Donor Advised Funds

[JCfire]

I am curious how many Mustachians here have made use of Donor Advised Funds?  They seem really tailor-made for early retirees.  One problem I frequently run into is that my preferred giving opportunities don't always line up perfectly with the optimal tax deduction timing.  For example, some charities like to have annual donation commitments to make it easier for them to budget, but some years I am not going to itemize my deductions, potentially wasting the tax benefit of a donation.  Donor Advised Funds allow you to donate when it makes sense for your taxes, and then send the money on to a particular charity of your choice any time in the future.

Vanguard offers these DAFs with their standard suite of low-fee investment options: https://www.vanguardcharitable.org/resource_center/giving_option_daf

I think this can be particularly useful in your last few years before FIRE.  With the low post-retirement expense of most Mustachians, you are unlikely to get any tax benefit from post-FIRE donations.  If you fund your DAF during the highest earning years of your career, you can capture the tax benefit up front, and donate the funds later to any 501(c)(3) charity during your FIRE years.  If altruistic giving is a personal goal for you, and you don't want to donate unnecessary funds to the tax man, this vehicle is a godsend.

Has anybody else here made use of a DAF?  What was your experience?

[tonysemail]

yes!  I think it's a great idea... maybe cause I opened one this year ;)

it's great for folks who decide to commit to an annual donation.
for me, this means 1k/yr to each public school my kids attend.
it works very well with donating appreciated ESPP.
my stock stretches almost 2:1 due to avoiding capital gains taxes.

[Proud Foot]

I think they are great.  I don't have one personally but used to work for a foundation than managed DAF's.  In addition to what you said above I like them because you don't have to have a charity in mind when you make your donation.

[Romag]

I opened an account last month with Vanguard Charitable and am going to fund it this year. This will be my last year with W-2 income (I think...) and likely the last year I will itemize. I am planning to use appreciated mutual funds, so I will not pay tax on those gains either. Will fund my typical annual giving for a long time.

[Catbert]

Fidelity also has a donor advised fund.  I do all my charitable donations through it since I have mutual funds with significant a capital gains.