fund through its advisory channel, which markets funds through banks, broker-dealers, and insurance companies.
The Advisor Charitable Gift Fund, which became available through third parties on Sept. 22, is the first charitable gift portfolio to offer advisers a fee-based incentive, Fidelity said. Third parties that distribute the charitable fund -- like those that market the other 41 Fidelity funds available to them -- receive a fee, in this case 25 basis points of clients' net assets.
The fund is identical to the $1.6 billion Fidelity Investments Charitable Gift Fund established in 1992 and sold directly to Fidelity customers.
Donors can set up an account with a minimum of $10,000 in cash, mutual funds, or securities, which are invested in one of three Fidelity-managed pools -- growth, asset allocation, or money market -- until dispersed to charity.
The donor, who gets an immediate tax deduction, chooses the Internal Revenue Service-registered charity and decides when the assets will be disbursed. They cannot withdraw money and receive none back.
"It's an efficient way for individuals to set up an organized giving program," said Cynthia Egan, the president of the Charitable Gift Fund. Ms. Egan said the fund will do well in the advisory channel, because of the large number of people who use securities for charitable giving. No capital gains taxes are assessed on contributed securities held more than one year.
The incentive fee "is something I don't think anyone else has," said Jim Folwell, a consultant with Cerulli Associates in Boston. And he said it was unlikely that many fund companies would follow Fidelity's lead. "The nice thing about Fidelity's size and scope is the ability to offer niche products like these," he said.
Fidelity, which has relationships with about 4,200 correspondent banks, broker-dealers, and insurers, said it is talking to several banks about selling the fund but has yet to enlist any.