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Vanguard Charitable Endowment Program Focuses Offer, Reduces Total Fees Up to 45% for Some Donors
Vanguard Charitable Endowment Program Focuses Offer, Reduces Total Fees Up to 45% for Some Donors
Published 06-19-06
Submitted by Vanguard Charitable Endowment Program
VALLEY FORGE, Pa.--(BUSINESS WIRE)--June 19, 2006--The Vanguard Charitable Endowment Program today announced significant reductions in administrative and investment fees for qualifying donor-advised fund accounts, as well as a lower threshold that will allow more participants to benefit from the new fee structure. These changes will increase the monies available for grants to public charities nationwide.
The new administrative fees will become effective July 1, 2006. On the same date, the Program will extend eligibility for reduced fees to all accounts with balances of at least $1 million. (Currently, eligibility is limited to accounts holding $5 million or more.) In addition, effective October 1, 2006, all qualifying accounts will benefit from a substantial reduction in investment fees.
"The Program has always stressed the importance of knowing and understanding all of the costs related to donor-advised funds, and administrative fees and investment fees are the main components," said Ben Pierce, the Program's executive director. "It is clear that, for any given investment performance, lower total costs mean more money remains to benefit charities."
The fee reductions reinforce the Program's status as a value leader among organizations offering donor-advised funds. Donor-advised funds are charitable giving vehicles that offer immediate tax deductions to donors, yet allow several years for planning and potential account growth before any portion of the donation must be distributed to charities. Distributions are based on recommendations by the donors or other authorized parties.
The total average account costs under the new fee structure are shown in Chart 1 below. Chart 2 provides examples of total fees for qualifying accounts.
| Chart 1: Total Average Annual Fees for Qualifying Accounts | |||||||
|---|---|---|---|---|---|---|---|
| Fee Tier | Annual Admin. Gee for Tier (starting 7/1/06) | Average Annual Investment Fee (starting 10/1/06) | Total Average Annual Fee+ (starting 10/1/06) | ||||
| Assets from $0-$1 million | 0.57% | 0.13% | 0.70% | ||||
| Additional assets from $1-$5 million | 0.25% | 0.13% | 0.38% | ||||
| Additional assets from $5-$15 million | 0.15% | 0.13% | 0.28% | ||||
| Additional assets from $15-$50 million | 0.10% | 0.13% | 0.23% | ||||
| Additional assets more than $50 million | 0.05% | 0.13% | 0.18% | ||||
+ Accounts with balances below $1 million are not eligible for reduced
fees. The total average fee for these accounts will remain at its current level of 0.79%. Accounts with balances below $15,000 will be assessed an additional $100 maintenance fee annually in March.
| Chart 2: Total Fee Examples for Qualifying Accounts
| |||||||
|---|---|---|---|---|---|---|---|
| Account Balance | Total Annual Admin. Fee (after 7/1/06) | Effective Admin. Fee Rate for Balance (after 7/1/06) | Average Investment Fee (after 10/1/06) | Effective Total Average Fee (after 10/1/06) | Effective Total Average Fee (before 7/1/06) | ||
| $1.5 million | $6,950 | 0.46% | 0.13% | 0.59% | 0.79% | ||
| $3 million | $10,700 | 0.36% | 0.13% | 0.49% | 0.79% | ||
| $7.5 million | $19,450 | 0.26% | 0.13% | 0.39% | 0.57% | ||
| $20 million | $35,700 | 0.18% | 0.13% | 0.31% | 0.43% | ||
| $75 million | $78,200 | 0.10% | 0.13% | 0.23 | 0.35% | ||
As shown in Chart 2, accounts in the $3 million range will benefit from a total average fee that is nearly 40% lower than the current total average fee. Depending on investment allocation, the total fee for a $3 million account could drop by more than 45%. The minimum total fee reduction for qualifying accounts will be about 7%.
As an additional enhancement, the Program is planning its first pool allocation change. Effective October 1, 2006, the Total Bond Pool will be comprised solely of Vanguard(R) Total Bond Market Index Fund.
The Total Bond Pool currently contains two specialized bond funds, and this change will broaden the pool's investment diversity while it simplifies tracking of the pool's performance.
The Vanguard Charitable Endowment Program is a public charity established to support and increase philanthropy across the United States. The Program's donor-advised fund serves individual and corporate donors who are seeking a simple, low-cost way to coordinate their philanthropic planning. Upon contributing cash or marketable securities to the Program (minimum $25,000), donors receive an immediate tax deduction and may then recommend grants to qualifying public charities of their choice over time.
The Vanguard Charitable Endowment Program is the second-largest donor-advised fund program in the United States as measured by annual contributions and invested assets. While the Program was founded by The Vanguard Group and shares many of its values, the Program is a separate, independent organization governed by its own Board of Trustees. With more than 5,000 donors, $1.2 billion in assets, and $850 million in grants to public charities since its inception in 1997, the Program is among the 30 largest charities in the nation.
Note to Editors: Charts of annual assets, contributions, and grants are available upon request.
Copyright Business Wire 2006
Vanguard Charitable Endowment Program
Vanguard Charitable Endowment Program
The Vanguard Charitable Endowment Program is a donor-advised fund established by Vanguard in 1997 as an independent, nonprofit organization. Donors create charitable giving accounts with a contribution of cash or securities, qualify for an immediate tax deduction, and then, over time, recommend charitable organizations to receive grants. This enables donors to separate their tax deductions from the act of giving to charity, and allows for the money to grow tax-free over time with the potential for more money to be available to charities.
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