[Editor’s Note: This is a republished post from Physician on FIRE, a member of The White Coat Investor Network. The original post ran here, but if you missed it the first time, it’s new to you! This one is about how to give to charity through a donor-advised fund. Shout out to the Physician on FIRE because today is his birthday! Last year on his birthday he celebrated by throwing down $100K to his DAF. Amazing way to give to the Red Cross, Salvation Army, a soup kitchen, animal shelter, church, your alma mater, or whatever charity of your choice!]
The Donor-Advised Fund, a Smarter Way to Give
- You get a tax deduction in the year that you donate to the fund that you control.
- You can give from the fund to charities of your choice years later.
- You can donate equities that have appreciated and nobody owes capital gains tax.
- Your donated money can remain invested in index funds.
I started my first DAF several years ago when I had large capital gains and wanted to bring my taxable income down. I had some T. Rowe Price funds that had sizeable gains and I donated them to start my DAF with the T. Rowe Price Fund for Charitable Giving. A couple years later, as I learned more about investing and fees, I realized I would probably be better off keeping my dollars with Vanguard. So I moved my taxable account to Vanguard and my DAF to Vanguard Charitable. When I realized that the minimum grant from Vanguard Charitable was $500, I opened another DAF with Fidelity Charitable, which allows donors to give as little as $50 at a time. Over the last five or six years, I’ve opened three separate DAFs, but only two remain funded. I use Vanguard when I am donating a grant of $500 or more and Fidelity when I wish to grant $50 to $499 (not that I’ve ever given $499).
My Donor Advised Fund Plan
Rules of Donor-Advised Fund Giving
When donating appreciated mutual funds, as I do, you are limited by IRS rules to giving 30% of your adjusted gross income in any given year. When donating cash, you can give and deduct up to 50% of adjusted gross income.
doing the most good
I also plan to donate half of any proceeds from this site to our DAF as part of my site’s charitable mission. When the DAF is fully funded, I will continue to treat it like a nest egg, donating around 4% or 5% per year, perhaps more when market returns are good. I should be able to make it last indefinitely if I’m careful, and I can give big with what’s left towards the end of my time on earth. How much does it cost to put $100,000 into a DAF? This is not a trick question, but it does depend on your marginal tax rate. If you live in a state with state income tax, at a physician’s salary, your marginal tax rate is probably in the 35% to 50% range. Donating $100,000 will reduce your tax liability by $35,000 to $50,000. If you are donating appreciated mutual funds like me, you will avoid capital gains (15% or 20% plus state income tax plus 3.8% ACA / NIIT surtax for most high-income professionals). If the $100,000 donation has a cost basis of $50,000 (you bought years ago and the fund has doubled), you’re saving about 25% of the $50,000 gain by avoiding the capital gains, so that’s an additional $12,500 saved on taxes in the year you donate (as compared to selling the fund and paying capital gains. Of course, there are other ways to reduce or avoid capital gains taxes. So… how much does it cost? It depends on the situation, but for me, it costs about $58,000 to donate $100,000, and that’s without factoring in the potential savings in capital gains.
Downsides of a Donor-Advised Fund
Are there drawbacks to using a donor-advised fund? Sure. You can’t take it back. A card laid is a card played. As with any charitable giving, once you give, the money is no longer yours. You will retain the ability to direct where the money goes from your fund as long as it goes to a bona fide 501(c)(3) charity. Also, there are minimum donations to open an account, and minimum grant amounts when you give from your fund. If you go years without giving at all, the Fund can choose to donate for you. If the parent company goes belly up, the money could disappear with it (this happened to the National Heritage Fund in 2009). Another drawback that deserves mention is that building up a DAF as I plan to do will obviously delay your retirement, or at least delay reaching your retirement goals. It will take me an extra year or so to reach my goal numbers for an early retirement, because I will be diverting funds to charity. It’s a choice that I believe will make me feel more comfortable leaving the medical profession well before my 50th birthday. As I mentioned above, I now have two DAFs. The Vanguard Charitable Fund makes it easy to transfer funds from my taxable account to my giving account. I have a Fidelity Charitable account so that I can make grants as small as $50. Both have a variety of investment options with low fees, and make it easy to make grants when you wish. Both have an additional annual expense of 0.6% (or $100 with Fidelity, whichever is higher). These fees are comparable to the tax drag one would see if the money were kept in a taxable account (2% dividends taxed at 30% = 0.6%).
My wife and I have each funded a nondeductible IRA since 1988. In 2014 and 2015 we converted these to Roth IRA’s. The nondeductible contribution portion converted tax free. But the portion that represented income or appreciation was taxable, on the order of $175,000. So, separately, from our taxable brokerage we contributed an equivalent amount of appreciated securities to our Fidelity Charitable account. The two sets of transactions offset each other.
We spent a couple of hours with our accountant to make sure the math worked. Given the many advantages of a Roth IRA, as well as our good health and family longevity, it was reasonable to do a large conversion.
I have especially come to appreciate the simplicity of the charitable account when it comes to tax time. We do not have to keep track of a multitude of receipts, letters, and other documents. If you have ever been audited, as I have been, then the advantage of such simplicity is clear.
In addition, it is reassuring to know that important contributions are “pre-funded.” I know, for instance, that our church contribution is set aside, and there is no temptation to use the funds personally. When someone says “This money is not mine, it is God’s,” it is literally true that in a charitable account the funds are no longer yours.
Fidelity does an excellent job in maintaining a database of eligible charitable organizations, with links to the various charity rating systems. It is easy to schedule contributions monthly, quarterly, or on a one time basis. I assume Vanguard and the others are similar. Thanks for the post.
That’s an excellent approach to eliminate a tax burden by donating your gains. I’ve done both a large Roth conversion (of a SEP-IRA) that resulted in a six-figure tax bill, and the similarly large donations to the DAF, but not in one fell swoop.
The simplicity of giving (particularly repeat giving) from the DAF is a major time saver for me. I’ve shown easy it is in a post that walks through screenshots from both Vanguard Charitable and Fidelity Charitable in a separate post (https://www.physicianonfire.com/dafgiving/).
Also, if the platform or Guidestar doesn’t find the charity in their search engine, you can still give to any registered 501(c)(3) as long as you get the name of the charity, the Tax ID# and address. A contact and phone number may expedite the process, but I’ve done that a few times for small, local charities.
Best,
-PoF
That’s really unfortunate you didn’t do that conversion in 2010, the first year you could.
That’s what I did and was able to spread out the tax due over two calendar years. Of course, I have a post about it, and I’ll be sharing it here in an upcoming Saturday.
Best,
-PoF
This was an encouraging post and very helpful to me at the moment because I am wrestling with estate planning decisions. Do you happen to know what happens to the DAF upon death of the donor(s)? Specifically, can the DAF be left to the kids to continue distribution decisions, or does the host company (probably Vanguard for me) get to distribute the remainder?
You have the option to designate your heirs to gain control of the fund or to have the remaining funds distributed to the charity or charities of your choice.
I chose to name our boys as designees. I like the Vanguard DAF, but keep in mind it does have higher minimums to open ($25K vs. $5K for Fidelity and Schwab) and higher minimum grants ($500 vs. $50). I believe additional funds added must also be in the amount of $5,000 or more wtih Vanguard Charitable, but not the others.
Best,
-PoF
Very inspiring!
I started my DAF when I left my private practice years ago. I put in 25K. Despite countless grants from $500 to $5000 each there is still 55K in the fund. I thought I was doing very well and being generous, but I think I need to step up my game to be in PoF’s league.
These have been some good years overall, haven’t they?
If you are inclined to build up that DAF, be sure to do it while you stand to get the largest deduction, i.e. while your income is still high. Since you’re dropping a significant portion of your schedule and salary next year (and tax reform is possible), 2017 may be a great time to step up your game.
Cheers!
-PoF
Have used Schwab Charitable for many years and agree with your comments. One other advantage is that any residual at my death goes to my children for their continued charitable giving– a sort of “back door” way to increase the estate exemption. It can also be used to increase the annual giving to children by moving funds from my DAF to their DAF– and I get the deduction! Thus far, my accountant has blessed the idea.
I’ve “given” from my Vanguard DAF to my Fidelity DAF, but my children (aged 7 & 9) are a long way from having donor advised funds of their own.
Also, just to clarify, and I realize this is what you meant, but you get the deduction when you donate to your own DAF, not when you move funds from one DAF to another.
It’s wonderful that both you and your children have them. I hope my boys have them someday, too.
Best,
-PoF
That is right- I only get a deduction for donating to my DAf, but I can then transfer to my kids DAFs. Both are young adults, limited income at present and this helps them get into the charitable mode while not stressing their budgets.
Now that’s interesting. Not really giving to the kids though.
Thanks for this post. I learned from it. We have this option in Canada too – I did not realize that.
Giving is a deliberate part of our financial plan each year. To date, we have given on a year by year basis, usually to a specific local need where we can see the money put to direct use or to directly support a group that is going above and beyond in their fund-raising for a more traditional charity. It has varied from year to year based on the community need and what we have available.
This would be great way to smooth it out and enable us to build it up now while we have higher income (and tax) for later when we don’t – kind of like an RRSP for giving.
Thanks for reposting this…. This has been on my to-do list and I’m hoping to set one up soon
This is the time of year when most giving is done. The combination of Thanksgiving and the last chance to get a tax deduction makes November / December a great time of year for charitable causes.
I have broken down how I chose which funds to give in a post last year. It’s pretty simple — give the stocks / funds that have the largest gains by percentage. I made a spreadsheet to figure it out, since my brokerage (Vanguard) gives you gains by dollar amount, but not percentage. (https://www.physicianonfire.com/donoradvisedfund/)
Also, if you have actively managed funds that are tax-inefficient, it’s wise to unload those, too. That’s how I first got started with a T. Rowe Price DAF.
Best,
-PoF
You have three DAFs? You might be the world’s expert on DAFs!
The T. Rowe Price one is no longer funded, but yes, I have had three (still have two funded). If I had done a bit more research beforehand, I might only have one.
One thing to highlight that may not be obvious, donor advised funds are great if you have a one time bump in income or gains that you want to offset in the same year, or if your income is going to drop off significantly going forward. However, if you are in a high tax bracket and plan to remain there for some time, it may be worth keeping your “marked for donation” appreciated assets in your taxable account so that they can continue to grow and increase your deduction until the time you are actually ready to donate–assuming you think they will increase in value. Then each year, you donate the appreciated assets as donations in-kind directly to the charity from your taxable account for the full value deduction. However, any gains in the DAF’s “waiting to be donated” assets are not yours to claim as a deduction. If you don’t trust your discipline, it may be better to donate into the DAF so the deal is sealed.
That’s the best explanation for why I don’t use a DAF. I just donate appreciated shares if I have them, cash if I don’t.
Thank you for the comment, Stevie Wonder, but you may be blind to the fact that the money you get back due to the deduction now will also continue to grow with market returns over the years.
See my example below in the reply to Doc William. A bigger deduction later doesn’t make you any more or less wealthy if you wait to donate unless your marginal tax bracket changes. The biggest difference is the amount of capital gains you’re eliminating.
“If you give $100 now, and get $40 back on your taxes now, you’ve got $100 in the DAF and $40 in your taxable. When the market has doubled, you have $200 in the DAF and $80 in your taxable account. (Ignoring the 0.6% in tax drag / fees which you would have if you give now or wait).
If you wait until the market has doubled to give, you will put $200 in the DAF and get $80 back.”
My advice to anyone on the fence is to give enough now to start the fund, and plan to give more later. It doesn’t have to be one or the other.
Best,
-PoF
That’s mostly true (especially with your caveat about the expense drag) but there’s still a few months difference. If I give in January, that deduction doesn’t really hit for 16 months. If I wait until December, I only have to wait 4 months for the deduction.
The real benefit of a DAF in my view is when you want the deduction now but don’t want the charity to get the gift for a while. You can use it to time the market or time your tax brackets etc. For example, if you wanted to pay $20K in tithing in 2018, 2019, and 2020, but you realize that with the tax code changes being discussed in Congress that you’ll be taking the standard deduction from now on, you could put $60K in a DAF right now, use that deduction on your taxes this year, and then actually give the money to the charity over three years. For a lot of people that would be worth the expense drag and additional hassle.
I was once intrigued by the idea of donor advised funds until I learned that they will often, if not usually, reduce your total tax deductions over time.
If I donate $100 to a DAF right now, I get a $100 deduction. Conversely, if I invest that $100 now, it later doubles in value to $200, and I then donate the proceeds (or shares) to a charity or DAF, I get a $200 deduction instead. Giving straight to the DAF in the first instance means that I forego the possibility of larger deductions in the future.
In situations where, for whatever reason, someone doesn’t want to hold on to the money before donating it, then a DAF is perfectly fine. There are also some situations where there is a tax arbitrage opportunity (e.g. giving to a DAF right now enables you to drop your marginal tax bracket) that can be taken advantage of. But giving to a DAF with the intention of letting the donation grow over time before it is distributed to a charity is usually sub-optimal to just retaining the funds in a taxable account, then donating them later after they have appreciated significantly.
If you’ve got no equities with significant capital gains, giving now won’t give you the benefit of lowering your cost basis significantly. I see what you’re saying, but you can always start small and give more later.
A couple points to think about:
1. There is a carrying cost to keeping funds in a taxable account. With tax-efficient passive index funds, I see about a 2% mostly qualified dividend. With 15% capital gains tax, 3.8% NIIT, and 9.85% state income tax, the tax drag on keeping the funds myself approaches 0.6% per year, which happens to be the admistrative fees charged by the most popular DAFs.
2. If you give $100 now, and get $40 back on your taxes now, you’ve got $100 in the DAF and $40 in your taxable. When the market has doubled, you have $200 in the DAF and $80 in your taxable account. (Ignoring the 0.6% in tax drag / fees which you would have if you give now or wait).
If you wait until the market has doubled to give, you will put $200 in the DAF and get $80 back.
So there’s really no benefit to waiting if you plan to give eventually, anyway. I guess the benefit could be that you may decide later that you need the money. Once you’ve donated, you can’t change your mind. But waiting doesn’t help you come out ahead unless the tax rates go up significantly, or if you expect to have a higher income that puts you in higher brackets later on.
Best,
-PoF
So in that instance, how would you have benefited by donating to the DAF if the after-tax effects are the same?
Again, I see DAFs potentially being useful for those with a tax arbitrage opportunity. Personally, I foresee using a DAF for the last five years or so leading up to my retirement. I’ll be in a higher tax bracket during that time than I will be in retirement, so donating significantly more to a DAF than I normally do to charity during that time will enable me to reduce my lifetime tax burden.
Your plan sounds like a good one. It’s quite similar to mine, actually. I’d like to give over a lifetime, but I expect my marginal tax bracket to drop soon, so I’m fully funding it now.
The example was to show that there is no significant financial benefit to waiting, not to show a benefit to giving early.
One benefit that I’ve noticed and several readers have highlighted is the ease of giving without having to keep receipts and detailed records of each grant. If time is money, that’s worth something, too.
Cheers!
-PoF
In #2, where does the $40 come from? If I make $500,100 in salary and donate $100, I now pay taxes on $500,000.
If you deduct the $100 contribution and you’re in the 39.6% bracket, you get $39.60 back in federal taxes.
Oh yeah duh
More likely more. I’m in the 39.6% bracket and my marginal tax rate (federal, state, payroll) is 46%.
I’m in CA so my marginal is closer to 50% lol. But I also had high income this year so my itemized deductions get phased out at federal and CA state level. If I did the math right, I think I would only get around 28% tax benefit on a $5k donation.
You ought to run the numbers. It’s probably not as bad as you think. What the Pease phaseouts really do is add 1% to your marginal tax rate.
I am trying to set up a DAF at Vanguard but I keep getting message the my name and email do not match. I guess I will call on Monday. I was thinking of donating to the DAF and doing a Roth conversion of the same amount.
I’m sure they can straighten it out for you. I’m touched to hear that you’re setting one up now. What you’ve outlined will essentially give you a tax-free Roth conversion. Of course, it would be cheaper to pay the tax than to set up a DAF, but the latter is much more satisfying.
Best,
-PoF
I had never really heard of them until you started posting about it last year.
We love our DAF for all the reasons you gave, but the MOST IMPORTANT by far: it is so much more convenient to give, we NEVER have to save receipts from charities, no end of the year scramble and, we give everything at once at the beginning of the year. That way, we don’t hesitate to give it all away — it’s not ours anymore anyway. So, tax benefits etc… are nice, but we love that it makes our lives easier and helps us be generous.
I agree.
It also focuses my giving. I’m fine with the $500 minimum personally. I want to give strategically to causes I want to support. I want to give in a way that truly makes a difference which I don’t think I can do with $60 here or there.
If you’ve got no equities with significant capital gains, giving now won’t give you the benefit of lowering your cost basis significantly. I see what you’re saying, but you can always start small and give more later.
A couple points to think about:
1. There is a carrying cost to keeping funds in a taxable account. With tax-efficient passive index funds, I see about a 2% mostly qualified dividend. With 15% capital gains tax, 3.8% NIIT, and 9.85% state income tax, the tax drag on keeping the funds myself approaches 0.6% per year, which happens to be the admistrative fees charged by the most popular DAFs.
2. If you give $100 now, and get $40 back on your taxes now, you’ve got $100 in the DAF and $40 in your taxable. When the market has doubled, you have $200 in the DAF and $80 in your taxable account. (Ignoring the 0.6% in tax drag / fees which you would have if you give now or wait).
If you wait until the market has doubled to give, you will put $200 in the DAF and get $80 back.
So there’s really no benefit to waiting if you plan to give eventually, anyway. I guess the benefit could be that you may decide later that you need the money. Once you’ve donated, you can’t change your mind. But waiting doesn’t help you come out ahead unless the tax rates go up significantly, or if you expect to have a higher income that puts you in higher brackets later on.
Best,
-PoF
I have zero intention of giving anything to charity. I have worked very hard all my life. Paid my loans, helped my family and kids. Have paid millions of dollars in taxes to help the public. My taxes are my charitable contributions to the society. The rest is for me and my family and friends.
The fun thing about charitable contributions is it is voluntary. You can give, or not. Pretty different from taxes that way.
Many people have found that giving well involves work, but that it can be just as rewarding as earning, saving, investing, and spending. I find that giving helps me to keep money in its proper place in my life and it seems weird, but when I give money away it makes me feel richer.
There are so many worthwhile causes out there, I bet you could find one that you could support, even in a very small way. You might even be able to use the experience to help teach your kids something about money.
charitable giving with tax implication is just another bad government backed nonsense that leads to misallocation of funds. “charitable money” could be spent better. Plenty of research shows that neither taxes nor charity leads to prosperity. It is all about efficient circulation of money through the economy, that creates rising tides, and fills the coffers of public treasury to perform their duties, including “charitable” work.
In fact, buying and spending money on things you enjoy is very charitable.
Paying taxes through hard work, in excess of what you will ever receive back from the government is a charitable act.
Giving away money without depriving the treasury of its revenue through tax deductions is a charitable act.
Paying for your friends, neighbors and family members medical expenses, weddings, tuition, and additional needs, WITHOUT TAX DEDUCTION is a charitable act.
Paying attention to local / state and national elections, to elect folks who will wisely deploy your hard earned money is a charitable act.
Rest of you are just involved in a tax avoidance scheme. Nothing charitable about it.
Well, I disagree with most of this comment AD.
I don’t give for the tax deduction. If I am going to give the tax effect can influence the timing. If my $50K can result in $100K of benefit to the recipient then I will choose that route.
““charitable money” could be spent better. ”
Well maybe. But shouldn’t that be up to the giver? I give to charities that spend 95% or more of their revenue on the cause rather than administrative overhead. I think I can give more efficiently than if I let the government take care of everything?
I do agree that if you work and earn and spend you are already serving and contributing. You shouldn’t need to “give back” because you didn’t “take away” in the first place. It should be optional for all whether they want to give or not. But to put down the givers as tax-avoidance schemers is a characterization.
I actually agree with a lot of that. A rising tide lifts all boats etc. In many ways, starting a company, providing services, creating wealth, creating jobs etc is very beneficial to society. I know of one foundation whose goal is to create self-sustaining businesses in third world countries.
However, I think there are some worthwhile things that should be done that government doesn’t do or does poorly. There are also things that business doesn’t do well either. I’m happy that I have more than enough resources for myself and those I care about that I can spare some for those causes. Characterizing that as a “tax avoidance scheme” is ridiculous. Why would I give $1 to save $0.46 in taxes? That doesn’t make any sense at all. Just because there is a tax deduction doesn’t eliminate the fact that it is a charitable act. Especially since lots of people don’t even itemize. That’s a ridiculous argument.
It’s your money. Do what you want with it. But you might ask yourself what Gates, Buffett, Carnegie etc know that you might not. They don’t seem like particularly stupid people. I think it was Carnegie who said:
“The man who dies rich, dies disgraced.”
Sorry to ruffle any feathers. Not my intent. By all means, give to charity as much as you please. However, my objection is with the tax deduction / avoidance aspect of it. Yes, regardless of intent, when you itemize donations, you are engaging in tax avoidance, though not tax elimination.
“The man who dies rich, dies disgraced.”
Bill gates and buffet are different animals all-together. They set up foundations, some larger than GDP of most countries, so they dont have to pay capital gains taxes or taxes upon death. At thh the same time they exercise un-due influence over humanity. Mean while, folks making < 500,000 pay majority of income taxes.
Tricks used by these foundations rob US treasury of trillions of dollars.
I’m going to guess you don’t share Grover Norquist’s view of government:
There are a lot of people in this nation that would not consider the US government a charitable organization.
My husband and I set up a DAF about 2 years ago with National Christian Foundation. Great company, easy website navigation, streamlined gift/grant process.
A few points to consider…
-With a DAF, giving is easy, it is stress free, and it is fun. Seriously, I am a surgeon, this is really fun. You set a goal for giving, you auto-transfer your monthly amount, and you give with a joyful heart. It is really quite impressive how ‘rich’ you feel giving your money away. There is no more discussion in our house about supporting this charity here or that friend doing some amazing outreach. If it is in the account, it is free for the giving. All year long. No budgeting, no compromise. We transfer the funds, sometimes appreciated stocks and sometimes cash, each month, so there is no crunch at the end of the year to sort things out. Our accountant loves it because it is consistent and allows for accurate tax planning.
-If you have a windfall that you have not made adequate tax planning for, you can dump it into your DAF with not a blip on your tax liability radar. You could always buy a new boat, the rubber round type in our house instead of the motorized version with many horses in WCI’s house, but when considering $100K donated is costing $58K, I can float the river in the used ten year old model and happily give that unplanned money away without a regret. I love a 2 for 1, especially from the government.
-I completely disagree with the tax-avoidance or deduction comments. We are smart people. We work hard. We choose to manage and spend and give our money based on our individual financial goals. Why would you not accomplish these goals with the most thoughtful, purposeful, tax-advantageous methods? Learn the rules, follow the rules, use the rules to reach your goals. If your goal is to keep your hard-earned money for yourself and your kin, no problem. If you want to give to causes you believe in, fantastic. If you don’t take the time to figure out how to keep your money or share your money in an intelligent way, you are lazy. Or incompetent. Or need to read the WCI blog a bit more. Or you can just invest in a high fee actively managed fund or buy some whole life insurance, be my guest. Don’t imply that the many generous, wealthy people on this site are giving away their ‘riches’ because we want a tax deduction. That is insulting.
-I challenge anyone who is considering a DAF to open one this upcoming year. Put $5000 into it. See what happens. It is a challenge that was made to me 2 years ago and it has changed how our family looks at generosity and sharing our wealth.
I like how it facilitates your giving. Kind of like a permission thing because you detach the giving from the donating.
Indeed. I’ve read that experiences are enjoyed more when they are prepaid. A DAF allows you to prepay future giving. When designating grants from the DAF to charity, it doesn’t feel like you’re spending your own money because you’re not.
It’s like the all-inclusive resort of charitable giving.
This is interesting, few questions.
1. Haven’t done a lot of charitable giving in the past but I’d like to this year and want to support local charities. Can you do that with daf?
2. What about company matching? I currently work for myself and my wife’s a resident. Not sure if she has marching but maybe she will at some point.
3. If I invested $50k in January and it’s appreciated to say $60k, wouldn’t it be better to donate those shares and take the deduction and avoid taxes on the $10k in cap gains too?
If I donated $60k from my cash reserves to a daf then I’d get the deduction but would still have to pay cap gains on the money in the taxable if/when I sold.
1. Yes
2. Matching for a DAF? Never heard of it.
3. Yes.
Thx, although I read some more of pof’s posts and it seems like you can transfer highly appreciated stocks from a tax account to a daf and get the same deduction so really the best of both worlds.
It really is. I give mostly to local charities. There are a couple million eligible charities in the US.
As far as a company match, that would be a great question for the specific employer that offers matching. There is a program in Minnesota call Give to the Max day that incentivizes giving, and they count donations from a DAF the same as donating cash, but some arrangements have to be made ahead of time: https://givemn.org/professionaladvisors
Best,
-PoF
Another reason to give now, before retiring, is the limitation on giving off only ?30% of your taxable income. So if you have a large donation contemplated, you might want to plan it before retirement. Otherwise your donation deduction will be carried over several years.
Here’s an interesting article from the NYTimes that talks about bunching donations through a donor advised so that you can continue to direct donations on an annual basis, but still take advantage of the recently passed higher standard deduction (every other year):
https://www.nytimes.com/2017/12/20/your-money/tax-plan-donations-charities.html?rref=collection%2Fsectioncollection%2Fyour-money&action=click&contentCollection=your-money®ion=stream&module=stream_unit&version=latest&contentPlacement=3&pgtype=sectionfront
We support a handful of missionaries who work for registered non-profits. With a DAF, can your donation be directed to a particular worker at the charity?
Yes. You just put a comment in the field after choosing other on the drop down menu. Whether the charity pays attention to that or not may depend of course.
With Fidelity Charitable, there is no problem directing a donation to a specific worker.
For example, my wife and I support a missionary couple in Kenya.
When you make such a donation, there is a text box for instructions.
The online receipt looks like this:
WORLD GOSPEL MISSION Tax ID 35-0911947 $*****
from: Contribution dollars Cleared
Submitted12/6/2018
Grant ID *********
Charity mailing address
WORLD GOSPEL MISSION
PO BOX 948
MARION, IN 46952-0948
Use:
******and ********* ************, at
Tenwek Hospital in Kenya
We have been very pleased with the ease of process and excellent record keeping.
Hope that helps!
Thanks WCI and Ralph. That’s very helpful info.