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Old 12-06-2017, 04:39 AM   #61
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I set up a DAF at Schwab last year with cash anticipating GOP tax plan would double standard deduction and eliminate most of tax benefit of charitable donations we do every year. Found Schwab folks made it pretty easy. All our charities were recognized. Last year’s cash donation to set up DAF helped with taxes. This year donated appreciated stock for first time and not only will get tax deduction for valued of appreciated stock, will also avoid capital gains hit that would have otherwise happened. (Company/stock bought out.) I can make charitable donations at pace I want. So far, seems to work fine.
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Old 12-06-2017, 06:21 AM   #62
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OK, my Vanguard investor account is now correct with the correct number of shares transferred out. Very odd that it happened in that order. But at least both sides are right now.
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Old 12-06-2017, 07:15 AM   #63
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Originally Posted by audreyh1 View Post
  • It makes it possible to bunch charitable deductions yet still gift on a regular schedule.
  • It lets you donate completely anonymously.
  • It makes it far easier to donate appreciated securities.
  • It vastly simplifies paperwork, tracking and reporting.
+1000

And "from the other side," as a treasurer of a small 501(c)(3), I saw that DAF donations were great compared to getting a stock transfer request.

DAFs also allow "complex asset" donations, which many charities have no prayer of handling. Someone above mentioned Bitcoin at FidoChar. For VGC, that would be a complex asset transaction.

Basically, the DAF can handle all the BS of a life insurance donation, restricted stock, personal property (art auction!), etc. The charity gets a check.

Also, the audrey's first point about "regular schedule" is important. It is much better for a charity to get donations over a regular schedule than in one huge lump. Charitable boards can be terrible stewards of one time gift. I think there was a story on a thread here recently about some university getting a gift for the library that somehow ended up with the football team. Much like the rest of America, boards can't seem to learn how to LBYM. Spreading it out helps avoid that temptation of blowing the load. Just my opinion here, having seen from the inside how boards can operate ...
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Old 12-07-2017, 10:31 AM   #64
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+1000

And "from the other side," as a treasurer of a small 501(c)(3), I saw that DAF donations were great compared to getting a stock transfer request.

DAFs also allow "complex asset" donations, which many charities have no prayer of handling. Someone above mentioned Bitcoin at FidoChar. For VGC, that would be a complex asset transaction.

Basically, the DAF can handle all the BS of a life insurance donation, restricted stock, personal property (art auction!), etc. The charity gets a check.

Also, the audrey's first point about "regular schedule" is important. It is much better for a charity to get donations over a regular schedule than in one huge lump. Charitable boards can be terrible stewards of one time gift. I think there was a story on a thread here recently about some university getting a gift for the library that somehow ended up with the football team. Much like the rest of America, boards can't seem to learn how to LBYM. Spreading it out helps avoid that temptation of blowing the load. Just my opinion here, having seen from the inside how boards can operate ...


Thanks for the perspective and thanks to Audrey for the explanation. I'm still not sure about this for us as I like keeping the control and flexibility each year rather than making a large irrevocable donation. However that may change over the years.
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Old 12-07-2017, 02:22 PM   #65
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Over the last two years I have liquidated a remaining legacy position of company stock from when I retired eons ago. As part of this process, I made substantial donations of appreciated stock to our Fidelity DAF. From our annual budget, this ends up covering planned budgeted donations for the next 8 years or so, so it frees up that part of our budget.

We may still donate more for other reasons. But it does mean we can take advantage of large lump sum donations from a tax deduction perspective, and still gift the funds over the next many years as if it were coming out of our budget annually.
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Old 12-07-2017, 02:34 PM   #66
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Thanks for the perspective and thanks to Audrey for the explanation. I'm still not sure about this for us as I like keeping the control and flexibility each year rather than making a large irrevocable donation. However that may change over the years.
Certainly understandable. For my situation, "irrevocable" kind of works the opposite. I want to make large donations this year due to my current tax situation and changing laws, but don't want to commit years of donations to my current charities. Not only might they not use them well if given as a 4 or 10 year or however big lump sum, but I may have reasons to not want to continue donating to them in the future. Too bad, the money is gone to them. With a DAF, it is true that the funds are irrevocably committed to charities (in general), but I retain full flexibility as to which ones they go to at any time in the future.
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Old 12-07-2017, 03:02 PM   #67
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And in a good year like this, the DAF has appreciated too (I have 50% in growth).

A request came up recently from a charity. The DAF has done well, there's excess. Sure, why not, here's a donation. Easy peasey. A couple of mouse clicks and it is done.
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Old 12-07-2017, 03:15 PM   #68
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For my situation, "irrevocable" kind of works the opposite. I want to make large donations this year due to my current tax situation and changing laws, but don't want to commit years of donations to my current charities. Not only might they not use them well if given as a 4 or 10 year or however big lump sum, but I may have reasons to not want to continue donating to them in the future. Too bad, the money is gone to them. With a DAF, it is true that the funds are irrevocably committed to charities, but I retain full flexibility as to which ones they go to at any time in the future.
Exactly!
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Old 12-08-2017, 12:22 AM   #69
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Yes, I understand this. If we get into a situation where we want to make a particularly large donation in one year, I can see how DAF's would help. We are early in ER and not ready to make a large commitment that is irrevocable. Maybe we'll feel differently if our portfolio continues to do well for the next several years,
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Old 12-08-2017, 08:44 AM   #70
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Yes, I understand this. If we get into a situation where we want to make a particularly large donation in one year, I can see how DAF's would help. We are early in ER and not ready to make a large commitment that is irrevocable. Maybe we'll feel differently if our portfolio continues to do well for the next several years,
Yes. Not for everyone. VGC is a large commitment at an initial $25k. FidoChar is much smaller, but still a significant commitment. Totally understand.
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Old 12-08-2017, 11:05 AM   #71
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After thinking about it for several years, finally opened our DAF with Vanguard Charitable. Be forewarned that transfers in may require a medallion signature guarantee, which is very difficult to get these days. We ended up moving the appreciated mutual fund shares we wanted to donate into a Vanguard brokerage account using voice verification in lieu of a medallion guarantee, and now we're making the DAF contribution from there electronically. Unfortunately, we found out yesterday that it takes (much) longer when you are moving non-Vanguard mutual funds - it's been a week since we requested the transfer and it's still in process. So don't leave it to the last minute if you want the deduction this year.
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Old 12-09-2017, 03:27 PM   #72
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Yes, I understand this. If we get into a situation where we want to make a particularly large donation in one year, I can see how DAF's would help. We are early in ER and not ready to make a large commitment that is irrevocable. Maybe we'll feel differently if our portfolio continues to do well for the next several years,
You might only care about the DAF for the reasons Audrey pointed out earlier, and my favorite reason is that we're totally off the fundraising mass-mailing lists. We only get 2-3 pieces of mail (total) per week now.

You could also send your next set of charitable donations through a DAF to see how you like the process. Set up the DAF and give it the minimum amount of money that you'd like to donate to a charity. When the funds are on deposit then the next day you could send them to your chosen charities and knock the account value back down to zero.

We use our DAF for multi-year financial planning, but right now it has a zero balance. (We haven't put more into it yet.) Every six months when I get a royalty check I transfer it into the DAF and then immediately transfer it out to the charity. The DAF effectively sits empty for 360 days/year, or until we make our next large lump-sum donation.
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Old 12-09-2017, 04:14 PM   #73
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The DAF effectively sits empty for 360 days/year, or until we make our next large lump-sum donation.
If that's what you want, then it's good.

But I love seeing the available funds grow in the DAF. Sure, it means FIDO makes a little from their fee, but the balance grows a lot more than that. So I'm able to make more generous gifts than I could otherwise. That works better for me.
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Old 12-09-2017, 04:26 PM   #74
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No fee if the balance is 0? For Fido I see an annual fee charge of the greater of 0.6% or (edit $100. Assume you probably wouldn't do this with VG because of the higher minimums but I think they have similar. What if you have $5 because a dividend slipped in before your grant got paid?
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Old 12-09-2017, 05:00 PM   #75
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No fee if the balance is 0? For Fido I see an annual fee charge of the greater of 0.6% or $500. Assume you probably wouldn't do this with VG because of the higher minimums but I think they have similar. What if you have $5 because a dividend slipped in before your grant got paid?
I think it's greater of 0.6% or $100 annual fee at Fido.
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Old 12-09-2017, 05:42 PM   #76
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I think it's greater of 0.6% or $100 annual fee at Fido.
I misread their fee page, $500 is for corporate accounts. You are right, $100 for individual accts.
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Old 12-10-2017, 06:11 AM   #77
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No fee if the balance is 0? For Fido I see an annual fee charge of the greater of 0.6% or (edit $100. Assume you probably wouldn't do this with VG because of the higher minimums but I think they have similar. What if you have $5 because a dividend slipped in before your grant got paid?
VGC has a low balance policy. Simply, if your balance is below $15k, they assess a $250 fee. If your balance is below $250, they close the account.

From their policy booklet:
Quote:
Account advisors who wish to avoid the maintenance
fee should ensure that account balances are safely
above $15,000 by the beginning of March. If an account
holds less than $250 at the time the fee is assessed,
the entire balance will be charged and the account will
be closed.
https://cdn.vcapps.org/sites/default...17_P%26G_4.pdf


I spoke to an agent there about this and she said that some people use the March date to full effect, i.e. they donate at the beginning of the year, reach the minimum, and then drain it out the rest of the year. That is allowed.

My gut feel about that is they picked March intentionally to try to spread some activity out to the early first 1/2 of the year.

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Old 12-10-2017, 08:40 AM   #78
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If that's what you want, then it's good.

But I love seeing the available funds grow in the DAF. Sure, it means FIDO makes a little from their fee, but the balance grows a lot more than that. So I'm able to make more generous gifts than I could otherwise. That works better for me.
Absent tax rate arbitrage it is more cost effective to have the growth outside the DAF.
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Old 12-11-2017, 10:27 AM   #79
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I was just reviewing the minimum grant requirements for our Fidelity Charitable DAF so thought I would share it here.
Quote:
Minimum Fidelity Charitable grant activity
Historically, Fidelity Charitable has made grants of about 20% of average net total assets to charities each year. The formal grantmaking policy requires that minimum annual grants, on an overall basis, be greater than 5% of average net assets on a fiscal five-year rolling basis. If this requirement is not met in a fiscal year, Fidelity Charitable will ask for grant recommendations from Giving Accounts that have not had grant activity of at least 5% of the Giving Account’s average net assets over the same five-year period. If Account Holders on these Giving Accounts do not make grant recommendations within 60 days, Fidelity Charitable will grant the required amounts out in accordance with the Fidelity Charitable Trustees’ Initiative (described on page 28), in its sole discretion.

Minimum Giving Account grant activity
Active charitable grantmaking is required for every Giving Account. If no grants are distributed from a Giving Account for three years, Fidelity Charitable will make every effort to contact the Account Holder to encourage grant recommendation(s) from the Giving Account. For every year thereafter in which no grants are recommended by an Account Holder, Fidelity Charitable will make grants from the Giving Account to IRS-qualified public charities approved by the Trustees of Fidelity Charitable. If a Giving Account has entered its seventh year of inactivity (i.e., no grants recommended by an Account Holder), Fidelity Charitable will consider the Giving Account to be abandoned and will grant the entire balance of the Giving Account in accordance with the Fidelity Charitable Trustees’ Initiative (described on page 28).
https://www.fidelitycharitable.org/d...Guidelines.pdf

Fidelity has enough donors that you can probably get away without gifting for a couple of years but have to do something by year three. Even then, you can get away with a lower grant% as long as Fidelity Charitable overall meets the 5% guideline for grants. And historically grants have been around 20% of assets.

We had been above the 5% requirement grant guideline every year, but since we have been front-loading the DAF recently - gifting way ahead of our annual budget via appreciated securities - I was just checking whether next year's gifting still met the requirements.

We have an $ amount set aside for charitable donations in our annual budget. But due to eliminating a long-held legacy stock position, it was more beneficial tax wise to gift from appreciated securities. I think we may have front-loaded like 10 years worth!
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Old 12-11-2017, 11:45 AM   #80
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We have been building up our DAF over the last few years in anticipation of retirement. We have at least 5 years maybe 10 of anticipated giving in there. Nice not having a giving line item in our budget during our early years of retirement.
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