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The DMI Account Program allows donors and their appointed advisors to actively manage the investment of donated assets, rather than being restricted to a few predetermined investment choices. A wide range of investment alternatives can be accommodated, that includes stocks, bonds, mutual funds, index funds and alternative investments. This unmatched donor control results from the difference in IRS regulations applicable to the type of nonprofit organization offering the Program.
To participate in the DMI Account Program, a nonprofit organization must qualify under one of Sections 170(b)(1)(A)(i) through 170(b)(1)(A)(vi) of the IRS Code. This includes educational institutions, religious organizations, health care facilities, and publicly supported charities. By limiting participation to this category of nonprofit organization, the DMI Account Program can offer assurances that even the most aggressive donor advised funds cannot match with respect to the viability and permissibility of permitting more control for donors over the investment of their contributions.
Comparison of Flexible Giving Vehicles
| |
DMI Account® Program |
Donor Advised Funds (Sponsored by For-Profit Companies) |
Private Foundation |
| Start Up Costs |
None |
None |
Several thousands of dollars |
| Tax Deduction for Cash |
50% of adjusted gross income |
50% of adjusted gross income |
30% of adjusted gross income |
| Investment Management Choices of Donor |
Significant choice, subject to nonprofit’s investment guidelines |
Limited choice |
Maximum choice |
| Subject to Flexibility Limitations based on Community Foundation and/or Exemption Restrictions |
No |
Yes |
No |
| Federal Annual Excise Tax |
None |
None |
Up to 2% on undistributed assets |
| Timing for End-User Charity to Receive Donation |
Immediate |
When donor decides to disburse |
Usually annually, but often only 5% of assets |
The principal differences in features of the DMI Account Program and other flexible gifting vehicles are as follows:
- DMI Accounts are used with specifically qualified nonprofit organizations that are not subject to community foundation regulations which limit donor control over investments, and accordingly are able to offer greater donor control over investments.
- The DMI Account Program offers donors a wide array of securities and interests as investment options. Investment alternatives available through other flexible vehicles are typically limited to a few mutual funds or, in the case of aggressive DAF organizations, typically only to certain stocks, bonds or mutual funds.
- Gifts made through a DMI Account go directly to the intended beneficiary charity, rather than through a commercial or foundation-based intermediary. The charity owns these assets, and can report them on their balance sheet.
- The DMI Account Program offers donors the opportunity to manage the contributed investments directly or through an investment advisor of their choice, rather than just choosing an initial investment style which the organization's advisor then pursues without the donor's input.
- The DMI Account Program encourages broad investment policies, whereas some alternative vehicles require the advisor to adhere to investment policies that are often stricter.
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