Mutual Funds

Many individuals find that there are significant advantages to funding gifts to WPI with appreciated securities. Gifts of mutual fund shares have become an increasingly popular choice, especially in light of the dramatic growth of mutual funds as an investment vehicle.

Which Mutual Funds Make the Best Gifts?

Giving mutual fund shares has the same beneficial effect as giving listed and actively traded stocks. Thus, mutual fund shares that have appreciated significantly since purchase (and held at least 12 months and one day) can be given without incurring any capital gains tax.

How Does My Mutual Fund Gift Get Transferred?

Normally the transfer of mutual fund assets is done electronically. Following instruction from you as donor, your mutual fund's agent transfers the shares into an existing WPI account. Please keep in mind that the effective date of the gift is the date WPI receives the shares in a WPI account. This is important because this date determines the completion, value, and deduction of the gift for tax reporting purposes.

The Transfer Process:

Should you decide to make a mutual fund gift to WPI, you must first contact your broker and ask what kind of documentation is needed from you in order to complete a transfer to WPI. Some fund companies provide this information and any related forms online. Others may require a letter of instruction from you, and this is something we can help you prepare if you wish. Regardless of whether it's a form or a letter, it is likely that your mutual fund company will require that the document be Medallion signature guaranteed by a bank officer. If the fund is in more than one name, or in the name of a trust, you may need additional signatures or other documentation.

Once you have completed the documentation required by your mutual fund company, it should be mailed to WPI, together with a letter from you concerning the purpose and intent of your gift. Our Treasury Office will then proceed to establish an account with your mutual fund company and arrange the transfer. It is important to note that this process can sometimes take up to six weeks to complete.

If your intent is to make an outright gift, please contact Nancy Smith, Treasury Analyst, at +1-508-831-6091 or nsmith@wpi.edu, to coordinate transfer procedures.

If you wish to make a gift to one of WPI's life-income plans, such as a pooled income fund, charitable remainder trust, or gift annuity, please contact the WPI Planned Giving Office toll-free at +1-888-974-4438, or email planned-giving@wpi.edu, for special transfer instructions.

How Does My Mutual Fund Gift Get Valued?

The value of the gift is the NAV (net asset value) of the shares on the date WPI receives them. We will provide an appropriate acknowledgment of your gift for tax-reporting purposes.

Does It Matter Which Shares are Transferred From My Mutual Fund Account?

It might, depending on your individual assets. Shares that are held less than 12 months are considered short-term and the charitable deduction for such shares is limited to the purchase price (cost basis). Shares held at least 12 months and a day are considered long-term; a deduction is permitted for the value of the shares on the date of transfer (again, the Net Asset Value on the date WPI receives the shares). If your account reinvests, it may be hard to know which shares were purchased when. If you have ever sold any shares, you will have had to determine cost basis in one of four methods:

   1. First-in, first-out.
   2. Specific-share method.
   3. Average cost-single category method (in other words, average cost of all the shares you own).
   4. Average cost-double entry method (short-term and long-term shares are separated).

Using either of the average cost methods at any time locks you into that method for the duration you are in that fund. So if you are already using that method, then it is likely that shares held both long-term and short-term will have the same average cost basis. If you have not used the cost average method, the default method is first-in, first-out.

Donors considering a gift of appreciated mutual fund shares are encouraged to contact their tax advisors regarding any personal tax implications of making a gift of such shares to WPI.

 
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