Donor Advised Fund

[AdrianC]

Anyone got one?
Good or bad experiences?

We're considering opening one at Vanguard. It has a 0.6% admin fee for <$500k. Uses typical cheap Vanguard funds for investment.

https://www.vanguardcharitable.org/

[AdrianC]

Google is my friend: this thread from May last year answers most of my questions:

https://forum.mrmoneymustache.com/investor-alley/who-is-your-daf-with/msg1992388/#msg1992388

Unless anyone has any updates?

Looks like Fidelity is better than Vanguard, which is a shame because Vanguard would be easier to transfer appreciated stock into (it's in a Vanguard brokerage).

[chasesfish]

I recommend Fidelity, much smaller grant sizes allowed.

The management fee you see is about the same between Vanguard, Fidelity, and Schwab.

Here's the best resource that MMM also quoted

https://www.physicianonfire.com/the-donor-advised-fund-a-win-win/

[thedigitalone]

We did this after reading the thread posted above last year.

We used Schwab since we already had an account there and you can make donations as small as $50. Simple to setup and just transferred stock in to fund the account.  Making donation "recommendations" is easy as putting in the charities tax ID and they receive a check in a week or so.  My wife's company will still match donations because we have the family name as part of the trust name, so double win.

[Trudie]

Started one a year ago with taxable annuity proceeds we inherited from my MIL’s estate which were unexpected and would have thrown us into a higher tax bracket so setting it up was a part of income tax planning.  We have TIAA so used TIAA Charitable.  We will start making grants in 2020, and I think it will be a key tool in periodically helping us stack our deductions.

[seattlecyclone]

We have a Vanguard DAF account. We're generally happy with it. Transferring shares from our Vanguard mutual fund account is a fully online process, which is great. The $500 minimum grant size hasn't been much of a problem for us, as we generally prefer to make a smaller number of more impactful donations rather than giving $50 here, $100 there, etc. For the rare occasion where we do want to make a smaller gift a credit card does the job nicely.

[MustacheAndaHalf]

Years ago even though almost all of my investments were at Vanguard, I setup a DAF at Fidelity Charitable.

Vanguard has a $25,000 minimum to open the account.  As you spend down the account, after you hit $5,000 your fees will always be $250/year.  That $250/year fee is 10% of a $2,500 account and 5% of a $5,000 account.  Vanguard Charitable isn't friendly to small accounts.

I picked Fidelity Charitable because of their $5,000 minimum and they allow smaller grant sizes.  At the time, I think Vanguard's minimum grant was $500.  Meaning you can't transfer less than $500 to a charity, while the Fidelity DAF allows $50 grants.  The cost structure is also more friendly, with a $100/year fee for accounts up to $16,600 (then it's 0.6%).


But regardless of your choice, look at making your DAF grants (money you send to charities) anonymous.  It dramatically reduces the junk mail you get from charities, since the receiving organization just knows it's from "Fidelity Charitable".  You can attach your name if you prefer, and keep your address revealed if you prefer, but I liked the anonymity.

[AdrianC]

Thanks very much everyone.

Looks like Fidelity is the way to go, though we might not be able to fund by years end with appreciated stock from our Vanguard brokerage, in which case we will open a Vanguard DAF, and maybe a Fidelity later. We’ll find out Monday.

One question I have not been able to answer: we can deduct up to 60% of AGI for cash contributions, 30% of AGI for appreciated stock - can we do 30% cash AND 30% stock?

[seattlecyclone]

One question I have not been able to answer: we can deduct up to 60% of AGI for cash contributions, 30% of AGI for appreciated stock - can we do 30% cash AND 30% stock?

I don't think so. If you do a combination of stock and cash donations, you can only deduct a total of 50% of your AGI. You could do 30/20, 25/25, etc. This is my understanding based on running through this IRS worksheet.

For most charities, your stock (and other capital asset) donations will go on Line 8, your donations of non-cash non-capital assets (used household goods given to Goodwill, etc.) will go on Line 9, and your cash donations will go on Line 10.

Suppose you put 30% of your AGI on each of Lines 8 and 10.

The 60% limit for cash contributions is applied on Lines 12-14.
Line 12: 60% of your AGI
Line 13: Smaller of Line 10 (30% of your AGI in this example) and Line 12 (60% of your AGI). This line is deductible on Schedule A.
Line 14: Any excess, carried over to next year (none in this case).

The 30% limit for capital asset donations is applied on Lines 26-31.
Line 26: 50% of your AGI.
Line 27: Sum of Lines 9-10 (in this example, Line 9 is zero, Line 10 is 30% of AGI, so you'll put down 30% of AGI).
Line 28: Subtract Line 27 from Line 26 (20% of AGI in this example).
Line 29: 30% of your AGI.
Line 30: Smallest of Line 8 (30% of AGI), Line 28 (20% of AGI), or Line 29 (30% of AGI). 20% of AGI it is.
Line 31: Carryover, Line 8 (30% of AGI) - Line 30 (20% of AGI) =  10% of AGI

As you can see, if you do a 30% of AGI cash donation and a 30% of AGI stock donation, you'll get to deduct the entire cash donation, two-thirds of the stock donation, and the final one-third of the stock donation will be carried forward until the next year.

[AdrianC]

Thanks, seattlecyclone. Makes sense.

We opened a Fidelity DAF this morning. It shouldn't be a problem funding it with appreciated ETFs from our Vanguard brokerage before year end.

[jeromedawg]

BTW: was curious but what is the advantage(s) of having a DAF versus doing stock contributions to an organization that accepts stock donations directly?

[seattlecyclone]

BTW: was curious but what is the advantage(s) of having a DAF versus doing stock contributions to an organization that accepts stock donations directly?

First off, the DAF means you only need to make one stock transfer. These transactions are often somewhat cumbersome. Much easier to do one stock transfer to the DAF and have them give cash to your charities than it is to track down the stock account info of each charity every time you want to make a donation.

Secondly, the DAF lets you decouple the year of the tax deduction from the year of the distribution to the charity. This can be helpful if you have a higher-income year and want to take a big charitable tax deduction that covers the next several years' worth of charitable giving.

[bacchi]

BTW: was curious but what is the advantage(s) of having a DAF versus doing stock contributions to an organization that accepts stock donations directly?

First off, the DAF means you only need to make one stock transfer. These transactions are often somewhat cumbersome. Much easier to do one stock transfer to the DAF and have them give cash to your charities than it is to track down the stock account info of each charity every time you want to make a donation.

Secondly, the DAF lets you decouple the year of the tax deduction from the year of the distribution to the charity. This can be helpful if you have a higher-income year and want to take a big charitable tax deduction that covers the next several years' worth of charitable giving.

And what MustacheAndaHalf wrote: It eliminates junk mail. I hate donating to a charity only to have my entire donation spent on junk mail trying to get me to donate more.

[jeromedawg]

BTW: was curious but what is the advantage(s) of having a DAF versus doing stock contributions to an organization that accepts stock donations directly?

First off, the DAF means you only need to make one stock transfer. These transactions are often somewhat cumbersome. Much easier to do one stock transfer to the DAF and have them give cash to your charities than it is to track down the stock account info of each charity every time you want to make a donation.

Secondly, the DAF lets you decouple the year of the tax deduction from the year of the distribution to the charity. This can be helpful if you have a higher-income year and want to take a big charitable tax deduction that covers the next several years' worth of charitable giving.

And what MustacheAndaHalf wrote: It eliminates junk mail. I hate donating to a charity only to have my entire donation spent on junk mail trying to get me to donate more.

BTW: was curious but what is the advantage(s) of having a DAF versus doing stock contributions to an organization that accepts stock donations directly?

First off, the DAF means you only need to make one stock transfer. These transactions are often somewhat cumbersome. Much easier to do one stock transfer to the DAF and have them give cash to your charities than it is to track down the stock account info of each charity every time you want to make a donation.

Secondly, the DAF lets you decouple the year of the tax deduction from the year of the distribution to the charity. This can be helpful if you have a higher-income year and want to take a big charitable tax deduction that covers the next several years' worth of charitable giving.

Thanks. I've been making direct stock contributions to my church the past couple years so yea I guess this would make it easier. Except the fees - that is a bit of a turn-off. I'd understand if I were transferring some S&P500 index funds from my Fidelity brokerage accounts, since those already have expense fees, etc. But if it's just individual stocks that I want to donate, where I'm not being assessed any fees, I could probably save a few bucks doing the direct stock donations. You are right though - having to fill out the partial transfer form is a bit of a pain. That said, I think I may hold off on the DAF for now... I didn't realize the expense fees part of it until after initiating opening haha oops!

Junk mail isn't an issue either since I don't consider mail from my church "junk" mail haha... of course, they don't mail stuff out to us as it is.

[Xlar]

BTW: was curious but what is the advantage(s) of having a DAF versus doing stock contributions to an organization that accepts stock donations directly?

First off, the DAF means you only need to make one stock transfer. These transactions are often somewhat cumbersome. Much easier to do one stock transfer to the DAF and have them give cash to your charities than it is to track down the stock account info of each charity every time you want to make a donation.

Secondly, the DAF lets you decouple the year of the tax deduction from the year of the distribution to the charity. This can be helpful if you have a higher-income year and want to take a big charitable tax deduction that covers the next several years' worth of charitable giving.

I opened a DAF for the second reason. Before the tax laws changed I made a large lump sum donation to the DAF to take the tax deduction that year. Since then I have been donating from that fund as I do not donate enough each year to itemize currently.

[MustacheAndaHalf]

@AdrianC -  Okay, Fidelity should be a good choice.  From what I recall, you will need a "medallion signature guarantee" to transfer assets from Vanguard to Fidelity Charitable.  I think it just means stopping off at a notary with some forms and I.D.

[AdrianC]

The Vanguard form "Gift of Nonretirement Brokerage Assets to External Account" says a Medallion signature guarantee is required only if the recipient is an individual or the transfer exceeds $1M.

We are a smidge under the $1M ;-)

I'm kinda excited about this. Should have done it years ago.

[chasesfish]

The Vanguard form "Gift of Nonretirement Brokerage Assets to External Account" says a Medallion signature guarantee is required only if the recipient is an individual or the transfer exceeds $1M.

We are a smidge under the $1M ;-)

I'm kinda excited about this. Should have done it years ago.

Congratulations again, they are really incredible vehicles.

If you ever get tired of picking where to send the money, there are also local community foundations that do Donor Advised Funds, Field of Interest Funds, or even donor directed endowments for a charity.  You can make a grant from your Vanguard one to a local community foundation to establish a another donor advised fund.

[Poundwise]

Necroposting because TIAA Charitable, where I had my DAF, closed down and moved accounts over to Renaissance Charitable, which stinks in so many ways.  Their web interface is terrible. Their list of charities does not include the charities where I donate.  Their customer service is slow and their reps don't seem to have much useful information. We can't see how much our investment has or hasn't grown.

And, worst of all, they charged us a $72 fee without warning! and when we complained, without apology! Their fee structure is posted nowhere and their CSR said he didn't have access to the fee structure. So we have no idea how much we can be charged, nor how often, nor why!

I could escalate to find out, but I would rather move my money elsewhere now that I have some time to do so. Can anyone recommend a DAF that accepts small ($5K or less) initial donations? Still happy with Fidelity?

[chasesfish]

I think you'll have to boost it up to $5,000 to open with Fidelity.

[MustacheAndaHalf]

Can anyone recommend a DAF that accepts small ($5K or less) initial donations? Still happy with Fidelity?

I have a DAF with Fidelity Charitable.  My only annoyance has been creating a new donor, and accidentally sending my name & address with the donation.  I wish their was a global setting not to share any information when donating.

Vanguard's minimum is $25,000 and they have larger minimum donations.  Fidelity seems better suited for $5,000 amounts.  They list $5,000 as their starting minimum, but I don't know if that applies to transfers or not.

[AdrianC]

Still happy with Fidelity?

We are. Done several transfers of stock from Vanguard and TD Ameritrade. No issues.
No issues with funding our charities.

[bacchi]

Still happy with Fidelity?

We are. Done several transfers of stock from Vanguard and TD Ameritrade. No issues.
No issues with funding our charities.

We're having great fun with ours. I transferred Vanguard to Fido brokerage first and then pushed it into the Fido DAF.

Is there a way to rebalance what's in the fund? I have an 90/10 split and I'm pulling out of the bonds first but would like to rebalance at the end of the year.


(For others, the Fidelity $5000 minimum contribution has been removed.)

[Poundwise]

Thanks everyone, sounds like Fidelity is the way to go!  Will have to figure out if there is a way to roll over from one fund to another, but I'm sure Fidelity will find a way to make it work.

RenPSG--  boooooo!!!!!