“Do you have an intuition around when one should make a Donor-Advised Fund?”
The reason I, personally, opened a DAF was to make it dead simple to donate appreciated stock.
If you’re not familiar: you can give a lot more to charity, at the same cost to you, if you gift stock that’s gone up in price instead of cash. For example, say you bought stock for $1k and has appreciated to $10k. (Lucky you!) If you sold it to donate it to charity, you first have to pay capital gains tax on the $9k, which is 35% or about $3k. So the charity only gets $7k. If instead, you gift the stock directly: you don’t pay taxes, and neither does the charity. Basically, the US Govt matches your donation. Great deal, right?
The catch is: actually gifting stock is really annoying! When I was donating TSLA shares to GiveWell I had to literally fax a piece of paper telling them which shares to take out of my account. A DAF is much simpler; I just click some buttons from my Schwab investment account and the stock lands and gets sold in my Schwab Charitable DAF. There are other great reasons to open a DAF too—but making this tax optimization really easy is why I went for it.
DAFs do make it much easier to donate appreciated stock, and this is good advice. However, if you want to make a donation of appreciated assests and you aren’t able to set up a DAF, EA Funds accepts donations of stock (in the US) and cryptocurrency (US, UK, and NL) for donations of more than $1000 (no promises that you won’t have to send a fax to your broker if you want to donate stock, but in general that hasn’t been the case for most of our donors who are donating from Vanguard etc).
“Do you have an intuition around when one should make a Donor-Advised Fund?”
The reason I, personally, opened a DAF was to make it dead simple to donate appreciated stock.
If you’re not familiar: you can give a lot more to charity, at the same cost to you, if you gift stock that’s gone up in price instead of cash. For example, say you bought stock for $1k and has appreciated to $10k. (Lucky you!) If you sold it to donate it to charity, you first have to pay capital gains tax on the $9k, which is 35% or about $3k. So the charity only gets $7k. If instead, you gift the stock directly: you don’t pay taxes, and neither does the charity. Basically, the US Govt matches your donation. Great deal, right?
The catch is: actually gifting stock is really annoying! When I was donating TSLA shares to GiveWell I had to literally fax a piece of paper telling them which shares to take out of my account. A DAF is much simpler; I just click some buttons from my Schwab investment account and the stock lands and gets sold in my Schwab Charitable DAF. There are other great reasons to open a DAF too—but making this tax optimization really easy is why I went for it.
DAFs do make it much easier to donate appreciated stock, and this is good advice. However, if you want to make a donation of appreciated assests and you aren’t able to set up a DAF, EA Funds accepts donations of stock (in the US) and cryptocurrency (US, UK, and NL) for donations of more than $1000 (no promises that you won’t have to send a fax to your broker if you want to donate stock, but in general that hasn’t been the case for most of our donors who are donating from Vanguard etc).