Q&A: Recurring Charitable Grant from an Insufficient Donor Advised Fund?

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Using appreciated stock for your charitable giving can save thousands of dollars which otherwise would have to be paid in capital gains tax. Shrewd investors use the gifting of appreciated stock to save on their taxes.

Normally a gift of charitable stock must be transferred from your brokerage account directly to a charity’s stock liquidation account. Nonprofits have such an account and they have standing orders to liquidate (sell) anything which is transferred into the account and transfer the money to the charity’s bank account. This allows the charity to give this account number to donors without compromising an active account containing real assets.

This transfer directly from your account to the charity’s account works for large gifts, but is impractical for smaller gifts. There may be a sales charge to the charity when they sell the stock and there is paperwork required for every simple gift – even of small amounts.

To facilitate charitable giving, all the major custodians provide the ability to have a donor advised fund for charitable giving. This allows investors to transfer their appreciated stock into the account, getting a taxable deduction for the donation. Later, the donor (investor) can designate which charities should receive the proceeds using an interface which is similar to a bill-pay process.

Some smaller charities find it easier to budget when support comes monthly rather than all in one gift. However, giving appreciated stock to charity on a monthly basis is tedious and time consuming. Rather than not give, I have used a Schwab Charitable Donor Advised Fund to turn a one-time gift into monthly gifts.

A year ago, I set up my first recurring charitable grant with my Donor Advised Fund. Now, a year later, the Donor Advised Fund is emptying, and I wondered what would happen. Rather than immediately refill the account, I waited to find out what would happen.

And it turns out that I had someone from the Schwab Charitable team email me personally (not professionally) to ask me what I want done.

My grant which had a shortfall was pending for October 8. On October 4, I received an email from a “Schwab Charitable Specialist” stating:

Charity Name: [NAME]

Grant Amount: $250.00

Current Account Balance: $234.87

Special Purpose: [DETAILS]



Good Morning Megan Russell,


I am reaching out regarding the above grant that is pending in your donor advised fund. It looks like the account has insufficient funds in order to send this gift out. Will you be raising funds or would you like for me to cancel this grant at this time?


Please respond on how you would like for me to proceed.



Then, I could reply and let them know what I wanted. Simple as that.

Photo by NORTHFOLK on Unsplash

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Chief Operating Officer, CFP®, APMA®

Megan Russell has worked with Marotta Wealth Management most of her life. She loves to find ways to make the complexities of financial planning accessible to everyone. She is the author of over 800 financial articles and is known for her expertise on tax planning.