Author ORCID Identifier

Daniel Solow

Document Type

Article

Publication Date

8-8-2023

Abstract

A novel approach to legacy donations, called the “Master Fund Strategy,” is proposed. Potential long-term financial benefits for both donor and nonprofit organizations (NPOs) when compared to a “Traditional Fund Strategy” are established through mathematical analysis and computer simulations, providing nonprofit marketing and fundraising professionals an alternative way to lock in bequest funding. In particular, formulas are developed for computing relevant financial quantities associated with the two strategies. Conditions are presented under which the Master Fund Strategy is better than the Traditional Fund Strategy, in the sense that there is a point in time when the net present value of the distributions to the NPO under the Master Fund Strategy exceeds that of a Traditional Fund Strategy and continues to do so beyond that point. These analytical results are obtained under the assumption that the investment rates of return and the fund payouts rates are known constants; however, formulas for relaxing these restrictions are also developed and the consequences are examined with Monte Carlo simulations.

Keywords

charitable donation, estate planning, legacy donation

Publication Title

Journal of Philanthropy and Marketing

Volume

29

Issue

1

Rights

© 2023 The Authors. Journal of Philanthropy and Marketing published by John Wiley & Sons Ltd.

Creative Commons License

Creative Commons Attribution 4.0 International License
This work is licensed under a Creative Commons Attribution 4.0 International License.

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