Comments on: Fidelity Charitable Gift Fund

By: Sarah

Sarah — Mon, 25 Aug 2008 14:30:32 +0000

We just opened a giving fund with Fidelity, and for us it was the perfect solution to the “problem” of appreciated stock. I had a chunk of stock in a bank that had been gifted to me over the years by my grandparents, went though several mergers/name changes, split several times – you get the picture. The records of when/how much was purchased are sketchy at best. The idea of figuring out the cost basis for this thing (other than the DRIP shares) looked like an unfun wild goose chase. And in the end, it was going to be almost all capital gains.

On the other side of it, we always give a certain amount to charitable organizations each year – our church, our alma maters, and other organizations whose work we support. We’re not super-systematic about it, but some of those pleas in the mail would get a modest check from us.

So for us it made perfect sense – take this chunk of stock that I’ve been sitting on my entire adult life, donate it to a gift fund, and use it to support the charitable causes that we want to for the next 5-8 years. An additional factor is that, with the impending birth of our second child, I’m looking very seriously at staying home with the kids for a few years, starting next year – so this being the last two-income year made it the perfect time to take a big deduction.

So, I’m not saying it’s the right choice for everyone, but for us all of the planets aligned such that it really worked in our situation.

By: Mr Credit Card

Mr Credit Card — Thu, 21 Feb 2008 03:05:50 +0000

The benefits of using a so-called “donor advised fund” which is what it really is or a “pooled income fund” – which functions like a charitable remainder trust is a great thing.

But I do think this really has to be part of an overall estate planning strategy. Any funds you set up and donate is considered an “irrevocable gift” and is out of your estate.

Transferring highly appreciated stock (perhaps from grants by your company) to a charitable remainder trust is one method of avoiding paying massive capital gains tax. You and your spouse (beneficiaries) can get income for life (like an annuity from the trust) and proceeds go to charity after death. To leave money for your kids, you can use the income from the trust to buy a “whole life insurance” policy for your kids.

So I think you should look at these things from an estate planning point of view as well.

With regards to what Future Millionaire said, the advantages of setting up a donar advised fund is that you can leave a legacy long after you have left this world. You can entrust your kid to be the trustee after your death and continue your charitable contributions. If the fund is well managed, the charity you support can get donations “forever”.

By: jim

jim — Wed, 20 Feb 2008 14:47:27 +0000

I think the main draw is that it’s an ego trip to be able to say you have a fund, but it seems that its “better” (tax-wise) to just invest the funds yourself and then donate stock directly if you can.

Another reason someone might do this is if they want to reduce their tax liability immediately (say on December 30th) but they don’t have the time to do their due diligence research on what charity they want to support.

By: Future Millionaire

Future Millionaire — Wed, 20 Feb 2008 12:55:31 +0000

Even after reading Flexo’s post I’m not sure if fully understand the benefits of creating this fund. Why not just contribute the principal you are going to invest directly to your choose charity and let them use it immediately for the benefit of others rather than wait a year, five years, ten years etc for them to then receive it.