Expert gives tips on charitable investing

An expert in the charity investment sector has said that the principles of ’asset allocation and diversification’ should form a major part of a donor’s investment strategy.

Writing in a Wall Street Journal blog, president of Schwab Charitable Kim Wright-Violich noted that one of the main differences between managing charity assets and ordinary investments is that the former is subject to little or no tax.

For this reason, ’liquidation and reinvestment decisions do not need to be driven by the need to outperform capital gains taxes’, she explained.

Ms Wright Violich said that affluent clients wishing to leave a substantial charitable legacy can be encouraged to adopt investments that involve more risk and a potentially higher return, while others may choose to be more conservative with their money.

She quoted investment advisor Jeff Colin, who said that a typical strategy for charitable donors targeting growth will include an allocation of equities and ’non-traditional investments that offer equity-like risk and return characteristics’.

Earlier this month, the Wall Street Journal reported that approaches to philanthropy have become ’more efficient and entrepreneurial’ since the onset of the financial crisis.ADNFCR-2318-ID-19517924-ADNFCR