Best way to starting a charity fund

[Mellabella]

I am thinking about starting an index fund just for charity but I'm no sure the best way to do it. The idea being that I would like to grow a "money tree" separate from my other ones that I can use to give from rather than just donating that money directly. I don't want to do a Donor Advised Fund as I'd like to try follow the ideas of effective altruism and give to the most effective charity.

My main question is would it be better to give monthly out of whatever profits the fund has made or let it grow and then donate yearly? How should I calculate how much to give so that it still grows? And is there anything else I should think about? I'm sure there is...!

[Watchmaker]

I don't want to do a Donor Advised Fund as I'd like to try follow the ideas of effective altruism and give to the most effective charity.

I'm not sure why you're saying a DAF would prevent you from following effective altruism precepts?

With a DAF you still select the charities, amounts, and timing of donations, as well as how the money is invested.

[Mellabella]

I'm not sure why you're saying a DAF would prevent you from following effective altruism precepts?

With a DAF you still select the charities, amounts, and timing of donations, as well as how the money is invested.

Oh really? Silly me. I read about it once and must have misunderstood it.

[Poundwise]

TIAA Charitable has a DAF which can be started with a relatively low minimum ($5000).
https://www.tiaacharitable.org/how-a-donor-advised-fund-works

I find that their index funds don't grow as fast as my Vanguard funds.

Some charities will gladly take donations of stock!

[Mellabella]

TIAA Charitable has a DAF which can be started with a relatively low minimum ($5000).
https://www.tiaacharitable.org/how-a-donor-advised-fund-works

I find that their index funds don't grow as fast as my Vanguard funds.

Some charities will gladly take donations of stock!

Ok thanks. What’s the advantage of DAFs then? That you don’t pay tax?

[Mellabella]

Just read this. It was really helpful so I’ll pop it here for anyone else who might be interested.

https://aaronhamlin.medium.com/practical-philanthropic-giving-using-effective-altruism-cd9636a6b014

[Watchmaker]

Ok thanks. What’s the advantage of DAFs then? That you don’t pay tax?

The advantage of a DAF is you can take the charitable deduction when you transfer funds to the DAF (as opposed to when the charity gets the money). This lets you "load up" the DAF in the years you have higher income/taxes, and then distribute funds at your leisure.

The main downside of the DAF is that you can't get the money back--it's no longer yours once you put it in the DAF. If you earmark part of your own portfolio for charitable giving, you can always change your mind and access that money in the case of emergency. Not so with a DAF.

[yachi]

TIAA Charitable has a DAF which can be started with a relatively low minimum ($5000).
https://www.tiaacharitable.org/how-a-donor-advised-fund-works

I find that their index funds don't grow as fast as my Vanguard funds.

Some charities will gladly take donations of stock!

Ok thanks. What’s the advantage of DAFs then? That you don’t pay tax?

Donations to the fund are tax deductible when you make them, instead of when they're disbursed to a charity, so you can contribute when it benefits your taxes (bi-yearly, or a particular year when you have high taxable income) and disperse funds to the charity of your choice on a set schedule.

[yachi]

TIAA Charitable has a DAF which can be started with a relatively low minimum ($5000).
https://www.tiaacharitable.org/how-a-donor-advised-fund-works

I find that their index funds don't grow as fast as my Vanguard funds.

Some charities will gladly take donations of stock!

Ok thanks. What’s the advantage of DAFs then? That you don’t pay tax?

Donations to the fund are tax deductible when you make them, instead of when they're disbursed to a charity, so you can contribute when it benefits your taxes (bi-yearly, or a particular year when you have high taxable income) and disperse funds to the charity of your choice on a set schedule.

The fund does the above by being a 501(c)(3), and rules are that the funds must only be given to  501(c)(3). 

[Mellabella]

Thanks everyone for your replies.

[Roots&Wings]

TIAA Charitable has a DAF which can be started with a relatively low minimum ($5000).
https://www.tiaacharitable.org/how-a-donor-advised-fund-works

I find that their index funds don't grow as fast as my Vanguard funds.

Some charities will gladly take donations of stock!

Fidelity Charitable is also very low cost, no minimums, and has a total stock market index option: https://www.fidelitycharitable.org/giving-account/what-it-costs.html

[bacchi]

We're thinking of creating a DAF next year due to some gains.

One of the advantages I envision is the receiving charity not seeing the original donor, thus allowing us to avoid any mailing lists. Is this a dream or will the DAF administrator pass along our name and address?

[Paul der Krake]

We're thinking of creating a DAF next year due to some gains.

One of the advantages I envision is the receiving charity not seeing the original donor, thus allowing us to avoid any mailing lists. Is this a dream or will the DAF administrator pass along our name and address?

https://www.fidelitycharitable.org/giving-account/compare-ways-to-give.html
https://www.vanguardcharitable.org/resources/giving-tools

(ctrl+F "anonym")

Anonymous giving is an advertised feature of both Fidelity and Vanguard DAFs.

[Watchmaker]

We're thinking of creating a DAF next year due to some gains.

One of the advantages I envision is the receiving charity not seeing the original donor, thus allowing us to avoid any mailing lists. Is this a dream or will the DAF administrator pass along our name and address?

https://www.fidelitycharitable.org/giving-account/compare-ways-to-give.html
https://www.vanguardcharitable.org/resources/giving-tools

(ctrl+F "anonym")

Anonymous giving is an advertised feature of both Fidelity and Vanguard DAFs.

I have a Fidelity DAF and can confirm there's a setting you can change to determine how much info the receiving charity gets.

[Proud Foot]

It looks like others have given you good information and it sounds to me like the DAF would be the way to go.

I am thinking about starting an index fund just for charity but I'm no sure the best way to do it. The idea being that I would like to grow a "money tree" separate from my other ones that I can use to give from rather than just donating that money directly. I don't want to do a Donor Advised Fund as I'd like to try follow the ideas of effective altruism and give to the most effective charity.

The bolded portion in your original statement got me thinking. When funding charity how important is the end benefit/gift ratio and the tax benefit to you? This past year has shown a lot of need within our communities and if you would give regardless of the tax benefit then you could additionally have an investment account outside of a DAF where you can give gifts directly to those in need within your community. This could all be done by cash if you wanted to remain anonymous.