Make gifts grow before they go to charity
Here's a quick holiday test: What mutual fund is among the the largest charities, in dollar terms, in the United States?Skip to next paragraph
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If you said Fidelity Investments Charitable Gift Fund you are either very tuned in - or you peeked at the list on page 18.
But either way, Fidelity's ascendancy to the highest ranks of charitable giving is a remarkable story in itself.
Thanks to some very creative mutual-fund work at Fidelity, thousands of individuals are now providing financial resources to more than 700,000 charities - from churches to neighborhood organizations to big national institutions.
In doing so, they also qualify for a tax break. Moreover, the concept - which Fidelity began in 1992 - has now expanded to two other major mutual-fund companies, Vanguard and Charles Schwab.
Fidelity's gift fund (800-682-4438) remains the largest of the three programs, closing in on $2 billion in assets. Vanguard's Charitable Endowment Program (888-383-4483) has more than $80 million. And Charles Schwab recently established its Fund For Charitable Giving (800-746-6216).
The initial contribution to open an account is $10,000, in cash or securities, for Fidelity and Schwab, and $25,000 for Vanguard. "But you have to get the funds in by Dec. 31, to qualify for a tax deduction for this year's taxes," says a Fidelity spokesman.
If you donate securities, the sooner the better, since they will have to be sold and the proceeds placed into the fund. You can either contribute the actual stock certificates, or - in the case of a street account held with a broker - make a wire transfer.
Once the money is in the gift fund, it can then be moved into other funds within the fund family. Returns, therefore, hinge on whether you move into conservative or aggressive investments.
The proceeds, which are managed within the charitable fund, are earmarked by the investor to charities of his or her choice. Again, you pick the way you want the proceeds distributed. Perhaps you just want to distribute the dividends. Or a mix of principle and dividends. Your choice.
If you donate cash, you can receive a deduction of up to 50 percent of your adjusted growth income (AGI). If securities, you can typically deduct up to 30 percent of AGI.
The fund companies charge management and administrative fees which range between 1 and 2 percent annually.
To learn more about charitable funds, call the three companies, or check them out on the Internet: www.charitablegift. org (Fidelity); www.schwabcharitable.org (Schwab); or www.guidestar.org, which has some information on Vanguard's product. Vanguard hopes to have its own Web site on the fund up by spring.
(c) Copyright 1999. The Christian Science Publishing Society