Stored up or poured out? A certified financial planner’s perspective on payout rates

When I received a letter from the CFP Board last week, it immediately caught my attention. I had just completed my annual renewal of my certification, so I checked to make sure all had gone okay. 

Boy, was I surprised when I read a letter announcing a joint statement between the CFP and other financial regulating organizations on the importance of advisors encouraging clients to grant money out of their donor-advised funds (DAFs, NCF Giving Funds).

This brought to mind two recent memories.

One was an article I read recently, mainly focused on Silicon Valley and essentially criticizing the fact that DAFs have millions of dollars parked in them, with abysmal payout rates. I wanted to write a letter back to the author saying, “I agree, and here’s good news: Take a look at our payout* rates!” NCF serves people who grant out at consistently more than two times the industry average of major DAF providers!

Another recent experience was hearing a challenge John Rinehart from Gospel Patrons gave to some givers at an NCF event last fall. John likened money sitting in DAFs to gas sitting in those red cans in our garages – though gas is really meant to move things (garage gas to move landscape tools, DAFs to mobilize generosity). I agreed and wondered if he knew about the rates at which NCF givers grant out.

When this CFP Board letter came, I again wanted to write back. “Agreed! Good news. Take a look at our rates.”

This issue essentially comes down to stockpiling and knowing your “why?”  I can think of two instances of stockpiling in the Bible with two very different motivations and two very different outcomes. The Lord told Joseph to stockpile in preparation for a time of need. The “why” was to help others – not for Joseph to add to his personal gain. The other story (from Luke 12) tells about a man who plans to build bigger barns and stockpile his surplus for his own future, easy life. While I am not a theologian, I observe that behavior did not end well for him.  

One of many things I love about working with NCF is that what we do is driven by our “why.” In my local office, and from interaction with the whole organization, the pervasive message I have received from day one is that we are a service and a ministry. It is not about the transaction, but the transformation. Our payout rates are a result of our mission: to mobilize resources by inspiring biblical generosity.

Our payout rates are a result of our mission: to mobilize resources by inspiring biblical generosity.

It’s no surprise that we are always encouraging givers to grant out. Mobilizing resources is our mission. There may, at times, be good reason to collect money in a DAF, and we encourage our givers and the advisors who help guide them to consider the “why.” There may be a future time when those funds are needed for good work.

But biblical generosity does not stockpile for long; and when it does, there is a specific purpose – to help others.

I believe we are unique in this mission; so we may always have higher payout rates. We are about transforming lives, not about assets under management. That fuels my enthusiasm every day going to work for NCF. I don’t wonder if my work has meaning. It is a 100 percent vision and mission match for me. 

Clearly, we are living in a time when funds need to be mobilized for nonprofits. I agree with the call to begin giving from DAFs. But NCF givers have been doing this all along and are granting even more now. I’m just excited to see financial organizations encouraging other DAF-providers to join in doing the same.

* Payout rates are total grants divided by total DAF assets from the previous year.

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