Recycle Your Philanthropic Dollars With Recoverable Grants
With so many challenges facing our local communities and the broader planet right now, it is common to feel overwhelmed with how to choose between a wide range of worthy causes. Recoverable grants allow individuals with donor-advised funds (DAFs) to release funds to non-profits, have the funds repaid to the DAF, and reuse them for future grants.
While a donation traditionally serves as a one-off transaction, a recoverable grant relies on agreed-upon conditions between the donor and the non-profit with the goal of getting the funds back to the donor who can then recycle the capital for other philanthropic donations.
Recoverable Grants, Explained
Here are a few things to know about this creative tool for social impact:
- While individuals can make loans to non-profits, the tax liabilities are significantly more complicated.
- Non-profits most worthy of funds are typically those
- with an earned revenue program that could benefit from an influx of capital to manage cash flow (think: a conservation land purchase that will be used for agricultural production; a museum with membership dues or ticket sales; a health care project that needs to guarantee bulk purchases, etc.).
- that need bridge financing while waiting for further (and expected) infusion of funds.
- There is no minimum amount, and you do not need hundreds of thousands of dollars to donate.
- You can work with other DAF holders! In some cases, several donors have provided recoverable grants to support a specific fund or project.
If you are interested in this model and have a Fidelity Charitable DAF, our philanthropy team can help you structure the grant and decide on key terms for deliverables and returns.
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