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Donor-advised funds maximize gifts, tax advantages

By Helen Huntley, Times Personal Finance Editor
In print: Sunday, June 22, 2008

“We want to work with you and see if we can come up with a better, more tax-effective way of funding your philanthropy,” says Robert “Bob” Collins, executive director of Christian Legacy Foundation.
	[GEN YAMAGUCHI | Times]

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The economic slowdown is starting to catch up with them, but donor-advised funds remain the fastest-growing form of charitable giving. And last year the fastest of the fast was Tampa-based Christian Legacy Foundation, which grew from $9-million to $22-million in assets.

"We seek to inspire and encourage and educate people about the true good life, which is the generous life," said Robert "Bob" Collins, the foundation's unpaid executive director since 2004. He helps people save on their taxes, too.

Donor-advised funds are hot because they allow donors to pursue their charitable instincts and collect their tax deductions with a maximum of flexibility and a minimum of fuss. The amount of money in the 103 largest of these funds grew 25 percent last year, to $23.3-billion, according to a recent survey by the Chronicle of Philanthropy.

As the name implies, donors get to tell the funds how they want their donations distributed, providing that the recipients are IRS-qualified charities. One of the funds' biggest selling points is that you get a tax deduction when you give money to the fund, but you can direct the fund to spread out your donations over many years.

Another big advantage is that funds typically are better equipped than the average charity to handle complicated gifts and to help donors with sophisticated tax and estate-planning techniques.

"We want to work with you and see if we can come up with a better, more tax-effective way of funding your philanthropy," Collins said. "When looking at the core competencies of the typical charity or church, it's not going to be planned giving. Even a large church in the Tampa Bay area will not have even one person focused on development."

Collins said the largest donors are "driven by a life event," such as selling the family business or a piece of real estate. "You can give a partial interest in this asset to a donor-advised fund first and then sell it," he said. You might then prefund your next 10 years of giving.

He said the foundation has had some gifts fall through recently because of the downturn in the economy. "We can point to at least four major gifts that we probably would have gotten had the real estate and credit markets stayed healthy," he said.

The tax advantages of giving through the foundation appealed to Bart Azzarelli, owner of Dallas 1 Corp., a Thonotosassa construction company. Rather than giving cash, he gives appreciated stock, avoiding capital gains tax and getting a charitable deduction at the same time.

"The foundation to me has a tremendous way of moving funds around in a smart way," he said.

The foundation's money is managed by the Atlanta-based National Christian Foundation, although Collins' own background is in investments. He retired at 38 from Goldman Sachs Asset Management and says he wanted to focus on "something that would be a little more significant and fulfilling."

Each donor-advised fund has its own administrative rules, but typically there is a minimum donation to open an account, a minimum size for charitable distributions and a management fee assessed against the account.

The largest donor-advised fund is Fidelity Investments' Fidelity Charitable Gift Fund, with $3.5-billion in assets.