No more spreadsheets: Sub-accounting for endowment, foundation, and DAF clients

I know a long-time cyclist who, like a lot of athletes, tracks his performance over time. The thing is, back when he started cycling, amateur cyclists didn’t have access to performance-tracking platforms. So he adapted a platform used by runners, entered information from his bike computer into spreadsheets, and manually compared results over time. Too often, he found himself working with incomplete data, tinkering with spreadsheets when he could have been out training, or realizing that, somewhere along the way, he made a tracking error.

Still, it was a decent system, so he stuck to it for years. Then one day he checked into training platforms such as Strava, TrainingPeaks, Garmin, and Wahoo. He was amazed. He could get up-to-the-minute performance stats and analysis. He could compare current efforts to past rides in real time. He could see his progress from day to day, get graphic reports on performance, and more, all in the blink of an eye. He quickly switched to the new technology, and he’s been amazed by the difference it makes. It saves him time, gives him more accurate and meaningful information, and, as a result, improves his performance.

In my friend’s story, I see a parallel with many financial institutions and the sub-accounting required to serve foundation, endowment and donor-advised fund (DAF) clients. Firms like yours are using repurposed systems, manual spreadsheets and other outdated systems to do work that now can be handled much more easily by software designed for that purpose.

The challenge

Charitable gift services can be great for your financial institution, potentially bringing additional assets under management and building stronger connections to the community. And, with nearly half of all Americans giving to charity, and nine out of 10 high-net-worth individuals making philanthropic donations, you can be assured that the philanthropic services marketplace will continue to grow.

The problem is, administering endowment, foundation, and DAF services – especially the related sub-accounting – probably isn’t cooked into your institutions’ processes, systems, or technologies. As a result, an organization like yours often uses jury-rigged systems to administer philanthropic services, sort of like my cyclist friend using running systems to track his performance.

For many financial institutions, this means using traditional trust accounting systems to meet these needs, living with the fact that the requisite sub-accounting requires a lot of work-arounds and manual processing.

Think about it: Traditional trust systems recognize cash, mutual funds, stocks, bonds, and other investments, but they only execute trades and record NAV at the account level. Ren offers our iPhi software designed to give organizations the ability to focus transactions on the sub-account level. It also can track NAV on a daily basis and apply that information proportionally across sub-accounts, meaning it can report on sub-account values on a daily basis.

All of this means your firm must find a way to break that information down to provide the sub-account reports that endowments, foundations, and DAFs require or to respond to a request for more up-to-date information. Often, this work ends up being done on spreadsheets, with one or two people responsible for getting the work done when they can. Relying on that one or two individuals increases the risk of human error and puts the entire line of business at risk if one of those people should leave. It also creates organizational bottlenecks as other activities get put on hold.

The result: Cobbled-together processes and unwieldy solutions with few checks and balances, more mistakes, and a lack of transparency and auditability. And, perhaps most troubling, a team that is distracted from what they do best.

The iPhi solution

When Stellar Technology Solutions and Ren joined forces in early 2023, it allowed us to combine our decades of experience serving financial institutions’ charitable services groups with Stellar’s software solutions, including iPhi, the Stellar technology that powers a number of the top donor-advised fund (DAF) programs.   

With iPhi (short for “integrated philanthropy”), financial institutions get a web-based software solution that automates philanthropic sub-accounting activities for you and your endowment, foundation, and DAF clients. No more spreadsheets, no more manual data entry, no more retrofitted processes. Instead, you get software that not only makes processes run smoothly but also allows secure 24/7 access to information for your team and your customers.

iPhi gathers daily market data and applies it to all accounts and sub-accounts automatically, with the data flowing into individual endowment and trust accounts in accordance with their rules and fund structures. With this happening behind the scenes, your firm can generate daily net asset value reports, gather real-time information about grant processing and payments, and track available spend and distribution at the sub-account level. You’ll be able to adapt automated spending rules as needed, support multi-level reporting and statements, and ensure up-to-date reconciliation of balances.

Plus, online portals will allow your team, clients, and even donors to get real-time information reflecting external data and internal actions. Reports can be generated as needed and audits will be easily supported.

These features allow accounts to be reviewed at a high level down to the granular level, equipping your firm’s team to deliver needed information at the right time and to make this information available to customers who can then use it as they talk with their funders. The system also accepts donor data and information – which mean, if you want it to, it could even function as a customer relationship management (CRM) system.

Additional benefits

While tapping into the sub-accounting support provided by iPhi could dramatically improve the functions of your firm’s charitable services, other iPhi features could add to its value on an enterprise level.

For example, working with Ren and iPhi, your firm has access to a sponsoring charity (Renaissance Charitable Foundation) and support in creating DAFs and administering them, which means you can make it easy for your clients to take advantage of the benefits that DAFs deliver.

In addition, with iPhi Business Process Outsourcing (BPO), you get access to a wide range of support services, from data entry and transaction processing to donor letters and statements, all available either as a turnkey package or a tailored set of features. 

The bottom line with all of these features is that they take the burden for sub-accounting and other activities connected to your charitable services off of your team, allowing them to focus on what you hired them to do. At the same time, it allows you to increase the benefits you deliver to your firm’s philanthropy clients and deliver essential services more accurately and efficiently.

Which means, like my cyclist friend, you, and your team can focus on doing the work you want to do,and spend less time on the administrative tasks designed to support that work. Which, to me, sounds like a formula for success.

If you’d like to talk learn more about sub-accounting services and how they could help your institution, talk to our experts at Ren.

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