Nov. 4 (Bloomberg) -- To boost its philanthropic business, Bank of America Corp. will begin letting customers open donor- advised funds online with as little as $5,000, the company announced this morning.

An enhancement to the Bank of America Charitable Gift Fund, the Web-based account will be managed by Bank of America acting as a third party that disburses money to a wide range of Internal Revenue Service-approved charities, including nonprofit arts organizations, based on recommended grantees.

The new minimum contribution is one-tenth of the previous requirement of $50,000, Cary Grace, Bank of America Merrill Lynch’s national philanthropic management executive, said in a phone interview.

“This allows people to get their feet wet in philanthropy,” Gillian Howell, the bank’s national private philanthropy executive, said in a phone interview. “So if you’re trying to introduce your children to philanthropy, this is a very effective way.”

Donor-advised funds have been growing at an average annual rate of 15 percent since 2002, according to the Charlotte, North Carolina-based bank’s 2008 Study of High Net Worth Philanthropy conducted by the Center on Philanthropy at Indiana University. The funds have become the fastest growing charitable giving devices in the U.S., the bank said.

On behalf of its clients, BofA’s Boston-based Philanthropic Management unit distributes more than $300 million annually in grants to charitable organizations and serves as trustee, co- trustee or grant-making agent for more than 30,000 philanthropic accounts. It has more than 10,000 clients, ranging from families to endowments, and oversees more than $55 billion in assets, Grace said.

Under the program, customers will be able to donate assets such as residential and commercial real estate, farmland and oil and gas, as well as cash. Individuals can manage their own accounts or get help from a bank advisor, Grace said.

“With a donor-advised fund, people really start thinking about their giving, and they start with a donor,” Grace said.

To contact the writer on this story: Patrick Cole in New York at pcole3@bloomberg.net.

Last Updated: November 4, 2009 11:12 EST