Fribble

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Monday, August 9, 1999

A Foolish Approach to Giving

by davekarpinski@hotmail.com

Charitable contributions have been a part of our family's finances since the very beginning. My wife and I met at church camp over 30 years ago and have always been active in church, so our giving has been a regular part of our budget. And there have always been other causes we wanted to support: Habitat for Humanity and Planned Parenthood, to name a few. Now, as our kids have graduated from college and we are getting our finances lined up for retirement, a more systematic approach to giving seems, well, Foolish.

We have been following the Motley Fool for about two years and have a substantial part of our non-401(k) investments in stocks. Last year we contributed some of our 200% appreciated Dell stock to our church in lieu if a cash pledge. Because of the current income tax laws, which allow us to deduct the market value of contributed stocks with long-term capital gains, our $4500 contribution allowed us to save about $600 in taxes ($3000 capital gain, taxed at 20%). Instead of giving $4500 in cash to the church, we could have used the cash to replace the Dell stock, with the net result that the government contributes $600 to our church and our portfolio remains unchanged (except for its tax basis). Nice.

But what about those other charities? Many seem not set up to accept stock and, in any case, what we want to give doesn't usually correspond to a set number of shares. We are about to set up, instead, an account with the Charitable Gift Fund run by Fidelity, which will allow us to give to all our charities with appreciated stock. This is not a unique idea, but Fidelity's Gift Fund comes closest to meeting all of our requirements. We found lots of smaller gift funds via the Internet with low minimum contributions and low minimum gifts, but most are limited in the types of organizations to which gifts can be made.

Now that feels really Foolish... making all of our contributions with appreciated stocks!


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