Saturday, June 08, 2002

Savvy Strategies

Fund allows donor to advise

        Problem: What is a way to give to charity that's less complex than a charitable trust but more controllable than an outright donation?

        Strategy: Try a donor-advised fund.

        According to the Financial Planning Association, a donor-advised fund is a fund in your name created inside a public charity. You make an irrevocable charitable contribution in cash or investments.

        The charity sells the assets and reinvests the proceeds in a managed portfolio. You may receive an immediate income tax deduction on the donation's full value.

        After your donation, you can advise the managing charity on how much income or principal to distribute to which selected recipient charities and when.

        But for your donation to be considered a gift, it must be out of your control, which means that technically, the charity has the authority to reject your grant recommendations. In general, however, charities follow the donor's “advice,” including how the proceeds should be invested.

        Advantages to donor-advised funds include donating to several charities without extensive paperwork. You can donate anonymously. You have flexibility in timing the gifts. You can involve your children when making your grant choices, including having them assume control when you die.

        Charities offering donor-advised funds come in several forms. The oldest are local community foundations. Some national independent foundations and national charities, as well as mutual fund families and religious groups, have started offering them, too.

        When choosing a charity, carefully examine management fees, donation restrictions, advice capabilities and investment choices.

        Readers: Consider Savvy Strategies as general information only and seek the help of professionals because circumstances might vary.

        Planners: Share your unique tips with Enquirer readers. Send your Savvy Strategies to Amy Higgins, 312 Elm St., Cincinnati 45202 or e-mail


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