Donor Advised Funds?

[fryjack2]

I'm googling and a little confused. Can I open my own fund and be the sole donator? 

I'm looking for a place to put a chunk of money and be able to grow it and donate from it throughout the years.  

Thoughts on types of accounts? I know the amount available to donate matters in what type of account to open/start.  Lets say that the initial amount to start with is high 5 figures with intend to donate 5 figure sums to it each year. 

[azalea]

We have a DAF with Fidelity and found their process very easy, plus their minimum initial investment is only $5,000. We donated appreciated stock into the DAF to take advantage of the tax benefit and have been slowly donating to charities via the DAF for the past two years. You can add money to the DAF whenever you want and send money to charities via the DAF whenever you want.

[farmvillelover]

We opened one last year with Fidelity and so far, so good.  Opening it was extremely simple.  We initially funded it with highly appreciated securities that I've been wanting to get rid of but didn't want to pay cap gains.  You can use the DAF strategically too, so if you know your income will be higher one year for whatever reason, you can make contributions to the DAF in that year.  We used the market downturns in March to do some Roth conversions so we'll put more into our DAF this year to hopefully offset some of the impact the conversion will have on our tax liability.  Most people I know have used Fidelity or Schwab but I'm guessing almost all of the large financial institutions have them too.

[formerlyak]

From a tax perspective, remember that you will take the deduction in the year you put the money in the DAF, not in the year you direct it to a charity. Many of my donors who are new to DAFs are confused when I can’t get them a gift receipt for their gift to our org when the money comes from a DAF. Also, most wont allow you to pay off a pledge using money from a DAF and you can’t get any benefit for your gift from a DAF. For example, you can’t use money from a DAF to buy tickets for a gala, because you’d get a meal. Some orgs will let you use a personal check to pay for the quid pro quo part of the ticket though. So be sure you know what you can and can’t do with it.

[konapoppy]

We have fidelity - opened a few years ago. It is easy. And if you care about tax deductions, an easy way to take a deduction one year but diabetes funds another year. We also make most donations not through the account because of the lag time, but that is personal preference.

[carmenere]

I think most large financial institutions offer some type of DAF option. I suggest also looking into a local nonprofit DAF, usually called a Community Foundation. They tend to be actively involved in the local nonprofit community and offer services like philanthropy consulting/advising.

[awkwardpenguin]

A DAF does exactly what you are hoping to do - you donate money and take the tax deduction at the time of donation, but actually give the money to 501c3s as grants from the fund over time.

Ours is at Vanguard, but the big companies are all fairly similar in terms of fees. The big difference is the initial minimum donation ($5k at Fidelity, $25k at Vanguard) and minimum grant amount ($50 at Fidelity vs. $500 at Vanguard). Overall I think Fidelity is much more flexible for average donors.

With the high standard deduction in effect right now, it can be advantageous to use a DAF to group donations into one year to get the maximum tax benefit and then do the grants over time.

[fryjack2]

Jun 29, 2020 9:55:34 GMT -5 carmenere said:

I think most large financial institutions offer some type of DAF option. I suggest also looking into a local nonprofit DAF, usually called a Community Foundation. They tend to be actively involved in the local nonprofit community and offer services like philanthropy consulting/advising.

I'd rather have the control to decide myself where the money goes than donate to another fund, but will look into this.  Thank you. 

[formerlyak]

Jun 29, 2020 20:51:40 GMT -5 fryjack2 said:

Jun 29, 2020 9:55:34 GMT -5 carmenere said:

I think most large financial institutions offer some type of DAF option. I suggest also looking into a local nonprofit DAF, usually called a Community Foundation. They tend to be actively involved in the local nonprofit community and offer services like philanthropy consulting/advising.

I'd rather have the control to decide myself where the money goes than donate to another fund, but will look into this.  Thank you. 

You still have the ability to decide where you give with a Community Foundation DAF. But since they are rooted in the nonprofit community, if there is a cause you are looking to support, they may have more contacts for you.

[carmenere]

Jun 29, 2020 20:51:40 GMT -5 fryjack2 said:

Jun 29, 2020 9:55:34 GMT -5 carmenere said:

I think most large financial institutions offer some type of DAF option. I suggest also looking into a local nonprofit DAF, usually called a Community Foundation. They tend to be actively involved in the local nonprofit community and offer services like philanthropy consulting/advising.

I'd rather have the control to decide myself where the money goes than donate to another fund, but will look into this.  Thank you. 

Community Foundation DAF accounts function the same way, it's just that they're structured as nonprofit orgs and they're local. (Of course, you can also donate to the Community Foundation if you like the work they're doing.)