How the ABE Charitable Gift Fund Works
Opening an ABE Charitable Gift Account is much like opening an investment account, and it can be done in less than half an hour. You provide the necessary information and recommend investment strategies. Once the account is open, you transfer at least $5,000 in cash, bonds, mutual fund shares or publicly traded stocks to ABE to be held in the ABE Charitable Gift Fund. You then can recommend grants from the account you created, change certain account options, and monitor account activity online. The process is simple; the rewards are significant.
Financial Benefits of the ABE Charitable Gift Fund
The ABE Charitable Gift Fund offers the greatest philanthropic tax benefits available to attorneys. The federal income tax deductions can equal up to 50 percent of your adjusted gross income. You can avoid capital gains taxes and get a charitable tax deduction for the current market value of the donation. Any income in the account you create accrues tax-free. And you have few of the burdensome expenses associated with private foundations.
The following information applies in average cases; individual situations can vary substantially, and Donors should check with their individual tax advisors for specifics.
Cash contributions: The entire amount of a cash contribution is deductible up to 50 percent of your adjusted gross income in the tax year of your contribution.
Publicly traded securities: Long-term—For those held more than one year, the amount of the deduction is the mean value of the high and low prices of the security on the day of the contribution, up to 30 percent of your adjusted gross income.
Short-term—For securities held for one year or less, the deduction is the lesser of the mean value of the high and low prices of the security on the day of the contribution or your cost basis, up to 50 percent of your adjusted gross income.
Estate taxes: All lifetime contributions to the ABE Charitable Gift Fund are outside the Donor's estate and are not subject to either estate tax or probate.
Capital Gains Advantages
A gift of appreciated securities to the ABE Charitable Gift Fund frees you of capital gains taxes while making more money available to philanthropy, as our chart shows. With just one transaction, you can use one large gift to benefit many different charities.
Advantages Over Private Foundations
The savings an ABE Charitable Gift Account represents over a private foundation are substantial, as our chart indicates. With an ABE Charitable Gift Account, you are eligible for an immediate federal income tax deduction of up to 50 percent of your adjusted gross income for cash gifts, compared with just 30 percent for private foundations. You have few administrative responsibilities and no startup fees, and an ABE Charitable Gift Account, unlike a private foundation, is not subject to excise taxes on its investment income. Instead of paying high-cost retainers, an annual fee of 130 basis points (1.3%) is deducted monthly for administration, management, marketing, education, and investment fees (fee is lower for accounts over $100,000).