Charitable Gift Funds Can Save Time and Taxes

“Charitable Gift Funds give investors at all wealth levels a practical way to accomplish philanthropic goals, but wealthy investors can benefit most from the tax savings,” said Catherine McBreen, MillionaireCorner’s publisher.

The funds, also known as donor-advised funds, offer investors advantages enjoyed by those who run a philanthropy, but spare them the trouble and expense of establishing a foundation. The funds are not new, but their popularity began to grow when some of the nation’s most trusted financial service providers, including Vanguard, Fidelity and Charles Schwab, began to offer them.  Investors are not involved in the day-to-day management of the account, but can direct distribution of the assets within the parameters of the fund.

Contributions to the funds are tax-deductible in the year they are made, and assets donated to the funds are removed from an investor’s taxable estate. Some investors donate appreciated stock to their charitable gift funds and are able to claim the full fair market value of the stock as a charitable donation while at the same time avoiding taxes on investment gains.

The funds appeal most to mega-millionaires. Our research shows that 40 percent of investors with a net worth of $25 million or more (not including their primary residence) have charitable gift funds with an average value of $5.5 million.

Ultra High Net Worth Investors, those with a net worth of $5 million to $25 million NIPR, use charitable gift funds to a lesser extent. Fifteen percent have contributed an average of $143,660 to the funds. Eight percent of Millionaire Investors, those with $1 million to $5 million NIPR, contribute an average of $42,220 to the Funds.

Mass Affluent Investors also use charitable gift funds, but to a lesser extent. Four percent of investors with a net worth of $100,000 to $1 million NIPR have contributed an average of $35,500 to charitable gift funds.

Copyright 2011 by MillionaireCorner.Com