Alms Alchemy

The National Christian Foundation’s ability to turn unusual contributions to gold is creating a new trove of generosity

Every year the Chronicle of Philanthropy publishes a list of the largest 400 charities in America. Last year, the National Christian Foundation was No. 15. But what may be more interesting is the word the Chronicle used to describe what type of charity NCF is: “other.” That word turns out to be perfectly apt.

Even NCF president David Wills doesn’t know quite where to place his group. When asked what other organizations NCF compares itself to, Wills says ­matter-of-factly: “None.”

That’s because the foundation is an unusual mix of Christian mission body, donor-advised fund, national nonprofit, and tax pioneer. It’s large and efficient like Fidelity—but religious. It’s religious like the Jewish ­Federations—but more national in scope. Its accounts are customizable like those at community foundations—but it has a tight focus on specific philanthropic purposes.

The net result is that the National Christian ­Foundation is zooming in popularity, outpacing household names like the American Cancer Society, Harvard University, and ­Habitat for Humanity in attracting funds (which it then sends back out the door in carefully targeted packages, as quickly as possible). In 2014, NCF distributed over $870 million to a range of Christian and humanitarian causes. What was once a small niche fund for faithful givers now finds itself an innovative leader among donor-advised funds.

And as if these successes were not enough, NCF has developed an additional, unusual strength: It is now one of the planet’s most sophisticated organizations in converting non-liquid assets into valuable charitable gifts.

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Giving trees, not just fruit

In November 2014, NCF employee Troy ­Austin found himself in North Dakota, addressing about a hundred local churchgoers in the ­Bakken shale region. In little more than the blink of an eye, they had gone from earning middle-class incomes to owning several million dollars worth of royalty interests in the oil beneath their homesteads. And they didn’t know what to do with it.

“They were already giving to the church. But they’re not giving as wisely as they could, and they recognize that,” Austin says. “One of the things they said is: ‘There are so many people up here who have wealth overnight, and we just don’t talk about it. So therefore we are all in the dark, and we’re spending our time surfing the Internet to find answers.’”

Fortunately, Austin had ideas about how they could give to their churches and communities in a smart way. He’d been working on a project to allow NCF to become a conduit for gifts of oil and gas interests. Though some universities and foundations have accepted petroleum royalty interests in the past, often outsourcing their management or selling them immediately, Austin found scant evidence of donor-advised funds accepting such gifts, let alone holding onto them long-term, or accepting donations of working interests—which come with more liability, as they bear the expense of getting the oil out of the ground, but also more potential for big payoff.

“We want to steward these resources just like a donor would choose to do. If it’s not an asset that the donor would choose to sell because they think it’s going to be more profitable to keep, then we want to be able to afford them that opportunity. Our goal is to try to maximize the asset.”

The NCF’s ability to capture complex assets for charity has helped transform it from a small fund to an innovative leader in philanthropy.

These are the kinds of puzzles the foundation has been solving for about two decades. NCF was co-founded in 1982 by attorney Terry Parker, who for a dozen years ran it with the help of just one assistant. But in the mid-’90s, Parker started accepting gifts beyond simple cash and stocks. As his expertise grew, so did his workload. Demand boomed, and the foundation has now given out nearly $5.3 billion in grants since its creation, growing to about 30 local affiliates with their own boards and staff.

Current president David Wills estimates that of the roughly $2.2 billion the foundation holds right now, $500 million of it is in the form of non-liquid assets. In addition to receiving real estate and various kinds of stock, NCF is also a leader in helping donors give away part or all of entire businesses. (Philanthropy’s Spring 2014 issue described how Alan and Eric Barnhart gave their $250 million crane and rigging company to charity through the National Christian Foundation.)

NCF employs about 20 experts—tax lawyers and financial gurus—to help make non-cash gifts happen. It offers simple fact sheets on its website to help donors understand the basics of giving unusual gifts and why they might want to do so. “It used to be in the fundraising world that when it came to these types of assets we’re talking about, donors would never give the tree, but would just give the fruit,” Wills says. And nonprofits would only accept fruit, not trees. “We’re saying, ‘No, that’s not what you would do if you were in business. So maybe that’s not what you should do if you’re a charitable organization.’”

The foundation is developing even more expertise in oil and gas interests. Austin’s project, dubbed Kingdom Energy, has accepted royalty interests from a handful of donors. And thanks to a risk-minimizing strategy that he created, NCF is now prepared to take working interests, though it has not yet received any. Since oil prices tanked in late 2014, more givers are deciding to hold on to their interests for now. Austin says several donors have told him they do intend to give away their interests, regardless of the market’s tosses and turns.

Austin says he has spoken with many devout members of the industry who believe that “the asset they generate is closely tied to God’s provision.” He’s met people who say: “We recognize that these minerals were in the ground, that our creator placed them there…. How could we not think of this from a stewardship perspective?”

Kingdom Energy has already become a go-to ­problem-solver. It recently stepped in to help out a donor who had royalty interests to give and a major university that felt ill-equipped to take them in. Now NCF holds the interests, and the proceeds go into a donor-advised fund and thence to the university.

“There were a lot of donors in Texas who had ­energy-related assets who were giving cash,” Austin says. “We just started asking questions like, ‘Should we not  be doing more?’ And that’s what led us to really start trying to innovate around this area, really just trying to constantly push the envelope.”

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A good pipeline

NCF has become so well known for its expertise in complex giving that it has become a valuable adviser to  donors who want to give a non-cash asset to a nonprofit.

One prominent example involved Samaritan’s Purse, the evangelical international relief organization led by Franklin Graham. A donor wanted to give the group a trucking terminal in the southeast U.S. But Samaritan staff worried the terminal could have “hidden ­toxicity”—perhaps spilled oil or other ­contaminated waste in its soil, for which the new owner could become liable, according to Jim Loscheider, the nonprofit’s vice president of donor ministries.

So Samaritan’s Purse called in NCF for help in assessing and, if necessary, avoiding any toxic liability. A cleanup effort by the donor later revealed there were only surface oil spills. Meanwhile, NCF was able to evaluate the property and transfer its six-figure value to the nonprofit. “NCF’s expertise is strong in making the complex simple,” Loscheider says.

Foundation staff have also given Samaritan’s Purse employees training on how to talk about donating businesses and other complex giving. Loscheider has even had NCF give a presentation to some of his donors about estate planning. The partnership has paid off: Loscheider estimates that his organization received more than $11.5 million from NCF donor-advised funds from 2010 to 2014.

Unlike Samaritan’s Purse, many of the nearly 20,000 charities that receive gifts through NCF-administered funds each year are low-budget organizations. These small ministries and other nonprofits would be unable to accept complex assets unless NCF helped convert them into cash.

In addition to nonprofits, the foundation has nurtured relationships with financial advisers. It doles out advice on whether donors should give away businesses or buildings before they sell them, or give away the proceeds after. “Over the years we’ve worked with thousands of advisers,” Wills says, and the foundation has helped them to think carefully with donors about when it makes the most sense to give.

Wills underscores that NCF tries to be “relationally engaged” with everyone it works with. NCF employee John Putnam, president of the affiliate in Charlotte, first got to know NCF through his former job as a financial adviser. “The one thing that very much impressed me was not only their technical expertise but their—to use a non-technical term—bedside manner,” he says. “It was just very warm.”

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The why, not just the what

NCF is loaded with expertise on how and where donors can give. But in recent years it’s also become a pioneer in answering a more philosophical question: Why should donors give? Wills says he got into that business almost by necessity. “Everybody’s asking and answering those three questions all the time…. You can’t avoid answering them.”

To inspire reflection on those questions, the foundation partners with Generous Giving, a nonprofit (funded by the Chattanooga-based Maclellan Foundation) that helps donors think deeply on charity. Wills helped found Generous Giving and sits on its board. The two organizations co-sponsor 24-hour retreats for NCF donors called Journeys of Generosity.

During a JOG, as they’re affectionately called, a small group of givers gathers to hear stories of remarkable benevolence, discuss why giving is good, and explore their own motives for their philanthropy, all aided by a staff facilitator. (JOGs are solicitation-free: ­Generous Giving offers no advice on where to donate your money.) Though based on a Christian perspective, JOGs go beyond the typical Sunday sermon.

“We believe the most powerful influence is peer influence. Essentially all the stories are peers talking about their own generosity,” says Generous Giving president Todd Harper. “And then the experience is very interactive and engaging, rather than didactic. We’re not teaching; we’re telling stories and discussing.”

JOGs also spark conversations between the wealthy that don’t normally happen in an ecclesiastical setting, allowing donors to talk about topics (such as lifestyle choices) that could be awkward missteps elsewhere. “This permission to be free and talk with my peers about these issues about handling wealth in a God-honoring way is a different dynamic for many people,” Harper says.

He’s seen a transformative effect, as uncertain donors trade in an “ought-to” mindset about their giving for a “get-to” mindset. “The participants experience the joy, the freedom, the purpose that these families are experiencing in living this way, and it’s very attractive,” he says. “I’ve never met an unhappy generous person.”

Generous Giving led more than 150 JOGs in 2014, and at least 30 were held specifically for NCF donors. And Generous Giving is working to train local NCF affiliate presidents and boards to lead JOGs themselves.

NCF employee Putnam once helped organize a Journey of Generosity in his previous stint as a financial adviser. Now he’s excited to bring JOGs to NCF givers in Charlotte, where he’s based. “It was very enlightening,” he says. “One commenter said: ‘We’ve been doing this a long time and thought we understood everything. After this 24 hours, we realize there is a lot more we could be doing.”

The factors attracting so many donors to the National Christian Foundation likely include its unusual efforts to spark generosity. They certainly include the foundation’s creative and expert handling of unique gifts. Wills thinks there is even more, though, to the story of NCF’s remarkable rise.

“It probably won’t surprise you,” he says, that he credits his group’s success to a higher power. “Frankly our growth is kind of almost inexplicable. But for God I can’t imagine it would have happened.”

Liz Essley Whyte is a contributing editor to Philanthropy.

Religious groups of all shapes and sizes help faith-filled donors plan big gifts—the Catholic Community Foundation, the Presbyterian Foundation, and the Hope Christian Community Foundation are examples. But perhaps the closest comparison to the National Christian Foundation is the Jewish Federations of North America, a network of 152 organizations sprinkled across the country. Taken together, the Jewish Federations (which are more independent and loosely tied than NCF affiliates) are a giant in philanthropy, raising and giving out $3 billion every year, according to Steven Woolf, senior tax policy counsel for the organization. The funds often go to support national and international Jewish causes, such as Birthright, but also to local services, such as kosher meals for the needy, and to Jewish education.

The national umbrella group coordinates the federations’ efforts and passes on best practices for fundraising. But each federation has its own giving campaigns and donor-advised funds (which are also sometimes managed by closely tied Jewish community foundations).

“It was and is very much a local movement. Federations really started as the local address for Jewish philanthropy and Jewish social services, most often in eastern urban areas—Boston, New York, Cleveland, Detroit. And federations themselves are still very autonomous in both their fundraising and social service support,” Woolf says.

Another major player in the religious giving field is LDS Philanthropies. Housed within the Church of Jesus Christ of Latter-day Saints, the organization’s staff members are all paid by the church, so that any gifts that go through LDS Philanthropies do so with $0 in administrative costs deducted.

The gifts go toward LDS initiatives such as humanitarian services around the globe, Brigham Young University, and the Perpetual Education Fund, a church-run student loan program.

Though most Mormons give their customary tithes and fast offerings directly to the church, LDS Philanthropies serves donors who wish to give more to specific projects or take advantage of the church’s donor-advised funds or planned-giving services. The group raised more than $160 million in 2014, with gifts coming in all shapes and sizes. “We could deal with someone who gives ten cents or tens of millions of dollars,” says Tanise Chung-Hoon, managing director.