By offering investment autonomy, the DMI account method is designed to appeal to donors who want to actively participate in the philanthropic support of a favorite charity.
[1] Donors using a DMI account to manage their gifts to qualified charities receive an upfront federal income tax and gift tax deduction for up to 50 percent of their adjusted gross income, and can actively invest the assets (independently or through a financial manager) in various investment vehicles, including hedge funds, private equity and real estate.
[2] The technique was developed in 2003 by Winklevoss LLC, a financial consulting firm based in Greenwich, Connecticut.
[3] In July 2004, the firm received a favorable private letter ruling from the U.S. Internal Revenue Service that effectively confirmed the tax-deductibility (for federal income and gift-tax purposes) of donor’s gifts that are managed in a DMI account.
[3] Charities can offer this method to encourage incremental gifts from investment-oriented donors, while fostering relationships between giver and recipient.