July 24, 2003 | Read Time: 2 minutes
A declining stock market caused assets to fall nearly 6 percent to $3.4-billion last year at 25 of the nation’s largest commercial donor-advised funds, according to an article in Bloomberg Wealth Manager (June).
The declining market also led two companies — Thornburg Investment Management and Allmerica Financial Corporation — to close their funds, according to the magazine.
Despite the economic downturn last year, four financial-services companies — Armada Funds, Carlson Capital Management, Fred Alger Management, and Merrill Lynch — entered the donor-advised fund market, the article said.
“People still have tax issues that they are trying to resolve in a down market,” David Ratcliffe, director of the Merrill Lynch Center for Philanthropy and Nonprofit Management, told the magazine. Donors also see government services and programs being cut, he said, and they want their money to help support those lost services.
The top four funds on Bloomberg‘s list — the Fidelity Charitable Gift Fund ($2.3-billion), Vanguard Charitable Endowment Program ($424-million), Schwab Fund for Charitable Giving ($200-million), and U.S. Charitable Gift Trust ($182-million) — accounted for more than 90 percent of the value of the surveyed funds.
By itself, Fidelity accounted for more than two-thirds of the total assets in the group, despite a 10-percent decline in assets last year, according to the article.
Vanguard, whose assets grew 23.6 percent last year, was the only fund among the largest eight in the survey whose assets increased more than 2 percent in 2002.
“There’s really no magic in it,” Benjamin Pierce, executive director of Vanguard’s program, told the magazine. “The reason for our growth is our low fees. We offer donor-advised funds at about half the cost of the average fund.”
Vanguard’s fees to manage a donor-advised account range from 0.65 to 0.75 percent of assets, which is the lowest of any company, the article reports. (Vanguard has since raised its fees; it charges donors 0.77 to 0.87 percent of assets.)
