By Molly Norton
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.
Molly Norton is the philanthropic advisor at Brighton Jones.
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