Should I open a donor-advised fund?
Jul 23, 2020
Are you wondering if a donor-advised fund (DAF) is right for you? You’re not alone. More and more charitably minded people–and their professional advisors–are talking about strategic philanthropy and how DAFs can help. This blog is to help you decide if a DAF is right for you.
What is a DAF anyway?
In a nutshell, a DAF is giving tool for impactful, tax-effective philanthropy. That means it’s a charitable giving account designed exclusively to invest, grow, and give assets to charities.
Working with a DAF starts by setting up an account. You can do this through our online portal, which walks you through the setup and your first contribution to fill the account. We accept many different types of contributions or assets. Once you donate assets to your account, you’re eligible for a tax deduction when Vanguard Charitable accepts ownership of the asset.
Once the DAF account is opened and funded, you’re ready to recommend how to invest those charitable dollars. Although investment returns aren’t guaranteed, a DAF provides the opportunity for tax-free growth. The more growth, the more there is to give to charity.
When you have a charity in mind, you can recommend a grant through your online account. We take care of the administrative details, charity due diligence, and even make sure your tax documents for the account are all held in one place. (This is a big help when tax time rolls round.) You can even give a member of your financial team partial access to the account to help with decision making or tax information.
I’ve heard enough: How do I sign up?
Why a Vanguard Charitable DAF?
We value donor feedback and ask for it often. Our donors tell us a Vanguard Charitable DAF is easy to use, and they appreciate our knowledgeable teams who provide excellent service. Here are a few of the more popular benefits of a Vanguard Charitable donor-advised fund.
Tax Efficient
Supporting charity through a Vanguard Charitable DAF is an effective form of tax-effective philanthropy. Since we are a nonprofit, most contributions are tax-deductible.
Cost Effective
Most giving tools have administrative fees, service costs, and investment fees. With a Vanguard Charitable DAF, fees are minimal. We do our best to keep our fees low because the less money spent on fees, the more that can go to the charities you care about most. Check out our fees and test our Cost Calculator here.
Convenient
Our donors are philanthropically minded and support charities often. They use a DAF to consolidate their charitable giving. Having this giving tool makes giving to charity—and tax time—easier.
Whether you give to one or many charities, we offer different granting options. For example, you can recommend recurring grants, which means you enter the grant recommendation once, select the timing intervals, and we do the rest.
Everything is organized in one place. Instead of writing individual checks and keeping track of each donations for an entire year, you can contribute to one account and then use it for all your giving needs. Or better yet, give your trusted advisor access to your account and ask them to download the needed documents.
Flexible
We offer you as much flexibility and choice as possible. For example, you can pick from a number of investments that span the risk spectrum and offer a range of asset exposure. You have the option to grant anonymously or provide your full name. It’s your choice. All of this is managed from your online account, which you can log on to from your laptop or mobile phone, any time day or night.
Legacy Plans
Some giving tools may not enable intergenerational philanthropy, but a Vanguard Charitable DAF does through a legacy plan. Once your account is open and you make a contribution, a succession plan can be set up. That plan can take various forms, such as bestowing to others or naming a charity as a beneficiary.
Immediate Funds
When disaster hits, our instinct is to support charities on the front lines of the crisis right away. Having a DAF account puts you in the perfect position to react quickly and thoughtfully during times of great need. If disaster strikes, you’re ready.