The following article appeared in NJBIZ on June 27, 2016. For the direct link, click here.
THE GIVING GURU: Dekker, foundation advise ultra-wealthy on charitable efforts
Hans Dekker travels in well-heeled circles, speaking with millionaires and billionaires on a regular basis. In some ways, he’s an adviser, but he doesn’t offer traditional financing or investment counsel to the well-off. Instead, he helps them decide how to give away a portion of their wealth.
Dekker, 50, is the president of the Community Foundation of New Jersey, or CFNJ. Established in 1979, the Morristown-based organization is a cooperative made up of families, businesses and foundations that work together to support charitable giving.
“We help philanthropic individuals and families align their charitable donations with their wish to make an impact in specific areas — from helping the blind to animal rescue — while helping to ensure that their gifts will be distributed in a way that will make a positive difference.”
Drawing on its own resources, along with a network of affiliates, CFNJ fields more than 1,100 legacy funds and donor- advised funds that total in excess of $380 million. Each year, the various CFNJ funds make grants to charitable organizations that total an average of more than $30 million.
In 2015, CFNJ raised about $100 million, breaking its previous internal collections record of $90 million that was set in 2014.
“We continue to expand our relationships with philanthropic families and potential donors,” Dekker said. “Our contacts are primarily established by referrals, and by relationships we have with professional advisers, wealth managers, tax accountants and others.”
Dekker, who joined CFNJ as president in 2003, has been working with nonprofit organizations since 1991, when he graduated with a master’s degree in public policy from the University of California-Berkeley.
Charitable giving, he said, is a result of the combination of two impulses: the desire of people to do good, and their desire to reduce their tax bite.
“Decades ago, people would often give a block grant to a favorite charity, and that was the end of it,” Dekker said. “But after awhile, people wanted to be able to measure the impact, or return on investment, of their donations. While they were at it, they also wanted to maximize the tax benefit they received from their charitable giving.”
Dekker said many donors are taking a “venture capital” approach to giving.
“They are increasingly giving in a targeted manner, so they can see the impact of their donations on the community,” he said. “Organizations like CFNJ act as a bridge between nonprofit organizations that need donations and philanthropic families that want to help. We also serve as a kind of knowledge pool to our donors, enabling them to find out more about best philanthropic practices.”
When philanthropists commit funds to CFNJ, the money doesn’t collect dust before being distributed.
“We have a volunteer investment committee that hires consultants and managers to suggest investments,” Dekker said. “The ready cash is placed in a variety of short-term and long-term investments designed to yield a good return while protecting capital. The majority of the funds are placed in equities, with some in fixed income instruments — like bonds — and some others are allocated to alternative investments like private equity, hedge funds or real estate investment trusts.”
CFNJ also helps donors and potential donors to explore their options.
“Even if we’re not their beneficiary, we will help donors to see what their options are to give in line with their wishes,” Dekker said. “It’s another way to build relationships.”
It’s also a good way for people to be sure they’re not donating to a scam charity.
“We and our partners engage in considerable due diligence to confirm that a charity is legitimate,” Dekker said. “We want to know that the donations will be put to use in the manner described, and that they align with the donor’s wishes.”
Last year, CFNJ received a $30 million gift from a former corporate executive in New Jersey who is keen on “effective education interventions.”
Despite this gift — and even though CFNJ broke its own fundraising records in 2014 and 2015 — Dekker said he has some worries about the future.
“The exit of wealthy people, like David Tepper, to other states is, unfortunately, part of a trend,” he said. “It worries me, because if we are losing wealthy people to other states, will we lose their giving, too?”
A menu of giving options
The Community Foundation of New Jersey has more than 1,100 different funds, essentially falling into one of three categories: donor- or business-advised, business-advised legacy and scholarships.
Generally, a donor-advised fund is a separately identified fund or account that is maintained and operated by a section 501(c)(3) nonprofit organization, like CFNJ. Each account is composed of contributions made by individual donors. Once the donor makes the contribution, the organization has legal control over it, but the donor can advise the fund about the distribution of the money and way the assets in the account are invested.
CFNJ-administered donor-advised funds include Carly’s Kids — A Foundation for Education Fund; the Todd Ouida Children’s Foundation; the Church in Radburn Foundation Fund; and many others.
Sometimes, a business wants to “give back” to the community.
In that case, CFNJ maintains business-advised funds that let companies such as Johnson & Johnson, PSE&G, Panasonic and Wakefern “approach philanthropy in a focused and efficient manner that makes the most of their charitable ‘investment,’” according to Hans Dekker, president of CFNJ.
Other times, individuals or families who want to ensure that their philanthropic efforts will extend beyond their lifetime, while catching a tax break now. Typically, a legacy fund — also known as a designated endowment fund — lets a donor setup a bequest and direct the future contributions to nonprofits that are aligned with his or her interests and passions.
Annual gifts may be made from the investment earnings of the legacy fund, which is designed to disburse the money in perpetuity, rather than making a lump sum gift. Another option is for families to support CFNJ’s own Changemaker Projects, which are select initiatives in which fund holders may participate and help drive significant collective impact, such as a recent focus on reforming New Jersey’s juvenile justice system and ultimately ending the use of solitary confinement for minors.
CFNJ holds legacy funds like the Alkemade Fund for vision loss, the Great Companions Fund (animal rescue), and the Diane Dixon Fund for abused women. CFNJ’s more than 200 scholarship funds also make a difference, together distributing more than $1 million to students each year.