beyond a message from the president donor-advised funds offer an attractive alternative to foundations: one donor s story converting a foundation

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1 beyond spring 2011 A publication of the t. rowe price program for charitable giving sm a message from the president donor-advised funds offer an attractive alternative to foundations: one donor s story converting a foundation to a donoradvised fund: an advisor s viewpoint philanthropic trends: why giving is no longer a waiting game Thanks to the continuing generosity of our donors, 2010 was a very good year for The T. Rowe Price Program for Charitable Giving. We experienced renewed strength in the economy, and the financial markets responded with impressive gains that helped renew consumer confidence. For the calendar year, total donor contributions to the Program were $29.12 million, bringing the Program s investable assets to $95.35 million. During this time, $14.78 million in grants were made. This issue highlights a follow-up survey from Bank of America detailing the giving habits of high-net-worth donors. While this group s contributions declined during the economic slowdown, they still gave generously and even increased their volunteer time. This survey provides some interesting insights into how philanthropy has fared during the recent downturn. We also show how Bill Gates and Warren Buffet are making huge strides in convincing their wealthy colleagues to commit sizable portions of their assets to charity. Notable names such as Ted Turner, filmmaker George Lucas, and Facebook cofounder Mark Zuckerberg have already taken the Giving Pledge. There is an interview with a Program participant who explains why she converted her foundation into a donor-advised fund. In addition, her advisor tells why he specifically recommended The T. Rowe Price Program for Charitable Giving was an eventful year in philanthropy, from the earthquake in Haiti to the economic recovery and associated upturn in giving. The tragedy in Japan poses new challenges for the charitable community, and we want to recognize our donors for their swift and generous response. We look forward to 2011 and the opportunity to serve both our donors and the charities they support. Ann Allston Boyce, President The T. Rowe Price Program for Charitable Giving

2 donor-advised funds offer an attractive alternative to foundations: one donor s story People with foundations may be surprised to discover that they can get many of the same benefits with a donor-advised fund and eliminate troublesome paperwork and administrative expenses. While dissolving a foundation can be a big emotional step, the benefits may outweigh the effort involved to achieve the dissolution. We spoke with a Program donor who converted from a foundation approximately six months ago. Her experience shows why donor-advised funds have become a convenient, cost-effective option for foundation holders. Why did you convert from a foundation to a donor-advised fund? I was on the Board of my father s foundation with two of my siblings, and after my father passed away we maintained the foundation for about 10 years. Since we live in different locations and have different interests in charitable giving, we eventually decided to divide the assets evenly and give each of us the opportunity to decide the appropriate charitable solution. I was interested in a donor-advised fund because it seemed like a simple, more cost-efficient way to give. I also liked the increased privacy a donor-advised fund offers. With a foundation, your information is public and you receive a lot of calls from people seeking money for their charity. On the other hand, my Program account lets me make grant recommendations without any pressure. Once I decided to convert, I asked my financial counselor to review several donor-advised funds. He recommended The T. Rowe Price Program for Charitable Giving because it seemed like the best allaround option. Are you happy with the conversion? It has been a real pleasure having a donor-advised fund. There are no foundation meetings to attend and the Program handles all my paperwork. The granting process is very fast, and the Program checks out all the organizations to be sure they meet certain standards. [ 2 ]

3 Did you have any concerns before you made the conversion? To tell the truth, I didn t know much about donoradvised funds at the start. I was concerned there might be pressure to make grants to certain causes. Of course that isn t the case at all. There are no foundation meetings to attend and the Program handles all my paperwork. After having your own foundation, how would you rate the Program s customer service? I am extremely happy with the service. Any technical issues have been handled immediately, and someone is always available to help if I have questions. In addition, with the Program website I can do everything online and find all the information I need. I can see exactly who I ve given to and how much it s all there when I want it. Would you recommend converting to a donoradvised fund to other foundation holders? I believe it s a great idea for people who want to simplify the giving process and save time. converting a foundation to a donor-advised fund: an advisor s viewpoint The Program donor who converted her foundation worked closely with a financial advisor. We got his perspective on why he recommended the Program and exactly how he went about choosing the T. Rowe Price Program for Charitable Giving. What factors did you consider before recommending the Program to your client? The most important factor I looked at was portfolio performance since that directly affects the future growth of the account. I was very happy with the overall performance of the Program s investment options and liked the fact that they had a variety of pools donors could choose from. The second factor I considered was ease of use. I was impressed with the Program s website it s easy to go there to make grant requests and get any information you need. The Program s people also make a difference they are very helpful and a pleasure to work with. Finally, I looked at the fees each donoradvised fund charged. The Program offered the lowest fee structure, and once you combined that with their investment strength and service, it was an easy choice. Had you ever worked with The T. Rowe Price Program for Charitable Giving before? This was a new relationship for me. I started out by considering five donor-advised funds and began the narrowing process from there. I was very pleased with the professionalism and personalized service offered by the Program for Charitable Giving, and I believe it offers a compelling value for anyone interested in a donor-advised fund. [ 3 ]

4 philanthropic trends: why giving is no longer a waiting game Dying broke isn t something most people aspire to, and it certainly hasn t been a mantra for many of the world s billionaires. At least until now. In Dying Broke, an article in Forbes magazine, credit card tycoon Denny Sanford explains in an interview why he is giving most of his money away while he s still alive. Sanford is concentrating his efforts on helping sick and troubled children, saying he wants to make an immediate impact for those who need help the most. In speeches he emphasizes his belief that the wealthy should Aspire to inspire before you expire. The Giving Pledge encourages more active philanthropy. Sanford is part of a vanguard of the extremely wealthy who are encouraging their colleagues to pledge at least half of their net worth to charity, either during their lifetimes or at death. The highest-profile proponents of this message are Bill Gates, his wife Melinda, and Warren Buffett. Their charitable initiative had an auspicious beginning in 2009 when they organized a private dinner in New York that included David Rockefeller, Michael Bloomberg, Oprah Winfrey, Ted Turner, and George Soros. Although no specific pledges were made at this event, the guests talked about their philosophy of giving and exchanged ideas on increasing philanthropy among the rich. According to Forbes, Buffet and Gates used the dinner as a springboard to secure commitments to their Giving Pledge of at least $120 billion. The success of the Gates/Buffet alliance can be seen in the fact that giving has spread from more established wealthy individuals to the 20-something generation. Among the latest to take the Giving Pledge are Facebook founders Mark Zuckerberg and Dustin Moskovitz. Zuckerberg noted that With a generation of younger folks who have thrived on the success of their companies, there is a big opportunity for many of us to give back earlier in our lifetime and see the impact of our philanthropic efforts. Giving now helps charities make it through hard times. For many charities, this influx of money can t come fast enough. Donations have fallen due to the economic downturn, and the demand for many services has risen dramatically. Jennifer Tierney, development director for Doctors Without Borders in the U.S., calls these donations a great way to fill the time between the recession and when the country gets back on its feet and your everyday American citizen is able to support [us] in the same way they have been in the past. [ 4 ]

5 philanthropic message may be lost in translation during china trip While the Gates and Buffet Giving Pledge was enthusiastically received by most audiences, it became a harder sell when they visited China. They called their meeting with 50 Chinese business leaders a complete success, and even got a commitment from self-made millionaire Chen Guangbiao to donate his entire fortune, now estimated at $735 million, to charity when he dies. Still, philanthropy is not nearly as prevalent in China as in the U.S. CNN Money.com reports that a governmentsponsored honor roll showed that 121 Chinese philanthropists donated $277 million dollars in 2009, far less than U.S. financier Stanley Druckenmiller and his wife gave in that same year. This is in a country that trails only the United States for the number of billionaires it has created. The article notes that many of China s most wealthy shun charity-related publicity due to worries about their family s safety or to avoid attention from corrupt local officials. In addition, there are no favorable tax policies to encourage donations. Rupert Hoogewerf of the Hurun Report, a Shanghaibased publishing group that surveys the country s most wealthy citizens, notes that Chinese entrepreneurs have made their money very quickly and they haven t really had time to think about how to spend it they are still in wealth-creation modes. prominent billionaires who have taken the giving pledge: Bill and Melinda Gates Warren Buffet Michael Bloomberg Paul Allen Ronald Perelman George Lucas David Rockefeller Ted Turner $54 billion $45 billion $18 billion $12.7 billion $11 billion $3.25 billion $2.4 billion $1.9 billion T. Boone Pickens $1.4 billion [ 5 ]

6 how america gives: exploring the habits of high-net-worth households In cooperation with the Center on Philanthropy at Indiana State University, Bank of America recently updated a detailed study on high-net-worth households.* The results show that while donations among this group decreased from 2007 to 2009, high-net-worth individuals maintained a strong commitment to giving with both their money and their time. We were also pleased to see that most households have made philanthropy a family tradition and continue to emphasize to their children the importance of giving. Here are some highlights of the survey: education is the top choice for donors Where donations were directed: Education 19.3% Religious organizations 13.3% Youth/family services 8.8% giving decreased from 2007 to 2009 Donations as a percentage of income: % % entrepreneurs gave the most among high-net-worth respondents The top three giving groups according to source of wealth: Family or startup business $105,001 Investment asset growth $92,689 Inheritance $59,312 respondents gave for a wide variety of reasons Most prominent factors that influence charitable decision-making: Personal experience with an organization 74.9% Organization s connection to donor, family, or friends 74.0% Donor s/public s knowledge of organization 68.8% Organization s communication about efficiency 54.1% high-net-worth individuals increased their volunteer activities from 2007 to 2009 Percentage of individuals who volunteered: % % high-net-worth individuals volunteered for a wide range of charities Percentage of individuals who volunteered, by type of organization: Education/youth service 43.5% Social/community service 38.7% Civic/political/international 38.6% Religious 38.6% Sports/hobby/arts and culture 32.5% families are essential to teaching children the value of philanthropy How children and younger relatives learn about giving: Parents personal efforts and family s network of friends/peers 85.4% Religious organizations 45.0% Nonprofit organizations 21.4% Children s or younger relatives own efforts 19.4% * High-net-worth households were defined as having incomes greater than $200,000 or a net worth of more than $1 million. The average net worth of respondents was $10.7 million, with nearly half having a net worth between $3 million and $20 million. [ 6 ]

7 survey shows how donors got started with the program The Program recently conducted an online survey to discover what influenced donors to establish their account with us. According to their responses: 53% preferred the Program over other donoradvised funds because of our association with T. Rowe Price Nearly half first heard about the Program through a T. Rowe Price communication such as Investor magazine 46% made a decision in less than a month after they started investigating donor-advised funds 71% considered other donor-advised funds besides the Program When asked what was most helpful in their decision to establish an account, respondents were equally split among the Web, printed materials, and a representative We also asked donors the primary reason they chose to give through a donor-advised fund. reasons for choosing a donor-advised fund websites that can give you an inside view of charities With nearly 2 million nonprofits operating in the U.S., it can be difficult to choose those that are well run and likely to make the best use of your donations. If you re looking for help, there are several websites that can provide the information you need to make an informed decision. Below we highlight two prominent sites you can access for free: GuideStar guidestar.org GuideStar offers you an enormous database that covers 1.8 million nonprofit organizations. You can find essential information on each charity s mission, programs, leadership, and finances. In addition, a copy of each organization s Form 990 is available to give you an overview of the charity. For your convenience, you can access GuideStar through our website, ProgramForGiving.org, under the left-hand navigation Charity Search. Charity Navigator charitynavigator.org Charity Navigator gives you a detailed evaluation of the health of more than 5,500 of the country s largest charities. You can perform searches based on variables such as keyword, category, region, or donor privacy policy. Charity Navigator recently added a feature that includes accountability and transparency in its ratings criteria. This lets you see whether a charity provides information on its: Board members and key staff Audited financials Form 990 Privacy policy 6% 10% 19% 42% Immediate tax deduction Convenience of managing all charitable giving through one account Ability to donate long-term appreciated securities Other Creating a new model that emphasizes results. Charity Navigator is also testing an innovative rating system that will focus on the results charities deliver. It will include a constituency voice component that awards 23% Time needed to decide which charities to support points to charities that publish rigorously collected feedback from those who receive donations. In addition, Charity Navigator is creating a Web platform to train and certify what it calls an army of volunteer raters. It believes these extra eyes and ears will let it evaluate approximately 20,000 charities each year. [ 7 ]

8 program statements are now available online For your convenience, the Program s quarterly and year-to-date statements are available online through account access on our website, ProgramForGiving.org. When you are in account access, you can go to My Profile Information and edit your statement preference. By selecting online only, you will no longer receive statements in the mail. Choosing the online option means you get your information faster and can help reduce your paperwork. It s a safe, convenient way to keep track of your account. SM ProgramForGiving.org /11