The UBS Donor-Advised Fund. Program guide

Transcription

1 The UBS Donor-Advised Fund Program guide

2 Contents Creating a donor-advised fund...1 Assets accepted...1 Tax benefits...2 Contributions...2 Account valuation...3 Grantmaking...3 Administration...4 Investments...4 Create a legacy...4 Fees...5

3 A simple, powerful, highly personal approach to giving A donor-advised fund is a charitable giving vehicle to which a donor makes an irrevocable contribution of personal assets. Any time thereafter, a donor can recommend grants to qualified charities. The benefits of the UBS Donor-Advised Fund through National Philanthropic Trust include: Opportunity to personalize the fund: A donor may name a donor-advised fund for himself or herself, in honor of a family or company, in memory of someone, or after a specific cause. Ability to donate a wide variety of assets: The UBS Donor-Advised Fund can accept a wide range of gifts, providing donors a variety of giving opportunities. Income tax deduction: Gifts to a donor-advised fund receive tax benefits, subject to limits based on the donor s adjusted gross income. Flexible grantmaking: Donors may receive recognition for their grants or remain anonymous. In addition, donors may recommend grants to any qualified charity in the United States and around the world. Simple administration: Online access to their donor-advised fund allows donors to create lists of favorite charities, track grants and contributions, and review fund balances. Potential to increase giving over time: Assets in donor-advised funds grow tax-free. Ability to create a legacy: If indicated by the donor, future generations can advise on the fund. Flexible investment options: Investment options include several of UBS Managed Portfolios of Funds, including options with an emphasis on environmental, social and governance factors, a personalized mutual fund option, and for donor-advised funds over $500,000, customized investment allocations. National Philanthropic Trust is a public charity under the Internal Revenue Code (sections 501(c)(3) and 170(b)(1)(A)(vi)). Created in 1996, National Philanthropic Trust serves donors across the country. Creating a donor-advised fund The UBS Donor-Advised Fund makes it easy to be a philanthropist by making it simple to open a donor-advised fund. Step 1: Read this UBS Donor-Advised Fund program guide to become familiar with the aspects of the program. Step 2: Complete the UBS Donor-Advised Fund application. This includes: Naming the fund Designating advisors Creating a succession plan by naming successor advisors or recipient charities Step 3: Complete the UBS Donor-Advised Fund contribution agreement with a minimum initial contribution of $25,000 (or $10,000 minimum contribution for a transfer from an existing donoradvised fund). For contributions of securities, complete a letter of authorization to move the securities into the UBS Donor-Advised Fund. Step 4: Complete the UBS Donor-Advised Fund investment allocation to recommend an investment strategy. Investment options vary based on the amount contributed to the donor-advised fund. Upon receipt of the application, contribution agreement and investment allocation, the UBS Donor-Advised Fund will: Issue the donor a username and password for online fund management Provide the donor with confirmation that the fund has been established, as well as documentation for tax purposes Begin to accept grant recommendations Assets accepted The UBS Donor-Advised Fund can accept a wide range of gifts, including the following assets: 1

4 Transfers from another donor-advised fund Cash Publicly traded stock Restricted and controlled stock Privately held stock Bonds Mutual fund shares Alternative investments Limited partnerships Real estate Proceeds from life insurance Payouts/grants from a private foundation Bequests from wills Payouts from a charitable remainder trust Payouts from a charitable lead trust Tax benefits The UBS Donor-Advised Fund can provide significant tax benefits. Donors who itemize their tax deductions may be eligible to receive a tax deduction for the amount contributed. The date of the deductible contribution when the asset is either unconditionally out of the donor s control, or received by National Philanthropic Trust (depending upon the type of asset contributed). For gifts of cash, donors may receive a tax deduction for the amount of the contribution up to 50% of adjusted gross income (AGI). For publicly traded securities, mutual funds, real estate, etc., held for more than one year, the donor s tax deduction will generally be the fair market value of the securities up to 30% of AGI. For securities or mutual fund shares held less for one year or less, the deduction is generally limited to the lesser of the donor s cost basis or the fair market value. Charitable contributions in excess of AGI limits may be carried forward for five years beyond the year in which the gift is made. Contributions of long-term appreciated securities are not subject to capital gains taxes. Contributed assets may be invested and grow tax-free, providing the opportunity for greater charitable gifts recommended to charities. Donate now, decide later: Donors receive the tax deduction on the date the contribution is completed. Donors may then recommend grants to qualified charities on their own timetable. Contributions The initial contribution minimum is $25,000 (or $10,000 minimum contribution for a transfer from an existing donor-advised fund). Additional contributions Subsequent contributions of $5,000 or more may be made to a UBS Donor-Advised Fund at any time online or by completing a contribution agreement. Cash contributions The value of the donor s charitable deduction is the cash contribution to the donor-advised fund before any reductions for commissions or asset management fees. Contributions of securities National Philanthropic Trust will seek to sell the securities promptly and obtain the most favorable sale price. The donor-advised fund will be credited with the net proceeds, after liquidation costs, from the sale of the securities contributed by the donor. When securities are donated, the initial value of the donor-advised fund will probably differ from the value of the tax deduction to which the donor is entitled. This occurs because the securities are likely to be sold at a price different from the fair market value on the date of the gift. The value of the donor s contribution (but not the amount of a donor s charitable deduction) is determined on the date on which National Philanthropic Trust receives the net proceeds from the sale. This value may fluctuate from the date of the contribution to the date of the sale. Contributions of other property For non-publicly traded securities assets for which no readily liquid market exists or real estate, National Philanthropic Trust will exercise its full discretion over all conditions of the sale, including, but not limited to, the time and price of sales, in an attempt to maximize sales proceeds. Any costs 2

5 incurred to dispose of these assets (e.g., legal or appraisal fees) will reduce the net proceeds to the account. In most cases, the donor is responsible for securing an appraisal for the illiquid assets. Donating appreciated securities When contributing assets to the UBS Donor-Advised Fund, a donor can potentially give more to charity and pay less in taxes. The chart below demonstrates the tax and giving advantages of contributing appreciated assets instead of cash to a donor-advised fund. Account valuation Donors will receive a quarterly statement reporting on the current value of their donor-advised fund and activity during that period, including any contributions made to, and grants issued from the donor-advised fund. Daily fund balances are available by accessing the fund online. Grantmaking At any time, donors may recommend grants from their donor-advised fund to 501(c)(3) charities in the United States, and on a case-by-case basis to qualified international charities. The process is simple and can be done online or by submitting a completed grant recommendation form. Eligible grant recipients All grant recommendations are subject to the review and approval of National Philanthropic Trust s board of trustees. Grants can be made to charitable Museums and arts organizations Schools and educational institutions Environmental organizations Hospitals and healthcare organizations Scientific and medical research institutes Religious organizations and places of worship Any other organizations or institutions established for charitable purposes Foreign charitable organizations Donors may also recommend grants to foreign charities. Grants to foreign charities require additional fees to cover the extra due diligence and processing costs. Please contact the UBS Donor-Advised Fund at National Philanthropic Trust at for a fee schedule and requirements for recommending a grant to a non-u.s. charity. Ineligible grant recipients IRS rules prohibit grants made to: Fulfill an existing pledge (an existing pledge is a legally-binding commitment made before the grant has been approved by National Philanthropic Trust) Provide a more than incidental benefit, good or service for any specific individual including oneself Pay for dues, membership fees, tuition, goods from charitable auction, or other goods or services Purchase a table or tickets to a gala or event in which a portion of that amount is not tax-deductible Support a political campaign, candidate or lobbying activity Donate cash proceeds from organizations that are tax-exempt under IRS sales Code of securities Section 501(c)(3) and are public Donate charities securities under Code directly Section Fair market 509(a). value Eligible of donation public charities include: $100,000 $100,000 Long-term capital gains taxes $19,040 $0 paid on appreciation of securities (assumes 23.8% capital gains tax rate on $80,000 of appreciation) Net charitable donation $80,960 $100,000 Income taxes saved on donation $22,669 $28,000 (assumes 28% income tax rate) Increased tax savings $0 $24,371 Increase in proceeds to charity $0 $12,000 For illustrative purposes only. UBS Financial Services Inc. does not give tax or legal advice. You should consult with your attorney or tax advisor regarding your specific situation. 3

6 Support an individual Support a non-operating private foundation Support a non-functionally integrated type III supporting organization Donor recognition or anonymity Donors may choose how they would like to be recognized. Grant checks can denote: The donor and fund name That the gift is from an anonymous donor That the gift is given in honor of or in memory of someone Number of grants Donors may recommend an unlimited number of grants from their donor-advised fund. They may also recommend that grant(s) be scheduled on a quarterly, semi-annual or annual basis. Grant minimum The minimum grant amount is $250. At least one grant is required every three years. (For more details, please request a copy of the UBS DAF Minimum Account Activity Policy.) Specialized grantmaking services Donors can make grants requiring specific terms. Additional fees apply for grant agreements and legal review. Please contact the UBS Donor-Advised Fund at National Philanthropic Trust at for a specialized grantmaking fee schedule. Administration The administration of a donor-advised fund is simple, and cost-effective. Donors avoid timeconsuming paperwork and achieve flexibility in their charitable giving. User-friendly online access allows donors and authorized UBS Financial Advisors to: View fund balances daily View detailed history of all contributions and grants View and download statements Create lists of favorite charities for one-click grant recommendations Make grant recommendations, including scheduling recurring grants quarterly, semi-annually or annually Update contact information and advisors Investments The UBS Donor-Advised Fund offers a variety of investment options you can recommend for your donor-advised fund. Your UBS Financial Advisor will help you recommend a portfolio that reflects your investment objectives and comfort level with risk. In the Managed Portfolio Program available to all UBS Donor-Advised Fund accounts, investment options currently include the UBS Managed Portfolios managed by the UBS Investment Management Group, and/or a personalized mutual fund allocation. These options allow you recommend investments based on your objectives. Investment reallocations are permitted twice per calendar year. In addition, accounts of over $500,000 can choose to recommend a customized allocation in a segregated account. More detailed information about the segregated account investment options is available on the UBS Donor-Advised Fund investment allocation form. All investment recommendations are subject to the review and approval of National Philanthropic Trust s board of trustees. Create a legacy The UBS Donor-Advised Fund allows donors to build a legacy of philanthropy by personalizing their fund and by creating a custom-tailored succession plan for the future. Personalizing a fund Donors may name their fund for their family, company, in memory of someone, or for a specific cause. When establishing a donor-advised fund, donors specify a succession plan that tells the UBS Donor- Advised Fund how to treat the fund assets after the primary and joint advisors have passed away. 4

7 Allowing chosen successors to advise for generations Donor-advised funds can establish a legacy for generations, allowing donors to name individuals such as their children, grandchildren or family friends as successor advisors to the fund. Endowing a favorite cause Donors may elect to distribute the balance of their fund to specific charities or recommend that a percentage of the fund be distributed to specific charities for the lifetime of the fund. Fees Charitable administration fee Each account is subject to an annual charitable administration fee to cover the UBS Donor-Advised Fund operating expenses such as grantmaking, recordkeeping, annual audits, tax filing, quarterly statements and other legal and fiscal responsibilities. The annual charitable administration fee is calculated monthly based on the daily net asset value of the account. 1 Assets Up to $250,000 Next $250,000 Next $500,000 Next $1,500,000 Next $2,500,000 Excess above $5MM Charitable administration fee 0.85% (85bps) 0.75% (75bps) 0.60% (60bps) 0.40% (40bps) 0.15% (15bps) 0.10% (10bps) Program management and investment management fees UBS Donor-Advised Fund Managed Portfolio Program ($25,000 minimum) Program management fee The UBS Donor-Advised Fund Managed Portfolio Program offers donors a choice of investment opportunities to diversify and potentially grow charitable assets. The program provides a selection of investment strategies each with different objectives and risk/reward profiles. Donor-Advised accounts invested in the Managed Portfolio Program are subject to an annual program management fee comprised of two components. National Philanthropic Trust charges a fee of two basis points for program support services and the donor s UBS Financial Advisor may also be compensated for investment oversight. The annual program management fee is calculated daily based on the daily net asset value of the account and assessed on a quarterly basis. Investment management fee The UBS Institutional Consulting will assess fees in addition to the internal management fees and expenses of the mutual funds and exchange traded funds available as investment options in the programs, which are set forth in detail in each fund s prospectus. These fees are paid directly from the assets of the fund and are outlined in the investment allocation form. Assets Up to $250,000 Next $250,000 Next $500,000 Next $1,500,000 Next $2,500,000 Excess above $5MM Program management fee 0.77% (77bps) 0.67% (67bps) 0.52% (52bps) 0.32% (32bps) 0.12% (12bps) 0.07% (7bps) * Program management fee includes support services and advisor compensation. UBS Donor-Advised Fund Segregated Account ($500,000 minimum) Program management fee UBS Donor-Advised Fund accounts with over $500,000 in charitable assets can choose to recommend a customized investment allocation and are subject to the UBS Financial Advisor fee schedule. These donor-advised fund assets are managed directly by the donor s financial advisor. Please contact your Financial Advisor for UBS Donor- Advised Fund customized investment allocations investment fee information. 5

8 Short-term fund fee If 95% or more of all assets contributed to a donor-advised fund are distributed during the first 12 months (from the date the fund is created), National Philanthropic Trust reserves the right to charge the fund an additional special short-term fee equal to 2% of the total value of the assets contributed during that 12-month period. For more information To learn more about the UBS Donor-Advised Fund: Contact your UBS Financial Advisor Contact the UBS Donor-Advised Fund at National Philanthropic Trust at or ubsdaf@nptrust.org 1 Any account under $25,000 as of December 31 will be subject to a fixed $25 annual fee. 2 For the customized investment allocation option, (i.e., typically $500,000 or more in charitable assets) UBS Financial Advisors are eligible to receive investment management fees based on the type of account recommended and investments approved by NPT. Contributions to donor-advised funds are subject to annual fees that reduce the value of the account. If the account s investment performance does not exceed the fees charged the ultimate grants to charities recommended by the donor would be less then the donor s contribution. The UBS Donor-Advised Fund is subject to the terms and conditions of National Philanthropic Trust s articles of incorporation and bylaws. National Philanthropic Trust s Board of Trustees and UBS reserve the right to modify the UBS Donor-Advised Fund at any time. See the UBS Form ADV Disclosure Brochure for the additional information and details regarding the UBS Managed Portfolio Program. It is important that you understand the ways in which UBS Financial Services Inc. (UBS) conducts business and the applicable laws and regulations that govern the firm. In providing wealth management services to clients, we offer both investment advisory and brokerage services, which are separate and distinct and differ in material ways. For information, including the different laws and contracts that govern, visit ubs.com/workingwithus. Rules and regulations regarding tax deductions for charitable giving vary at the state level. Tax deductions discussed herein refer specifically to federal taxes. Furthermore, different forms of contributions receive different tax treatment and this should be considered carefully before choosing the form a contribution will take. UBS Financial Services Inc. does not give tax or legal advice. You should consult with your attorney or tax advisor regarding your specific situation. UBS The key symbol and UBS are among the registered and unregistered trademarks of UBS. All rights reserved. UBS Financial Services Inc. is a subsidiary of UBS AG. Member FINRA/SIPC. UBS Financial Services Inc. ubs.com/fs