1. Sunbridge Investment Management May 12, 2008 © 2006 Schwab Charitable. All Rights Reserved. NE_ADVISOR 112906

2. 2 Trends in Charitable Giving Overview of Schwab Charitable’s Offerings –Donor-Advised Fund –Charitable Remainder Trust Services Strategic Philanthropy: Best Practices How We Can Help Agenda

3. 3 1950s1970s 1990s2010s Home Ownership Investing Retirement Planning Charitable Giving Scope & Impact of Philanthropy ~$300 Billion= 2.2% GDP 10 year CAGR = 20% Sources: Giving USA Foundation AAFRC Trust for Philanthropy/Giving USA 2006 (for 2005), IRA Rollover Market: Gibson Consulting, 2/05, Annual Charitable GivingNews Stories mentioning Philanthropy Source: Google News

4. 4 Individuals Drive Philanthropy $295 Billion per year-- 76% from individuals Source: Giving USA Foundation AAFRC Trust for Philanthropy/Giving USA 2006 (for 2005), IRA Rollover Market: Gibson Consulting, 2/05, Wal-Mart Annual Report

5. 5 Where People Give Only 25-40% of Giving Up for Grabs Source: Giving USA, 2007

6. 6 Donate directly to a charity Cash Securities Non-cash Set aside funds to give to charity over time Private Foundations Donor-Advised Funds Supporting Organizations Direct Gifts Endowment-Style Vehicles Split-Interest Vehicles Donations which create income for the donor Charitable Gift Annuities Pooled Income Funds Charitable Trusts Source: Giving USA, 2007 Methods of Giving 63,000 Private Foundations 100,000 donors using Donor-Advised Funds 95,000 Charitable Trusts

7. 7 Charitable Vehicles Comparison Endowment-Type Charitable Vehicles Comparison National Donor Advised Funds ProsCons PrivacyMedium Donor “Control” Perpetual SuccessorsLess "Intimate" Sophisticated Technology Platform Perceived as “Poor Man’s Foundation” Community Foundation Donor Advised Funds ProsCons Local ExpertiseMore Expensive Than NDAF Local ImpactLimited Successors (or none) Donor Events, Educational OutreachRestricted Grant Making Private Foundations ProsCons Social CachéExpensive (Admin, Excise Tax) Can Employ Family MembersCannot Retain Privacy International, Scholarships Asset Valuation (Valued at Cost Basis)

8. 8 Donor-Advised Fund launched September 1999 10,000+ Charitable Gift Accounts $2.1+ billion in assets under management $3.0+ billion in contributions inception top date Account sizes range from $5,000-$200+ million $1 billion in charitable donations to over 50,000+ charities Key benefits: –Competitively Priced –Complex Transactions Expertise –Customized and Personalized Service Schwab Charitable

9. 9 Schwab Charitable: Charitable Gift Account Open Invest Grant Build Create Irrevocable contribution of $5,000 or more Contributions grow tax free Recommend grants for years to come Continue to contribute at clients’ convenience Create a Legacy: name the account & name successor donor-advisors for future generations’ involvement

10. 10 How a Donor Advised Fund Works Start by contributing cash or appreciated securities/assets Receive immediate tax benefits Invest your account for tax-free growth Recommend grants to charity ($100 minimum) Build charitable legacy for your family DonorDonor Advised Fund Cash or Appreciated Securities/Assets Capital gains tax avoidance & income tax deduction Charities Grant over time at your convenience Simple, Streamlined & Cost Effective

11. 11 Allocate among 7 Investment Pools Account balances of $5,000+ MUTUAL FUND SOLUTION SCF Donor-Advised Fund: Investment Choices Advisors can actively manage portfolios in charitable gift accounts Advisors may charge a fee for their service (cap of 1%) Account balances of $250,000+ ACTIVE MANAGEMENT

12. 12 Source: Nonprofit Issues/October-November 2003 Ready Reference Page No. 68 FeatureDonor-Advised FundPrivate Foundation Start-Up CostsNoneRange from $4,000 – $15,000 with $8,000 being average AdministrationNoneRecord-keeping and Asset Management ReportingNone; contributions will be included in personal tax return Annual state and federal tax returns TaxesNone2% of annual investment income PrivacyDonor’s contributions and grants remain private Public disclosure in annual tax filings of contributions and grants Annual Distribution Requirements 5% for Fund, none for individual donors; we distribute on average 20-25% annually 5% distribution required annually (5 year rolling average) Grants to Individuals or Internationally; Pay staff Not permittedPermitted Tax Deduction Limits50% of AGI for cash 30% of AGI for securities 30% of AGI for cash 20% of AGI for securities Valuation of Non-Cash Asset Contributions Fair-market valueCost Basis Donor-Advised Fund vs. Private Foundation

13. 13 How Charitable Remainder Trusts Work Split-interest irrevocable trusts typically established with highly- appreciated assets  Avoid immediate capital gains tax from sale  Immediate income tax deduction for present value of future charitable gift  Removal of asset from taxable estate Income beneficiaries receive income stream for life (or term of years)  Income based on % of trust assets (minimum 5%, maximum 50%; 10% test)  Distributions taxable to beneficiary based on 4-tier accounting system Charities receive remaining trust assets when last income beneficiary dies or trust term ends Donor Charitable Remainder Trust Tax deduction & lifetime income Highly appreciated asset 1 2 Donor-Advised Fund or other charity 3 Remainder to charity at death Donor Charitable Remainder Trust Tax deduction & lifetime income Highly appreciated asset 1 2 or other charity 3 Remainder to charity at death

14. 14 The Ideal Client for a Charitable Remainder Trust Clients with … Highly appreciated asset(s)* which they are ready to liquidate Charitable intent + Some desire for future income * Asset should have no debt, or debt must be removed before the asset is contributed. Concern about saving taxes + and/or

15. 15 Custodian Accepts & liquidates gifts Offers investment products Performs transaction clearing Receives and disburses income/remainder Serves as primary customer service interface Trust Administrator Trust Design &Initiation Trust Implementation Trust Income Distributions Accounting & Compliance Tax Filings, Reporting & Statements Investment Manager Manages investments under trust guidelines - Income vs. payout rates - Charitable remainder - No UBTI permitted Agrees to this via Investment Advisory Agreement with SC Trustee Fiduciary, chooses custodian, investment manager & trust administrator Provides service, coordination and oversight relieving the grantor of day-to-day administration and oversight duties First leading national provider to package role of Trustee, Custodian and Administrator, leaving Independent Investment Advisors free to manage assets Schwab Charitable Trust Services

16. 16 Benefits of Designating Donor-Advised Fund Account as Beneficiary of a CRT Ultimate Flexibility –No cost or administrative hassle to add, delete, or change charitable beneficiaries at any time –Simplifies donating to multiple charities Establish a Charitable Legacy –Enables client to involve heirs in the tradition of charitable giving –Support valued causes across generations Simple –Charitable accounts are seamlessly integrated with other accounts on the Schwab Institutional platform –We take responsibility for all administrative and tax-reporting requirements

17. 17 Commonly Accepted Contributions to DAFs or CRTs Cash Publicly-traded securities Stock in privately-held companies Real estate* Tangible personal property/collectibles Each asset type has a specific tax treatment as well as potential limitations *Encumbered real estate more complex. Though debt cannot transfer to a trust, there are creative solutions for dealing with debt that can be considered for encumbered real estate. The Donor-Advised Fund has greater flexibility on many non-cash assets, such as LLCs and encumbered real estate.

18. 18 Best Practices: Untapped Opportunities: Non-Cash Assets Estimated $40 - $60 trillion market size –More than half of affluent investors’ assets are held in non- cash assets Turn non-working, low cost basis assets into working assets and a valuable tax deduction for your client Typically receive a fair market value tax deduction Contributions are initially made to the Dechomai Foundation, an IRS public charity. Dechomai manages the sale of the assets and then transfers net proceeds into your client’s charitable gift account at Schwab Charitable. Dechomai provides asset due diligence, gift negotiation, property management and other services dependent on the nature of the gift. Dechomai fees are a percentage of the net sale proceeds: Schwab Charitable and Dechomai are not affiliated with one another. FMV is based off of an independent appraisal of the asset (client is responsible for obtaining this appraisal).

19. 19 Best Practices: Strategic Use of Multiple Vehicles Use a DAF in conjunction with a Private Foundation –Manage the 5% annual distribution requirement –Use both vehicles to pursue distinct philanthropic goals and strategies –Use both vehicles together to reach maximum income tax deductibility of contributions –Collapse the Private Foundation into a DAF to reduce time commitment and expenses and to increase flexibility

20. 20 Best Practices: Strategic Use of Multiple Vehicles Use a DAF in conjunction with a Charitable Remainder Trust –Allows the donor/grantor of the CRT to create more flexibility regarding the eventual distribution of the remainder interest –Collapse the CRT into a DAF if the income from the CRT is no longer desired

21. 21 Best Practices: Strategic Use of Life Events Use windfall or life events to “pre-fund” future years of charitable giving –Sale of a business –IPOs –Concentrated positions –Inheritances –Legal settlements

22. 22 1. Recognize - Most of your clients are already giving to charity in some form 2. Discuss - Your clients expect you to discuss charitable giving with them 3. Listen - Help your clients identify needs and desires before proposing a charitable vehicle 4. Build Relationships - Charitable giving decisions are emotional decisions – this is an opportunity to get to know your clients well and involve the next generation 5. Utilize Experts - Help your clients get the right expert advice (attorneys, accountants, investment advisors etc.) For charitable giving guidance, feel free to contact Schwab Charitable: 800-746-6216 or www.schwabcharitable.org Conclusion

23. 23 Contact Us To learn more about Schwab Charitable, contact us: Jim Wilroy, Relationship Manager Office: 415.636.33310 Email: jim.wilroy@schwab.com Schwab Charitable Donor Relations Team: 800.746.6216 Visit our Website: www.SchwabCharitable.org

25. 25 Balance Administrative Fee first $500,000 60 Basis Points next $500,000 30 Basis Points next $1,500,000 20 Basis Points next $12,500,000 15 Basis Points over $15,000,000 10 Basis Points For All Accounts Sample Fees for Charitable Asset Management Balance Annual Fee $250,000$2,500* $500,000 $4,000* $1,000,000$4,500 $3,000,000$8,248 $5,000,000 $11,248 $10,000,000$18,748 $20,000,000$31,248 *Charitable Asset Management accounts with balances <$1 million charged $250/quarter for investment oversight. Donor-Advised Fund: Administrative Fees

26. 26 Charitable Trust Services: Fee Schedule Account Minimum$ 250,000 Review & Set-up Fee* $ 500 Annual Administrative Fees First $500k.65% Next $500k.55% Next $2 million.45% Next $4 million.25% Next $3 million.20% Over $10 million.15% Advisor Role You manage the investments of your client’s Charitable Remainder Trust just as you do their other assets All trading and reporting through SchwabInstitutional.com *This fee is charged directly to your client’s attorney for review/drafting of trust document.

27. 27 Consider Asset Valuation and Deductibility Donated AssetTax TreatmentRestrictions Publicly-Traded Securities Charitable gift valuation = market value if held more than 1 year No capital gains tax at contribution Deduction limited to 30% of AGI for public charity gifts*; 20% of AGI for private foundation gifts Cash Charitable valuation = 100%. Least complicated choice; only 1 deduction benefit, i.e., AGI reduction Deduction = 50% of AGI for gifts to public charities; 30% for private foundations Stock in Privately- Held Companies Often highly appreciated with minimal cost basis; charitable valuation = fair market value (independent appraisal required) for public charities No capital gains tax at contribution C-Corporations usually the only acceptable contribution (S-Corp generates UBTI for charities) Deduction = 30% of AGI for gifts to public charities; 20% for private foundations Real Estate Charitable valuation = fair market value for all public charities (independent appraisal required) Charitable valuation = cost basis for private foundations No capital gains tax at contribution Deduction limited to 30% of AGI for gifts to public charities; 20% for private foundations Must be unencumbered (no mortgage) if donated to a charitable remainder trust Tangible Personal Property (Artwork, Collectibles) Charitable valuation = fair market value for public charities (independent appraisal) Charitable tax deduction = cost basis for private foundations Deduction limited to 30% of AGI for public charities; 20% of AGI for private foundations * Public charities include Donor-Advised Funds & CRTs; all deductions allow for a 5-year carry forward on any unused deduction.

28. 28 What to Consider When Selecting a Charitable Vehicle What assets to contribute Tax treatment of various alternatives and nature of the tax you are trying to minimize Donor recognition or privacy desires Donor preference for ease versus complexity and control Expected duration of funding Desired duration of distributing to charities Future income needs of the donor Current charitable giving vehicles

29. 29 Sample of On-line Donor Advised Fund Tools Blocked for Privacy