The Power of Donating Complex Assets— Trends, opportunities and considerations Mike Hoffman, CAP® VP, Charitable Planning Consultant

2 Examples of complex assets Private Company Stock S-Corp C-Corp LLC and Limited Partnership Interests Restricted Stock Real Estate Oil and Gas Royalty Interests Certain Alternative Investments *2012 Fidelity Charitable ® “Advice & Giving” survey, conducted by Harris Interactive for Fidelity Investments on behalf of Fidelity Charitable ® between March 19 and March Respondents who work with a paid financial advisor, have at least $100,000 in household income and a minimum of $1million in investable assets excluding their primary residence 34% of wealthy clients report that they own complex assets*

Current trends Private companies Bulk of wealth in this country is held in private companies –In 2012, total U.S. private equity exit volumes totaled 616 – valued at $142 billion * –Private business owners are estimated to generate $10 trillion in liquidity by 2020 as they exit their businesses** Mergers and acquisitions (M&A) M&A activity is off to its fastest start since 2000 ◊ – In 2012, $982 billion in M&A deals were announced ◊ 3 *Private Equity Growth Council, 2012 Private Equity Index and Industry Update **Exit Planning Institute. “Key Facts About Exit Planning.” ◊ CNN Money. “M&A Making a Comeback.”

The Opportunity : A tax-efficient way to give Bring a new idea to a client and increase awareness –Complex assets are often the most powerful assets to give in a client’s portfolio Show clients how to utilize seemingly illiquid assets to fund charitable giving –There is a perceived complexity around the process of donating complex assets—it’s not when done correctly Help clients give more by minimizing taxes and capital gains –Lowest cost basis—costs less to give more 4 72% of advisors say that offering charitable planning advice is an effective relationship builder* * 2012 Fidelity Charitable® “Advice & Giving” survey, conducted by Harris Interactive for Fidelity Investments on behalf of Fidelity Charitable ® between March 15 and 29, Advisors have a key opportunity to:

Why donate complex assets to a DAF at a public charity? Donor-Advised Fund (DAF)* Directly to Public CharityPrivate Foundation (PF) Tax deductionFair market value Cost basis Expertise handling complex assets Internal expertise (some may outsource) May need to outsource— could reduce net amount Generally outsource Deduction limitation (federal) 30% 20% Ability to diversify giving with one asset Multiple grants to many charities with one asset 100% of asset to one charity Multiple grants to many charities with one asset ConfidentialityAnonymity May generate additional fundraising Annual tax filings of IRS Form 990-PF is a public record of assets, contributors, and grants Efficiency One point of contact for transaction Multiple charities requires multiple contacts One point of contact for transaction 5 *At a 501(c)(3) public charity.

Key concerns for donor and charity 6 Transferability Liquidity and Timing Valuation Risk Management

7 Giving in advance of a business exit/transition* Donor STEP 1 Donor contributes shares of company stock to charity STEP 2 Tax-exempt charity sells stock to third-party buyer, eliminates capital gains tax STEP 3 Proceeds flow into Donor’s Giving Account ® 7 *During negotiations, material terms of sale cannot be final before involving charity in sale of company. The end result: FMV tax deduction, eliminate capital gains, and give more to charity

Case study: Oil & Gas royalties 8 STEP 1 Donor’s investment managers contact a charitable planning consultant STEP 2 Tax-exempt charity evaluates the situation and performs due diligence; negotiates sale with buyer STEP 3 The proceeds, less carrying costs, flow into Donor’s Giving Account ® Situation: Donor is considering a sale of oil & gas interests and potentially using the after-tax proceeds for charitable gifts. Considerations How marketable is the asset? Is the donor willing to make the irrevocable contribution? What are the carrying costs and risks to the charity? Valuation of the asset The end result: FMV tax deduction, eliminate capital gains, and give more to charity

Case study: Real estate contribution 9 STEP 1 Donor’s advisor contacts a charitable planning consultant STEP 2 Tax-exempt charity performs due diligence and manages the sale STEP 3 The proceeds, less carrying costs, fund the Donor’s Giving Account Situation: Donor is selling a condo in Palm Beach and is interested in donating to 30 charities annually. The donor’s advisor suggests donating the condo to a donor-advised fund*. Considerations How marketable is the property? Is the donor willing to make the irrevocable contribution? What are the carrying costs and risks to the charity? Valuation of the property The end result: FMV tax deduction, eliminate capital gains, and support multiple charities over time * At a public charity with a donor-advised fund program.

10 Recent complex asset contributions Stock Buyback Programs Affordable Housing Credits Indiana Farm Land 1 Donors are generally entitled to a tax deduction of the full fair market value of the long-term appreciated complex asset, not just the original cost basis as would be the case if it was contributed to a private foundation. Asset class created by state statute Necessary for all commercial construction Builders must acquire housing credits or include set percentage in each new project, or pay a fee to the county More than 200 acres – under agreement in 7 days, closed in 3 weeks Very much a commodity Readily sold at auction if necessary Charity can elect to sell back to company; Great private “market” for charity to sell to Number of donors could increase each year if buyback program is offered annually Valuation Marketability

Contact Us Donating complex assets doesn’t have to be complicated. 11 Call early, call often. We can help. {Fidelity Charitable Contact Name} Phone # address Donating complex assets doesn’t have to be complicated.

Appendix 12 Appendix

13 Fidelity Charitable hires Investment Firm as investment advisor; advisor agrees to program investment guidelines »Investment vehicle flexibility »Asset allocation and diversification Assets held at Investment Firm custodian; registered to Fidelity Charitable TIN Trading through Investment Firm portfolio management system Quarterly fee billing »Investment management fees »Fidelity Charitable administrative fees Giving Account set up and maintenance Manage Giving Accounts and view transaction activity online Brokerage account position and transaction data transferred through Advent Investment statements and confirmations from Investment Firm Wire for money movement between Investment Firm and Fidelity Charitable Program Details Operations Charitable Investment Advisor Program Overview

14 Charitable Investment Advisor Program Overview

15 Private equity contributions: Partners donate stock Benefits Potentially eliminate capital gains on the appreciation and receive a fair market value charitable tax deduction Multiple firm partners with differing charitable objectives can utilize one streamlined process A single lot contribution can support multiple charities over time * Assume the Investment Entity is taxed as a partnership. Stock distribution to the partners BY the entity is NOT taxable to the partners; they have carryover basis. ** As a tax exempt charitable entity, for most transactions, Fidelity Charitable pays no capital gains tax on sale. PE Fund (LP)* Portfolio Company PE Fund holds shares STEP 1 Shares in Portfolio Company are allocated to partners STEP 2 Partners donate shares in Portfolio Company to Fidelity Charitable STEP 3 Participating partner(s) take a Fair Market Value charitable tax deduction STEP 4 Fidelity Charitable awaits liquidity event** and chooses to participate with other shareholders. Proceeds flow into Donor’s Giving Account Taxpayers/Partners/LPs

16 Private equity firm contributions: Partnership donates stock PE Fund (LP)* PE Fund holds shares STEP 1 PE Firm typically identifies Partner/MDs who would like to donate STEP 2 Partnership contributes the appropriate collective share amount to Fidelity Charitable STEP 3 Fair Market Value Charitable tax deduction goes to PE Fund, which allocates to donating partner(s) STEP 4 Fidelity Charitable awaits liquidity event** and chooses to participate with other shareholders. Proceeds flow into Donor’s Giving Account Taxpayers/Partners/LPs * Assume the Investment Entity is taxed as a partnership. Stock distribution to the partners BY the entity is NOT taxable to the partners; they have carryover basis. ** As a tax exempt charitable entity, for most transactions, Fidelity Charitable pays no capital gains tax on sale. Benefits Potentially eliminate capital gains on the appreciation and take a fair market value charitable tax deduction Multiple firm partners with differing charitable objectives can utilize one streamlined process A single lot contribution can support multiple charities over time

Disclosures Information provided is general and educational in nature and should not be construed as legal or tax advice. Fidelity Charitable does not provide legal or tax advice. Content provided relates to taxation at the federal level only, and availability of certain federal income tax deductions may depend on whether you itemize deductions. Rules and regulations regarding tax deductions for charitable giving vary at the state level, and laws of a specific state or laws relevant to a particular situation may affect the applicability, accuracy, or completeness of the information provided. Charitable contributions of capital gain property held for more than one year are usually deductible at fair market value. Deductions for capital gain property held for one year or less are usually limited to cost basis. Consult an attorney or tax advisor regarding your specific legal or tax situation. To ensure compliance with Treasury Department Circular 230, you are hereby notified that: (a) any discussion of federal income tax issues in this presentation is not intended or written to be relied upon, and cannot be relied upon, by you for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code; (b) such discussion is being used in connection with the promotion or marketing (within the meaning of Circular 230) by Fidelity Charitable of the matter addressed herein; and (c) you should seek advice based on your particular circumstances from an independent tax advisor. Fidelity Charitable is the brand name for Fidelity ® Charitable Gift Fund, an independent public charity with a donor-advised fund program. Various Fidelity companies provide services to Fidelity Charitable. The Fidelity Charitable name and logo are registered service marks, and Fidelity is a registered service mark, of FMR LLC, used by Fidelity Charitable under license. Giving Account is a registered service mark of the Trustees of Fidelity Charitable