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 great philanthropic tax benefits to attorneys. The federal income tax deductions may equal up to 60 percent of your adjusted gross income. You may avoid capital gains taxes and qualify for a charitable tax deduction in connection with 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 may be deductible up to 60 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. Instead of selling an appreciated capital asset, incurring capital gains taxes, and contributing the remaining proceeds to a private foundation, you can contribute the appreciated asset directly to the ABE, thereby avoiding the capital gains tax while still qualifying for a charitable contribution deduction. With just one transaction, you can use one large gift to benefit many different charities.
The advantages of establishing an ABE Charitable Gift Account with $50,000 in appreciated stock.
Advantages of Contributing to an ABE Charitable Gift Account Instead of a Private Foundation
The savings an ABE Charitable Gift Account represents over a private foundation are substantial. With an ABE Charitable Gift Account, you may be eligible for an immediate federal income tax deduction of up to 60 percent of your adjusted gross income for cash gifts, compared with just 30 percent for cash gifts to private foundations. ABE Charitable Gift Account holders have few administrative responsibilities and little to 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).
The savings in choosing an ABE Charitable Gift Account rather than a private foundation are realized many ways:
|Start-Up Costs||None||30 percent of adjusted gross income|
|Deduction Limits for Cash Gifts||60 percent of adjusted gross income||20 percent of adjusted gross income|
|Deduction Limited for Appreciated Assets||30 percent of adjusted gross income||Generally subject to a 5% minimum annual distribution|
|Annual Distributions||None||Up to 2 percent of the foundation’s net investment income annually|
|Tax Reporting||None3||Annual state, federal returns|
|Administrative Responsibilities||Recommending grants||Managing assets, keeping records, selecting charities, administering grants|
|Privacy||Anonymity, if desired||Public disclosure of contributions received|
3 The Donor must obtain a receipt of the contribution from ABE and report the contribution on his or her individual income tax return for the year of the contribution to ABE.
Learn more about the ABE Charitable Gift Fund:
WHAT IS THE ABE CHARITABLE GIFT FUND
Establish a lasting legacy to reflect your years of legal and public service without cumbersome paperwork.
MANAGE YOUR CHARITABLE GIFT FUND ACCOUNT
Secure online access allows you to view all the details of your ABE Charitable Gift Account including donation details, submit grant recommendations, review grant history, grant status, account balance(s), new giving opportunities and receive impact reports and updates directly from grant recipients.
ADDITIONAL CHARITABLE GIFT FUND INFORMATION
For information regarding the ABE Charitable Gift Fund, contact Joanne Martin at JMartin@abenet.org or (312) 988-6408.
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