Can an investment manager include the Foundation’s account when transferring their “book” to another investment advisor?
No. Any change in the underlying structure of the firm or investment advisory relationship will result in the termination of the delegation of investment management. If the donor establisher of the fund is still alive, they may suggest a new advisor that must undergo the Foundation’s diligence process and must be approved by The Pittsburgh Foundation.
What happens when an investment advisor changes brokers/firms?
The donor establisher will need to suggest in writing the use of the investment advisor at their new firm. As with all changes in the structure of the investment program, the move of an investment advisor to a new firm requires the completion of the diligence process and subsequent approval of The Pittsburgh Foundation before this new relationship can be established.
In the event the donor establisher is deceased the relationship will terminate and assets associated with any charitable funds will be moved to appropriate corporate portfolio(s).
If an investment advisor is attached to a charitable fund through the American Funds program, what happens if that advisor moves to a new broker/firm?
The advisor will need to ensure that we have their current American Funds broker number and the name of the new firm. Staff at the Foundation is then responsible for ensuring the broker is appropriately attached to any existing funds.
An investment advisor was recently approved as a Third-Party Manager. How can they manage the charitable funds of TPF fund advisors?
By policy no existing funds may be transferred to new investment advisors under the Third-Party Manager Program. However, with reasonable cause and on a case‐by‐basis, existing funds may be transferred to new advisory relationship. Examples of reasonable causes are where we can document that the manager was previously attached to a fund and suggested by the donor establisher (as in the case of a broker attached to a charitable fund through American Funds) or there is a documented relationship with a living donor who is suggesting the advisor.
Under no circumstances can advisors prospect for new funds from the existing donor base. In the event such activities become apparent the termination of any existing relationships or pending approvals will be revoked.
What happens when a manager was approved, but does not refer any donors right away?
Manager approvals are conditional until a donor establishes a fund and suggests the use of the investment advisor. Once a fund is established their investment management is evaluated at least annually. Should no fund be created and portfolio established with the advisor within 1 year of being conditionally approved, the approval is revoked and must be re‐instated by the advisor confirming that the investment structure under which they were approved remains the same. In the event a fund is not established after 3 years then the advisor will be required to complete a new Investment Manager questionnaire and must be approved by The Pittsburgh Foundation.
Are there limitations on the amount of fees an investment advisor can charge?
There is no official limit to the fees an investment advisor can charge. However, fees are a specific part of the approval process and excessive fees will be a reason to preclude an advisor from being recommended to and approved. Additionally, investment advisors should be made aware of the range of existing fees, their relative location within that range and that the Foundation will discuss the fee on this investment with the donor and its relative basis versus that of the Foundation’s corporate portfolios.
What fees are included in the investment management fee?
All investment related fees should be disclosed as part of this calculation, including, but not limited to the weighted investment management fees for delegated funds and managers, custodial fees, account fees, consulting fees, and estimated transaction fees.
What is the minimum portfolio size that a third-party manager can run?
The current minimum amount to establish a separately managed portfolio is $250,000. This amount may change in the future. However, in the event the portfolio drops in value due to inline investment performance the relationship may remain intact.
What happens when the donor establisher dies?
Provided the investment manager remains in good standing with the Foundation and manages the investments under the existing investment structure the relationship will remain intact. Should the investment structure change in an appreciable manner – such as the investment advisor retiring or switching firms – the relationship will terminate and associated assets will be transferred to the appropriate corporate portfolios.
Can I manage my own donor-advised fund?
Yes, you are able to manage the assets that represent your donor-advised fund however, as a disqualified person, you are not able to charge any fees. For that reason, we require that all assets managed by disqualified persons be segregated in a separate portfolio that pays no fee.
Who is a disqualified person?
According to the IRS, under section 4598 of the Internal Revenue code, a disqualified person is a donor or advisor of a donor-advised fund or a substantial contributor of a supporting organization as well as family members and 35 percent controlled entities with respect to donors, advisors and substantial contributors.