October 14, 2004 | Read Time: 1 minute
The Internal Revenue Service has approved a new type of charitable gift that allows donors to take an immediate tax deduction for the contribution while retaining the ability to oversee how the money is invested in the charity’s behalf.
According to the ruling issued by the revenue service, donors may continue to manage the investment of such gifts, known as “donor-managed investment accounts,” for up to 10 years after the gifts are made.
Financial advisers and fund raisers say the accounts are designed to appeal to donors who are experienced investors and who might otherwise delay their gifts in the hope of increasing the amount they could contribute through smart investing.
They say the benefit to charities is that they gain possession of the money from such donors earlier than they might otherwise — and do not run the risk that the donors will move on to another cause by the time they are ready to give.
Winklevoss Consultants, in Greenwich, Conn., sought the IRS ruling — which has not yet been publicly released by the government — and is now seeking a patent on the idea.
Paul G. Schervish, a researcher at Boston College who helped develop the idea for the investment accounts, says charities that are just starting to build an endowment might consider the accounts as a way to accept large gifts “without having to immediately establish an investment committee and an endowment manager. This gives them a window of several years to move in that direction.”
