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Featured Advisor

Srbo Radisavljevic
Managing Principal/Investment Advisor

Edge Portfolio Management


State: IL

At Edge, a low client to advisor ratio allows for personal and customized service for each individual.  Our goal is to work as a team for each client to provide not only portfolio management but wealth coordination and financial planning.  We make every effort to have frequent communication with our clients and to provide timely response to calls and emails.  I also enjoy spending time with my wife and three kids, following Chicago sports, enjoying ethnic cooking, and serving as a school board member for Norridge School District 80.

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Millionaires, Non-Millionaires Structure Charitable Giving

Millionaires often choose to structure their charitable giving through foundations, and charitable gift funds or annuities. Some of the vehicles are also used by less affluent investors.

| BY Adriana Reyneri

Charitable giving is a serious undertaking for most of America’s wealthiest citizens, and many choose to structure their giving through such philanthropic vehicles as private foundations, and charitable gift funds and annuities.

Private Foundations

More than one-fourth (26 percent) of millionaires with a net worth exceeding $25 million have established a private foundation to accomplish their philanthropic goals, according to the latest research from Millionaire Corner, $25 Million Plus Investors 2012. Independent foundations, which account for more than 70 percent of grant awards in the United States, accounted for $32.5 billion in giving in 2010, according to The Foundation Center, a non-profit tracking philanthropy worldwide. 

Most  $25 million plus investors (54 percent) cite “using my wealth to help others” as a significant financial concern, and 46 percent say they consider it important to leave their wealth to worthy causes. More than one-third (37 percent) of the foundations they set up support religious organizations, while 29 percent are dedicated to education. Three percent serve general goals, while another 3 percent support medical endeavors and 29 percent have “other” missions.

Charitable Gift Funds

Charitable gift funds are preferred by many high net worth investors who wish to structure their charitable giving, but want to avoid the expense and trouble of establishing and running a private foundation. More than one-third of individuals with investable assets of $15 million to $25 million had opened charitable gift funds by the end of 2011, and their average balance was $156,000, according to a Millionaire Corner study conducted over the fourth quarter of last year.

Assets held in charitable gift funds have grown 10 percent since 2001 and totaled $24.2 billion at the end of 2011, according to The Chronicle of Philanthropy. While charitable gift funds generally attract high net worth investors, accounts can be established with initial contributions as low as $5,000. Contributions to charitable gift funds are irrevocable and tax-deductible, and can include mutual fund shares and appreciated stocks.

Accounts grow tax free until donors direct how the funds are spent, according to Bank of America. Donors can make gifts as small as $250 to IRS-qualified charities.

Charitable Gift Annuities

A charitable gift annuity also allows donors to support causes while saving on taxes. More than 1,000 nonprofit groups now manage the specialized annuities, and the list includes colleges, religious organizations and health care centers. The advocacy group AARP describes charitable gift annuities as “perhaps the most popular planned giving option” because the products allow investors to donate a potentially tax-deductible gift to a cause and receive a lifetime stream of fixed annual payments. Experts warn that the lifetime guarantee is meaningless should the charity default.

The payment rate depends on a donor’s age at the time of the gift, long-term interest rates and whether the payments are deferred and for how long. Income from a charitable gift annuity can be taxed as ordinary income, dividends or capital gains, depending on the annuity principal. A portion of the payment is a tax-free return of the donor’s principal. Upon the donor’s death, the remaining principal – usually calculated to be 50 percent of the starting principal - goes to the charity.