Buzzword: Donor-advised funds

Marketplace Staff Jul 7, 2006

The gift of giving brings us this week’s Marketplace Money Buzzword: donor-advised fund.

A donor-advised fund is a way for non-millionaires to set up a charitable trust. Think of it as your own Bill and Melinda Gates Foundation, minus several billion dollars.

Donor-advised funds work like mutual funds. You invest as little as $10,000. The money grows tax-free. Then, at a time you choose, your charity of choice gets the whole shebang.

These funds are registered as non-profit organizations. So when you put your money in, you get a tax deduction.

A nice gift for another worthy charity: Yourself.

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