Charitable Gift Funds

Fund a Lifetime of Giving!  

One of the neatest new ways to "give" may well be the Charitable Gift Fund Concept. Basically, numerous investment entities are setting up independent public charities that you can "give" to and receive some awesome upfront benefits while retaining your ability to give the proceeds and future earnings to whomever you choose! 

Your self-advised donor fund or Charitable Gift Fund can help you lower your current taxes and make it easier to keep track of your charitable activities for tax-filing purposes.

• You can take an immediate federal tax deduction for each charitable contribution you make to your self-advised donor fund account. Deductions can be up to 50% of personal income for cash gifts and 30% of personal income for appreciated property at 100% of the fair market value.
   

• When you donate appreciated securities, you'll avoid paying capital gains taxes and wow! today, that might well be a ton of capital gains saved. Unless, you buy stocks like I've been known to do! 
   

• The contributions you make to your account will be removed from your estate and, therefore, will not be subject to estate taxes.
   

• Individuals may donate appreciated property without the risk of triggering the federal alternative minimum tax (AMT). Ouch, this is a tough tax and an even tougher tax calculation. 
   

• You can fund your account with cash, appreciated securities, mutual fund shares, bonds and some privately-held, restricted and control stock. Because a contribution of certain types of assets constitutes transfer of ownership, they can be sold immediately, if there are no other restrictions.
   

• Most investment houses seem to require an irrevocable minimum contribution of $10,000.
   

• You can make additional contributions at any time. Some investment houses require minimum additional contributions.
   

• Some also require that the grants or gifts that you make from the account be of a certain minimum amount. 
   

• Typically, you can make grant recommendations whenever you want and to whomever you want, as long as they are public 501C3 charities which includes most churches . You can recommend one or many grants within a given year, while simultaneously scheduling a one-time or annual grant to take place at a future date.
   

• Your grants can either be attributed or anonymous.
   

• Basically, you are creating a Low-Cost Alternative to a Private Foundation. Thus, a  Charitable Gift Account allows you to build a low-cost alternative to a private foundation.
   

• Contributions are irrevocable and unconditional. Once you have made a contribution to the Fund, the assets become the property of the Fund and cannot be returned under any circumstances.
   

• The Charitable Gift Account allows you to recommend grants but not control them. Tax laws require that your charitable gifts be irrevocable and unconditional in order for you to receive the associated tax benefits. If you were to retain control over the assets transferred to a Charitable Gift Account, there would be no "gift" for purposes of a charitable deduction. While the Fund will allow you to recommend how assets are invested and disbursed, all recommendations are subject to the approval of the Fund.

  This last bit of information might lead us to stay away from some investment houses so I'm hoping some of our church related investment vehicles allows, or will allow, these Charitable Gift Funds. 

  Note also that the investment vehicles available for your gift are generally pooled income type funds. These are big funds that merge all of the contributions so that they can invest as a single owner. Your "share" is computed and reported to you on a regular basis. 

  Check out www.charitablegift.org for Fidelity Investments Gift Account webpage. Tons of good information here and a great calculator to see what your appreciated assets will save in taxes if given prior to selling them.

  Charles Schwab and company has a similar account at www.schwabcharitable.org

  In the coming weeks and months I'll be saving and researching some more information on this subject and I'll update as necessary. We need to ask some questions about managing costs, investment returns on the pooled funds, etc. etc. 

   

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