Philanthropic accounts for individuals and families. The Value in Giving

Transcription

1 Philanthropic accounts for individuals and families The Value in Giving

2 Vanguard Charitable is one of the largest charities in the United States. We were founded by Vanguard in 1997 as an independent nonprofit organization focused on increasing philanthropy by administering the highest-value donor-advised fund a tax-effective way to consolidate, accrue, and grant assets to charity. Although we are separate entities, Vanguard Charitable is strongly aligned with Vanguard s principled investment philosophy and unwavering values, including its commitment to ethics, transparency, and at-cost investing. We firmly believe that minimizing costs can help maximize philanthropic impact. No other donor-advised fund can extend the direct benefits of Vanguard s at-cost investments like we can.

3 Increasing philanthropy We are a leading U.S. 501(c)(3) nonprofit organization with tens of thousands of donors and more than $4 billion in assets under management. Our mission to increase philanthropy in the United States is fulfilled by administering a donor-advised fund a tax-effective way to consolidate, accrue, and grant assets to charity. At Vanguard Charitable, we help our donors form giving strategies that reflect their philanthropic goals. The end result? Billions of dollars in grants to nonprofit organizations. Together, we are making an impact. A solution for the strategic philanthropist The unique structure of a personal philanthropic account allows you to manage your charitable donations in a tax-effective, flexible, and convenient way. For example, by conducting charity due diligence and issuing grants, we relieve you of the administrative burdens of giving and offer you the opportunity to customize, optimize, and expand your philanthropy. Tax-effective Receive an immediate tax deduction for each contribution. Contribute appreciated securities and reduce capital gains. Select from investment options; proceeds grow tax-free. Avoid estate taxes on contributed assets. Manage deductions with a single charity receipt. Flexible Select from investment options that span the risk spectrum and offer a wide range of exposures. Craft a legacy of giving with a succession plan. Complement other giving options. Request recognition or anonymity with each grant. Focus on grant recommendations, growing your account, or both. Convenient Consolidate giving. Let us handle charity due diligence and administrative details. Support charitable organizations; we are national and cause-neutral. Easily manage account activity online. Establish auto-granting preferences for your favorite charities. 1

4 Give strategically We make it easier for you to give by alleviating the administrative burdens and time it requires to invest assets, conduct charity due diligence, and issue grants. In addition, our philanthropic accounts allow you to tailor and time your giving to meet different giving goals. We effectively reduce work and streamline costs on your end without sacrificing charitable impact in four simple steps. Convert a variety of assets into donations Strategic philanthropy is most effective when you consider when to give and what assets to gift. Our philanthropic accounts enable you to convert a variety of assets into donations: Cash or check Appreciated securities Mutual fund shares, stocks, or bonds Special assets How our account works Contribute and deduct Select and invest Recommend and issue Establish a legacy You contribute You select You recommend to a philanthropic investment a grant. We account and take an immediate tax deduction. options and we invest the assets; proceeds grow tax-free. conduct due diligence and issue the check. You craft a succession plan to establish your legacy of giving. 2

5 Minimize costs The concept is simple: A penny saved is a penny earned. We strive to provide donors with the highest-value philanthropic accounts at the lowest possible cost. We offer access to a wide range of Vanguard investment options, which allow you to tailor your philanthropic account to match your risk tolerance. Vanguard, a pioneer in mutual fund management, is a client-owned company with a proven history of reducing expense ratios, and only we can extend the direct benefits of its at-cost investments to donors. For select donors looking for further diversification, we also offer exclusive access to The Investment Fund for Foundations Multi-Asset Fund, an investment that is traditionally reserved for nonprofit organizations. All-in fees Lower fees keep more of your charitable dollars working for the causes you care about most helping you to make a greater impact. That is why Vanguard Charitable s cost structure for an account of $25,000 or more consists of two parts, and nothing more. For more information, please see the Philanthropic account fee schedule and Investment options and performance inserts. Our fee structure Administrative fee For our general operating costs, including legal, accounting, and employee expenses. Investment fee* + = Weighted expense ratio charged for investment options. All-in fee For less than a 1% annual fee, enjoy the benefits of taxeffective, convenient, flexible philanthropy. * Vanguard Charitable itself does not charge investment fees. The expense ratios are assessed by the underlying funds of the Vanguard Charitable investment options and and vary per donor based on investment allocation. 3

6 Make a difference We issue grants to an outstanding variety of charities, a reflection of the diversity of our donors and the causes that are important to them. Our average grant is nearly $12,000. The potential result of each donation food for 24 families for a month, a college scholarship for a student, or 200 health screenings can have both an immediate and lasting impact. For more information, please see the Effective granting insert. A legacy of giving Fulfill your philanthropic intentions beyond your lifetime and craft a giving legacy that includes the people and causes you care about most. By choosing from a variety of succession plan options, including family, charity, and sunset gifts that steadily help for many years, your account will be an enduring testament to your philanthropic values. For more information, please see the Craft your giving legacy insert. Our donors causes of interest Fiscal years % Human services 25% Education 12% Religion 8% Civic 7% Other 6% Health 4% Arts and culture 2% Environment and wildlife 1% Historical 4

7 Start giving Begin making your impact and open a personal philanthropic account today vanguardcharitable.org/startgiving

8 P.O. Box Boston, MA p f vanguardcharitable.org Vanguard Charitable was founded by The Vanguard Group, Inc. as an independent, nonprofit, public charity in Although Vanguard provides certain investment management and administrative services to Vanguard Charitable pursuant to a service agreement, Vanguard Charitable is not a program or activity of Vanguard. A majority of Vanguard Charitable s trustees are independent of Vanguard. Each donor s tax situation is unique and is likely to be impacted by specific facts and circumstances that are beyond Vanguard Charitable s control or knowledge. Additionally, tax laws and regulations change frequently, and their application to a particular taxpayer s circumstances can vary widely. We strongly encourage you to consult with your tax advisor. Vanguard Charitable disclaims any responsibility for the accuracy or adequacy of any position taken by donors in their tax returns. Vanguard and the ship logo are trademarks of The Vanguard Group, Inc. Florida: A copy of the official registration and financial information may be obtained from the Division of Consumer Services by calling , toll-free within the state. Our Florida registration number is CH8474. Georgia: A full and fair description of the programs of Vanguard Charitable and our financial statement summary is available upon request at 95 Wells Avenue, Suite 155, Newton, MA ; New York: New York residents may obtain a copy of our annual report by writing to the Office of the Attorney General, Department of Law, Charities Bureau, 120 Broadway, New York, NY North Carolina: Financial information about us and a copy of our license are available from the State Solicitation Licensing Branch at Pennsylvania: The official registration and financial information may be obtained from the Pennsylvania Department of State by calling toll-free, within Pennsylvania, Virginia: A financial statement for the most recent fiscal year is available upon request from the State Division of Consumer Affairs, P.O. Box 1163, Richmond, VA 23218; Washington: You may obtain additional financial disclosure information by contacting the Secretary of State at GIVE. West Virginia: West Virginia residents may obtain a summary of the registration and financial documents from the Secretary of State, State Capitol, Bldg. 1, Room 157-K, 1900 Kanawha Blvd. East, Charleston, WV Registration does not imply endorsement, approval, or recommendation by any state. Maryland: Copies of documents and information submitted by us are available for the cost of copies and postage from the Secretary of State, Statehouse, Annapolis, MD 21401; Mississippi: The official registration and financial information may be obtained from the Mississippi Secretary of State s office by calling New Jersey: Information filed with the attorney general concerning this charitable solicitation and the percentage of contributions received by the charity during the last reporting period that were dedicated to the charitable purpose may be obtained from the Attorney General of the State of New Jersey by calling (973) and is available on the internet at charfrm.htm. Registration with the attorney general does not imply endorsement Vanguard Charitable Endowment Program. All rights reserved. VPROSP

9 Effective granting Tailor and time your giving to support the charitable causes you care about most.

10 Make a greater impact Philanthropists take special pride in the charities and causes they choose to support. A philanthropic account offers you the opportunity to tailor and time your giving based on what is important to you, allowing you to set goals, research, and recommend grants to charity more effectively. Grant to charity in five easy steps Grants may be recommended for a minimum of $500, and all grants must support a public charity. 1. Choose a 501(c)(3) nonprofit organization Research charities through our online system or provide us with charity contact information. 2. Decide on a grant amount 1 The minimum grant recommendation is $500. Please provide your reasoning if you wish to grant an unusual amount, such as numbers that do not end in 0 or Select a grant purpose Grants may support everything from general operating expenses or a capital campaign to events or specific projects. Each purpose requires a varying degree of research before a grant is issued. Less research General operating expenses Annual fund, class gift, capital campaign or expenditure, underwrite event Scholarship, missionary support Special project, any other purpose More research 4. Manage timing 2 Send the grant check now, later, or on a recurring basis. The time to process a grant recommendation may vary based on the type of organization being supported. Nearly 80% of our grants are reviewed and issued in less than 2 days. Less than a week Traditional grants 1 2 weeks Religious, government, and intermediary grants 3 3 weeks Supporting organization grants Months Direct international grants 4 5. Consider recognition Grants may be anonymous, fully attributed to your account, or something in between. Choose how you want to be recognized, if at all, each time you recommend a grant. 1 Donors must successfully recommend at least one minimum $500 grant every seven years. International grants and grants subject to tailored grant agreements may require larger minimum recommendations. Account advisors may not claim a charitable tax deduction for a grant made from Vanguard Charitable, even if the nonprofit organization provides a tax receipt. 2 Timing may vary depending on grant purpose, type of organization, and seasonal volumes. 3 An intermediary is an organization based in the U.S. that supports international organizations and causes. 4 Direct international grants are researched and approved on a case-by-case basis. Contact Vanguard Charitable before recommending an international grant.

11 The importance of charity due diligence Traditionally, as a donor, you bear the responsibility to research charities you wish to support to ensure they meet their missions and allow for 100% tax-deductible gifts. Vanguard Charitable reduces that administrative burden by managing the review and distribution process for you. Our grants team abides by IRS guidelines when reviewing your recommendations. You can be confident your contributions are helping compliant organizations in an efficient and timely manner. Three factors considered before approving your grant recommendation Type of organization Every organization that receives our grants requires a unique review and approval process. We may need different documentation from a church or public library than the fundraising arm of a hospital or a charity that grants abroad. Consider your end goal before choosing what type of organization to support. Purpose of grant When you recommend a grant to charity, you also choose how the organization can use the money. Perhaps you wish to donate to a specific project or fund, or maybe you prefer to support a charity s overall mission, allowing the organization to choose how best to spend the grant and satisfy the greatest need. We work with you and charities to support projects that are important to you, while satisfying IRS requirements for granting. The simplest way to recommend a grant is also the most convenient for nonprofit organizations: Designate the charitable dollars for general operating expenses. Impermissible benefit Grants that underwrite events or allow for memberships require additional research to be approved. We must ensure the grant will not result in any benefits that would reduce the charitable deduction, as if you donated directly from personal funds. If the grant enables an individual to receive special goods or services, such as free tickets to a gala or some membership benefits, or it fulfills a donor s pledge, it cannot be approved. When a grant is approved, we mail a check and a letter acknowledging the gift to your charity of choice. While the nonprofit organization cannot issue a tax receipt, if you choose to provide contact information, it may thank you. For more information on effective granting, please see our Policies and guidelines booklet or visit vanguardcharitable.org/resourcecenter. For help recommending a grant, contact us at

12 P.O. Box Boston, MA p f vanguardcharitable.org Vanguard Charitable was founded by The Vanguard Group, Inc., as an independent, nonprofit, public charity in Although Vanguard provides certain investment management and administrative services to Vanguard Charitable pursuant to a service agreement, Vanguard Charitable is not a program or activity of Vanguard. A majority of Vanguard Charitable s trustees are independent of Vanguard Vanguard Charitable Endowment Program. All rights reserved. VGRT

13 Craft your giving legacy Fulfill your charitable intentions beyond your lifetime with flexible legacy options.

14 Leave a legacy of giving Continue your philanthropy beyond your lifetime by crafting a giving legacy that reflects your charitable values. A giving legacy, laid out in a succession plan, is an effective way to ensure the assets remaining in your philanthropic account continue to fulfill your charitable mission. 1 Your philanthropic account can be bestowed to loved ones or endowed to charity in a variety of ways. Mix and match different options to craft a plan that meets your philanthropic goals. Plans are set up to be flexible and can be changed or amended at any time. Figure 1. Legacy options Name advisors on existing account Retirement plan Create two or more new accounts Philanthropic account from account Bestow to others IRA to account Will Give to multiple charities Endow to charity from account Defer giving Trust account in full Life Endow percentage annual insurance Grant Bestow to others Pass your philanthropic values and account privileges to loved ones and continue a tradition of giving. We encourage you to include your charitable successors early on in your philanthropy, so they are better prepared to manage your account when the time comes. Pass on your account. You can appoint up to two individuals, such as your spouse and child, to assume account privileges. Any individuals can be named account advisors, which allows them to recommend grants, select investment options, and change account preferences. New account advisors may then name new successor-advisors, allowing your original account, and spirit of giving, to continue for generations. Create new accounts. If you wish to divide your account so more than two individuals can advise, you may request to have multiple new philanthropic accounts opened when the succession plan is enacted. Each account requires a minimum initial balance of $25,000. Endow to charity Recommend your account s remaining assets go directly to nonprofit organizations as a final testament to your charitable mission. 2 Recommend final grants to charity. Recommend one or more charities to receive a final grant from your remaining account balance. 1 Plans are enacted when account advisors are deceased or unable to manage account processes. Vanguard Charitable remains the sole owner of the assets within the account and has ultimate control and discretion over account investments and distributions. 2 Charities identified as grant recipients in the succession plan will be subject to review once the plan is enacted to ensure they remain in good standing with the IRS.

15 Transfer account assets to the General Fund. The General Fund is an account managed by Vanguard Charitable s trustees and used to issue grants to a variety of charitable causes. If a succession plan is not selected, account assets are automatically moved to the General Fund. Establish recurring grants. Recommend that one or more charities receive a recurring grant based on a percentage of your remaining account balance through an Endowed Grant Plan (EGP). Total annual distribution is a minimum 5% and can be distributed across any month except December, due to seasonal transaction volume. Over time, remaining account funds will continue to grow tax-free through investments. Term: Grants may continue for a specific time or as long as the account s size continues to exceed distributions. While accounts are not permanent endowments, theoretically, recurring grants could continue indefinitely if the account growth, which depends on financial markets and investment choices, outpaces the distributions. The minimum term for an endowed grant plan is five years. Termination: Remaining account assets will be distributed in a lump sum at the conclusion of a predetermined term. If no term is indicated or the account balance can no longer support the requested distribution, remaining account assets will be distributed in a final grant. Notification: One individual may be nominated to receive statements and confirmations about EGP activity. This individual may not alter EGP parameters or recommend additional grants. Deferred giving Fulfill your philanthropic intentions beyond your lifetime by establishing a plan now to gift to charity later. Deferred giving options allow you to donate your assets when you pass to Vanguard Charitable, which will then create or add to an account and grant to charity in your honor. Vanguard Charitable can be named as a beneficiary to the assets listed in Figure 1, allowing you to move assets from a taxable estate into a tax-free, philanthropic environment. 3 Family, friends, heirs, professional advisors or even Vanguard Charitable may be named advisor to the account. For more information, please see our Policies and guidelines booklet. For help crafting your giving legacy, contact us at Individual circumstances may vary. Consult a tax advisor for advice on how best to manage your individual situation.

16 P.O. Box Boston, MA p f vanguardcharitable.org Vanguard Charitable was founded by The Vanguard Group, Inc., as an independent, nonprofit, public charity in Although Vanguard provides certain investment management and administrative services to Vanguard Charitable pursuant to a service agreement, Vanguard Charitable is not a program or activity of Vanguard. A majority of Vanguard Charitable s trustees are independent of Vanguard Vanguard Charitable Endowment Program. All rights reserved. VGPL

17 Contribute complex assets Rebalance your portfolio and reduce capital gains with a complex asset contribution.

18 Minimize capital gains by donating complex assets Complex assets, like hedge fund or private equity investments, insurance policies, and non-publicly traded stocks, can be very tax-effective donations. They can also be difficult and expensive to gift to charity. Many nonprofit organizations are simply not equipped to accept these types of donations because of the high cost to liquidate and required staff expertise. Vanguard Charitable has the skills and resources to manage your complex financial asset donations. These gifts are different than many traditional donations because they require prequalification, higher contribution amounts (see table below), additional fees, and extended processing time. Why contribute complex assets to a philanthropic account? Receive a tax deduction based on an asset s fair market value. Avoid recognition of capital gains on highly appreciated assets. Rebalance your portfolio in a tax-efficient way. Avoid tedious paperwork required to donate the asset to multiple organizations. Support many charities over time with the proceeds from one donation to Vanguard Charitable. Complex asset minimums Primary asset type Minimum contribution Non-publicly traded stock (e.g. C Corp.) $750,000 LLC or LLP interest $750,000 Private equity $750,000 Hedge fund interest $750,000 Restricted stock (incl. Rule 144/145) $50,000 Insurance policy $25,000 Other 1 Contact for quote Note: The IRS may require a qualified appraisal of donated assets. 1 While some complex asset donations, such as gifts of foreign traded stock, do not have higher minimum contributions, they may be subject to additional transaction or legal fees. Contact Vanguard Charitable to learn more.

19 Donate non-financial assets Non-financial assets, like real estate or fine art, are also tax-effective donations. Vanguard Charitable will help you partner with a third-party organization to liquidate unique, non-cash assets and contribute to your philanthropic account. Like with other complex asset donations, the process can be extensive and require prequalification. Steps to contribute a complex asset 1. Review our Policies and guidelines booklet. Review the list of acceptable assets and learn about our processes and timelines for contributions. 2. Contact us to prequalify your proposed contribution. Together, we discuss your gifting intentions and gather information about the asset. This process may take several weeks and may require the completion of additional forms. 3. Read and sign the Understanding the terms for contributing complex assets form. The form states the details of your intended donation and acknowledges your consent to our terms and conditions. (This form is not required for gifts of restricted stock.) 4. Vanguard Charitable completes due diligence. We review all submitted documents and complete research. Legal review is generally required, as is consultation with all parties involved in the proposed asset transfer and liquidation. The time required for a formal review varies depending on the asset type and time of year. 5. Receive determination from Vanguard Charitable. When the due diligence process is complete, we approve or deny your intended contribution. If your asset is accepted, you are required to complete a Make a contribution form and submit any other paperwork essential to the asset transfer. Note: Complex asset donations are often subject to specific time windows and delayed settlement of proceeds. We liquidate assets as quickly as possible while adhering to IRS and applicable legal guidelines. Due to extended research and processing timeframes, please initiate complex asset contributions well in advance of desired deadlines. To initiate a complex asset donation, contact us at questions@vanguardcharitable.org.

20 P.O. Box Boston, MA p f vanguardcharitable.org Vanguard Charitable was founded by The Vanguard Group, Inc., as an independent, nonprofit, public charity in Although Vanguard provides certain investment management and administrative services to Vanguard Charitable pursuant to a service agreement, Vanguard Charitable is not a program or activity of Vanguard. A majority of Vanguard Charitable s trustees are independent of Vanguard Vanguard Charitable Endowment Program. All rights reserved. VSAS

21 Philanthropic account fee schedule Low all-in fees Benefit from tax-effective, high-value philanthropy at a minimal cost. The less spent on fees and expenses, the more money is available to grant to charity. That is why Vanguard Charitable s cost structure for accounts with $25,000 or more is simple, consisting of two parts administrative and investment fees and nothing more. 1 Our fee structure Investment fee Pay for the management of invested assets to allow for charitable growth + = Administrative fee Cover the cost to make giving flexible and convenient All-in fee Weighted expense ratio charged for investment options. 2 Select from a range of options across major asset classes that span the risk spectrum and pay an average of only 0.11%. When invested, charitable assets compound tax-free, increasing philanthropic impact over time and enabling more grants to go to worthy causes. For general operating costs, including legal, accounting, processing, and employee. Allow Vanguard Charitable to ease your giving by alleviating the administrative burdens and time it requires to conduct charity due diligence and issue grants, as well as manage all day-to-day activities. 1 Individuals must make an initial, minimum $25,000 contribution to open a philanthropic account. Accounts with balances less than $15,000 will be charged an annual $250 maintenance fee in March. 2 Vanguard Charitable does not itself charge investment fees. The expense ratios are assessed by the underlying funds of the Vanguard Charitable investment options and vary per donor based on investment allocation.

22 Our fees and minimums Administrative fees are assessed on a tiered schedule based on account balance and status. We offer donors two account statuses: Standard and Select. Qualifying accounts with balances of more than $1 million for at least three months are eligible for Select status. 3 Administrative Standard Select fee schedule account account First $500K 0.60% 0.60% Next $500K 0.40% 0.40% Next $29M 0.40% 0.13% Next $70M 0.05% Minimums New account $25,000 Additional contribution $5,000 Charitable grant $500 For more information on investment fees, see the Investment options and performance booklet or visit vanguardcharitable.org/investments. 3 Account status is subject to Vanguard Charitable s approval and is based on account balance, activity, and patterns. Account status is reviewed and approved on a quarterly basis. Vanguard Charitable was founded by The Vanguard Group, Inc., as an independent, nonprofit, public charity in Although Vanguard provides certain investment management and administrative services to Vanguard Charitable pursuant to a service agreement, Vanguard Charitable is not a program or activity of Vanguard. A majority of Vanguard Charitable s trustees are independent of Vanguard Vanguard Charitable Endowment Program. All rights reserved. VFEE