Schwab: Using a Donor Advised Fund for Your Charitable Giving

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We have discussed the benefits of gifting appreciated stock to charity in a previous blog entry, and today’s topic is another strategy for giving to charities, particularly if you want to give small amounts to many charities.

One way to do this is to set up a Donor Advised Fund. The Schwab website has done a fairly good job at laying out the options and explaining how it all works (check out the aptly titled “How the Program Works” tab for more details).

Here is the bottom line:
The account minimum is $5,000, and the minimum additional contribution is $500. The minimum grant to a 501(c)(3) is $50. This is the page with that information, as well as a chart of their fees to administrate the accounts: The minimum administration fee is $100 a year, and it is possible for there to be investment fees incurred.

Once a Donor establishes an account, it looks like Schwab is fairly flexible with allowing “grant nominations” to be made at any time, and they can be made either online or via a mailed or faxed pdf form.

Here are downsides of Donor Advised Funds: you must contribute a minimum of $5,000, and there are administrative fees (of at least $100 a year). Also, once you contribute funds, they must be used for charitable giving; you cannot get them back out of the fund; they are technically owned and held by the fund, though the donor is the one who recommends grants (i.e. disposal of funds). Here more details about the program:

Here are the good things about using Donor Advised Funds: these funds allow charitable donations to be given anonymously, and they also allow a donor to give somewhat small amounts to multiple 501(c)(3) organizations. Schwab keeps easily accessible records of donations, so for someone trying to keep track of many small donations, having one fund from which to give could simplify the process.

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Wealth Manager

Austin Fey is a Wealth Manager at Marotta Wealth Management, specializing in charitable giving and asset allocations. She is a regular contributor to our Marotta On Money articles, often giving advice to those just getting started in finance.

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