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Charitable Donations of Shares--A Clearinghouse or Other Simple Way?
Old 12-03-2012, 11:17 AM   #1
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Charitable Donations of Shares--A Clearinghouse or Other Simple Way?

We're looking at the considerable advantages of donating appreciated MF shares rather than cash to charities this year. They won't be giant amounts, and some of our intended recipients are fairly small local charities. Is anyone aware of an easy way to do this?

Ideally, I'd like to log onto a (legitimate) web site run by a charitable organization (my name: "CharityShares") that serves as a front-end for other charities: Donate X number of shares to them, specify which groups I'd like to get the cash, and log it all as one donation to "CharityShares" on my taxes. Kinda like United Way, but for stock shares (and, unlike United Way, the choices made by donors always corresponds to which charities get the money).

Thoughts? Experiences?
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Old 12-03-2012, 11:23 AM   #2
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Brokerages such as Fidelity have group Charitable Trusts that may match what you have in mind. http://personal.fidelity.com/account...foption2.shtml
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Old 12-03-2012, 11:26 AM   #3
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Locally, we have a community foundation that does exactly what you mentioned. It'll take funds and stocks and set up various vehicles to make one-time or multi-year grants for individuals and organizations. Sometimes the foundation has broad discretion (you left money to be invested to support the "arts", or very specific such as a one time grant to local food pantry. Possibly with a little searching, you can find a similar community foundation in your area.

See http://en.wikipedia.org/wiki/Community_foundation for a good description.

I just checked the local foundations website out of curiosity and they generally have a $10K minimum
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Old 12-03-2012, 11:47 AM   #4
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Brokerages such as Fidelity have group Charitable Trusts that may match what you have in mind. Fidelity Charitable Remainder Trust
That's what we use and fund with appreciated MF. We are also front loading extra $ each year while working. This enables us to continue at the current level of giving during retirement even though our income will be drastically reduced as well as providing a nice tax advantage now.

Ooops, just realized this is not the trust we utilize. Ours is through Fidelity, but is their Charitable Contribution Fund (or similar name)...we fund and we distribute funds to our favorite charities or a yearly basis.
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Old 12-03-2012, 12:07 PM   #5
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We call up the charity, ask them for their brokerage account info, they tell us, we transfer the shares to their brokerage account. They send us a receipt.

It's the same process to give shares to your kids. Except the kids don't send a receipt.

We also have a donor-advised fund at Fidelity, but have not made any donations from it yet.
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Old 12-03-2012, 12:08 PM   #6
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Locally, we have a community foundation that does exactly what you mentioned.
Bingo! Just what I need. I checked, we've got such a foundation in Dayton. I can donate my appreciated shares, make a single entry on my tax forms for the donation, and the funds go into something similar to a checking account that I can use to make charitable donations to any IRS-approved charity in the local area or anywhere in the US whenever I choose. Lots of advantages to this:
-- Make the donation now and get the tax deduction today, but send the money to charities when I choose. (In the meantime, the local foundation earns interest on the funds to support their organization). This ability to take the tax deduction in "lumps" is particularly valuable to folks who are right at the break-point between taking the standard deduction and itemizing deductions--take the standard deduction one year, then make two year's worth of charitable contributions (plus early tax payments to municipalities, etc) to maximize the itemized deductions every other year.
-- It's easy to give anonymously to the ultimate recipients. That should clear my mailbox of lots of trash, and keep the charities from wasting money on solicitations.
-- No minimum balance to start, no minimum contributions. Disbursals have a $25 minimum, which seems reasonable. You can even set up recurring donations, which can be handy.

Thanks for the lead. The Charitable Remainder Trusts and other options through brokerages are something I'll investigate later--looks like a little more formal approach, maybe a tad less flexible but maybe with other advantages I'm overlooking.

Edited to add: For Vanguard investors there's a charitable fund you can set up, more info here. $25K minimum to open one and modest annual admin fees, the bucks can be invested in a several mixes of mutual funds and you get to decide where the checks go. For us right now, I'll go with the local community foundation.
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Old 12-03-2012, 03:09 PM   #7
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Thanks for the lead. The Charitable Remainder Trusts and other options through brokerages are something I'll investigate later--looks like a little more formal approach, maybe a tad less flexible but maybe with other advantages I'm overlooking.
Edited to add: For Vanguard investors there's a charitable fund you can set up, more info here. $25K minimum to open one and modest annual admin fees, the bucks can be invested in a several mixes of mutual funds and you get to decide where the checks go. For us right now, I'll go with the local community foundation.
I think the community foundations are actually emulating the big financial companies which started the CGFs. At least the earnings are going to your community foundation instead of to Fidelity.

I especially appreciate a CGF's anonymity. Our personal giving is done that way, yet when I make the grants to the book's military charities I can still designate them "In honor of..." to credit those who've contributed to the book.

I had no idea how much junk mail comes from charities until I switched my Dad's snail mail to our Hawaii address.
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Old 12-03-2012, 03:41 PM   #8
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Wow, I've never heard of anything like this, but this could be really great for me. I found the fidelity one here: Fidelity Charitable | Make more of a difference and it looks like it has a $5000 minimum. I have some appreciated shares that this might be really useful for.

Thanks!!
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Old 12-03-2012, 04:01 PM   #9
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I think the community foundations are actually emulating the big financial companies which started the CGFs. At least the earnings are going to your community foundation instead of to Fidelity.

......
Nords, the earnings do not go to Fidelity, but to the CGF (they do in the one I have set up). I set up a balanced fund in the CGF to receive my contributions. I id the MF w/the highest appreciation, the appropriate # of shares get transfered to the Fund, get sold and shares of my balanced funds are purchased. I then advise Fidelity of the $ amount to send to the appropriate charity and they handle the rest.
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Old 12-03-2012, 04:23 PM   #10
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Wow, I've never heard of anything like this, but this could be really great for me. I found the fidelity one here: Fidelity Charitable | Make more of a difference and it looks like it has a $5000 minimum. I have some appreciated shares that this might be really useful for.

Thanks!!
Yep, that's the one we have set up. In addition to the tax advantages, as well as the growth of our front load $s, it's so much easier to track!
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Old 12-03-2012, 05:16 PM   #11
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The "Community Foundation" approach and the brokerage-run "Charitable Gift Fund" (CGF) approach both look like good answers, but each appears optimized to fill a slightly different purpose.

Looking at the Fidelity literature, their program charges an annual administrative fee of .6 percent or a minimum of $100 per account per year (pg 20). If the account size is modest, that $100 could represent a fairly healthy chunk. (These fees are in addition to the ERs of the investment MFs you can choose to hold the money). Also, if you don't "grant" at least 5% of the balance each year to charity, they'll withdraw the funds and do it for you (see page 19). Still, these accounts could be a good choice for someone who wants to get the credit for the tax donation today and have plenty of options for investing the money so it can grow and eventually go to a charity.

I have only looked at my local community foundation (Dayton, Ohio-- more info here, but there may be an even better option in your home town so check around). There's no minimum account size and they assess no annual fees to the accounts. On the other hand, there are no investment options for donors to use--it's just like a checking account in that respect, the money doesn't grow. I imagine the community foundations help offset a portion of their admin expenses by taking any interest they earn on this money. There's also a handy menu of local grant-giving opportunities that I probably wouldn't have found elsewhere, but you can donate to any IRS recognized charity in the US.

So, it would seem that the biggest factor in making a decision is whether you want the account as a means to grow funds for later grants to charities or if you intend to get the dough to the charities more quickly (within a year or two of your donation). The investment growth opportunities of the brokerage-sponsored CGFs appear to suit them better for the first purpose, the zero costs and flexibility (low minimum balance, etc) of the community foundations would seem to make them a better choice for the second purpose.
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Old 12-03-2012, 07:12 PM   #12
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I think the community foundations are actually emulating the big financial companies which started the CGFs..
Not really sure of that as our local community foundation has been around since 1971. Not that it matters. Of course, the services offered have evolved over time.

This thread has led me to take a closer look at our local foundation and the good it does within the community. In 2011,
  • Disbursed 1,589 grants totaling $8.4 Million
  • Received 1,532 gifts totaling $15.9 Million
All the various donations are lumped together and professionally invested. A rough look at the asset allocation comes up with 77/20/3. They take care of evaluating grant applications for unrestricted funds but will disburse your fund any way you wish, min $250. Administrative fee is 60 basis points per year



Got me thinking about better organizing my charitable giving in the future as Samclem is considering.
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Old 12-04-2012, 10:47 AM   #13
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How To Find The Right Donor-Advised Fund (And Why) - Forbes.com

Above link to Forbes article on Donor Advised Funds. These entities allow you to make one donation ( of highly appreciated shares, for example), get a tax deduction at the time of the donation, and them you can instruct the DAF to distribute $ to the charities of your choice when you want.
I've used one to help make things simpler for some of the organizations I like to help, as they don't have the infrastructure set up, nor would it be cost effective, for receiving small gifts of shares.
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Old 12-04-2012, 02:07 PM   #14
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Thanks, gcgang, for posting that link. I've been looking into this for a few months now and haven't decided between a big national provider and our local community foundation. This article has good points about how to choose between them.
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Old 12-06-2012, 02:54 PM   #15
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I presume everyone is receiving an acknowledgement letter stating the number of shares gifted - $ amount isn't necessary & could be calculated incorrectly by the charity - & knows the date the shares left their name/account in order to properly calculate their value for tax deduction.
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Old 12-06-2012, 05:24 PM   #16
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I presume everyone is receiving an acknowledgement letter stating the number of shares gifted - $ amount isn't necessary & could be calculated incorrectly by the charity - & knows the date the shares left their name/account in order to properly calculate their value for tax deduction.
Yep, just another thing to check when filling out the ol' tax forms. I don't plan to be doing these frequently (a lump sum now to carry us through a few years) so checking my Vanguard statement against the letter from the Donor Advised Fund isn't much of a hassle.

I'm completing the account setup now, just mailed the form to the Foundation for them to fill in and return to Vanguard to transfer shares. Very easy, and all will be wrapped up in time for a 2012 deduction. It will not only lower our taxes this year, but get us farther under a tax bracket cutoff so we can sell some appreciated shares and take advantage of the 2012 LTCG rate. No one knows what 2013 will hold for CG rates, but I don't hear anyone guessing they'll be lower.
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Old 12-06-2012, 06:04 PM   #17
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