CHARITABLE GIVING
Your cup runneth over with dot-com gravy. It's high time to cash out, but with the recent tax season fresh in your mind, the thought of paying 30 percent on capital gains makes you feel as though the tech bubble has finally burst - right in your face.
If you donate shares you've held for more than one year to a nonprofit organization, you can deduct their full worth (up to 30 percent of your adjusted gross income) and sidestep capital gains tax to boot, possibly saving more than you invested. But for many beneficiaries of the Internet economy, putting those appreciated assets into a donor-advised charitable fund like those offered by Fidelity and Schwab might be a better choice.
Gifts to a charitable fund garner the same tax advantages as direct donations, but because appreciated assets are converted to cash and reinvested in low-overhead mutual funds, you can share the wealth with any number of organizations on your own schedule. You can "recommend" a grant from the fund at any time. The charitable fund will make sure the recipient is an IRS-approved nonprofit, then cut a check.
Stocks make up the lion's share of deposits to the Fidelity Charitable Gift Fund, according to fund president Cynthia Egan. The minimum initial deposit is $10,000, and $1,000 per subsequent deposit. Grants must be at least $250, increasing in $50 increments.
The Schwab Fund for Charitable Giving has identical deposit requirements, but grants can be any amount over $500.
Both funds boost charitable instincts with online convenience. You can research nonprofits, view records, and, in Fidelity's case, recommend grants and make deposits over the Web. And neither you nor the recipients of your largesse need a broker to liquidate securities.
But convenience and tax savings are only means to a more noble end, says Schwab spokesperson Mo Schafroth. "A lot of people who come to the fund aren't desperately looking to write a check on December 31," he observes. "They want a long-term giving plan. They want to make an impact."
- Heather Bourbeau (hbourbeau@thestreet.com)
Fidelity Charitable Gift Fund:www.charitable-gift.org.
Schwab Fund for Charitable Giving:www.schwabcharitable.org.
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