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Against Backdrop of Changing Estate Planning and Tax Landscape, National Donor-Advised Fund Outlines Five Approaches to Tax-Smart Giving for Individuals and Financial Advisors

SAN FRANCISCO—November 27, 2012—(BUSINESS WIRE)—With the annual giving season underway, Schwab Charitable is expecting record levels of contributions as individuals and their advisors seek to meet charitable giving priorities while also navigating the uncertain outlook for taxes given the expiration of the Bush-era tax cuts at the end of this year. As of October 31, 2012, Schwab Charitable has seen an almost 75 percent increase in contributions year-over-year.

"November and December are traditionally a time when many people activate their giving strategies—contributing to their donor-advised account in advance of year-end contribution deadlines, as well as making grants to their favorite causes as part of their holiday giving traditions," says Kim Laughton, President of Schwab Charitable. "This year in particular, we are already seeing an even more pronounced surge in activity as individuals look to reduce their estate sizes and tax burdens and maximize what they are able to give to charitable causes."

A donor-advised fund allows investors to contribute cash or appreciated assets to a charitable account to realize the greatest possible tax benefits and to then more strategically support charity(ies) of their choice over time. Serving a wide range of philanthropic investors, Schwab Charitable's account sizes range from $5,000 to almost $500 million.

Five Approaches to Tax-Smart Giving this Season

With the uncertain tax environment top of mind for many donors this season, Schwab Charitable has outlined five approaches for individuals and their advisors to consider as part of their financial and tax planning:

  1. Reduce estate size before taxes rise and exclusion amount drops: With estate tax exclusions potentially decreasing from over $5 million to $1 million and estate tax rates set to potentially rise, individuals can make donations to charitable accounts that will enable them to immediately reduce their estate size and tax exposure and give more to important causes during their lifetimes.
  2. Donate highly appreciated assets to charitable accounts to offset taxes from accelerating capital gains: Contributions can be made now to realize the maximum tax benefit but the donor can decide later what causes he/she wants to support.
  3. Donate to charitable accounts in 2012 to lock in the maximum deduction: Some proposals to cap itemized deductions starting in 2013 could reduce the income tax benefits of future charitable gifts.
  4. Donate to charitable accounts to reduce the income tax generated by a Roth IRA conversion: For individuals who are converting a traditional individual retirement account (IRA) to a Roth IRA, charitable giving can help to offset the taxes resulting from such a conversion.
  5. Donate to charitable accounts to enable tax-free growth to support future giving: In general, putting as much money as the budget allows into non-taxable accounts enables potentially greater tax-free growth which, in the case of charitable accounts, can support an ongoing strategic giving strategy.
It's the Most Wonderful Time of the Year...For Conversations with Clients about Charitable Giving

Charitable planning and giving is an important component of any tax planning or financial planning discussion, and conversations about giving intentions and strategies is a good way for advisors to build deeper relationships with clients.

"When advisors are helpful in providing clients with simple and tax-effective ways to support the causes that are important to them, it opens up much more personal conversations and builds tremendous loyalty," says Laughton. "The holiday giving season is a natural opportunity to ask questions about giving intentions and strategies and highlight their importance in financial and tax planning."

Schwab Charitable works with close to 1,000 registered investment advisors (RIAs) to meet the charitable giving needs of their clients. Advisors are able to use the same technology platform ( to oversee charitable accounts as they do for other accounts at Schwab.
"We are pleased by the enthusiasm shown by the thousands of independent advisors who gathered at Schwab's recent IMPACT conference, and are proud to be a trusted resource for those who want to simply and tax-effectively facilitate their clients' charitable giving," says Laughton.

About Schwab Charitable

Created as a national donor-advised fund with a mission to increase charitable giving nationwide, Schwab Charitable has received over $6 billion in contributions and has facilitated over $3 billion in grants to charities on behalf of its donors since inception. Serving a wide range of philanthropic investors, account sizes range from $5,000 to almost $500 million. Schwab Charitable has been a pioneer in enabling investment advisors to manage the investments of donor-advised accounts and remains a leading provider of such professionally managed accounts. Schwab Charitable also offers private foundation conversion service for private foundations considering donor-advised funds as a complementary or alternative charitable vehicle. For more information, visit