December 1, 2010

Fidelity Charitable Gift Fund Adds Alternatives to Advisor Program

The Gift Fund's new Private Donor Group offers special services for high-net-worth donors

The Fidelity Charitable Gift Fund has expanded its Charitable Investment Advisor Program to enable financial advisors to invest a portion of the Gift Fund’s charitable assets in alternative investments, including hedge funds, hedge funds of funds and private equity funds, the charity announced Tuesday.

The Charitable Investment Advisor Program (CIAP) allows independent investment advisors to develop and actively manage customized portfolios for Gift Fund donors with a Giving Account of $250,000 or more. In addition to alternative investments, advisors can customize a donor’s Giving Account portfolio by using a mix of stocks, bonds and mutual funds. According to the statement, assets managed in CIAP have increased 22% through the third quarter of 2010, compared with the same period last year.

“Adding alternative investments to the CIAP allows advisors to diversify and potentially increase investment returns in their clients’ charitable portfolios, ultimately enabling donors to grant more to the causes they care about,” Sarah Libbey, president of the Gift Fund, said in the statement.

The announcement said a 2009 Fidelity Investments survey found that 82% of financial advisors view alternative investments as important to their clients’ investment goals. Moreover, according to a recent Spectrem Group study, half of ultra high-net-worth households (those with $25 million or more in household assets) own hedge funds and 56% own private equity.

The Gift Fund has also introduced the Private Donor Group to support advisors and high-net-worth donors with at least $1 million in Giving Account balances. Through a dedicated relationship management and service offering, the new entity can do these things:

  • Provide guidance on the types of assets donors may contribute—including special assets beyond traditional cash equivalents and publicly traded securities
  • Offer education on the Gift Fund’s various investment options
  • Ensure grants are made effectively and efficiently, with the donor’s charitable objectives as a priority (for example, facilitating direct international grants)
  • Provide information on legislative changes that may affect philanthropy
  • Serve as liaisons with external resources (such as philanthropic advisors)

The announcement said that as part of its Private Donor Group offering, the Gift Fund has created a network of professional philanthropic advisory firms. Initially made up of 10 philanthropic advisors,

the new offering provides a broad range of services, complementing the Gift Fund’s expertise, including these:

  • Helping to increase impact through strategic philanthropic planning
  • Evaluating nonprofit organizations that match the donor’s charitable goals
  • Measuring, reporting and giving feedback on grant effectiveness
  • Facilitating philanthropic gifts that reflect the donor’s values, interests and passions

The Gift Fund statement noted that according to its recent Advice & Giving study, nearly one-third of financial advisors who did not proactively offer charitable planning advice said this was because they did not feel qualified or knowledgeable enough on the topic.

The Gift Fund has also added a dedicated advisor resource center to the Giving Strategiessection of its Web site. The new resource center contains a wide array of insights on topics such as donating appreciated securities and the tax consequences of donating employee stock, restricted stock and non-publicly traded assets, including private company stock, LLC and limited partnership interests, pre-IPO shares and certain other assets.

“December is traditionally the most active month in terms of charitable giving and we expect this year is no different,” Libbey said in the statement. “We’ve seen donations of non-publicly traded assets triple through the third quarter and appreciated securities have comprised more than half of the Gift Fund’s contributions.”

(AdvisorOne reported Tuesday that giving to nonprofit organizations during the 2010 holiday season was expected to approach $50 billion through all giving channels.)

The Fidelity Charitable Gift Fund is an independent public charity, established in 1991, with the mission to further the American tradition of philanthropy by providing programs that make charitable giving simple and effective. Since its inception, the Gift Fund has helped donors support more than 136,000 nonprofit organizations with upward of $10 billion in grants.

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