Cheapest DAF in 2020?

[traveling_salesman]

Hi bogleheads,

The subject says it all. I am looking for a DAF to reduce the amount of junk mail I get and also so I can have a little bit more time to decide contributions in 2020. What is the current recommendation? I am looking for the fund which has the lowest “total cost of ownership” over the next 5 to 10 years.

We are definitely not the biggest givers — I estimate around $2-5k each year for the next 5 years. I will be donating appreciated index funds from Vanguard if that makes a difference.

Thank you for help, and also for pushback if a DAF seems unwise at the moment.

[pshonore]

Hi bogleheads,

The subject says it all. I am looking for a DAF to reduce the amount of junk mail I get and also so I can have a little bit more time to decide contributions in 2020. What is the current recommendation? I am looking for the fund which has the lowest “total cost of ownership” over the next 5 to 10 years.

We are definitely not the biggest givers — I estimate around $2-5k each year for the next 5 years. I will be donating appreciated index funds from Vanguard if that makes a difference.

Thank you for help, and also for pushback if a DAF seems unwise at the moment.

Fido has no minimum to open an account - I believe Vanguard has a 25K minimum

[InMyDreams]

Hi bogleheads,
...looking for a DAF to reduce the amount of junk mail I get ...

This could be achieved without having your own DAF. Network for Good is one such example - a DAF that accepts directed donations from its contributors.

I've also been eyeing Fidelity Charitable Gift Fund
https://www.bogleheads.org/wiki/Donor_a ... e_examples

As near as I can tell, it works much like NFG but it doesn't seem to skim costs from the donation (does anyone know?). Unlike NFG, it doesn't seem to accept donations from credit cards.

To me, the big advantage of having your own DAF would be to contribute a large amount upfront to be distributed over several years. I think you may be able to achieve that thru Fido's fund.

It would be great to hear from someone who has used Fido's gift fund.

[calvin111]

I understood that Fidelity has 100$ annual maintenance fees for their Charitable Account.

[InMyDreams]

I understood that Fidelity has 100$ annual maintenance fees for their Charitable Account.

For a DAF that you open up personally, or for the Charitable Gift Fund? They seem to be two different things.

[jebmke]

Isn't Fidelity Charitable Gift Fund the Fidelity DAF?

[ModifiedDuration]

A lot of people here have the Fidelity Charitable Gift Fund (including me) and are happy with it.

No minimum initial contribution.

Minimum gift to a charity is $50.

The annual administrative fee is:
First $500,000 - 0.60% or $100 (whichever is greater)
Next $500,000 - 0.30%
Next $1,500,000 - 0.20%
Next $2,499,999 -0.15%

There are three index funds:
Domestic stock: total market index - 1.5 basis points
Foreign stock: international index - 3.5 basis points
Bond: U.S. bond index - 2.5 basis points

And many other funds, with fees up to 97 basis points

[ModifiedDuration]

Isn't Fidelity Charitable Gift Fund the Fidelity DAF?

Yes

[InMyDreams]

Isn't Fidelity Charitable Gift Fund the Fidelity DAF?

Yes

Thank you!

[traveling_salesman]

Thank you for the suggestions! As a follow up to those who use fidelity (or other vendors): is the administrative fee charged to the DAF account or to a separate account? (i.e. can I deduct that fee from my taxes?)

[stan1]

Thank you for the suggestions! As a follow up to those who use fidelity (or other vendors): is the administrative fee charged to the DAF account or to a separate account? (i.e. can I deduct that fee from my taxes?)

The fee is charged to the DAF. Remember you don't own the funds in the DAF once you make the contribution. Technically the DAF is paying the fee not you so you can't deduct from taxes just like you don't pay taxes on any investment returns in the DAF. The return on the investments in the DAF may also cover the fee. This may sound like semantics but it is important to understand the difference between directing and owning the funds in the DAF after you make the contribution.

[traveling_salesman]

Thank you for the suggestions! As a follow up to those who use fidelity (or other vendors): is the administrative fee charged to the DAF account or to a separate account? (i.e. can I deduct that fee from my taxes?)

The fee is charged to the DAF. Remember you don't own the funds in the DAF once you make the contribution. Technically the DAF is paying the fee not you so you can't deduct from taxes just like you don't pay taxes on any investment returns in the DAF. The return on the investments in the DAF may also cover the fee. This may sound like semantics but it is important to understand the difference between directing and owning the funds in the DAF after you make the contribution.

No, not semantics at all ... this is exactly what I was asking. thank you for the information!

[Mike Scott]

Are you trying to set up a larger one time donation to itemize deductions this year? That may be worth the DAF fees. If not, it may be to your advantage to just hold the stocks and donate the appreciated shares directly when you are ready as long as the charities can handle donated shares.

[Stinky]

Fidelity seems to be the DAF of choice amongst folks who post here.

I have all of my funds at Vanguard, except for the Fidelity DAF. The reason is chose Fidelity for DAF is the lower minimum grant size at just $50, rather than $500 at Vanguard.

[tj]

I belive the Schwab DAF has the same costs and minimums as the Fidelity. Mine is at Fidelity.

[BroIceCream]

...As a follow up to those who use fidelity (or other vendors): is the administrative fee charged to the DAF account or to a separate account?

I've had a Fidelity DAF for 4 years...never paid a fee. I make a contribution, and within a week of it clearing, I contribute it out to the charity -- so the account sits empty most of the time. Unless the money sits for a period of time, the fee is not charged, based upon the statements I've received.

[FIREchief]

I really don't understand the focus on DAF fees. The DAF itself is a 501c3 charity, so if I pay Fidelity a 0.6% annual fee (balances over $16.6K), it really doesn't bother me. It's not the same as an ER on a fund. While not directly benefiting those in need, the DAF does help to facilitate long term giving to such causes. Most/all charities have administrative costs. I don't worry that my church pays an accountant and clerical staff. Why should I concern myself with a very small overhead cost with my Fidelity DAF? From a certain perspective, it's ALL charity.

[traveling_salesman]

I really don't understand the focus on DAF fees. The DAF itself is a 501c3 charity, so if I pay Fidelity a 0.6% annual fee (balances over $16.6K), it really doesn't bother me. It's not the same as an ER on a fund. While not directly benefiting those in need, the DAF does help to facilitate long term giving to such causes. Most/all charities have administrative costs. I don't worry that my church pays an accountant and clerical staff. Why should I concern myself with a very small overhead cost with my Fidelity DAF? From a certain perspective, it's ALL charity.

That’s an understandable point of view. To me, once I give away the money, it is no longer mine... which is why the fees are even more important. I can’t be less careful with other people’s money than with my own.

[BogleMelon]

I was under the impression that Fido DAF has a $5000 minimum to open! Have they changed recently to be $0, or I was getting it wrong!

[TheOscarGuy]

...As a follow up to those who use fidelity (or other vendors): is the administrative fee charged to the DAF account or to a separate account?

I've had a Fidelity DAF for 4 years...never paid a fee. I make a contribution, and within a week of it clearing, I contribute it out to the charity -- so the account sits empty most of the time. Unless the money sits for a period of time, the fee is not charged, based upon the statements I've received.

I don't follow why this is the approach vs just donating directly to the end recipient? Isn't the main reason to use DAF to avail gains so your contributions can get bigger when you actually do the donation?

[FelixTheCat]

Fido has no minimum to open an account - I believe Vanguard has a 25K minimum

I had to look it up. Fido used to be 5K minimum.

Go with Fidelity!

[BroIceCream]

...As a follow up to those who use fidelity (or other vendors): is the administrative fee charged to the DAF account or to a separate account?

I've had a Fidelity DAF for 4 years...never paid a fee. I make a contribution, and within a week of it clearing, I contribute it out to the charity -- so the account sits empty most of the time. Unless the money sits for a period of time, the fee is not charged, based upon the statements I've received.

I don't follow why this is the approach vs just donating directly to the end recipient? Isn't the main reason to use DAF to avail gains so your contributions can get bigger when you actually do the donation?

Because of easily linked DAF to my Fidelity Brokerage, it is very easy to do the donation of appreciated shares. Going direct to charity is a bit more cumbersome (different process for each charity). With fidelity, I contribute the shares, and then there is a simple/common process to redirect each grant to a charity from one place.

[calvin111]

This is fee details from Fidelity Charitable

$100 or 0.6% administrative fee*
This annual fee is based on your Giving Account balance and covers services like processing transactions and donor
support. The more you donate, the lower the percentage.
0.015%–0.97% investment fee (as of September 2020)
Investment fees are based on how your donation is invested

https://www.fidelity.com/bin-public/060 ... itable.pdf

[DosCommas]

If you have equities in Schwab or TDA use the Schwab one (TDA bought by Schwab so they will consolidate eventually). If you have equities at Fidelity use Fidelity. If you don’t have current accounts at either, they are equivalent. I have used Schwab and securities in a Schwab brokerage can be donated instantly. If your securities are elsewhere you have to send a letter to have them donated or do an ACAT transfer to a brokerage account at Schwab or Fidelity first before donating it, which takes 1-2 weeks.

[TheOscarGuy]

...As a follow up to those who use fidelity (or other vendors): is the administrative fee charged to the DAF account or to a separate account?

I've had a Fidelity DAF for 4 years...never paid a fee. I make a contribution, and within a week of it clearing, I contribute it out to the charity -- so the account sits empty most of the time. Unless the money sits for a period of time, the fee is not charged, based upon the statements I've received.

I don't follow why this is the approach vs just donating directly to the end recipient? Isn't the main reason to use DAF to avail gains so your contributions can get bigger when you actually do the donation?

Because of easily linked DAF to my Fidelity Brokerage, it is very easy to do the donation of appreciated shares. Going direct to charity is a bit more cumbersome (different process for each charity). With fidelity, I contribute the shares, and then there is a simple/common process to redirect each grant to a charity from one place.

I see so you keep the shares in taxable and make a transfer to DAF come donation time. But you are on the hook for taxes on any gains with this approach.

[ModifiedDuration]

...As a follow up to those who use fidelity (or other vendors): is the administrative fee charged to the DAF account or to a separate account?

I've had a Fidelity DAF for 4 years...never paid a fee. I make a contribution, and within a week of it clearing, I contribute it out to the charity -- so the account sits empty most of the time. Unless the money sits for a period of time, the fee is not charged, based upon the statements I've received.

I don't follow why this is the approach vs just donating directly to the end recipient? Isn't the main reason to use DAF to avail gains so your contributions can get bigger when you actually do the donation?

Because of easily linked DAF to my Fidelity Brokerage, it is very easy to do the donation of appreciated shares. Going direct to charity is a bit more cumbersome (different process for each charity). With fidelity, I contribute the shares, and then there is a simple/common process to redirect each grant to a charity from one place.

I see so you keep the shares in taxable and make a transfer to DAF come donation time. But you are on the hook for taxes on any gains with this approach.

You do not have to pay taxes on the gain on shares transferred to a DAF.

In addition, if the shares had been held more than a year, than you get a tax deduction equal to the value of the shares on the date of transfer, limited to 30% of adjusted gross income, with a 5-year carry-forward on any unused amount.

If the shares had been held less than a year, than your tax deduction is limited to your cost basis.

[IowaFarmWife]

Hi bogleheads,

The subject says it all. I am looking for a DAF to reduce the amount of junk mail I get and also so I can have a little bit more time to decide contributions in 2020. What is the current recommendation? I am looking for the fund which has the lowest “total cost of ownership” over the next 5 to 10 years.

We are definitely not the biggest givers — I estimate around $2-5k each year for the next 5 years. I will be donating appreciated index funds from Vanguard if that makes a difference.

Thank you for help, and also for pushback if a DAF seems unwise at the moment.

You may want to look at the Dayton Foundation, https://www.daytonfoundation.org/ccaintro.html

[orthros]

Another interesting data point for those of us entirely in the Vanguard ecosystem.

I've been a Vanguard DAF user for several years. The $25K initial contribution is rough, but so is the $5K additional donation.

Recently, they've made the process of donating Vanguard mutual funds/ETFs a lot easier. Curiously, I didn't notice any flag when I was playing with it so I tested a $900 donation.

It went through.

So YMMV but the additional donation limit to Vanguard may have been changed. My account still has the $500 minimum charitable contribution though.