Donor-advised funds

[retiringby50]

Let's revive this thread for my sake. I'm thinking of opening one w/VG, especially since my money is already there. If I'm planning to give the money away anyway, won't need to rely on it for the future, and I'll probably have higher earnings this year than in 2008, any particular reason I shouldn't open one? I've complete the forms, will put in the minimum of $25,000 (which is sort of high), and plan on sending them next Monday at the latest... but I have this weekend to reconsider. From speaking to the rep., I should have enough time to get it in so that it'll be reflected for 2007. Thanks in advance for your help!

 

[MooreBonds]

Let's revive this thread for my sake. I'm thinking of opening one w/VG, especially since my money is already there. If I'm planning to give the money away anyway, won't need to rely on it for the future, and I'll probably have higher earnings this year than in 2008, any particular reason I shouldn't open one? I've complete the forms, will put in the minimum of $25,000 (which is sort of high), and plan on sending them next Monday at the latest... but I have this weekend to reconsider. From speaking to the rep., I should have enough time to get it in so that it'll be reflected for 2007. Thanks in advance for your help!

Congratulations for making this decision!

As far as everything 'being with Vanguard' - it's a completely separate entity (for tax purposes), so don't think you'll qualify or other gain some advantage. I don't even think you can 'link' your Vanguard Charitable account with your other Vanguard accounts, so it will all be a separate thing.

I haven't revisited the DAF issue lately, even though I should, since I am going to put more money in this year for tax bracket reasons. I was toying with the idea of putting one in Schwab's DAF, since they had a wider selection of investment options and comparable/lower fees than Vanguard (didn't hear about Schwab's option until after I opened up my account with Vanguard).

As far as any reasons "not to" (assuming you've made the decision to make charitable contributions to some charities), the only reason I can think of might be tax bracket reasons -if you think you'll have higher incomes in the future and/or see income tax brackets and rates creep up (my prediction), you might want to consider splitting up your contribution and going with another firm with a lower minimum (put in some in 2007, some in 2008/9).

As a side note-the literature I received from Vanguard Charitable earlier in the year has a deadline that's already passed if you want to transfer funds from a Vanguard mutual fund/stock to a Vanguard Charitable Fund account. You can still send in the paperwork by 12/31/07 (postmark date) if you are mailing a check with your account paperwork, but if you're intending to transfer money from a mutual fund to Vanguard Charitable, I believe the deadline for that date has passed.

 

[retiringby50]

As far as any reasons "not to" (assuming you've made the decision to make charitable contributions to some charities), ...

You can still send in the paperwork by 12/31/07 (postmark date) if you are mailing a check with your account paperwork, but if you're intending to transfer money from a mutual fund to Vanguard Charitable, I believe the deadline for that date has passed.

Yes, part of the decision was knowing that if I decided not to research other organizations, I would just give to my church, which is a 501(c) (or whatever the correct designation is), which I would give to on a regular basis anyway.

The rep I spoke to, who sounded pretty knowledgeable, said that my fund transfer info needs to be received by 12/27 in order to be processed by 12/31, or like you said, I could send in a check from another place. I forgot to ask if I could send in a check from my Vanguard money market though! Although I was planning to do a fund transfer, I'm going to write a check from a liquid CD just to be safe! I will probably add more money in the future (again, church contributions anyway), so I'll keep the "higher tax bracket" in mind. I'll check back during the weekend to see if there are more answers.

 

[Nords]

... any particular reason I shouldn't open one? I've complete the forms, will put in the minimum of $25,000 (which is sort of high)...

Geez, is your AGI big enough to take that high a deduction?!? I wonder how many potential philanthropists are put off by that requirement.

I'm surprised that Vanguard even bothers with a DAF-- it's a very high-maintenance, high-touch service that requires a lot of effort for little (if any) reward. Fidelity's DAF website is almost completely separate from their regular website, probably so that donors don't accidentally put a six-figure trade into the DAF by mistake. But if you could pay the same amount of expenses (zero) to have the DAF account with either Vanguard or Fidelity, and if Fidelity's minimum was only $5000, which would you choose?

 

[Achiever51]

I'm surprised that Vanguard even bothers with a DAF-- it's a very high-maintenance, high-touch service that requires a lot of effort for little (if any) reward.

The reason why VG, Fidelity, Merrill Lynch and other brokerages have gotten into the DAF business is to in effect compete with community foundations that have been growing in large numbers across the US over the past two decades. I attended a conference a few years ago where there was a panel discussion on this issue with participants from both sides. Very interesting perspectives. Basically, the community fdn people of course would like your $$ to stay in the area, benefiting your local community; the brokerage people see these enormous sums being peeled off into the community foundations and since they want to keep your assets in their pool under their management, they are willing to do the DAF stuff as a tradeoff.

 

[retiringby50]

Geez, is your AGI big enough to take that high a deduction?!? I wonder how many potential philanthropists are put off by that requirement.

But if you could pay the same amount of expenses (zero) to have the DAF account with either Vanguard or Fidelity, and if Fidelity's minimum was only $5000, which would you choose?

With the $25,000, I think my contributions in 2007 is equal to at least 25% of my income. So if I put in less (like $10K), it wouldn't be to my benefit, right? Ugh, the taxes part always messes me up!

The main reason I was going with VG is that I already have all their literature and really want to do this for 2008. I guess I better take a look at the Fidelity info as well. Thanks.