Be Your Own Kind of Warren Buffett

If Warren Buffett's $37 billion gift to charity last week made your annual $50 contribution to PBS feel a little puny by comparison, take heart. Even if you're merely affluent, you can have your own charitable "foundation" and, unlike Buffett, you can even name it after yourself.

The tool you'll want is known as a donor-advised fund, and here's how it works:

You set up a fund and contribute cash or other assets like stocks and bonds. You take a tax deduction the year you make the contribution but you can distribute the assets to charity when and as you see fit.

In the meantime, you can invest those assets so they grow tax-free in the fund, giving you even more money to donate when the time is right.

You manage all your contributions through one account and you do it all online so you can see to whom you've given and how much, and it will make it much easier to figure your deductions at tax time.

How do you set up a donor-advised fund? For-profit financial services firms are increasingly popular as fund administrators because of the range of service sand investment options they offer.

Fidelity runs the largest donor advised fund but T. Rowe Price, Vanguard and Schwab also have them. All require a minimum deposit of $10,000 and charge less than 1% of assets each year in fees.

Community foundations, churches and universities may also run funds and ask you to allocate a certain portion of the proceeds to their institution.

Knight Kiplinger, editor-in-chief of Kiplinger's Personal Finance magazine, went with Fidelity because the company is flexible about what assets can be deposited. He gives away mostly shares of his family's publishing company, which are not publicly traded.

Typically, he says, you deposit appreciated assets like stock, which the fund sells and immediately invests the proceeds in mutual funds or money markets. To donate, he simply goes online, punches in a password and makes a distribution to any IRS-qualified charity.

You can also pass your fund on to your heirs as a way to maintain a history of family giving.

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