This perpetual structure helps charities become more stable by providing an annual source of support, Schaub said. The group is an IRS-qualified charity and becomes one of the donor's charitable beneficiaries, Benson said. Donors must allocate at least 1 percent of their account's value each year to the American Foundation. The money is used to meet administrative costs and to support the group's own charitable programs. The American Foundation also provides related assistance in supplying pertinent tax information, calculating appropriate distribution amounts and the like.
Donors receive semiannual reports on trust and foundation performance.
The group, formerly known as the Interstate Community Foundation, has been around since 1982. Donors in Fidelity's plan can reap similar tax benefits while recommending that their gift dollars support particular charities. However, the program is less flexible than that run by the American Foundation. For example, donors must direct their gifts into any of four investment pools composed of Fidelity mutual funds. These pools have objectives ranging from capital preservation to growth.