Kevin McCormally: I am Kevin McCormally of Kiplinger's and I am here with Jane Clark, an Associate Editor of Kiplinger's Personal Finance Magazine to talk about charitable contributions through donor-advised funds. Jane, a donor-advised fund sounds like a sophisticated thing. What is it?
Jane Clark: A donor-advised fund lets you give a lump sum to an intermediary or financial services institution and later the money goes to whatever charity you suggest, so you do not have to make that decision right away.
Kevin McCormally: So what do I get? What is the deal for me? Why would I want to go to an intermediary instead of directly to the charity?
Jane Clark: Well for one thing, it is really convenient at the end of the year when you are trying to decide where you want your charitable contributions to go and things get busy and you can just put that money in at that time and get the tax deduction and then decide later that how you want the money to be dispersed. So you do not have to get into that holiday rush of figuring out what you want to do with your money.
Kevin McCormally: Are there any other tax advantages to this?
Jane Clark: Yes, actually, if you donate appreciated stock you do not have to worry about paying the Capital Gains Tax and you also do not have to worry about the paperwork involved.
Kevin McCormally: Okay, Jane, I have given my money to this donor-advised fund, mutual fund. How do I get the fund then to give the money to the charity that I want to benefit from my generosity?
Jane Clark: Well you get to advise them on how you want the money to be dispersed that is the beauty of them; you get to call the shots.
Kevin McCormally: Did you say advice call the shots, which is it? Do I get to advise them or I get to tell them who to give the money to?
Jane Clark: Well it is a little of both, technically you are not able to dictate where the money goes, but in the real world you are able to instruct them as to how you want the money to be dispersed.
Kevin McCormally: Okay and how do I find a donor-advised fund if I want to make one of these gifts?
Jane Clark: Well you can go to the big mutual funds, Charles Schwab, Vanguard, Fidelity, and all of them run these donor advised funds.
Kevin McCormally: Thanks very much Jane.
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