DONOR ADVISED FUNDS

Grandparents and parents have found a new vehicle for teaching
their children and grandchildren about philanthropy. This vehicle
is the Donor Advised Fund. Donor Advised Funds are funds that
allow people to make charitable giving effective and simple.
Hypothetically, the grandparents of Jacob Weiss could give their
grandson a gift of $5000 for his bar-mitzvah. They could set up a
donor advised fund entitled “The Jacob Weiss Charitable Gift Fund”
with the $5,000 gift. The grandparents could then review different
Jewish charities and together with Jacob help Jacob give grants of
$2,500 to American Jewish World Service and $2,500 to the Jewish
National Fund. Both charities will then send Jacob personal letters
thanking him for his grant. Other guests to Jacob’s bar-mitzvah
could also make donations of any size to Jacob’s charitable gift fund.

Donor Advised Funds are funds owned and maintained by public
charities that receive contributions from a single donor or from a
group of donors. Donor advised funds are offered primarily by
charities like the Jewish federations, financial companies like
Fidelity Investments, community foundations, and universities.

Donors can donate cash, stock, bonds or other assets to the funds.
The donation is irrevocable and the donor can claim an immediate
federal income tax deduction. The donor can then recommend how
much, when and to which charities money in the accounts should
be distributed. The donor advised fund then makes a grant in the
donors name to the charity chosen by the donor. Thus, donor
advised funds allow individuals to act like a foundation without
the hassles of being a foundation and without having Bill Gates
type wealth. There are no initial set up fees, no ongoing legal fees,
no tax preparation fees, no contribution limits that apply to private
foundations, and no complicated corporate compliance hassles.

The largest donor advised fund in the country is the Fidelity
Charitable Gift Fund. It has assets of over $3.5 billion.and in
fiscal year 2006, it donated approximately $1 billion to charities.
Fidelity charges an administrative fee of 0.6% of an account’s
total assets. Fidelity has a minimum contribution of $5,000.

There are 10 Jewish federations that have established donor
advised funds. They are the Combined Jewish Philanthropies
of Greater Boston, the Greater Miami Jewish Federation, The
Jewish Communal Fund (of New York), The Jewish Community
Federation of Cleveland, the Jewish Community Federation of
San Francisco, the Jewish Community Foundation (of California),
the Jewish Federation of Greater Atlanta, the Jewish Federation/
Jewish United Fund of Metropolitan Chicago, the Associated
Jewish Community Federation of Baltimore, the United
Jewish Communities of MetroWest, the United Jewish
Foundation and the Jewish Federation of Metropolitan Detroit.

The Jewish Communal Fund (of New York) has a minimum
contribution of $5,000. However, the minimum contribution
for children is $1,800. The website for the Jewish Communal
Fund is http://www.jewishcommunalfund.org/. Its telephone
number is 212 752-8277.

At your next family bar or bat-mitzvah, instead of giving a gift
consider establishing a donor advised fund for the bar or
bat-mitzvah. It will be the gift with a legacy that the child will
long remember.

Next Week’s Blog: the American Jewish World Service