investing on the homefront

How to use your time and money to build wealth in your community

on the board of directors, there is no fiduciary liability. You will probably be asked to meet once a month to offer your expertise in developing strategies, which may include fund-raising.

SOCIAL INVESTMENTS AND CHARITABLE TRUSTS
Invest in socially responsible mutual funds. One way to do well by doing good is to invest in mutual funds with a social bent. Socially responsible funds generally shy away from companies in the tobacco, alcohol, gambling and defense industries. They also steer clear of industries that cause environmental problems. At the same time, they look to invest in companies that promote workplace diversity and good community relations.

The men of Omega Diversified are investing with a conscience. They have purchased shares in 10 mutual funds, including the Ariel Capital Appreciation fund, the Ariel fund and the Calvert New Africa fund, three mutual funds known for socially responsible investing (see “Doing Well by Doing Good,” July 1999). To learn more, check out GreenMoney Online Guide (www.greenmoney .com) and Morningstar Mutual Funds (www.morningstar .com) or Investing With Your Values: Making Money and Making a Difference by Hal Brill (Bloomberg Press, $23.95).

Set up a trust as
part of your estate plan.
By now most people know of Oseola McCarty, the 91-year-old washerwoman who gained worldwide fame when she bequeathed a little over half her life savings-$150,000-to the University of Southern Mississippi. Trusts traditionally have assisted people, especially high-net-worth individuals (or those who come into huge inheritances), in transferring and managing their property. Beyond the altruism that motivates people to benefit society through charitable giving, certain tax breaks make trusts attractive too. Any amount you leave to a charity is deducted from your gross holdings, lowering your estate taxes.

You can sign an irrevocable trust agreement stating your wishes for your estate. For example, the trust may be set up so that you’ll receive a small income each month for living expenses for the rest of your life, while a sizable chunk of your assets is set aside to go to your college alma mater upon your death. In an irrevocable trust, the donor relinquishes all rights to the assets in the trust. In other words, you can’t later have a change of heart and try to alter the terms of trust or reclaim some or all of the assets for your own personal use.

With a charitable remainder trust, you can give appreciated securities, such as stocks, bonds or property, to a charity in exchange for a qualified annuity. It’s important that you consult a lawyer in crafting the legal document. From there, you can seek the advice of a broker about investing the funds.

In general, it’s important that you keep records of your donations (receipts, canceled checks and bank statements) so you can document your charitable giving at tax time. Although the value of your time as a volunteer is not deductible, out-of-pocket expenses (including transportation costs) directly related to your volunteer services are.

Note that contributions to tax-exempt organizations are not always tax deductible. The designation “tax exempt” means the

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