Philanthropy Management

Transcription

1 Philanthropy Management Philanthropy Management How do I start a private foundation? How do I know if the money I donate is being used effectively? As a non-profit, how can we become more effective at fundraising? How can I get my family interested in philanthropy? How do I find a non-profit board to serve on? ADVANCED RESOURCES CENTER CAPABILITIES CRC (7/16)

2 Philanthropy Management We deliver the information, advice and support needed to help you define your philanthropic goals and create an effective strategy to reach them. With the right advice, your good intentions can become your greatest legacy Your favorite causes can become family causes Your wealth can become a tool to change lives Your passion for others can become a strategic plan for giving and one that inspires others to follow suit. If your passion leads you to join a non-profit board, there are ways to help ensure that the non-profit is governed well and raises funds effectively ADVANCED RESOURCES CENTER CAPABILITIES CRC (7/16)

3 Philanthropy Management Philanthropy Management supports individuals, families, corporate and private foundations, and non-profit organizations by offering a suite of services to help define and realize clients charitable missions Specialized Philanthropic Experience Established in 1998 Pioneer in offering philanthropic services Experience assisting foundations with assets from $25MM to more than $1B Leverage expertise with private and corporate foundations, donors, and non-profits Author academic journal articles, white papers, books, and Morgan Stanley publications on thematic issues Sharing a Culture Of Philanthropy Demonstrated commitment to the communities in which we work Active non-profit leadership roles in local, national, and international organizations Integrating Resources to Help You Accomplish Your Philanthropic Mission Leverage resources of both Morgan Stanley and external providers Coordinate partnerships between Private Wealth Advisors and Philanthropy Management team Available to supplement a foundation s professional staff or provide a complete outsourced solution Delivering Highly Customized, Innovative Solutions Third-party administration, operational, grant making, and governance solutions Donor-Advised Fund with over $850MM in assets and more than $1Bn in grants distributed1 Customized private label back office and administrative support to non-profit donor-advised fund (DAF) opportunities Introducing planned giving solutions for charitable gift annuities, pooled-income funds, and charitable trusts beginning in 2016 ADVANCED RESOURCES CENTER PHILANTHROPY MANAGEMENT CRC (5/16)

4 Philanthropy Management The Philanthropy Management Offering ADVISORY SERVICES Identifying effective and strategic giving options Researching charities to help identify ones that complement your philanthropic aims and operate efficiently Conducting philanthropic meetings and retreats to discuss family values, grantmaking strategies and charitable goals GIVING ASSISTANCE Offering insight and advice on private foundations, donor-advised funds, and other charitable vehicles Educating you on methods of tracking the effectiveness of your philanthropy Keeping you informed on emerging trends in philanthropy Supporting your private foundation, donor-advised fund, charitable trust, and non-profit organization in creative programming to scale the impact of your gifts CONNECTIONS Establishing philanthropic giving circles which extend the impact of individual efforts Identifying board positions and assisting you through the protocol of becoming a board member Working with you and your outside advisors to create grant agreements and negotiate the terms of your gift Connecting you to non-profit leadership and industry experts financial instrument or to participate in any trading strategy. Please refer to important information, disclosures and qualifications at the end of this material. ADVANCED RESOURCES CENTER CAPABILITIES CRC (12/17)

5 The Philanthropy Management process Philanthropic resources should be managed and allocated as strategically as the rest of your portfolio ASSESSMENT Holistic View of Organization Mission and objectives Goals and values Board skills and effectiveness Administrative staff needs and capabilities Unique aspects of organization GROWTH MANAGEMENT Optimize Philanthropic Effort Governance best practices Recruiting Education Impact evaluation and tracking Grant-making design / fundraising Advocacy and awareness Client events and conferences RISK MANAGEMENT Protect Assets and Reputation of Organization Ensure best practices Compliance monitoring Financial / grant reporting Collaborations Introductions Publications ADVANCED RESOURCES CENTER PHILANTHROPY MANAGEMENT CRC (5/16)

6 Services for Private (Family) Foundations Family Foundation Needs Preserve and grow the endowment assets that support their mission and values Address board development and leadership succession Manage complexities of financial regulatory environment, IRS staffing requirements, and state regulatory compliance Lessen administrative demands to focus on mission Evaluate the outcomes and impact of charitable programs Collaborate with like-minded philanthropists Explore grant-making opportunities, including scholarship programs and international granting Services Turn-Key Solutions for Family and Corporate Foundations Advisory (Offered by MS Philanthropy Management) Facilitate board efforts to redefine strategic direction Help craft and redefine mission statement Provide tactical support on grant making policies Perform due diligence on supported organizations Vet potential grant recipients Draft agendas for board meetings Counsel the executive director on board composition and other issues Make introductions to like-minded philanthropists Educate and prepare next generation for future responsibilities ADVANCED RESOURCES CENTER PHILANTHROPY MANAGEMENT CRC (5/16) Outsourced Services (Offered by Foundation Source 1 ) Research Financial and Grant Reporting Administration of matching gift and volunteer programs Governance Compliance monitoring Transaction processing Tax preparation and filing Advanced grant-making services Advanced compliance and tax services 1. Foundation Source is the largest third-party provider of back office foundation management services in the United States. Additional fees apply.

7 Private Foundation Services in Action 1 Circumstances Family patriarch passed away, fully funding a $50+ million family foundation The only heir interested in running foundation was the patriarch s daughter The patriarch s son served as foundation president The son nominated the daughter to become executive director, but needed help overcoming a lack of enthusiasm expressed by other family members Solution Philanthropy Management assisted foundation president with drafting a presentation as to why the daughter ought to be hired as executive director Board agreed to hire the daughter and utilize Philanthropy Management s services to provide a broad range of support Facilitated board efforts to redefine strategic direction of the foundation towards green technology Helped craft and redefine mission statement Created foundation s grant making policy requiring multimillion dollar grants Vetted potential grant recipients, make introductions, and conduct site visits Drafted agendas for board meetings Consulted the executive director on inclusion of cousins on foundation s board Reviewed guidelines in patriarch s will to help ensure foundation s mission complied with the patriarch s wishes Assisted the executive director in obtaining an experienced outside opinion Made introductions to several experienced philanthropists working in the area of green technology The executive director quickly established her credibility with the foundation board and together they were able to refocus their giving on fewer, more transformational gifts in the area of green technology 1. The example presented is provided for illustrative purposes only. It does not represent a specific client situation, but it does represent generally ways that Philanthropy Management can help clients with similar circumstances. Each client's specific situation, goals, and results will differ. ADVANCED RESOURCES CENTER PHILANTHROPY MANAGEMENT CRC (5/16)

8 Services for Public Foundations and Endowments Public Foundation and Endowment Needs Formulate strategy Streamline operations Hire talented staff Improve governance Identify and retain effective board members Make connections Raise money Host / attend donor events Services Philanthropy Management advises in the following areas: Develop / refine charitable mission Create strategic plan Perform non-profit financial health analyses Assist in hiring and training staff Identify high-impact board members, optimize volunteers Assist in maximizing fundraising capabilities Establish Donor-Advised Fund Morgan Stanley DAF Morgan Stanley Private Label DAF Donor-Sponsored Supporting Organization Society Foundation Planned giving vehicles Charitable Gift Annuities Pooled Income Funds Charitable Trusts Facilitate board retreats Speaking engagements and networking collaborations ADVANCED RESOURCES CENTER PHILANTHROPY MANAGEMENT CRC (5/16)

9 Foundation and Endowment Services in Action 1 Circumstances Client was running a for-profit jewelry company, promoting tradenot-aid, to empower women in Africa Company could not effectively fundraise since it was not a public charity, and could not offer charitable income tax deductions for donations Company s work, while admirable, was not receiving sufficient public attention or raising adequate awareness due to poor marketing Solution Philanthropy Management assisted client in establishing a Donor- Sponsored Supporting Organization Established as a 501(c)(3) public charity Allowed organization to engage in broad-based fundraising By utilizing a Donor-Sponsored Supporting Organization, the client was able to effectively fundraise for the programs employing women in Africa and build a school to ensure their children have access to primary education to help prevent a life of poverty for the next generation Promoted work of founder and non-profit in publication reaching Morgan Stanley clients and employees worldwide Featured artisan jewellery in Philanthropy Management s Gifts for Good catalog 1. The example presented is provided for illustrative purposes only. It does not represent a specific client situation, but it does represent generally ways that Philanthropy Management can help clients with similar circumstances. Each client's specific situation, goals, and results will differ. ADVANCED RESOURCES CENTER PHILANTHROPY MANAGEMENT CRC (5/16)

10 Services for Family Offices and Individuals Family Office and Individual Needs Focusing charitable goals and ambitions Articulating a mission Recording family / individual story Developing next generation family members Formulating a strategic approach to giving Tax and estate planning strategies Creating awareness in order to sustain and scale charitable work Services Philanthropy Management offers both charitable giving solutions and philanthropic advisory services Giving Solutions: Private Foundation Donor-Advised Fund Morgan Stanley DAF Morgan Stanley Private Label DAF Donor-Sponsored Supporting Organization Society Foundation Planned Giving Vehicles Charitable Gift Annuities Pooled Income Fund Charitable Trusts Advisory Services: Developing and implementing charitable grant making strategies Advising on the creation of customized grant agreements between donors and non-profits Renegotiating grants to optimize donor situations Advising on the type, amount, and timetable of grants Forming and operating scholarship programs Bequest services ADVANCED RESOURCES CENTER PHILANTHROPY MANAGEMENT CRC (5/16)

11 Family Office and Individual Services in Action 1 Circumstances Client s daughter struggled with type 1 diabetes for years Inspired by her daughter, the client decided she wanted to serve on the board of a non-profit diabetes research organization Client was unfamiliar with non-profit landscape, board election process, and responsibilities of being on a non-profit board Client was uncomfortable asking for donations from family, friends, and colleagues Client was concerned about personal liability and risk of board service Solution Philanthropy Management assisted in the following ways: Surveyed domestic and international landscape of diabetes research non-profits Contacted organizations to learn about board openings and board member expectations Narrowed the list of organizations for the client to review Prepared her for board service by advising on process for filling out paperwork and prepping for board interview Helped client create a board ready resume Client was ultimately elected to a board, sits on its executive committee, and has helped raise over $10 million in donations 1. The example presented is provided for illustrative purposes only. It does not represent a specific client situation, but it does represent generally ways that Philanthropy Management can help clients with similar circumstances. Each client's specific situation, goals, and results will differ. ADVANCED RESOURCES CENTER PHILANTHROPY MANAGEMENT CRC (5/16)

12 Philanthropy Management Team Melanie Schnoll Begun Managing Director Melanie Schnoll Begun leads Morgan Stanley s Philanthropy Management and exemplifies her professional work by living a life of committed action. For over 18 years she has worked with many of the Firm s wealthiest and most influential clients. She develops focus areas for client s philanthropy; engages senior and millennial generations in their foundation s governance; designs customized grant portfolios; aligns client values with impactful investing; and facilitates giving circles, board retreats and educational events. In 2000, Melanie launched Morgan Stanley GIFT, the Firm s global Donor-Advised Fund. In 2012, she launched Foundation Management Services, a philanthropic advisory and administrative services platform for corporate and private foundations. She is also responsible for the Firm s Nonprofit and Endowment Consulting Services. Melanie is a thought leader. She was honored in May 2014 by the Rotary Club of Verrazano as Humanitarian of the Year, and in June 2013 received the Juvenile Diabetes Research Foundation s Perseverance Award. She is the co-editor of Morgan Stanley s Perspectives in Philanthropy and is a popular speaker. She has published articles in the Journal of Taxation, has been quoted in The New York Times, Wall Street Journal, Barron s, Bloomberg and Investment News and has appeared on such programs as Good Morning America and CBS News. Melanie received her law degree from Quinnipiac University Law School. Melanie is an insightful and tireless advocate. She is the current nominating chair and former board president of the JDRF New York City chapter. She serves as Morgan Stanley GIFT s board president and on the advisory boards of the Naomi Berrie Diabetes Center, Quinnipiac University Law School and Grameen America. She lives in New York City with her husband and two boys and has a passion for golf, marathons and triathlons, which she competes in to raise awareness and funding for her charitable causes. ADVANCED RESOURCES CENTER PHILANTHROPY MANAGEMENT CRC (5/16)

13 Philanthropy Management Team (cont d) Chad Bolick Executive Director and Senior Philanthropic Advisor Chad Bolick is an Executive Director in Morgan Stanley s Philanthropy Management group. Based in San Francisco, Chad is responsible for providing customized philanthropic advisory services to private wealth management individuals, families, and family offices, as well as nonprofit, foundation, and other institutional clients. Chad brings 15 years of experience in management consulting, international development, corporate philanthropy, and nonprofit fundraising to the team. Prior to joining Morgan Stanley, Chad served as Director of Global Partnerships at FSG, a boutique social impact consulting firm co-founded by Harvard Business School professor Michael Porter, where he advised large foundation and nonprofit clients. Prior to FSG, Chad served as the Director of Impact and Innovation for the Tides Foundation and as Director of Partnerships at BSR (Business for Social Responsibility). At BSR, Chad launched HERproject, an award-winning program focused on women s health in the apparel and agricultural sectors across Asia and Africa. Chad started his career in Asia where we lived for 5+ years, first with the American Chamber of Commerce in Vietnam and later with The Asia Foundation. Chad received his B.A. in International Relations from the University of North Carolina at Chapel Hill and his M.A. from the Fletcher School of Law and Diplomacy at Tufts University. He was also a fellow at the Rockefeller Foundation s Bellagio Center in A frequent speaker on philanthropy, international development, and impact investing, Chad has presented at the Skoll World Forum (Oxford, U.K.), CSR Asia Annual Summit (Hong Kong), Shared Value Leadership Summit (New York), and Asia IIX Impact Forum (Singapore), as well as locally in the Bay Area with the Northern California Grantmakers (NCG), Mills College, and Stanford Center on Philanthropy and Civil Society. He has also contributed to the Stanford Social Innovation Review and Huffington Post. Chad is an active board member of REMAKE, a global nonprofit focused on sustainable consumption, as well as an advisor to Fast Forward, a San Francisco-based incubator focused on nonprofit technology startups. ADVANCED RESOURCES CENTER PHILANTHROPY MANAGEMENT CRC (5/16)

14 Philanthropy Management Team (cont d) Steven J. Rosandich Vice President and Senior Philanthropic Advisor Steven J. Rosandich develops new charitable products and advisory services for high net worth clients. He conducts due diligence on nonprofit organizations and analyzes legal and taxation issues related to charitable giving. Steven helps clients identify innovative giving strategies; track the effectiveness of charitable dollars and engage in effective grant making. Steven joined the firm in 1988 and has been working in Philanthropy Management since Steven has extensive experience in the field of compliance and state regulations and frequently writes on issues related to charitable planning. He is co-editor of Perspectives in Philanthropy, Morgan Stanley Philanthropy Management s client journal. In 2011 he co-authored the article, Simple Tests Can Save Countless Lives which appeared in Perspectives in Philanthropy, Vol. 5, Medical Philanthropy and Global Healthcare. Steven authored the publication Primer on Planned Giving, Best Practices for Private Foundations - What They Must Do, Must Not Do and May Do and Guidelines for Charitable Giving in Turbulent Times. He also co-authored the white paper, Giving Without Guilt: Helping Women Realize Their Full Giving Potential. Steven has served on the Junior Committee of the Federation of Protestant Welfare Agencies and on the Advisory Committee of NURTUREArt. Steven is an engaged community supporter of the Little Sisters of the Assumption Health Service and the New York City Anti-Violence Project. Steven received his B.A. in Anthropology from Yale University and his J.D. from the Benjamin Cardozo School of Law. Steven is Series 7, Series 24 and Series 63 licensed. ADVANCED RESOURCES CENTER PHILANTHROPY MANAGEMENT CRC (5/16)

15 Philanthropy Management Team (cont d) Craig Styles Philanthropic Associate Craig Styles joined Philanthropy Management through the Wealth Management Rotational Analyst Program in He is responsible for conducting non-profit research and due diligence, maintaining the team s internal website, and assisting Financial Advisors and their clients with developing and implementing various charitable giving strategies. Craig also assists with the creation and publication of the team s marketing materials, including the periodic journal Perspectives in Philanthropy. In Volume 13, Perspectives in Philanthropy: The Advancement of Women and Girls, he authored the article The Ripple Effects of Microfinance. Prior to joining Philanthropy Management, Craig rotated through the Office of Business Management, where he focused on branch real estate and account redistribution, and the Alternative Investments Group s Investor Relations team, where he covered private equity funds. He joined the firm in 2012 as a Summer Analyst in Global Investment Manager Analysis. Craig s work in philanthropy extends back to his time at Villanova University where he was active with numerous service organizations. On campus, he served as a volunteer for the Pennsylvania Special Olympics Fall Festival the largest annual student-run Special Olympics event in the world and as both a member and facilitator of the Service Learning Community. Off campus, Craig tutored at the High School of the Future in Philadelphia, participated in the Philadelphia Committee to End Homelessness outreach program, and worked on two week-long Habitat for Humanity builds in Beaumont, TX and Exmore, VA. Craig received his B.B.A. in Finance and Economics from Villanova University and is Series 7 and Series 63 licensed. ADVANCED RESOURCES CENTER PHILANTHROPY MANAGEMENT CRC (5/16)

16 Philanthropy Management Team (cont d) Emma Portnoy Philanthropic Associate Emma Portnoy joined Philanthropy Management in July She is responsible for developing customized philanthropic strategies for Financial Advisors and their individual and institutional clients. Emma assists individual and family clients with creating philanthropic mission statements to focus and direct their charitable giving; identifies charitable organizations aligned with their mission through philanthropic landscape surveys; conducts research and due diligence on potential nonprofit grantees; and works with families to integrate next generation family members into their strategic philanthropy as part of their legacy and succession planning. Emma is also responsible for providing support for Philanthropy Management s thought capital efforts through the creation and publication of whitepapers and marketing materials which includes the periodic journal Perspectives in Philanthropy. Prior to joining Philanthropy Management, Emma worked as an Account Manager for the Clinton Global Initiative (CGI). While at CGI, she managed a portfolio of international corporate and non-profit organizations as they developed and implemented projects to address a social or environmental challenge. In this role, she forged successful partnerships resulting in new commitments in areas that include education and workforce development, entrepreneurship, women and girls empowerment and diversity and inclusion. Before joining CGI, Emma worked as a corporate communications consultant at Brunswick Group where she advised corporate clients on their communications strategies surrounding critical reputation issues including M&A, bankruptcy, and brand positioning. She also provided communications support for clients implementing philanthropic or social good business initiatives. Emma has a personal passion for and commitment to philanthropy in the New York City area. She serves on the Junior Committee for Tusk USA, an African wildlife conservation organization, and is a regular volunteer for City Harvest, an organization working to address hunger in New York. She received a B.A. in English from the University of Michigan and an M.S. in Global Affairs from New York University. ADVANCED RESOURCES CENTER PHILANTHROPY MANAGEMENT CRC (5/16)

17 A Donor-Advised Fund can Simplify Your Philanthropic Giving A donor-advised fund (DAF) is a private fund administered by a third party and created for the purpose of managing charitable donations. Gifts to DAFs can be in the form of cash, marketable securities and other assets An individual, family or organization can make non-binding recommendations for donations from contributed assets CONSULTING GROUP DONOR-ADVISED FUNDS CRC (2/17)

18 How a Donor-Advised Fund Works When you give assets to a DAF, you re making an irrevocable donation to the public charity that operates the fund. The assets are used to fund an account in your name and you may receive a potential charitable tax deduction. 1 The public charity is responsible for managing assets on behalf of all its donors. When you decide to give to a specific charity, you do it by making a non-binding recommendation for a grant. Your donoradvised fund has final discretion to distribute grants from your account based on your requests. 2 Charitable Deduction CHARITY DONOR DONOR- ADVISED FUND Grant CHARITY Gift (Public Charity) CHARITY 1. The maximum deduction for a gift to a donor-advised fund, as a public charity, is limited to 50% of adjusted gross income (AGI); deductions exceeding AGI limits may be carried forward for up to five years. 2. Grants can be directed to US organizations that are tax-exempt public charities, US religious houses of worship, and US-qualified foreign charitable organizations. At an additional cost, other domestic and foreign organizations that do not qualify as US public charities can be considered. CONSULTING GROUP DONOR-ADVISED FUNDS CRC (2/17)

19 Introducing the Global Impact Funding Trust (GIFT) Morgan Stanley GIFT is an independent section 501(c)(3) organization. Key facts about Morgan Stanley GIFT Over 15 years of operation and experience; established in August 2000 More than 4,350 accounts, collectively valued over $1 billion as of 12/31/2016 Total grants to charities have exceeded over $1 billion in assets since inception Led by a Board of Directors including seasoned professionals from both within, and outside of Morgan Stanley Investment platform professionally managed by Morgan Stanley Wealth Management Back office administration provided by Drinker Biddle & Reath LLP, an unaffiliated international law firm recognized as a leader in philanthropy and non-profit organizations CONSULTING GROUP DONOR-ADVISED FUNDS CRC (2/17)

20 Morgan Stanley GIFT Makes Giving Simple THROUGH MORGAN STANLEY GIFT, YOU CAN RECOMMEND GRANTS TO: US ORGANIZATIONS THAT ARE TAX-EXEMPT PUBLIC CHARITIES US-QUALIFIED FOREIGN CHARITABLE ORGANIZATIONS US RELIGIOUS HOUSES OF WORSHIP OTHER DOMESTIC AND FOREIGN ORGANIZATIONS THAT DO NOT QUALIFY AS US PUBLIC CHARITIES 1 1. Additional cost to the donor for electing to grant to non-us public charities. CONSULTING GROUP DONOR-ADVISED FUNDS CRC (2/17)

21 Morgan Stanley GIFT Administrative Services Morgan Stanley GIFT provides a comprehensive Donor Portal where you can suggest a grant by completing an online application or you can provide grant information to your Financial Advisor team or our Administrative Help Desk. Morgan Stanley GIFT includes these comprehensive administrative services: Confirmation of all grants made and gifts received Quarterly fund statements listing gifts, grants, fees and investment performance Documentation needed to report contributions to the IRS Information about qualifying non-profit organizations CONSULTING GROUP DONOR-ADVISED FUNDS CRC (2/17)

22 You can do Many Things Through Morgan Stanley GIFT RECEIVE PROFESSIONAL INVESTMENT ADVICE ON YOUR CHARITABLE GIFTS. DEVELOP A PROGRAM OF GIVING, OR TRANSFER A PRIVATE FOUNDATION TO A SIMPLER GIFTING SOLUTION. CONTRIBUTE USING A WIDE VARIETY OF CASH, AND MARKETABLE OR RESTRICTED SECURITIES. MITIGATE CAPITAL GAINS TAX ON GIFTS OF APPRECIATED SECURITIES AND OTHER ASSETS. WITH PRIOR APPROVAL, CONTRIBUTE ILLIQUID ASSETS SUCH AS REAL ESTATE, ART, GRAIN, OR PRIVATE COMPANY STOCK. ESTABLISH A LONG-TERM CHARITABLE GIVING STRATEGY THAT REFLECTS YOUR PASSIONS, VISION AND VALUES. HELP COORDINATE YOUR GIVING INTO SUCCESSION PLANNING. MAKE ANONYMOUS CONTRIBUTIONS. CONDUCT RESEARCH ON AREAS OF CHARITABLE INTEREST AND SPECIFIC CHARITIES. REDUCE YOUR ESTATE TAX LIABILITIES. CONSULTING GROUP DONOR-ADVISED FUNDS CRC (2/17)

23 Key Investment Features of Morgan Stanley GIFT SELECT UMA PROGRAM: Contributions to Morgan Stanley GIFT are invested in the Select UMA investment advisory platform. The unified managed account combines separately managed accounts, mutual funds and exchange-traded funds in a diversified, cost-effective portfolio. You have a choice of four traditional risk-based portfolios, two Investing with Impact portfolios, two ETF portfolios, as well as a money market fund. You may also split the money among the various investment options. PORTFOLIO MANAGEMENT (PM) PROGRAM 1 : You may choose to have the account managed by your Financial Advisor through the PM investment advisory platform. To qualify for this investment option, the initial contribution must be at least $250,000 and your Financial Advisor must be properly certified for the program. PLATFORM FEATURES INCLUDE LEVERAGING: INVESTMENT MANAGERS AND PRODUCTS ANALYZED BY MORGAN STANLEY ASSET ALLOCATION WEALTH MANAGEMENT S PROFESSIONALLY MANAGED STRATEGIES DEVELOPED GLOBAL INVESTMENT DISCIPLINED PORTFOLIO INVESTMENT STRATEGIES BY THE MORGAN STANLEY MANAGER ANALYSIS (GIMA) CONSTRUCTION PROVIDED FEATURING BROAD WEALTH MANAGEMENT GLOBAL TEAM FOR POSSIBLE INCLUSION BY THE CUSTOM SOLUTIONS DIVERSIFICATION AND INVESTMENT COMMITTEE IN THE SELECT UMA PROGRAM TEAM AUTOMATIC REBALANCING 1. The individuals comprising the Portfolio Management Team are Financial Advisors with Morgan Stanley Smith Barney LLC ( Morgan Stanley ) participating in the Morgan Stanley Portfolio Management program. The Portfolio Management program is an investment advisory program in which the client s Financial Advisor invests the client s assets on a discretionary basis in a range of securities. The Portfolio Management program is described in the applicable Morgan Stanley ADV Part 2, available at or from your Financial Advisor. CONSULTING GROUP DONOR-ADVISED FUNDS CRC (2/17)

24 Morgan Stanley Wealth Management is the trade name of Morgan Stanley Smith Barney LLC, a registered broker-dealer in the United States. The sole purpose of this material is to inform, and it in no way is intended to be an offer or solicitation to purchase or sell any security, other investment or service, or to attract any funds or deposits. Investments mentioned may not be suitable for all clients. Any product discussed herein may be purchased only after a client has carefully reviewed the offering memorandum and executed the subscription documents. Morgan Stanley Wealth Management has not considered the actual or desired investment objectives, goals, strategies, guidelines, or factual circumstances of any investor in any fund(s). Before making any investment, each investor should carefully consider the risks associated with the investment, as discussed in the applicable offering memorandum, and make a determination based upon their own particular circumstances, that the investment is consistent with their investment objectives and risk tolerance. Morgan Stanley Smith Barney LLC offers investment program services through a variety of investment programs, which are opened pursuant to written client agreements. Each program offers investment managers, funds and features that are not available in other programs; conversely, some investment managers, funds or investment strategies may be available in more than one program. Morgan Stanley s investment advisory programs may require a minimum asset level and, depending on your specific investment objectives and financial position, may not be suitable for you. Please see the Morgan Stanley Smith Barney LLC program disclosure brochure (the Morgan Stanley ADV ) for more information in the investment advisory programs available. The Morgan Stanley ADV is available at Sources of Data. Information in this material in this report has been obtained from sources that we believe to be reliable, but we do not guarantee its accuracy, completeness or timeliness. Third-party data providers make no warranties or representations relating to the accuracy, completeness or timeliness of the data they provide and are not liable for any damages relating to this data. All opinions included in this material constitute the Firm s judgment as of the date of this material and are subject to change without notice. This material was not prepared by the research departments of Morgan Stanley & Co. LLC or Morgan Stanley Smith Barney LLC. Some historical figures may be revised due to newly identified programs, firm restatements, etc. Global Investment Manager Analysis (GIMA) Focus List, Approved List and Tactical Opportunities List; Watch Policy. GIMA uses two methods to evaluate investment products in applicable advisory programs: Focus (and investment products meeting this standard are described as being on the Focus List) and Approved (and investment products meeting this standard are described as being on the Approved List). In general, Focus entails a more thorough evaluation of an investment product than Approved. Sometimes an investment product may be evaluated using the Focus List process but then placed on the Approved List instead of the Focus List. Investment products may move from the Focus List to the Approved List, or vice versa. GIMA may also determine that an investment product no longer meets the criteria under either process and will no longer be recommended in investment advisory programs (in which case the investment product is given a Not Approved status). GIMA has a Watch policy and may describe a Focus List or Approved List investment product as being on Watch if GIMA identifies specific areas that (a) merit further evaluation by GIMA and (b) may, but are not certain to, result in the investment product becoming Not Approved. The Watch period depends on the length of time needed for GIMA to conduct its evaluation and for the investment manager or fund to address any concerns. Certain investment products on either the Focus List or Approved List may also be recommended for the Tactical Opportunities List based in part on tactical opportunities existing at a given time. The investment products on the Tactical Opportunities List change over time. For more information on the Focus List, Approved List, Tactical Opportunities List and Watch processes, please see the applicable Form ADV Disclosure Document for Morgan Stanley Wealth Management. Your Financial Advisor or Private Wealth Advisor can also provide upon request a copy of a publication entitled Manager Selection Process. The Global Investment Committee is a group of seasoned investment professionals who meet regularly to discuss the global economy and markets. The committee determines the investment outlook that guides our advice to clients. They continually monitor developing economic and market conditions, review tactical outlooks and recommend model portfolio weightings, as well as produce a suite of strategy, analysis, commentary, portfolio positioning suggestions and other reports and broadcasts. The GIC Asset Allocation Models are not available to be directly implemented as part of an investment advisory service and should not be regarded as a recommendation of any Morgan Stanley investment advisory service. The GIC Asset Allocation Models do not represent actual trading or any type of account or any type of investment strategies and none of the fees or other expenses (e.g. commissions, mark-ups, mark-downs, advisory fees, fund expenses) associated with actual trading or accounts are reflected in the GIC Asset Allocation Models which, when compounded over a period of years, would decrease returns. The Global Investment Manager Analysis (GIMA) Services Only Apply to Certain Investment Advisory Programs GIMA evaluates certain investment products for the purposes of some but not all of Morgan Stanley Smith Barney LLC s investment advisory programs (as described in more detail in the applicable Form ADV Disclosure Document for Morgan Stanley Wealth Management). If you do not invest through one of these investment advisory programs, Morgan Stanley Wealth Management is not obligated to provide you notice of any GIMA Status changes even though it may give notice to clients in other programs. Strategy May Be Available as a Separately Managed Account or Mutual Fund Strategies are sometimes available in Morgan Stanley Wealth Management investment advisory programs both in the DISCLOSURES

25 form of a separately managed account ( SMA ) and a mutual fund. These may have different expenses and investment minimums. Your Financial Advisor or Private Wealth Advisor can provide more information on whether any particular strategy is available in more than one form in a particular investment advisory program. In most Morgan Stanley Wealth Management investment advisory accounts, fees are deducted quarterly and have a compounding effect on performance. For example, on an advisory account with a 3% annual fee, if the gross annual performance is 6.00%, the compounding effect of the fees will result in a net performance of approximately 3.93% after one year, 1 after three years, and 21.23% after five years. Conflicts of Interest: GIMA s goal is to provide professional, objective evaluations in support of the Morgan Stanley Wealth Management investment advisory programs. We have policies and procedures to help us meet this goal. However, our business is subject to various conflicts of interest. For example, ideas and suggestions for which investment products should be evaluated by GIMA come from a variety of sources, including our Morgan Stanley Wealth Management Financial Advisors and their direct or indirect managers, and other business persons within Morgan Stanley Wealth Management or its affiliates. Such persons may have an ongoing business relationship with certain investment managers or mutual fund companies whereby they, Morgan Stanley Wealth Management or its affiliates receive compensation from, or otherwise related to, those investment managers or mutual funds. For example, a Financial Advisor may suggest that GIMA evaluates an investment manager or fund in which a portion of his or her clients assets are already invested. While such a recommendation is permissible, GIMA is responsible for the opinions expressed by GIMA. See the conflicts of interest section in the applicable Form ADV Disclosure Document for Morgan Stanley Wealth Management for a discussion of other types of conflicts that may be relevant to GIMA s evaluation of managers and funds. In addition, Morgan Stanley Wealth Management, MS & Co., managers and their affiliates provide a variety of services (including research, brokerage, asset management, trading, lending and investment banking services) for each other and for various clients, including issuers of securities that may be recommended for purchase or sale by clients or are otherwise held in client accounts, and managers in various advisory programs. Morgan Stanley Wealth Management, managers, MS & Co., and their affiliates receive compensation and fees in connection with these services. Morgan Stanley Wealth Management believes that the nature and range of clients to which such services are rendered is such that it would be inadvisable to exclude categorically all of these companies from an account. Consider Your Own Investment Needs: The model portfolios and strategies discussed in the material are formulated based on general client characteristics including risk tolerance. This material is not intended to be a client-specific suitability analysis or recommendation, or offer to participate in any investment. Therefore, clients should not use this profile as the sole basis for investment decisions. They should consider all relevant information, including their existing portfolio, investment objectives, risk tolerance, liquidity needs and investment time horizon. Such a suitability determination may lead to asset allocation results that are materially different from the asset allocation shown in this profile. Talk to your Financial Advisor about what would be a suitable asset allocation for you, whether CGCM is a suitable program for you. No obligation to notify Morgan Stanley Wealth Management has no obligation to notify you when the model portfolios, strategies, or any other information, in this material changes. Please consider the investment objectives, risks, fees, and charges and expenses of mutual funds, ETFs, closed end funds, unit investment trusts, and variable insurance products carefully before investing. The prospectus contains this and other information about each fund. To obtain a prospectus, contact your Financial Advisor or Private Wealth Advisor or visit the Morgan Stanley website at Please read it carefully before investing. An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund. The type of mutual funds and ETFs discussed in this presentation utilizes nontraditional or complex investment strategies and /or derivatives. Examples of these types of funds include those that utilize one or more of the below noted investment strategies or categories or which seek exposure to the following markets: (1) commodities (e.g., agricultural, energy and metals), currency, precious metals; (2) managed futures; (3) leveraged, inverse or inverse leveraged; (4) bear market, hedging, long-short equity, market neutral; (5) real estate; (6) volatility (seeking exposure to the CBOE VIX Index). Investors should keep in mind that while mutual funds and ETFs may, at times, utilize nontraditional investment options and strategies, they should not be equated with unregistered privately offered alternative investments. Because of regulatory limitations, mutual funds and ETFs that seek alternative-like investment exposure must utilize a more limited investment universe. As a result, investment returns and portfolio characteristics of alternative mutual funds and ETFs may vary from traditional hedge funds pursuing similar investment objectives. Moreover, traditional hedge funds have limited liquidity with long lock-up periods allowing them to pursue investment strategies without having to factor in the need to meet client redemptions and ETFs trade on an exchange. On the other hand, mutual funds typically must meet daily client redemptions. This differing liquidity profile can have a material impact on the investment returns generated by a mutual or ETF pursuing an alternative investing strategy compared with a traditional hedge fund pursuing the same strategy. Nontraditional investment options and strategies are often employed by a portfolio manager to further a fund s investment objective and to help offset market risks. However, these features may be complex, making it more difficult to understand the fund s essential characteristics and risks, and how it will perform in different market environments and over various periods of time. They may also expose the fund to increased volatility and unanticipated risks particularly when used in complex combinations and/or accompanied by the use of borrowing or leverage. DISCLOSURES

26 KEY ASSET CLASS CONSIDERATIONS AND OTHER RISKS Investing in the markets entails the risk of market volatility. The value of all types of investments, including stocks, mutual funds, exchange-traded funds ( ETFs ), closed-end funds, and unit investment trusts, may increase or decrease over varying time periods. To the extent the investments depicted herein represent international securities, you should be aware that there may be additional risks associated with international investing, including foreign economic, political, monetary and/or legal factors, changing currency exchange rates, foreign taxes, and differences in financial and accounting standards. These risks may be magnified in emerging markets and frontier markets. Small- and mid-capitalization companies may lack the financial resources, product diversification and competitive strengths of larger companies. In addition, the securities of small- and mid-capitalization companies may not trade as readily as, and be subject to higher volatility than, those of larger, more established companies. The value of fixed income securities will fluctuate and, upon a sale, may be worth more or less than their original cost or maturity value. Bonds are subject to interest rate risk, call risk, reinvestment risk, liquidity risk, and credit risk of the issuer. High yield bonds are subject to additional risks such as increased risk of default and greater volatility because of the lower credit quality of the issues. In the case of municipal bonds, income is generally exempt from federal income taxes. Some income may be subject to state and local taxes and to the federal alternative minimum tax. Capital gains, if any, are subject to tax. Treasury Inflation Protection Securities (TIPS) coupon payments and underlying principal are automatically increased to compensate for inflation by tracking the consumer price index (CPI). While the real rate of return is guaranteed, TIPS tend to offer a low return. Because the return of TIPS is linked to inflation, TIPS may significantly underperform versus conventional U.S. Treasuries in times of low inflation. There is no guarantee that investors will receive par if TIPS are sold prior to maturity. The returns on a portfolio consisting primarily of environmental, social, and governance-aware investments ( ESG ) may be lower or higher than a portfolio that is more diversified or where decisions are based solely on investment considerations. Because ESG criteria exclude some investments, investors may not be able to take advantage of the same opportunities or market trends as investors that do not use such criteria. The companies identified and investment examples are for illustrative purposes only and should not be deemed a recommendation to purchase, hold or sell any securities or investment products. They are intended to demonstrate the approaches taken by managers who focus on ESG criteria in their investment strategy. There can be no guarantee that a client's account will be managed as described herein. Options and margin trading involve substantial risk and are not suitable for all investors. Besides the general investment risk of holding securities that may decline in value and the possible loss of principal invested, closed-end funds may have additional risks related to declining market prices relative to net asset values (NAVs), active manager underperformance and potential leverage. Closed-end funds, unlike open-end funds, are not continuously offered. There is a one-time public offering and once issued, shares of closed-end funds are sold in the open market through a stock exchange. NAV is total assets less total liabilities divided by the number of shares outstanding. At the time an investor purchases shares of a closed-end fund, shares may have a market price that is above or below NAV. Portfolios that invest a large percentage of assets in only one industry sector (or in only a few sectors) are more vulnerable to price fluctuation than those that diversify among a broad range of sectors. Alternative investments often are speculative and include a high degree of risk. Investors could lose all or a substantial amount of their investment. Alternative investments are suitable only for eligible, long-term investors who are willing to forgo liquidity and put capital at risk for an indefinite period of time. They may be highly illiquid and can engage in leverage and other speculative practices that may increase the volatility and risk of loss. Alternative Investments typically have higher fees than traditional investments. Investors should carefully review and consider potential risks before investing. Certain of these risks may include but are not limited to: Loss of all or a substantial portion of the investment due to leveraging, short-selling, or other speculative practices; Lack of liquidity in that there may be no secondary market for a fund; Volatility of returns; Restrictions on transferring interests in a fund; Potential lack of diversification and resulting higher risk due to concentration of trading authority when a single advisor is utilized; Absence of information regarding valuations and pricing; Complex tax structures and delays in tax reporting; Less regulation and higher fees than mutual funds; and Risks associated with the operations, personnel, and processes of the manager. As a diversified global financial services firm, Morgan Stanley Wealth Management engages in a broad spectrum of activities including financial advisory services, investment management activities, sponsoring and managing private investment funds, engaging in broker -dealer transactions and principal securities, commodities and foreign exchange transactions, research publication, and other activities. In the ordinary course of its business, Morgan Stanley Wealth Management therefore engages in activities where Morgan Stanley Wealth Management s interests may conflict with the interests of its clients, including the private investment funds it manages. Morgan Stanley Wealth Management can give no assurance that conflicts of interest will be resolved in favor of its clients or any such fund. All expressions of opinion are subject to change without notice and are not intended to be a forecast of future events or results. Further, opinions regarding Alternative Investments expressed herein may differ from the opinions expressed by Morgan Stanley Wealth Management and/or other businesses/affiliates of Morgan Stanley Wealth Management. This is not a "research report" as defined by NASD Conduct Rule 2711 and was not prepared by the Research Departments of Morgan Stanley Smith Barney LLC or Morgan Stanley & Co. LLC or its affiliates. Certain information contained herein may constitute forward-looking statements. Due to various risks and uncertainties, actual events, results or the performance of a fund may differ materially from those reflected or contemplated in such forward-looking statements. Clients should carefully consider the investment objectives, risks, charges, and expenses of a fund before investing. While the HFRI indices are frequently used, they have limitations (some of which are typical of other widely used indices). These limitations include survivorship bias (the returns of the indices may not be representative of all the hedge funds in the universe because of the tendency of lower performing funds to leave the index); heterogeneity (not all hedge funds are alike or comparable to one another, and the index may not accurately reflect the performance of a described style); and limited data (many hedge funds do not report to indices, and the index may omit funds, the inclusion of which might significantly affect the performance shown. The HFRI indices are based on information self-reported by hedge fund managers that decide on their own, at any time, whether or not they want to provide, or continue to provide, information to HFR Asset Management, L.L.C. Results for funds that go out of business are included in the index until the date that they cease operations. Therefore, these indices may not be complete or accurate representations of the hedge fund DISCLOSURES