WASHINGTON -- It isn't surprising that the Salvation Army and the YMCA top the Philanthropy 400 -- the list of charities that raised the most money last year. What is surprising, controversial and troubling to some in the nonprofit world is the newcomer to the No. 3 slot.
Right after those two big brand-name charities, and right before the venerable American Cancer Society, comes the Fidelity Investments Charitable Gift Fund.
Fidelity Investments is the world's largest mutual fund company. On this list, its charitable offspring is a giraffe grazing among the cows.
Fidelity launched the Charitable Gift Fund in 1992. The Vanguard Group and Charles Schwab & Co. recently started similar funds.
They work this way: You are, say, an investor who has just made a killing on the stock market. You donate some of your assets to the fund, get a charitable tax deduction for the current year, and take your time deciding which causes will eventually get your money. In the meantime, the fund invests the money so your gift can grow, tax-free. Because the fund itself is an Internal Revenue Service-registered public charity, you can't ever get the money back.
"This is a public charity like any other," said Cynthia Egan, Charitable Gift Fund president.
But it seems a strange animal to established philanthropy leaders. "It's a corporate for-profit entity creating a not-for-profit entity," said David Lawrence, chief development officer for the Mayo Clinic. "They ultimately get the money to charity, but there's a parking lot there."
"It's interesting that they should soar, when almost everyone else stays about the same," said Stacy Palmer, editor of the biweekly Chronicle of Philanthropy, which released the Philanthropy 400 list this week.
Biggest change
Palmer said the rise of the gift fund has been the biggest change she has seen in the list since 1991, when the Chronicle began its annual ranking of charities that raise the most money from private sources.
"They are touching some kind of a chord that is working with lots of people," Palmer said, "but it's still a controversial concept."
The booming economy accounts for both major trends in the Philanthropy 400. First, the top charities raised 16 percent more last year than in 1997, the largest jump since the Chronicle began publishing its list.
