (both public securities, private investments, and real assets), as this is a highly tax efficient way to donate to the DAF and avoid capital gains taxes on these assets.
• Clients receive an immediate tax deduction while deferring decisions on specific grants or charitable recipients, so they can take their time figuring out their charitable priorities.
• You can advise on investments within the DAF while they grow tax-free, increasing the resources available for future giving.

Introduce your clients to the benefits of DAFs as a tool for streamlined giving. By opening a DAF now, they can secure significant tax advantages while ensuring flexibility to support causes they care about over time.

Challenge 2: “My client’s family foundation wants to have a bigger impact and needs to make grants before year-end.”

Solution: Recoverable grants and foundation-supported DAFs

Recoverable Grants:

Recoverable grants, are a way for family foundations to support nonprofits while maintaining the potential to recover their funds if the grant achieves its financial and impact objectives. These grants are designed to help organizations with time-sensitive or revenue-generating initiatives, such as:

• Bridge Financing: Provide short-term capital to bridge funding gaps while waiting for pledged donations or government reimbursements.
• New Revenue Programs: Funding initiatives that aim to create sustainable income streams, such as a social enterprise or expanding fee-based services.

If the initiative is successful, the grant funds are repaid to the foundation, creating a revolving pool of capital for future philanthropic projects. This approach allows foundations to stretch their impact further while maintaining flexibility for new opportunities.

Learn more about recoverable grants.

Foundation-Supported DAFs:

DAFs aren’t just for individuals—they can be a powerful tool for family foundations too. By setting up a DAF, foundations can:

• Support Private Impact Investments: Use their charitable dollars to fund projects like affordable housing or renewable energy startups, learning and benefitting from the robust investment infrastructure that exists at DAFs versus building the capacity in-house.
• Involve the Next Generation: Use DAFs to give family members autonomy to recommend grants independently from their “own account” fostering a culture of giving across generations.
• Expand Mission Reach: Fund projects or causes that might not align directly with the foundation’s primary mission but still reflect family values.

By adopting these strategies, your foundation clients can enhance their giving capacity, take on innovative projects, and maximize their long-term impact.

Challenge 3: “I’ve used up my grant-making budget for the year, but I want to do more.”

Solution: Impact investments and recoverable grants

Impact Investments:

Impact investments allow clients to deploy their charitable dollars in ways that generate both financial returns and measurable social or environmental impact. With these investments, your clients can:

• Align their portfolios with their personal or organizational values, supporting causes they deeply care about.
• Build solutions to address critical needs, such as clean energy, affordable housing, or healthcare access.
• Catalyze systemic change by funding innovative projects or businesses that fill gaps where traditional markets fall short.

Recoverable Grants:

For clients who want to make an immediate impact, recoverable grants provide a way to give more now with potential for recovery and use for future needs. Unlike traditional grants, these allow clients to recover their contributions if the funded project achieves its goals, creating a sustainable cycle of giving.

By integrating impact investments and recoverable grants into their strategies, your clients can extend their philanthropic reach beyond the limits of their annual grant-making budgets. When working with CapShift, these approaches also come with robust impact reporting, offering tangible insights into the outcomes of their contributions. Clients can see their impact grow year after year, creating a sense of pride and fulfillment in their ongoing efforts to make a difference.

Equip Your Clients for Success

By solving these common year-end challenges, you can position yourself as a trusted advisor who delivers practical solutions and creates opportunities for lasting impact. Through DAFs, innovative grant-making, or impact investments, you can help clients achieve their goals today while building a legacy of giving for tomorrow.

Ready to help your clients tackle their year-end goals? Contact us to explore strategies that support tax efficiency and your client’s values.