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I guess the author of this WSJ article didn't have much time before his deadline -- it's brief and doesn't say much. I think Morningstar had more information recently, comparing donor-advised funds from different investment firms. Their focus was more on how these funds perform as investments over time. I've used the Fidelity Charitable Trust for about ten years and never considered this as a place to grow money. My time horizon is generally fairly short. I'll move some mutual fund shares or shares of stock into FCT and place the funds in the money market fund there, then direct the "grants" to charities fairly quickly. There are several advantages. As the article says, I get the credit for the charitable contribution in the year I make the deposit, even if the individual grants are not delivered until the next year. Fidelity allows small grants; I've given $100 to a local homeless shelter (which met Fidelity's guidelines), whereas some other donor-advised funds have much a larger minimum. Fidelity sends cash; some charitable organizations might have a hard time handling shares of stock, or especially shares of mutual funds. Donating this way gives you a tax deduction for the entire amount of your contribution, no matter what your basis. I've donated some small spinoffs just because I didn't want to figure out the basis. I gradually donated one entire mutual fund position over a period of years, after accumulating it over a very long period of years (with reinvested dividends and monthly contributions); I did not want to try to establish my cost basis. Of course, there is a small fee assessed annually. It's usually best to donate appreciated assets and a donor-advised fund makes it simple to do this. It's all online and your past giving history is readily available. David
One of the virtues of reading a real, tactile paper you hold in your hands is that you can get a sense of an article's value from its placement. There you would find this little article stuck in the lower left portion of an even numbered (left hand side) page, buried deep within the paper. This filler piece looked a little forlorn.
(I was sitting in the dentist's office today reading the waiting room's copy of the WSJ's monthly mutual fund/ETF section.)
There are many places you can create a donor advised fund, which means you have input into how the funds are allocated to which charities. There are many more choices through a local community foundation than through a brokerage. I created one with a local community foundation with a choice of areas to fund, I chose family and children, plus economic development and training for homeless. It does not have to be done though an investment house, although I am not against that. Since I spent the last part of my career in nonprofit fund development, I was more familiar with many of the local options.
For those who choose how Fido does it, I admire your desire to help others. From everything I have heard they do a fine job. Its a matter of personal choice.
Comments
I think Morningstar had more information recently, comparing donor-advised funds from different investment firms. Their focus was more on how these funds perform as investments over time.
I've used the Fidelity Charitable Trust for about ten years and never considered this as a place to grow money. My time horizon is generally fairly short. I'll move some mutual fund shares or shares of stock into FCT and place the funds in the money market fund there, then direct the "grants" to charities fairly quickly.
There are several advantages. As the article says, I get the credit for the charitable contribution in the year I make the deposit, even if the individual grants are not delivered until the next year. Fidelity allows small grants; I've given $100 to a local homeless shelter (which met Fidelity's guidelines), whereas some other donor-advised funds have much a larger minimum.
Fidelity sends cash; some charitable organizations might have a hard time handling shares of stock, or especially shares of mutual funds.
Donating this way gives you a tax deduction for the entire amount of your contribution, no matter what your basis. I've donated some small spinoffs just because I didn't want to figure out the basis. I gradually donated one entire mutual fund position over a period of years, after accumulating it over a very long period of years (with reinvested dividends and monthly contributions); I did not want to try to establish my cost basis.
Of course, there is a small fee assessed annually.
It's usually best to donate appreciated assets and a donor-advised fund makes it simple to do this. It's all online and your past giving history is readily available.
David
Regards,
Ted
https://www.mutualfundobserver.com/discuss/discussion/37020/lewis-braham-how-smart-investors-give-to-charity#latest
(I was sitting in the dentist's office today reading the waiting room's copy of the WSJ's monthly mutual fund/ETF section.)
For those who choose how Fido does it, I admire your desire to help others. From everything I have heard they do a fine job. Its a matter of personal choice.