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Calvert Taps Wealthy Via Charitable Trust


The Calvert Social Investment Foundation, an affiliated charity of Calvert Group, has created the Calvert Giving Fund, which the company says is the first socially responsible donor-advised fund.

The new Calvert Giving Fund will allow philanthropic-minded individuals to create a charitable gift account with a low minimum contribution of $5,000 in any combination of cash, securities or even mutual funds. The contributions are immediately tax-deductible.

Calvert will target high-net-worth investors and market the services to its existing investor base of socially conscious, aging Baby Boomers, all through its established network of financial advisors. But that's not the only audience on Calvert's Giving Fund wish list.

It will be focusing efforts on the smaller end of the high-net-worth audience through affinity groups and other financial advisors who invest client money under a socially conscious credo. It will also be talking to other advisors, such as lawyers and CPAs, who may have clients who are interested.

Donors are essentially creating personal foundations and can donate to charities of their choosing while realizing significant tax benefits.

Donors can choose to split their account in any proportions among 12 Calvert mutual funds that are socially screened.

Charity Begins in the Community

Calvert Giving Fund donors can also make contributions in another way that Calvert claims is a first in charitable trusts. Donors may opt to invest a portion of their account in a community reinvestment option that funnels money to community development projects that build affordable housing for the poor. They can also offer small denomination, low-interest "micro-credit" loans to ventures that wouldn't otherwise qualify.

Donors to the Calvert charitable program select the rate of return they want to get on their community investment portion, from zero to 4%. The rate of return determines the rate at which the Calvert Foundation will loan money. "Nobody else has the community investment option we have," said Timothy Freundlich, director of strategic development for the Bethesda, Md.-based Calvert Foundation. "It puts us in a unique place."

Along the way, donors can specify donations be sent to favorite recognized charities. These can include a donor's alma mater, church, or other organized charities that the Calvert Foundation will provide information about in an online database.

Technically, investors may only "recommend" to which charities the Foundation donates. That's because an investor legally transfers to the Foundation full control over the account. The Foundations' trustees are legally responsible for deciding which qualified charities will receive donations, but donors' requests are complied with, said Freundlich. Donations of $250 or more can be gifted.

Targeting the Philanthropic

Calvert also wants to tap the emerging affluent, the next generation of socially conscious investors who stand to inherit trillions of dollars but may only have a more modest $5,000 now to gift. This group will become philanthropists earlier than their parents did, Freundlich said.

The donor-advised charitable gift fund concept was pioneered by Fidelity Investments of Boston in 1992. To date, Fidelity boasts that its charitable program has $2 billion in assets and 27,000 donors.

In late 1997, Vanguard Group created a similar program dubbed the Vanguard Charitable Endowment Program. In 1999 Charles Schwab rolled-out the Schwab Fund for Charitable Giving. And last year, three more fund groups jumped on the adviser donated account bandwagon. Eaton Vance launched its program in June of 2000, followed by T. Rowe Price, which created the T. Rowe Price Program for Charitable Giving one year ago. Most recently, last December of last year, OppenheimerFunds began its OppenheimerFunds Legacy Program. Assets are invested in funds or in pools which, in turn, are invested in several of the underlying mutual funds of the creator.

While Calvert is the first group to introduce a charitable gift program that invests exclusively in socially responsible funds, the desire for socially responsible investments appears to be picking up steam in the charitable arena.

In September, Vanguard announced the creation of a fifth investment pool under its Charitable Endowment Program, which invests a majority 70 percent in the Vanguard Calvert Social Index Fund, which was created last year through a licensing arrangement with Calvert Group.