How to Give Like the Rich

The Wall Street Journal featured an article that you don't have to be a Rockefeller to give like one. Even philanthropists of relatively modest means can direct their giving for years after they pass away through "donor advised funds" -- charitable-giving accounts set up with community foundations or some investment firms.

With as little as, say, $5,000, you can set up a fund to help needy children or other causes you select. You get an immediate tax break and, because you're donating through an existing entity, your money won't get eaten up by administrative costs (though you will pay a small annual administrative fee).

"It really kind of multiplies the effect of the charitable dollar," because investment gains can accumulate before the money is distributed, says Ani Hurwitz of the New York Community Trust, a foundation in New York.

The mechanics are fairly easy: You donate to a local community foundation or a charitable fund set up by an investment firm such as Fidelity Investments, Vanguard Group or Charles Schwab.

They will invest the money and make grants supporting the causes of your choice. You make recommendations on how the money should be donated, but they make the final decision.