Christian Donor-Advised Fund Succeeds by Accepting Complex Assets

Alan Barnhart has been working in his family’s business, Barnhart Crane and Rigging, ever since he was 10, helping the company’s profits grow to more than $60-million annually.

But Mr. Barnhart and his wife have studiously shunned the trappings of affluence because their Christian faith warns them about the temptations and other dangers of great wealth.

So the couple and their six children began living on $150,000 a year and giving the rest away, eventually reaching their goal of donating $1-million each month to charities, with advice from employees. Then in 2007, Mr. Barnhart and his brother Eric, co-owner of Barnhart Crane, made a momentous decision: to give away their entire company.

To pull it off, they turned to the National Christian Foundation, a donor-advised fund.

National Christian now holds 99 percent of Barnhart Crane. The brothers continue to run the company, and profits flow into charitable accounts at the foundation. The family and their colleagues at the company use the accounts to make grants, mostly to overseas projects.

Such large donations are one reason the National Christian Foundation has been growing quickly. Donations to the fund increased by 33 percent last year, to more than $875-million; now the group is No. 12 on the Philanthropy 400, up from No. 19 in last year’s survey of charities that raise the most from private sources.

Like other donor-advised funds, National Christian was buoyed in part by the rise in the stock market in recent years but also by threats from lawmakers last year to limit the charitable deduction, which in the end was left intact.

But National Christian is different from many of the other funds: Its donors give substantially more as a percentage of the fund’s assets than donor-advised funds offered by companies, Jewish federations, and community foundations. Last year, its grants exceeded $605-million.

Evangelical Donors

National Christian Foundation is also different because, unlike Fidelity Charitable or community foundations that serve a single region, it makes a point of reaching out to evangelical donors who tend to give to religious causes.

The foundation’s winning fundraising approach, according to its president, David Wills, combines a religious focus with national support for donors and a growing network of 27 local offices, with half a dozen more in the works. Those offices provide a place where donors can interact with others who share their beliefs and have access to local legal and financial experts who help them figure out the best way to carry out their charitable plans.

“Typically a group of high-capacity givers get together, and they know someone in another one of our local offices,” Mr. Wills says. “They say ‘Wouldn’t it be great to have one in our city?’”

Noncash Gifts

Another key to National Christian Foundation’s fundraising achievements is its ability to accept complex assets, like the Barnharts’ family business.

“More and more often people are asking, ‘What is the wisest thing for me to give?’” Mr. Wills says. “This didn’t used to happen. In the past, we just tried to get them to think about stock gifts in addition to cash. Now they are more attuned to the fact that it’s smart to give something of high value, held long term, and highly taxed.”

Working with privately held assets has helped the foundation avoid the big drops that other donor-advised funds—which rely heavily on gifts of publicly traded stock—suffered during the recession.

By 2010, Mr. Wills notes, the National Christian Foundation held $1-billion in cash and more than $300-million in illiquid assets. Just two years later, illiquid assets had grown to more than $500-million while cash assets stood at $1.2-billion.

“More and more people are making gifts not designed to be liquidated immediately,” says Mr. Wills. As with the Barnhart gift, “we get a business interest that throws off cash.”

The Barnharts, says Mr. Wills, “didn’t see themselves as owners. They knew God had given it to them.”

Working With Families

Another family that feels the same way is the Green family, which founded Hobby Lobby, a privately owned national chain of 561 stores.

The Green family says it donates half of Hobby Lobby’s profits to charity, and that 90 percent of the gifts are made through a handful of donor-advised funds the Greens created at the National Christian Foundation.

“Because of their belief that everything comes from God, they basically send it back to Him,” Mr. Wills says.

The Greens are a good example of how the foundation’s local offices are able to work closely with families on their charitable plans and activities. Over two years, its Kansas City office was a meeting place for the family as it sought to articulate a giving plan for four generations.

Working with David Green, who founded Hobby Lobby, and his wife, Barbara, the couple’s three adult children and their spouses came up with a family mission “to go on the adventure of impacting the world for Christ, love God intimately, and live extravagant generosity by giving time, talent, and treasure.”

They also identified values such as “live with humility and integrity.”

Then third-generation Greens, who have a donor-advised fund from which they make gifts as a group, were each asked to select one of the values and use it as a guide in their personal and professional lives. Their children will be asked to do the same when they become adults.

Staff members and volunteers at the National Christian Foundation’s local offices “help families understand their calling,” says Mart Green, a second-generation family member. “They helped us pull together.”

Room for Growth

Most of the local offices have at least two paid staff members, but 10 are run by a “Generosity Council” of full-time volunteers. National Christian’s headquarters in Atlanta manages all of the donor-advised accounts.

Together the foundation’s local and national offices have recruited more than 9,000 Christian donors. Many are families like the Greens and Barnharts who give $10,000 or more a year to their churches and other religious groups, such as World Vision and Compassion International, while occasionally supporting other causes such as disaster relief or a local hospital.

At least 80,000 to 100,000 American Christian families give away as much, Mr. Wills says.

That means there’s still room for growth by the National Christian Foundation, even though studies have found that American society is becoming more secular.

Donors’ religious beliefs set the National Christian Foundation apart in other ways. Last year donors asked the fund to distribute grants worth 42 percent of its assets, more than double the average percentage given away by commercially sponsored donor-advised funds and Jewish federations, which on average give 17 to 19 percent of their assets away, and community foundations, 14 to 16 percent.

“Christians are interested in making a wise grant out of a fund so it can go to work,” Mr. Wills says. “These are not people who sit on assets. We want to keep the money moving.”