How Does Fidelity Charitable's Investment Menu Stack Up?
We take a close look at the ongoing fees and underlying investment offerings of the largest donor-advised fund in the U.S.
Donating money to charities through donor-advised funds has become increasingly popular over the past decade. According to data from the National Philanthropic Trust's Donor Advised Fund Report, overall assets as of the end of 2017 surpassed $100 billion for the first time.
One of the biggest advantages of a donor-advised fund from a strategic tax-planning perspective is their flexibility: You make donations to the account and receive immediate tax benefits for doing so. But then you're allowed to disburse the money from the accounts according to your own timetable. As of now, there is no set time frame during which you have to pay out the funds; the donation you make can sit in the donor-advised fund account indefinitely. In fact, you can pass the account along to your heirs. In other words, you can choose to pay out a donation to an approved charity right away, or invest the money in the donor-advised fund account and let it grow tax-free until you want to pay it out. Either way, you get an immediate tax deduction. And though you cede control of the assets, you retain advisory privileges over how the account is invested, and how the fund distributes money to charities.
Karen Wallace does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.