New benefit targets charitable giving
One new benefit offering is aiming to help employees with their charitable giving.
Global Impact, a nonprofit organization that works with international charities, has partnered with public benefit corporation Charity Charge to offer a donor-advised fund (DAF) and cashback credit card as an employer-sponsored benefit. Global Impact is offering employers access to its Growfund giving platform, which operates like a 401(k) plan.
As an added benefit to an existing financial wellness program, employers can designate donor-advised funds to each of their employees through a white label offering. Workers can deposit pre-tax dollars straight from their payroll into the account; employees also can set up recurring payments.
Like a 401(k), Global Impact will invest those funds with Vanguard 500 Index Fund. Executives say the rate of return hovers between 5% and 7%.
“The beauty about that is the money sits in your account and you can have it grow [and] you can grant it out,” says Ann Canela, vice president of Global Impact. “You can plan for what you want to do with that money.”
Unlike other DAFs that require a minimum initial contribution between $5,000 and $25,000, such as accounts with Fidelity, Charles Schwab and Vanguard, Growfund has no minimum requirement.
However, the nonprofit charges 3% of assets under management up to $20,000 “and then drops to 1% and scales down from there,” Canela says.
“Our hope is that we keep our fees under what it is expected to return,” she says.
Although the company only has seven employers using the white label platform, Growfund has $1.3 million in total assets under management, according to Global Impact.
The partnership with Charity Charge will also help employees invest more money into their DAFs through the cashback program, where 1% of purchases will go directly into the account. The company hopes to expand the program to include corporate cards as well, says Canela.
The hope is that employees will be able to save and plan their charitable giving, thus changing the way they interact with not only their employer but also the organizations they give to, she says.
For example, a $25 monthly donation to Oxfam International, one of the listed charities for Growfund, might not warrant the same attention from the organization as a $312 annual check.
Similarly, employers can offer a contribution or match to employees’ DAFs, especially after a disaster strikes and donations ramp up, as happened following the Syrian civil war or Hurricane Sandy.
“For employers to be able to facilitate that process and be able to take care of their employees in that way, we see that as the next level of deepening that employee engagement,” Canela says.