The charitable arm of Amalgamated Bank wants donor-advised-fund holders to give at least 10 percent of their funds to charity per year.
A financial-services company with deep roots in progressive politics today announced the creation of a donor-advised-fund service that will push donors to distribute at least 10 percent of their accounts annually to charity, a move that other major players in the fast-growing field have resisted.
In addition to agreeing that they will distribute a tenth of their accounts to charity each year, donors holding accounts in the charitable arm of Amalgamated Bank will have the option of carving out 1 percent of their accounts for a communal fund to be administered by Amalgamated advisers.
Those wrinkles will help differentiate the funds from donor-advised funds created by other financial companies, said Anna Fink, executive director of the Amalgamated Charitable Foundation. Those donor-advised funds, which steer investment-management fees to their parent companies, tend to focus on transactional efficiency rather than improving the world, Fink said.
“Our collective role is to be a financial partner to the social-change field so we don’t have an incentive to just keep the resources sitting in investments,” Fink said. “For us, it’s great to see the money going out to nonprofits. We want to create a community that’s inspired and excited about engaging in social change together.”
If a donor doesn’t meet the 10 percent threshold, Fink said, Amalgamated will work with that donor to come up with a plan to achieve that goal.
“We will reach out regularly with collective giving opportunities to encourage and inspire donors to meet their pledge,” she said, adding that the organization has not finalized policies for “orphan accounts” that have been inactive for long periods of time.
The pledge has the ability to change the mind-set surrounding donor-advised funds, according to Ray Madoff, a law professor at Boston College.
“Too many DAF sponsors subtly encourage donors to think of their DAF Funds as something to preserve for later rather than as something to put to work today,” said Madoff, who is director of the law school’s Forum on Philanthropy and the Public Good.
Roots in Organized Labor
Amalgamated was created in 1923 by the Amalgamated Clothing Workers of America labor union. It now is a B Corporation, meaning it has met a series of environmental and social business operations and investment goals laid out by B Lab, a nonprofit certification group. It has $4 billion in assets and manages the finances of left-leaning political organizations, labor unions, nonprofits, foundations, and individuals.
Last year it spun off the Amalgamated Charitable Foundation with more than $1 million in seed money for grants and operational expenses. It also detailed staff to the foundation to develop the donor-advised-fund offering.