Comment from Greater Salina Community Foundation

I am not in favor of the proposed IRS definition of a “Donor Advisor,” in which it defines a donor-advisor as “a person appointed or designated by a donor to have advisory privileges regarding to the distribution or investment of assets held in a fund or account of a sponsoring organization,” implying that investment advisors of DAFs are donor advisors of the fund. All our outside investment managers sign an Investment Management Agency Agreement in which it states that the “agent recognizes that the Foundation is the sole owner of the assets held in the fund and that such assets remain under the Foundation’s sole control.” This statement should be sufficient to prove that the investment advisor is providing services to the community foundation and not the donor advisor on the fund. In fact, the donor is never once mentioned in the agreement between the advisor and the Foundation because the Foundation has legal control over the fund and its investments, not the donor. To address the Treasury Department and IRS concerns about potential conflict of interest, our Statement of Investment Policy specifically states that “Investment managers shall not invest any part of the Foundation’s assets through transactions that involve self-dealing or an actual or perceived conflict of interest.” All investment managers are required to sign a statement that they have read, understand, and will abide by this policy. In addition, our Statement of Investment Policy also states that “Investment managers must have appropriate licensing to professionally manage financial assets, be affiliates with a registered broker dealer under the U.S. Securities and Exchange Commission (SEC) supervision or affiliated with a trust company, or a bank have trust power per state and federal law,” making it unlikely that the manager would manipulate the assets of the DAF for personal gain. The Greater Salina Community Foundation has worked with investment managers to manage individual donor funds since it was established 25 years ago, establishing a vibrant culture of philanthropic throughout north central and western Kansas. Currently we manage over $35M representing 48 individual funds of which18 ( $7.5M) are donor advised funds. From those donor advised funds, $5.9M has been granted back to local charities lessening the burden on government. This is especially meaningful smaller communities such as ours in rural Kansas where the population and tax base are smaller. Not allowing outside investment managers to manage individual DAFs by the proposed definition would likely reduce the number of donor advised funds established, ultimately reducing the number of charitable dollars that go back into our communities.