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Old 12-03-2017, 08:19 AM   #21
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Doesn't look like you can, not surprising. When I did a sample run in TT last night it didn't ask whether it was a stock or MF. Just asked the amount and the basis, and when it saw it was an appreciated asset, anything over 30% of AGI is carried over to the next year. You can do your own run with a tax program to confirm, but this is what it looked like to me.

And as a follow on, the 50% looks to be total, so if you did the full 30% equities, you could only add 20% cash.
Thanks. I thought that would be the answer. You also answered my other thought about total gift including cash + stock or MF. If we open a DAF this year, we will probably be limited in the gift amount since we are trying to stay under the ACA subsidy threshold (limiting MAGI >AGI>DAF contribution).
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Old 12-03-2017, 08:57 AM   #22
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Yeah, this year turns out to be ideal for me. Not limiting income for the ACA subsidy, and taking a large LTCG gain, which raises my deductible amount and also the marginal rate I get the deduction on. It also lets me make a larger Roth conversion since I can convert up the total of deductions/exemptions at 0%, just pushing more LTCGs at 15%. A small amount is subject to HIIT tax at 3.8%, so once income is taxed at 10% my rate is 28.8%, so I'm stopping there, though not worried if I'm barely over. So I can basically fund a lifetime of giving, more or less, with a big tax break this year and not have to worry about not getting a itemized tax deduction in later years.
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Old 12-03-2017, 09:50 AM   #23
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I won't repeat all the great things about a DAF. See above. I'll try to add a few more tidbits. I'm a real fan of these for so many reasons. Here are a few more than I don't think were mentioned much:

- The "vetting" process (at least at VGC) mostly used Guidestar (http://www.guidestar.org/Home.aspx). If your charity is listed and has up to date, clean financials, there's a good chance your recommendation won't have any hiccups. They may also do some manual approvals if the info in Guidestar is hazy. The charity I'm involved in never was asked by VGC or FC for any info. We just got the checks with no hassle. However, if that charity's finances or purpose were unclear, they may be contacted.

- At VGC, donating to the "general unrestricted fund" of a charity also smooths the process. If you start specifying programs or put notes in the grant, a human will vet it out. That's not necessarily bad. I think they are looking for something like: "Pay for person x's tuition" or some such, which is against the rules.

- The "Succession Plan" options are extremely flexible. This is for when you die. You can have other people run your fund, or you can give instructions to automate it. For example: "Give 5% per year, to charity X". Essentially, an endowment of sorts. Or you can distribute it all.

- You can specify your fund in your will. Using the succession plan above gives a lot of flexibility.

Our lawyer actually endorsed the DAF idea from our will. He worked the language to be very clear about our wishes to donate to our fund at VGC. From there, we can change charities as often as we like, depending on our changing desires. Our lawyer said that's actually better than constantly updating the will or trust and was very positive about this aspect of a DAF.
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Old 12-03-2017, 10:50 AM   #24
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A question about the will. What happens to the DAF when you die? My impression is that you can name a successor advisor, but then it is up to them to make grants, so those may or may not go to charities you desire. Or can you instead chose to liquidate the DAF according to some designation formula you've made?
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Old 12-03-2017, 11:03 AM   #25
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A question about the will. What happens to the DAF when you die? My impression is that you can name a successor advisor, but then it is up to them to make grants, so those may or may not go to charities you desire. Or can you instead chose to liquidate the DAF according to some designation formula you've made?
For Vanguard Charitable, either method.

For the endowed method, here are details.

https://www.vanguardcharitable.org/i...dow_to_charity

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Endow grants to charity
Recommend your account's remaining assets go directly to nonprofit organizations as a last testament to your charitable mission by endowing final or recurring grants.

Recommend final grants to charity. Recommend one or more charities to receive a final grant from your remaining account balance.

Establish recurring grants. Recommend one or more charities receive a recurring grant based on a percentage of your remaining account balance through an endowed grant plan.* Total annual distribution must exceed 5% and can be distributed across any month except November or December, because of seasonal transaction volume. Over time, remaining account funds will continue to grow tax-free through investments.

Term: Recurring grants may continue for a specific time or as long as the account's size and growth continue to exceed distributions. While accounts are not permanent endowments, theoretically, your recurring grants could continue indefinitely if the account growth, which depends on financial markets and investment choice, outpaces the distributions. The minimum term for an Endowed Grant Plan is five years.
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Old 12-03-2017, 02:42 PM   #26
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Fidelity Charitable is similar in this regard. We have used them for a few years now and are delighted. Even better, Fidelity has been waiving the DAF fees for us since we're a PAS client as well. I like the DAF so that I can choose how much of my contact information to provide, as a lot of charities, once you start, hound you endlessly. (But if your employer matches donations, you are probably required to get a receipt from the charity directly.)

DW and I changed our wills so that our assets go to our DAF. That means we can change charity beneficiaries and percentages as often as we want without difficulty or expense.
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Old 12-03-2017, 03:01 PM   #27
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So the charity would not have had funds set aside for that specific project?
They do have funds set aside for the project. On the other hand, they run a very "nimble" budget, so having cash in one pocket while other pockets are empty would be more a struggle for them. They are very good people and, IMHO, would always do the right thing. I thought this type of funding might make their life easier. The funds they have for the project are maintained in a bank account. I could have paid the fund fees and still done a better job for them. I did not set up this fund because it became apparent that it would not start until about the time I turned 70 1/2. The biggest hurdle has been getting approval through the county. They have just sent in their plans for the third time. Each time they address the issues the county has and each time the county comes up with new issues.
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Old 12-03-2017, 04:16 PM   #28
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Thanks for this point about possibly accelerating 2018 giving by putting it in a DAF- hadn't thought of that. OTOH, I looked at my situation and it may not do much. Tell me if this makes sense.

My church pledge alone exceeds the proposed exemption for an individual filer ($12K proposed). I'll also have additional charitable deductions and lesser amounts for mortgage interest and property taxes. No subsidy issues; I've been on a private insurance policy with no subsidies and start Medicare on 1/1.

I've got a Fidelity DAF up and running but it looks like accelerating charitable donations won't help that much unless I happen to be in a higher tax bracket this year than next year. No way to predict that; my taxable income is highly dependent on investment results, and only some are under my control.
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Old 12-03-2017, 07:03 PM   #29
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Just be aware that the charity has to be 501(c)(3) for a DAF grant, at least that's true of Fidelity Charitable. A lot of churches haven't registered for that.
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Old 12-03-2017, 08:53 PM   #30
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The Fidelity DAF website has a simulator where you can lookup charities on their list. Both churches that we have been active in show up on the list, as well as a Makerspace that we helped get started several years ago. Here is a link to their site. Down at the bottom is a 'Try our Demo Account' link.
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Old 12-03-2017, 09:14 PM   #31
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My church was also eligible as a recipient; no issues the first time I had a check sent to them. As always, YMMV.
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Old 12-04-2017, 04:13 AM   #32
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Just be aware that the charity has to be 501(c)(3) for a DAF grant, at least that's true of Fidelity Charitable. A lot of churches haven't registered for that.
You can also used Guidestar and/or Charity Navigator to check on 501(c)3 status.

For DAFs, the org absolutely must be 501(c)(3). It is a non-starter after that.

For my church, I spoke with our treasurer first, and found out that they were already successfully getting contributions from both VGC and FC.
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Old 12-04-2017, 04:19 AM   #33
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Thanks for this point about possibly accelerating 2018 giving by putting it in a DAF- hadn't thought of that. OTOH, I looked at my situation and it may not do much. Tell me if this makes sense.

My church pledge alone exceeds the proposed exemption for an individual filer ($12K proposed). I'll also have additional charitable deductions and lesser amounts for mortgage interest and property taxes. No subsidy issues; I've been on a private insurance policy with no subsidies and start Medicare on 1/1.

I've got a Fidelity DAF up and running but it looks like accelerating charitable donations won't help that much unless I happen to be in a higher tax bracket this year than next year. No way to predict that; my taxable income is highly dependent on investment results, and only some are under my control.
Athena, think about it a different way. The goal is to make the automatic exemption as minimal as possible in some years, and work for you others.

A DAF can help with this by allowing you to bunch in years. Let's say your giving (15k) plus taxes (5k) is 20K per year. You get 8K in deductions. For two years, that would 16K.

OK. Let's bunch your contributions. Year 1: Giving 0K, Tax 5K. Deductions are 0. Year 2: Giving 30K, tax 5K, deductions are 23K. By bunching contributions every other year, you are 7K of deductions ahead of that game. That's an extra few thousand saved in real money.

There is a caution to this approach. You have to watch the AGI limits on charitable giving (30% for appreciated stock, 50% overall).
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Old 12-04-2017, 06:37 AM   #34
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Fidelity looks like where I want to set this up. I'm going to call them tomorrow and make sure I have time to transfer a VG appreciated fund to them by the end of the year. Their timeline recommends Nov 27 as the date to do this by, and that has passed. https://www.fidelitycharitable.org/w...eadlines.shtml If that say it's no problem, I'll still do it, but if there's any doubt, I'll go with Vanguard. It looks like I could switch over to Fidelity later by making a grant from Vanguard to my Fidelity DAF. A bit of a hassle but it has to happen this year to get the full tax break.
I called Fido today. They said they'd give it their best shot and likely would be able to get the transfer from outside done, but as it is past their deadline they couldn't guarantee it. It's a much bigger advantage for me to do it this year, so I'm going to open it at Vanguard. The Fido rep said it would be simple to get it transferred over to them later. I'll probably wait until after the first for that, both to make sure nothing changes the credit for this year, and to let the end of year rush pass.
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Old 12-04-2017, 06:42 AM   #35
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I called Fido today. They said they'd give it their best shot and likely would be able to get the transfer from outside done, but as it is past their deadline they couldn't guarantee it. It's a much bigger advantage for me to do it this year, so I'm going to open it at Vanguard. The Fido rep said it would be simple to get it transferred over to them later. I'll probably wait until after the first for that, both to make sure nothing changes the credit for this year, and to let the end of year rush pass.
I didnít know about the DAF transfer - as in gifting from one DAF to another. Thatís good to know.

If your main intention was to gift this money over four years. You could still do just that. Give away all the money over four years and close the DAF.

You can always open another DAF later, and choose Fidelity then if you like.
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Old 12-04-2017, 07:00 AM   #36
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Athena, think about it a different way. The goal is to make the automatic exemption as minimal as possible in some years, and work for you others.

A DAF can help with this by allowing you to bunch in years.
Thanks for the explanation! I definitely need to re-think this.
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Old 12-04-2017, 07:23 AM   #37
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I didnít know about the DAF transfer - as in gifting from one DAF to another. Thatís good to know.

If your main intention was to gift this money over four years. You could still do just that. Give away all the money over four years and close the DAF.

You can always open another DAF later, and choose Fidelity then if you like.
Four years was just a thought when I was planning on doing this by lumping regular donations. I didn't want to give a larger one-time gift now. The DAF changed my strategy to donate a much larger amount now, and distribute the grants over time. I'll be set until at least QCD time (15 years), probably a lot longer since the fund will grow, even with doubling my giving.

If transferring it proves difficult, I'm OK leaving it at VG. I'd just like to be able to make smaller grants, which Fido allows, since I like the idea of making them anonymously. But between some reading I've done at bogleheads and other places, and what the rep told me today, it should not be a problem to just grant from the VG DAF to a new Fido DAF I'll open later.

I know I'm repeating myself, but this has really worked out well and I feel good about this. Between the tax law changes coming and limiting income in future years for the ACA subsidy, my incentive for giving was going to be reduced, and this was a way to set aside an amount for increased giving. It'll be close to a 40% write-off between fed and state deductions and avoiding the CG+state tax on the appreciated fund. With the money committed to the DAF I'm committed to giving more than I had been, so the tax savings will be passed on.
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Old 12-04-2017, 11:01 AM   #38
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Thank you to everyone for your explanation and input regarding the DAF. The DW and I opened a Vanguard DAF this morning. Since the funds are transferred into the DAF from our regular Vanguard account, the process was completed online in 20 or 30 minutes.
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Old 12-04-2017, 11:26 AM   #39
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Great! I opened my Vanguard account this morning too. I haven't funded it yet, because I'm also selling some of the Primecap holding that I plan to fund the giving account with, and I want to make sure the highest gain shares go to the DAF. I put my sale in for the other shares (SpecID) but it hasn't completed yet. Once it does, all that will remain is those shares I want to donate.
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Old 12-04-2017, 11:38 AM   #40
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Heh. Me too.

It was very easy. To fund it I'm moving some $7 AAPL over to it from eTrade and that'll take a few days - or so I'm told.

And I get to feel like a Rockefeller since I now have the "John D. Doe and Jane D. Doe Foundation". We'll see how that sounds read out loud on PBS ;-)
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