The split-interest nature of a planned giving portfolio differs significantly from that of an endowment. The balancing act between the distinct interests of the income and remainder beneficiaries limits the asset classes available for planned giving portfolios.
Most endowment portfolios dwarf the typical planned giving portfolio. When coupled with the minimum investment requirement of most alternative investment funds, the smaller size of the average planned giving portfolio can leave little room for an allocation to alternatives.
Both endowment and planned giving investment portfolios are subject to liquidity constraints related to distribution requirements; however, the size, frequency and unpredictability of planned giving portfolio outflows make the inclusion of some alternative funds inappropriate.
Although planned gifts have a similar tax advantage as non-profits, there are some unique tax rules that limit the suitability of certain alternative assets.
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