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Advisors / External Investment Managers Program

External Investment Managers Program

Niagara Community Foundation is always looking for new ways to help donors in achieving their philanthropic goals and to work with professionals in the financial, estate and investment world in mutually beneficial relationships. As a result, the Niagara Community Foundation created the External Investment Managers (EIM) Program. Below is a brief overview of the Program.

What is the External Investment Managers Program?

  • The External Investment Managers Program allows assets gifted to a newly created fund to be invested outside of Niagara Community Foundation’s Consolidated Investment Fund in a portfolio managed by the donor’s recommended investment firm.
  • When coupled with a donor advised fund, the Program provides donors with an attractive alternative to a private foundation.  

How does the External Investment Managers Program benefit investment firms?

  • A firm’s book of business will not shrink when a client decides to make a substantial charitable gift. 
  • A firm may continue to manage the assets in the fund even after the donor’s death if the firm’s investment performance continues to meet Niagara Community Foundation’s standards. In other words, the firm could manage the assets indefinitely. 
  • A firm will enhance its relationships with philanthropic clients and their families because it will be involved directly in decisions affecting the success of their philanthropy on an ongoing basis. 
  • A firm will be assured of a key position within a client’s estate and financial advisor network leading to increased opportunities for client referrals.

What advantages does the External Investment Managers Program provide for clients?

  • Clients can continue an existing relationship with a trusted portfolio manager. 
  • Clients can have as little or as much involvement with the grant-making from their funds as they choose, and their level of involvement can change over time. The program allows clients maximum flexibility and adaptability to pursue their philanthropic goals. 
  • Clients have access to grant-making expertise and philanthropic services that are unrivalled in Niagara. 
  • Clients can consolidate all of their charitable giving through a single fund and achieve as much public recognition or privacy as they choose. 
  • Clients can take advantage of the enhanced tax credit for donations of publicly listed securities and use more complex gift structures tailored to their business and family situations.

Why was the External Investment Managers Program created?

  • Niagara Community Foundation has been paying attention to new philanthropic and business trends. 
  • There are two philanthropic trends at play:
  1. A new generation of donors is demanding more engagement with their charitable giving. The days of “cheque book philanthropy” are drawing to a close. Donors want more options for and involvement with their giving. 
  2. Government funding reductions for social and other services means that Niagara Community Foundation is facing increased pressure to step into the breach. There is a need to increase the financial resources to meet this pressure. 
  • Niagara Community Foundation recognizes that large gifts from investment portfolios have a direct impact on the livelihoods of portfolio managers. The Foundation is interested in testing ways to remove the business barriers to charitable giving. This means working with the business community to ensure that its needs and concerns are met as much as possible. 
  • Financial institutions in the USA and Canada have begun to pursue business opportunities generated by their clients’ philanthropy. The External Investment Managers Program is one way Niagara Community Foundation is responding to the market place.

How does the External Investment Managers Program work?

  • A simple fund agreement is used to create the donor’s fund at Niagara Community Foundation. The donor has several types of funds to choose from; however, the most common fund type selected by today’s donors is a donor advised fund.
  • The minimum contribution to the fund is $1,000,000.  Gifts under this amount will be considered on a case-by-case basis.

To qualify for a donation receipt under the Income Tax Act (Canada), the donor must transfer ownership and legal control of their portfolio assets to Niagara Community Foundation. The definition of a “gift” in the Act must be met to protect both the donor and Niagara Community Foundation. This means that the investment firm’s contractual relationship shifts from the client/donor to Niagara Community Foundation. However, the client/donor may remain involved as an advisor to Niagara Community Foundation and is entitled to receive copies of annual fund statements from the Niagara Community Foundation. 

Follow the External Investment Managers Program link for more information, or contact Bryan Rose, Executive Director, Niagara Community Foundation.