Charitable Gift Funds Help the High Net Worth Give it Away ...

High net worth investors, concerned with using their wealth to help others, often turn to charitable gift funds to accomplish their philanthropic goals, according to Millionaire Corner research.

Charitable gift funds provide donors a convenient, tax-efficient way to direct their giving without having to create or manage a foundation. Assets held in charitable gift funds totaled $24.2 billion at the end of 2011, an increase of 10 percent from $22 billion in 2007, according to The Chronicle of Philanthropy. More than one-third of individuals with investable assets of $15 million to $25 million had opened charitable gift funds by the end of 2011, according to Millionaire Corner research, and their average balance was $156,000. (A significant share of high net worth investors cites philanthropy?as a key personal financial concern.)

Charitable gift funds generally attract high net worth investors, but accounts can be established with relatively low amounts. The Bank of America Charitable Gift fund, for example, requires a minimal initial contribution of $5,000 and additional contributions of $1,000 or more. (Millionaire Corner research finds that less affluent investorsalso use charitable gift funds.)

Contributions to charitable gift funds are irrevocable and tax-deductible, and can be made in various forms, including mutual fund shares and appreciated stocks. Though the contribution qualifies for an immediate tax deduction, gifts can be disbursed in following years. Contributions also lower the value of a donor?s taxable estate, according to Bank of America, and accounts grow tax free until donors direct how the funds are spent. Donors can use charitable gift funds to channel gifts as small as $250 to charitable organizations recognized by the U.S. Internal Revenue Service.

In return for their services, organizations providing charitable gift funds charge management fees.? The Fidelity Charitable Gift Fund, for example, charges 0.60 percent on the first $500,000 in assets, 0.30 percent on the next $500,000, and 0.20 percent on the next $1.5 million, according to The Chronicle of Philanthropy, and a minimum account fee of $100. ?

The Fidelity Charitable Fund is the largest with close to $7.4 billion in assets under management at the end of 2011, a 29 percent increase from 2010, according to The Chronicle of Philanthropy. The Schwab Charitable Fund is second in size, with more than $3.2 billion in assets, a 26 percent increase from 2010 to 2011. The Vanguard Charitable Endowment Program is third with $2.8 billion in assets, up 21 percent from 2010 to 2011. Rounding out the top-ten list of charitable gifts funds are the National Christian Foundation, the National Philanthropic Trust, the Jewish Communal Fund, the Silicon Valley Community Foundation, the New York Community Trust, the Chicago Community Trust and the San Francisco Foundation.

Source: http://www.millionairecorner.com/article/charitable-gift-funds-help-high-net-worth-give-it-away

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