Donor Managed Investment Account

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A Donor Managed Investment Account (DMI Account) is a charitable giving mechanism that provides donors with a full tax deduction at the time the account is funded, while permitting them to exercise ongoing investment management over the account funds for a period of time.

By offering a high level of investment autonomy, the DMI Account methodology appeals to donors who wish to actively participate in the philanthropic support of a favorite charity. Donors using a DMI Account to manage their gifts to qualified charities receive an upfront federal income and gift tax deduction for up to 50 percent of their adjusted gross income, as well as the ability to actively invest the assets (independently or through a financial manager) in a wide array of investment vehicles, including hedge funds, private equity and real estate. The technique was developed in 2003 by Winklevoss LLC, a financial consulting firm based in Greenwich, Conn. In July 2004, the firm received a favorable private-letter ruling from the IRS that effectively confirmed the tax-deductibility (for federal income and gift-tax purposes) of donor’s gifts that are managed using the DMI Account methodology.

Since the charity offering the DMI Account owns the donated funds outright from the time of their receipt, funds are managed in a tax-free environment and can potentially result in a much larger ultimate gift for the organization than the initial contribution. This methodology can be offered by charities to encourage incremental gifts from investment-oriented donors, while fostering stronger direct relationships between giver and recipient.

See also:

• Donor advised funds

• Planned Giving

• Foundation (charity)

Further Reading:

“Controlling Interest” by Melissa Phipps (Worth Sept 2005) (http://www.worth.com/Editorial/Money-Meaning/Philanthropy/Best-Practices-Philanthropy-Controlling-Interest.asp)

“Beyond Foundations” by Jennifer Frazier (Wealth and Retirement Planner Oct 2005) http://www.wealthandretirement.com/articles.php?int_id=74

“IRS Approves Donor Managed Investment Account Technique”(The Tax Advisor April 2005) http://www.allbusiness.com/personal-finance/individual-taxes-tax-deductions/408664-1.html

External Links:

• Winklevoss Consultants (http://www.winklevoss.com/winklevoss/dmi_home.html)

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