I "made" $65K today. Why am I having a hard time donating to charity???

[athena53]

I think you just have to set aside X amount each year and not worry about it. Sounds like your wife can run the gifting. DH does that for us.

In years past when it was tax favorable we made donations to a DAF and every year we gift from that.

I agree- I withdraw $X every year from my investments and set aside part of that for charitable donations. I know the $X is sustainable; I've been retired almost 10 years and the balance keeps going up. As opportunities to give come up during the year, there's money in the pot to send them. I try to focus larger amounts on a smaller number of charities; I think they're less likely to sell mailing lists with their high-roller names to other charities. Sometimes I donate more from what's left over; I also give DS and DDIL a check every year for around $15K and I pay for a lot of experiences with them and the kids. I need very little Stuff for myself and don't even have Amazon Prime. My big splurge is travel.

I also have a DAF- highly recommended not only because you can get the immediate tax deduction and figure out where to give later, but the donation can be anonymous.

Only you know what causes touch your heart and there are certainly many that are not faith-based. I hope you continue to enjoy seeing the results of your generosity.

 

[target2019]

"The $5K per year would not affect our networth at all so I don't know why I have been so "stingy"."

Pretty difficult to turn off a life-long trait. Sounds like you've taken a first step. So the gifts go directly to those in need.

Leaving $100 tips may not be best. I mught leave four $25 tips. But, it's your choice.

 

[TheWizard]

At the top, people think it will continue.
At the bottom, people think it will continue.
Both are wrong.

Correct.
It's possible we are dealing with an element of Loss Aversion in this case.

When I needed to get $40k for a new car six weeks ago, I sold the ETF shares in my taxable account with the least gain, which happened to be shares showing small losses.
So anyway...

 

[harllee]

My DH and I have always given a large percentage of our income each year to charity. Now we are doing it through QCDs from our IRAs (have to be over 70.5 to do this). We have causes and charities that we are passionate about and that is where our money goes. We just wish we had more to give.

 

[qwerty3656]

+1 for DAF. Years ago, we funded a DAF with appreciated stock and have been using that for charities ever since. I've given away more than we funded and the balance is still about what we originally put in.

 

[MichaelB]

<mod note> Multiple posts discussing religion were removed. Religious debates cause great offense and have no resolution, which is why they are discouraged in our community rules. Let’s please keep it friendly.

 

[audreyh1]

Whether you made 65K in day, or lost 65K in a day, should not influence your desire or guilt about giving. If you considering giving, give at a level you feel comfortable and cheerful about, regardless of your financial circumstances of the moment .

Exactly!

 

[rk911]

Old habits are hard to break but it can be done. We donated somewhere between 3%-4% of our NW this year and will likely do the same in 2024. You and your wife are to be commended for your sweat donations.

 

[rmcelwee]

We have decided to start a DAF with the $65K. I believe you can only get the tax break (meaning more money to donate) if you itemize instead of taking the standard deduction so we will probably wait a couple of weeks before opening it in 2024. I'll use that time to research how to use it. My wife went to Walmart to get the $200 in bedding for the kids this month. I'll have to find out how to do that next year through the DAF. I'm assuming we can just write a check out of the DAF but I don't know.

If anyone knows a great place to research DAF please let me know. Thanks!

Also, thanks for all the comments in this thread. I appreciate the help!

 

[audreyh1]

You request grants from a DAF. These go directly to the charitable organization. You can’t go to Walmart and write a check from your DAF. So don’t fund one until you understand how they work.

 

[braumeister]

The custodian of your DAF will give you the instructions you need.

At Fidelity, the details can be found here:
https://www.fidelitycharitable.org

 

[Dash man]

Here’s a link to Schwab DAFs that explain how they work.

https://www.schwab.com/donor-advised-fund

Basically, you donate appreciated assets to the fund. You select the type of funds the donations will go into when you set up the account. The assets are sold and invested into the selected funds.
When ready to make a grant from the fund, you can search for it by name or enter their Tax ID to search for them. They have to be a qualified charity under IRS regulations. Enter the amount of the grant. They will sell the funds and send a check to the charity. You will get a copy of the grant letter.

 

[rmcelwee]

You request grants from a DAF. These go directly to the charitable organization. You can’t go to Walmart and write a check from your DAF. So don’t fund one until you understand how they work.

Thanks! I'll contact the national office for the charity we are working with now and see if they have numbers and such. Maybe they can take my donation and then write a check to our local affiliate? I appreciate the info and no, I wasn't going to give up 65 grand before I checked what the rules were <G>.

 

[audreyh1]

Thanks! I'll contact the national office for the charity we are working with now and see if they have numbers and such. Maybe they can take my donation and then write a check to our local affiliate? I appreciate the info and no, I wasn't going to give up 65 grand before I checked what the rules were <G>.

Yes, talk to the organization. I think we have been able to identify a local affiliate when making the grant.

Notice how the language shifts. The donation is to the DAF. It is no longer your money, but you have a say in who ultimately gets it. You tell the DAF to make grants on your behalf to charitable organizations. It’s also good to talk with the charitable organization to see how to word the grant so it goes where you want.

 

[athena53]

My wife went to Walmart to get the $200 in bedding for the kids this month. I'll have to find out how to do that next year through the DAF. I'm assuming we can just write a check out of the DAF but I don't know.

As others have said, once the money is in the DAF, the company holding the DAF writes checks. Think of it as a black box- your money goes in and you can't personally get it out but you direct the company (e.g., Schwab or Fidelity) where to send the $$. Fidelity has a great database so I've nearly always been able to find the charity I want. The one exception was a very small church in Navajoland trying to serve an impoverished population, they weren't listed and the paperwork sent to the church was never completed so I couldn't make that donation from the DAF.

If you itemize, of course, the $200 in bedding is a legitimate deduction. I do plenty of that, too.

 

[rk911]

We have decided to start a DAF with the $65K. I believe you can only get the tax break (meaning more money to donate) if you itemize instead of taking the standard deduction so we will probably wait a couple of weeks before opening it in 2024. I'll use that time to research how to use it. My wife went to Walmart to get the $200 in bedding for the kids this month. I'll have to find out how to do that next year through the DAF. I'm assuming we can just write a check out of the DAF but I don't know.

If anyone knows a great place to research DAF please let me know. Thanks!

Also, thanks for all the comments in this thread. I appreciate the help!

- A Contribution to a DAF is itself considered a charitable donation, deductible in the year it was made (assuming you itemize and have more Sked A deductions than the standard deduction). The donations made from a DAF are not considered deductible.

-You don't write checks from a DAF but make charitable grants to qualified charities, essentially 501c(3) organizations. The custodian of the DAF will make the actual donation in your name. In our DAF we can also choose to remain anonymous. Our DAF has a database of qualified charities. If we want to donate to a charity or cause that is not in our DAF's database we have to write a check or make an online donation. Deductibility of those donations may be deductible if the charity has the proper IRS classification.

- You can take your time making the donations from the DAF although a lawyer at the firm that manages our money told us the IRS may look askance if you take too long to make the grants. He could not define 'too long'.

- In 2024 we are considering donating one of our investments that has a gain into our DAF. The advantage is we don't taxes on the gain AND we get a tax deduction subject to the same qualifications mentioned earlier.

- When you donate to a DAF you cannot get the money back. So be sure of the amount you want to put there.

-You might also look into DAF's cousin, the QCD (Qualified Charitable Deduction). The basic difference? If you direct your IRA RMD's into a DAF that amount is still counted as part of your AGI. If the RMD is sent to a QCD it is NOT part of your AGI but donations from a QCD must be directed to a charity(ies) immediately in the same tax year. You can't carry a balance in a QCD.

The above is how I understand how these two similar processes work (based on our experiences and advice of our financial advisor). Corrections and clarifications welcome.

 

[Enuff2Eat]

not a real gain

This kind of gain doesn't mean that much just because it is NOT a real gain...

Just like you are ahead in a Poker table. Are you really a winner?.. NOT when your money is still on the table. You might to pay $25k in income tax too.

I feel that the more frugal you are the harder for you to give. Just opinions.

Enuff

 

[audreyh1]

As others have said, once the money is in the DAF, the company holding the DAF writes checks. Think of it as a black box- your money goes in and you can't personally get it out but you direct the company (e.g., Schwab or Fidelity) where to send the $$. Fidelity has a great database so I've nearly always been able to find the charity I want. The one exception was a very small church in Navajoland trying to serve an impoverished population, they weren't listed and the paperwork sent to the church was never completed so I couldn't make that donation from the DAF.

If you itemize, of course, the $200 in bedding is a legitimate deduction. I do plenty of that, too.

It’s easy to add charities to Fidelity. DH added several smaller charities. If they have the right IRS numbers it should be straightforward. Usually this info is searchable online.

Too bad your church never completed the paperwork. DH only had to submit the info.

 

[CO-guy]

I volunteered so much of my time with a local non-profit that supports the intellectually disabled that I became president of the board right around the time I retired. It's a working board, so it's not as easy as writing a check. Rather, it's hours of my time each week supporting various roles of the executive team.

Instead, my better half and I try to hemorrhage money at whatever silent auction we attend. Even with that, we still make 1-2 large donations at the end of the year with any extra money to an organization that rescues dogs from the 4-corners region in the Southwest US. For a set fee, a person gets into an animal transport van, collects 30-35 animals from a 100% kill shelter (zero boarding facilities), and brings them to a location in Colorado where they can be rehabilitated and adopted to loving homes. We make our budget at the beginning of each year, every cent we have left over goes to saving puppies, because I couldn't sleep otherwise. (personal issue I know) Last year we rescued around 60-70 animals. This year we're hoping to do the same.

 

[Gumby]

Link for Vanguard DAF. https://www.vanguardcharitable.org/

 

[GhostofTomJoad]

Living frugally here, though retired. In my younger years and through my working life, I traveled, experienced all kinds of cool stuff. Don't feel the need anymore. It frees up money I'd have spent doing that stuff. I can give modestly to my favorite charity.

If you're well-off, enjoy it, hell! Why not? At the same time, it sounds like you've learned that self-sacrificing actions done for the sake of others offer the best sense of inner satisfaction. Good on ya!

 

[rmcelwee]

This kind of gain doesn't mean that much just because it is NOT a real gain...
Enuff

My point was was that if in one day my brokerage account balance went up $600 million there should be no reason why I can't donate $25 to a local charity.

That one day "gain" ($65K) is going to be the starting amount with which we open our DAF. I'm in the process of getting with that 501(c) beds for kids charity to see if the money can go to our local chapter that is getting formed soon.

 

[TimSF]

I've found that, to become a cheerful giver, it helps to start early in life. It's about developing a good habit, like many others, that gets easier with practice.

 

[teejayevans]

You can put a charity on your account(s) as the beneficiary, easy to do, and of course being dead you don’t worry about running out of money anymore.

 

[braumeister]

It’s easy to add charities to Fidelity. DH added several smaller charities. If they have the right IRS numbers it should be straightforward. Usually this info is searchable online.

I've also added charities a number of times. Sometimes I've had to contact them to get their tax identification number, but that info is usually available on the organization's website.