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 PROGRAM DESCRIPTION AND DISCLOSURE MEMORANDUM |
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[Administration] [Donor's Accounts] [Grants to Charities] [Administration of Grants] |
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| The American Gift Fund is a public charity which receives donations from individuals, corporations and others and makes grants to numerous charitable organizations throughout the United States, both charities selected by the Fund and those recommended by the persons who make the donations. The Fund was established to allow donors to make charitable donations at the most suitable times tax-wise while spreading grants from those donations to specific charities over time as the donors prefer - without the costs and administrative burdens separate charitable foundations bear.
Gifts may be made to the Fund at any time and are immediately deductible for federal income, estate or gift tax purposes upon acceptance by the Fund. The full value of outright gifts is deductible, subject to ceilings and conditions affecting the donors and referred to in the section entitled "Tax Considerations" below. Only donations of cash or securities may be made to the Fund. Although the Fund normally accepts publicly traded securities, the trustee of the Fund may also accept certain closely-held or restricted stocks. In any case, the trustee will review each lifetime donation, whether of cash or securities, before accepting it and will notify prospective donors promptly of the acceptance or rejection of each proposed gift to the Fund. Donations, both cash and securities, must also be delivered to the trustee in a form and manner which is acceptable to the trustee. The minimum initial contribution is $5,000. Subsequent gifts may be made in the amount of at least $250. Each donor must complete and sign an Application (click here for PDF Application) when he or she makes an initial gift.
The donor may also, in a Grant Recommendation (click here for PDF Grant Recommendation):
The Fund has a Board of Directors of three members, a majority of whom must be independent of the Fund's trustee. The Board appoints the trustee. The Board selects all charities to which the Fund will make grants and fixes the amounts and times of such grants. In addition, the Board has overall responsibility for the Fund's investments, but the trustee provides the day-to-day management of the Fund's assets as well as administration of the Fund. The Board of Directors has the right to change the terms of the gift program described in this brochure at any time. Board members serve until their death, resignation, removal or adjudication of incompetency. Vacancies on the Board will be filled by a majority of the remaining independent members. When a donor makes his or her initial donation to the Fund, the Fund will establish an account in the donor's name or another name selected by the donor and acceptable to the Fund. For example, John Doe's account may be simply called "John Doe" or may be named "The John Doe Foundation" or "The Janet Doe Memorial Fund." The Fund's investments are divided into units of equal value on the Fund's books and are allocated to a donor's account in proportion to the initial value of the donor's contributions to the Fund's investment portfolios. The investments are assets of the Fund, and the donors do not own any interest in them.
Charges payable only from some of the accounts will be paid by reducing the units allocated to such accounts at the end of a month. If, at any time before the first anniversary of a donor's initial donation, grants from the units allocated to the donor's account from the donor's contributions exceed 5% of the donor's contributions before that date, the Fund will pay the trustee a fee from those units equal to 1% of the value of the donor's contributions utilized for such grants. The Fund provides three ways by which donors may suggest charitable purposes for which, or charities to which, the Board of Directors will make grants from the donors' accounts: selecting one or more areas of charitable interest proposed by the Fund; recommending one or more charities designated by the Fund as being focused on those areas of interest; and recommending other charities with which the donors are familiar. In the alternative, as noted in the preceding section, a donor may recommend that his or her gift to the Fund be added to the Fund's General Charitable Account. Areas of Charitable Interest The Fund has developed a list of specific categories of charitable purposes, such as children's cancer research, preservation of wilderness and rivers, and art education, of charities to which the Fund will make grants. A complete current list of these categories accompanies this brochure. A donor may, in a Grant Recommendation, request that his or her donation be used for grants to organizations whose purposes fall within one or more categories the donor specifies or may cancel a previous request. The Board of Directors will consider every such request and, in addition, welcomes recommendations from donors for additional categories of charitable purposes. Charities in Specific Categories With respect to some categories on the list of charitable interests, the Board of Directors has selected one or more charitable organizations whose programs are designed to meet the purpose of the category. A donor may, in a Grant Recommendation, request that his or her donation be used for grants to such organizations or may cancel a previous request. The Board of Directors will consider every such request, but has the power to disapprove or approve any request. Recommendations A donor may, in a Grant Recommendation, recommend one or more charities to receive grants by the Fund from the donor's account or may cancel a previous request. Each recommended charitable organization must be exempt from federal income taxation under Section 501(c)(3) of the Internal Revenue Code at the time of the grant. The Board of Directors will review each recommendation both when made and at the time a grant is to be made to determine the recommended charity's status under Section 501(c)(3). The Board has the power to approve or disapprove any such recommendation. [Top of Page - Index] Amounts and Times Of Charitable Distributions A donor may also recommend, in a Grant Recommendation, the amounts and times of grants for his recommended charitable purposes or to his or her recommended charities, whether it is a lump sum grant or a periodic grant of a fixed amount or percentage of the value of the account. The minimum amount of a single recommended distribution is $1,000. The minimum amount of a fixed periodic distribution is $500. A donor may also recommend (in the original or a subsequent Application) that the entire balance of assets attributable to the donor's contributions to the Fund be distributed to the recommended charities after the Fund has received satisfactory evidence of the donor's death. The Board has the power to approve or disapprove any recommended amount and timing of a grant. The Fund will send a notice to the donor or other person having the authority to make recommendations with respect to the donor's account if a recommended charity does not qualify under Section 501(c)(3) or the Board does not approve a recommendation with respect to the account. If a person with the authority to make recommendations concerning the donor's account fails to make recommendations which the Board approves, the Fund will distribute assets of the donor's account to such charities in such amounts and at such times as the Board determines in its uncontrolled discretion. Minimum Grants The purpose of the American Gift Fund is to promote philanthropy by seeking charitable contributions that can be used to support qualified organizations. The Fund expects that its grant distributions will exceed 5% of its average net assets on a fiscal five-year rolling basis. If that level of grant activity is not attained, the Fund will identify the named accounts from which grants over the same five-year period totaled less than 5% of each account's average assets. The Fund will then contact the donor advisors of these accounts to request that they recommend grants of at least this amount. If a donor advisor does not provide qualified grant recommendations within 60 days of such request, the Fund reserves the right to transfer up to 5% of assets from the donor advisor's named account to the Fund's General Fund for discretionary grantmaking. Successor And Substitute Grant Advisers In the Application or in a subsequent Grant Recommendation a donor may designate an individual (who is not a minor), a corporation or a charity exempt under Section 501(c)(3) to replace the donor in making recommendations of charities and the amounts and timing of grants until the donor gives written revocation of such other person's authority. Similarly, in the Application or in a subsequent Grant Recommendation, a donor may designate an individual (including a minor), corporation or exempt charity to make such recommendations after the Fund has received satisfactory evidence of the donor's death. A minor's authority shall be exercised by the minor's guardian. If more than one donor establishes an account, the surviving donors shall have the authority to make and change recommendations, Only the last surviving donor shall have the right to designate a successor to make recommendations after the donors' deaths. Grants One advantage the Fund offers is to give donors a way to create endowments, memorials or special funds for charities they prefer without the cost and time of setting up and administering a private foundation. For instance, a scholarship fund can be established, provided grants are made to exempt charitable organizations which administer the scholarship payments from the fund. Moreover, other persons besides the donor can make gifts to the Fund which can be noted as part of the donor's account. Whenever the Fund makes a grant (or makes initial distribution of a periodic payment grant), the Fund will notify the charitable recipient of the donor's name, address and account name, unless the donor has requested anonymity. Grants may not be used to satisfy preexisting pledges or to provide a private benefit, for example, to pay dues or membership fees, purchase tickets to a benefit, pay the donor for time or services provided to a charity or purchase goods at charitable auctions. Grants may not be made for lobbying activities, political contributions or political campaigns. Moreover, grants may not be made to a Section 509(a)(3) organization (a "supporting organization") or to a private foundation. To assure that all grant funds are used exclusively for charitable purposes in accordance with the Fund's guidelines, the Fund will conduct an investigation when it has reason to believe that grant funds are being used for the private benefit of the donor advisor. The Fund reserves the right to take appropriate legal action if it determines that grant funds have been diverted for improper purposes. If it becomes necessary to terminate the Fund, the Board of Directors will distribute the Fund's assets attributable to each account to the qualified organizations the donors have most recently recommended and, in the absence of such a recommendation and in the case of the General Charitable Account, as the Board determines. [Top of Page - Index] Fund investments are presently held in several portfolios which have different investment objectives. Securities contributed to the Gift Fund and awaiting sale are held separately.
The Growth Portfolio seeks long-term growth of capital by investing primarily in common stocks and securities convertible into such stocks or in mutual funds primarily holding such stocks and securities. Not only may donors make outright gifts and bequests to the Fund, they may also name the Fund as the charitable beneficiary of a charitable remainder trust. A donor or other named beneficiaries will receive distributions from the charitable remainder trust and, upon the death (or earlier termination) of the trust, the remainder will pass to the Fund. The Fund can also be named as the charitable beneficiary of a charitable lead trust or the beneficiary of an IRA. Upon acceptance of a donor's gift by the Fund, the donor becomes entitled to a federal income tax and gift tax deduction. A federal estate tax deduction is available for bequests to the Fund. The Fund will accept cash bequests only. The donor does not obtain a charitable deduction when the Fund makes a charitable grant because the Fund is distributing its own property, not the donor's. For federal income tax purposes, an individual donor's itemized deduction for a donation to the Fund is limited to 50% of his or her adjusted gross income in the case of cash gifts and 30% in the case of appreciated securities. Corporate deductions are limited to 10% of the corporation's taxable income as specially calculated. The portion of any deduction which cannot be used in a year because of that limitation can be carried forward and used for up to five years after the year of contribution. No income, gains or other item of income or expense received or incurred by the Fund or allocated to or incurred by a donor's account is attributable to the donor since he or she does not own assets assigned to the account. [Top of Page - Index]
Donors are urged to consult their attorneys, accountants or tax advisors with respect to questions relating to the deductibility of various types of contributions to the Fund for federal and state tax purposes.
Each donor is responsible for determining the value for tax purposes of the donations he or she makes to the Fund. The values of publicly traded securities given to the Fund which may be shown on statements issued by the Fund to donors are estimates by the trustee only and donors cannot rely on them. Individual donors must file Form 8283 with their income tax returns for gifts of more than $500 of non-cash property. All donors must file a Form 8283 for most charitable gifts of more than $5,000 in non-publicly traded securities.
The Fund has received ruling from the Internal Revenue Service treating the Fund as a public charity under Section 501(c)(3) of the Internal Revenue Code.
The American Gift Fund has registered in all states which require registration from which it is not exempt and in the District of Columbia. The following notifications are required by the states indicated:
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