Foundation Source has acquired Vennfi, the parent company of the donor-advised-fund (DAF) sponsor platform Charityvest. The move is expected to help client retention for Foundation Source, whose existing software supports planned giving and private foundations.
“The problem we had is if a client winds down their foundation over time — say they get it down to $150,000 — they feel the foundation is too onerous at that level that dollars either get fully granted out, which happens maybe 20% of the time. Or 80% of the time, it gets dissolved into a DAF,” Foundation Source CEO Joseph Mrak III told Crain Currency. “We wanted a way to capture those assets on our side and keep our customers.”
Among Foundation Source’s clients who support private foundations, 45% also make contributions through DAFs. “A lot of them use it for anonymous giving, some use it to hit their 5% at the end of the year, or they can transfer dollars into the DAF,” Mrak said. “Generally, if people decide not to move forward with a foundation, it’s not because they don’t want to donate; they just look at a foundation and think it’s a lot of work. Our largest competition would be a DAF.”
Vennfi’s mobile-friendly technology, which lets users search for charities and donate through DAFs via Chartyvest, was attractive to Foundation Source, which previously bought the planned-giving software PG Calc in February.
After Foundation Source’s acquisition of Vennfi, Charityvest Inc. will continue as an independent entity managed by its own board of directors.
“We hope to take our technology and expand it to more places, such as partnering with banks and financial institutions to power their donor-advised-fund programs,” said Vennfi CEO Stephen Kump.
Charityvest also provides a white-label product for independent registered investment advisers to offer donor-advised funds to their clients. Serving corporate donors is another area that Foundation Source is looking to tap into via Vennfi, as Mrak said many clients have asked about wanting to offer workplace giving programs as an employee benefit.
“[Corporations] can create DAFs seamlessly for all their employees and as a benefit put money in for their employees to give away,” Kump said. “We can do traditional matching programs and push the envelope on having donor-advised funds as a benefit alongside your 401(k)s and HSAs [health savings accounts] as an employer.”
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