A Donor Advised Fund, according to the IRS, is “a separately identified fund or account that is maintained and operated by a section 501(c)(3) organization, which is called a sponsoring organization. Each account is composed of contributions made by individual donors. Once the donor makes the contribution, the organization has legal control over it. However, the donor, or the donor’s representative, retains advisory privileges with respect to the distribution of funds and the investment of assets in the account.” Creating a Donor Advised Fund and then giving your appreciated stock to it has several additional benefits over other methods of giving.
Normally the process of transferring appreciated stock is tedious and time consuming. You have to contact the charity and ask if they have a stock liquidation account. You need to get the charity’s account number and Depository Trust Company (DTC) number. You need to send instructions to your custodian and then value the stock transferred by using an average of the market high and low on the day of transfer. Using a donor advised fund is much easier but requires some initial effort to set up the account.
In the past, Schwab Charitable used to require a very large initial contribution in order to open the account. As the form used to say, “Initial Account contributions must be in the amount of $5,000 or more, with subsequent contributions at a minimum of $500. All contributions are irrevocable and are generally eligible for a tax deduction.”
However, now as their phone hold audio says proudly, “Opening a Schwab Charitable account has never been easier. Simply open an account with no minimum contribution!”
Schwab’s website summarizes this for Core Accounts As:
Account minimum: No minimum
Minimum additional contribution: No minimum
Minimum grant: $50
According to one Schwab Charitable representative, this change was made in approximately February 2021. Now, thanks to this change, anyone with charitable intentions can open and benefit from a Donor Advised Fund.
You can reach Schwab Charitable directly at 800-746-6216.
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