We talk to the US organization about "philanthropy technology" – aka philtech – how the sector of foundations is evolving, and the approach of the man who recently joined from the financial data and wealth management space.

When Chicago-headquartered private equity firm GTCR acquired Foundation Source last September, and at the same time appointed former Refinitiv wealth solutions head Joseph Mrak, it showed how far the world of foundations has come. 

Foundation Source supports more than 2,200 foundations representing over $20 billion in charitable assets. In all, a report for 2023 by Giving USA found that foundations accounted for 21 per cent of all giving in that year, or $105 billion out of a total of $499 billion. There are 105,757 private non-operating foundations in the US (source: IRS Exempt Organizations Business Master File, June 2023).

And that means the task of making the most of its operations takes a lot of technology and know-how. 

Joining the organization was quite a leap for a man who had worked in areas such as wealth management, but Mrak relishes the challenge of driving philanthropy technology – or “philtech” – as it is called.

The world of private foundations was “not necessarily on my radar,” Mrak told Family Wealth Report, when he joined Foundation Source. “I looked at the business and thought this was pretty interesting,” he said.

Foundation Source’s cloud-based software, used to help serve foundations, is “amazing” and Mrak sees big opportunities in the space.

There is regular debate – see an example here – about the pros and cons of using private foundations as opposed to donor-advised funds (DAFs). One difference, for example, is that foundations aren’t limited on the sort of assets they can hold, whereas DAFs are, said Mrak. Foundations also give their creators more control over where the money goes, and why. 

DAFs mainly support cash contributions to 501c3 organizations; foundations can carry out tasks such as run museums, food pantries or training camps, pay for documentaries, award prizes, and contribute to non-profits, provided the entities fit the foundation’s mission. Foundations typically have a greater remit than DAFs. That said, foundations can also use DAFs to reduce a tax burden and speed up delivery of funding in an emergency.

Mrak said Foundation Source is considering building a DAF offering at some stage.

Compliance with a rising amount of regulation is a task that private foundations need help with, such as ensuring that clients’ proposed grantees are recognized by the Internal Revenue Service as valid and in good standing. Other tasks include navigating federal, state and local laws on tax and charitable fundraising, calculating the minimum distribution requirement accurately, filing tax returns, keeping track of expenses and disbursements to a wide variety of causes, Mrak said. 

Mrak and colleagues are stepping up the pace of growth. Foundation Source recently appointed Lou D’Addario as chief revenue officer and Warren Bailey as chief information security officer.

These appointments were “pivotal” to accelerating Foundation Source’s enterprise strategy and making it easier to deliver “large-scale corporate solutions as we expand into new areas of the charitable giving landscape,” Mrak said.

In other moves, Foundation Source also appointed Vestigo Ventures founder Mark Casady to join its board of directors in March. Industry veterans Pamela Norley, former president of Fidelity Charitable, and Charles (Chip) Roame, founder and managing partner of Tiburon Strategic Advisors, joined its board of directors in November 2023.

And continuing the busy period, in February 2024, it acquired PG Calc, expanding its suite of charitable giving solutions to include planned giving software and services. 

Mrak measures the success of his tenure at the organization by it becoming an “easy button” to press for wealth advisors looking to help clients realize their philanthropy plans. “There are 70,000 wealth advisors out there,” he said.