A Comparison of Donor-Advised Fund Providers

MichaelDickens9 Mar 2022 18:53 UTC
103 points
29 comments12 min readEA link

Last updated 2024-04-24.

A donor-advised fund (DAF) is an investment account that lets you take a tax deduction now and give the money to charity later. When you give money to a DAF, you can deduct that money just as you would deduct a charitable donation. The DAF invests the money tax-free. At any time, you can write a grant from your DAF to a charity of your choice.

You can open a DAF through a donor-advised fund provider. A provider charges an administrative fee to invest your DAF and make donations when you recommend them.

For donors in the United States,[1] which DAF provider is best?

The short answer

All the big DAF providers offer similar features. For most people, it doesn’t matter much which one you choose.

  • If you already have a DAF, you might as well keep using it.

  • If you have a brokerage account at Fidelity, Schwab, or Vanguard, then the easiest thing to do is to open a DAF with your brokerage account. That way, you can manage all your investments in one place.

Otherwise, this handy flowchart can help you choose a DAF provider that fits your preferences.

The long answer

That flowchart might not cover everything you care about, and it doesn’t offer nuance. In the rest of this post, let’s look in detail at how DAF providers compare.

Cross-posted to my website.

My process

I made a list of every United States nationwide DAF provider I could find. I excluded regional DAF providers (example: Silicon Valley Community Foundation), providers that only support certain causes (example: National Christian Foundation), and providers that don’t work with individual donors (example: American Online Giving Foundation). Your local community foundation might offer a better DAF than any of the national providers of my list, but there are too many community foundations for me to look at them all.

I ended up with nine DAF providers (in alphabetical order):

  1. American Endowment Foundation (AEF)

  2. Charityvest (see disclaimer)

  3. Daffy (see disclaimer)

  4. Fidelity Charitable

  5. Greater Horizons

  6. National Philanthropic Trust (NPTrust)

  7. Schwab Charitable

  8. T. Rowe Price Charitable

  9. Vanguard Charitable

This list is probably not comprehensive, but it’s all the DAF providers I could find that meet my criteria.

I spoke to representatives at these providers to fill in some gaps in my knowledge. I also spoke to a few DAF users and financial advisors who manage DAFs at different providers.

I then eliminated four DAF providers:

  • T. Rowe Price Charitable has the greatest number of investment options, but most of the funds have expense ratios of 0.6% or higher. Not worth it unless you really want those extra choices.

  • AEF and NPTrust both look like decent options, but they charge higher administrative fees than Vanguard/​Schwab, offer a worse user experience, and don’t have any special features to compensate.

  • Fidelity is nearly identical to Schwab, but it’s slightly worse in a few ways (for more, see here.

Five DAF providers remain: Charityvest, Daffy, Greater Horizons, Schwab, and Vanguard.

Caveat 1: I don’t have good firsthand knowledge of any of these DAF providers except for Fidelity Charitable (which I used to use) and Greater Horizons (which I currently use). I created accounts at Charityvest, Daffy, Schwab, and Vanguard to get a sense of how they work, but I haven’t tried to do anything fancy like set up an advisor-managed account. I had to make subjective judgments on things like UI, so don’t take my claims as definitive.

Caveat 2: This article is not about whether you should open a DAF in the first place. For some people, a foundation would better serve their needs; other people should simply keep their money in a taxable account. But if you’ve already decided you want a DAF, then I hope this article will help you choose a provider.

Comparison

Let’s compare Vanguard, Schwab, Greater Horizons, Daffy, and Charityvest on these questions:

  1. What fees do they charge? [More]

  2. Do they have contribution/​grant minimums? [More]

  3. What investment choices do they offer? [More]

  4. Do they have reasonable default investment options? [More]

  5. How flexible are their advisor-managed accounts? [More]

  6. Can you contribute complex assets such as cryptocurrency or real estate? [More]

  7. How good is the user experience? [More]

  8. How risky are the newer DAF providers (Daffy and Charityvest)? [More]

Fees

Minimum fees:

  • Charityvest has no minimum fee for cash accounts, and a minimum annual fee of $48 ($4 per month) for accounts that hold stocks and bonds.

  • Daffy has three tiers of accounts, with minimums of $36, $60, and $240 per year.

  • Greater Horizons has a minimum annual fee of $500.

  • Schwab has no minimum annual fee.

  • Vanguard has a minimum annual fee of $250.

Charityvest, Greater Horizons[2], Schwab, and Vanguard offer tiered fee structures based on the account value. Daffy charges a monthly fee but no percentage-based fee. See Appendix for full details on the administrative fees for each provider.

Daffy has a unique pricing structure. It offers three plans: a basic account for $3/​month, a family account for $5/​month, and a premium account for $20/​month, and has no percentage-based fee.

Daffy is the least expensive DAF provider if you have a basic account with at least $6,000 or a premium account with at least $53,000. But beware that Daffy does not allow you to contribute more than a lifetime total of $25,000 in non-cash assets to the basic plan, or $50,000 to the family plan. If you make $75,000 and you donate 10% of your income, you’ll hit the basic plan’s limit in 4 years and the family plan’s limit in 7 years.

Daffy’s $20/​month plan has no limit. You can keep $10 million in your DAF and still only pay $20/​month.

If you only use a DAF as a convenient way to donate appreciated stock (or other assets), and you don’t plan on keeping money in the DAF long-term, you want a DAF with no minimum fee. Your best options are Schwab and Charityvest:

  • Schwab has no minimum fee.

  • Charityvest has a basic plan with no minimum fee, but with the basic plan you can’t hold any investments in your account, only cash. (You can still donate non-cash assets.)

In brief:

  • Daffy’s basic account is the cheapest of all the providers if you have at least $6,000. Its premium account is the cheapest if you have at least $53,000.[3]

  • Schwab is the cheapest for accounts with less than $6,000 because it’s the only provider with no minimum fee. (Unless you have a Charityvest cash-only account.)

  • Other than Daffy, Charityvest charges the lowest (or tied-for-lowest) fees for accounts with over $8,000.[4]

  • If you have enough money (probably starting in the tens of millions), you can negotiate lower fees. In that case, Vanguard probably will be the cheapest after Daffy.

Daffy and Charityvest are startups, which makes them riskier. If we exclude the two startup-y DAF providers:

  • If you have less than $25,000, Schwab is cheapest.

  • If you have between $25,000 and $1 million, the three providers (Greater Horizons, Schwab, Vanguard) charge the same fees.

  • For larger accounts, Vanguard is cheapest.

Minimums

Donor-advised funds have three types of minimums:

  1. Minimum contribution to create an account

  2. Minimum additional contribution

  3. Minimum grant size

  4. Minimum size for an advisor-managed account

Charityvest Daffy Greater Horizons Schwab Vanguard
Account Min $0 $0 $0 $0 $25,000[5]
Contribution Min $15 $0 $0 $0 $5,000
Grant Min $15 $18 $0 $50 $500
Advisor Min $1 million N/​A $0 $0 N/​A

Investment choices

If you don’t know much about investing or you want to invest in whatever default your DAF provider uses, skip to the next section.

Let’s compare the investment options for Charityvest, Greater Horizons, Schwab, and Vanguard. Daffy doesn’t let you allocate from among a list of funds, it requires you to pick one of its pre-determined allocations. So I don’t include Daffy in the table below.

The DAF providers offer index funds covering the following asset classes.

Charityvest Greater Horizons Schwab Vanguard
US stocks Y Y Y Y
US small-cap Y
international stocks Y Y Y Y
emerging market stocks Y Y
US bonds Y Y Y Y
international bonds Y Y
TIPS Y Y
money market Y Y Y Y

Vanguard offers funds covering many other market segments, including US growth/​value, US REITs, European stocks, Pacific stocks, corporate bonds, dividend growth stocks, and commodities. Vanguard absolutely has the best variety in terms of index fund offerings.

The expense ratios on the funds themselves are low enough not to matter as long as you stick with the passively-managed funds. (Vanguard and Schwab offer a few actively-managed funds with higher fees, which you should avoid.) You can use any of these DAF providers to construct a globally diversified portfolio for an average expense ratio of about 0.05%.

Vanguard and Charityvest investors can approximately replicate the global market portfolio with 30% US stocks, 30% international stocks, 20% US bonds, and 20% international bonds. Investors with Schwab or Greater Horizons don’t have access to international bonds, so the closest they can get is something like 30% US stocks, 30% international stocks, 40% US bonds.

Vanguard, Daffy, Charityvest, and Greater Horizons offer a few ESG funds with low expense ratios. Schwab also has ESG funds, but they’re unreasonably expensive.

If you want to invest in cryptocurrency, you can either do that through an advisor-managed account[6], or you can invest in a cryptocurrency fund through Daffy. Daffy is the only provider that offers crypto funds.

In summary:

  • If you want the global market portfolio, use Vanguard or Charityvest because they offer an international bond index.

  • If you want ESG funds, use any except Schwab.

  • If you want cryptocurrency (and you don’t want an advisor-managed account), use Daffy.

  • If you want a wide diversity of options, use Vanguard.

  • Otherwise, any provider is a good choice.

Default investments

Each of the five DAF providers offers a few default investment allocations. The defaults cater to investors with different levels of risk tolerance (conservative/​balanced/​aggressive).

Schwab’s default investments are not good because they charge unconscionably high fees.[7] Schwab does offer some low-fee options (listed in the previous section), so if you use Schwab, make sure you choose their low-fee funds instead of the defaults.

The other four providers—Charityvest, Daffy, Vanguard, and Greater Horizons—charge low fees on their default investments. So if you use one of those providers, you don’t need to worry about fees.

All five providers offer ESG portfolios. Again, though, Schwab’s ESG funds are unreasonably expensive.

All four providers’ default funds allocate too much to US stocks relative to the global market portfolio. I personally wouldn’t use a default allocation because I’d want to invest more into international stocks. Every provider but Daffy makes it easy to do that. Daffy doesn’t let you pick your own allocation, you have to invest in one of their pre-determined portfolios. But I don’t believe this is important enough to outweigh Daffy’s lower fees (on accounts with over $6,000/​$53,000).[8]

Advisor-managed accounts

Schwab, Charityvest, and Greater Horizons allow donors to appoint an investment advisor who can invest in things other than the pre-selected funds. Their program guidelines (links: Greater Horizons, Schwab (p. 11–14)) dictate what investments are allowed. Charityvest’s advisor-managed accounts must hold a minimum of $1 million.

Vanguard and Daffy do not allow advisor-managed accounts.

Some examples of restrictions that apply to advisor-managed accounts:

  • “Risky” investments are not allowed, including margin, short sales, options (except covered calls/​puts), futures, and swaps, unless held within a mutual fund or ETF structure.

  • The advisor may not charge higher fees to the DAF than to the donor’s personal accounts.

  • The donor’s family members may not serve as investment advisors.

Schwab has some additional restrictions that Greater Horizons does not:

  • The account must trade using a Schwab brokerage account.

  • The advisor must establish a benchmark and then track that benchmark reasonably closely. If the account deviates substantially from the benchmark, the advisor is accountable to Schwab’s investment committee.

  • The account must meet certain asset allocation requirements. For example, it cannot allocate more than 25% to any one security, more than 25% to emerging market equities, or more than 50% “to publicly traded funds that pursue alternative or non-diversified investment strategies, e.g., commodities or cryptocurrencies”.

  • Advisors may not invest in funds that they own or manage.

(Charityvest allegedly also has some restrictions, but they’re not publicly listed.)

Greater Horizons provides the most flexibility to investment advisors. If I wanted to do anything unconventional, I would use Greater Horizons. (In fact, I do use Greater Horizons for exactly that reason.)

Contributing complex assets

Four of the five providers—Greater Horizons, Schwab, Charityvest, and Vanguard—can accept donations of complex assets, including cryptocurrency, private equity, real estate, and more.[9] Daffy can accept cash, stocks/​ETFs/​mutual funds, and cryptocurrency, but not other types of assets.

These four providers claim to accept pretty much any type of asset that can legally be donated. But if you want to donate a large position in a complex asset, you should contact your DAF provider of choice to confirm they can receive it.

These providers all manage donations of complex assets through the same third party (Charitable Solutions LLC).[10]

(Amusingly, AEF, NPTrust, and Schwab claim they’re “uniquely flexible” when handling complex assets. If they’re all uniquely flexible, I guess that means none of them is?)

User experience

Most donors probably only care about the basic features of a DAF—they don’t need fancy investment options or the ability to donate complex assets. So the main deciding factors for most people are (1) fees and (2) user experience.

Of the five providers I’m focusing on, Greater Horizons easily has the worst sign-up process. You have to request that a customer service representative reach out to you. Then they send you a PDF form to fill out and the representative manually creates the account for you. In contrast, the other providers all let you sign up online and you can fill out your personal information on the website.

In the process of writing this article, I created accounts at Schwab, Vanguard, Daffy, and Charityvest and went through a few common use cases. I found them all easy to use. Vanguard was slightly more complicated than the others.

Another important aspect of user experience is the quality of customer service. Good customer service matters, but it’s difficult to assess—if you have a good/​bad customer service experience, that might have more to do with the specific person you talked to than the quality of service in general. That said, I communicated through email and over the phone with all of the providers to get answers to my questions, and had decent experiences with all of them. I don’t know if my experience with Charityvest would generalize because the CEO specifically reached out to me to ask me to review it (see disclaimer). Daffy also reached out to me, but then didn’t do a great job of answering my questions. I have a friend who uses Daffy[11] who reports that he had a good customer support experience with them.

I’ve heard that Schwab has particularly good customer service. I’ve heard Vanguard the brokerage has worse customer service, but that Vanguard Charitable has a separate customer service department and it’s better than Vanguard the brokerage.

A side note: You might think it’s a good idea to evaluate user experience by looking at reviews on a site like Trustpilot or Better Business Bureau. I would avoid looking at those sites because they are protection rackets[12]—they offer to remove bad reviews in exchange for money. So the companies with good reviews are just the ones who pay to get the bad ones deleted.

I can’t give objective metrics for user experience, but my subjective ranking is Charityvest > Schwab > Daffy > Vanguard > Greater Horizons.

How risky are new DAF providers?

Daffy and Charityvest only started a few years ago. If they can’t earn enough money to sustain themselves, they might have to dissolve customers’ accounts and use their money to pay their bills (which they have a legal right to do, as established by National Heritage Foundation v. Highbourne Foundation). You might not want to use Daffy or Charityvest if you’re concerned about the risk.

I believe that:

  1. There is a non-trivial probability that Daffy/​Charityvest will close down and you’ll have to transfer your money to another DAF provider. (I have no reason to believe they’re riskier than the average startup, but most startups go out of business.)

  2. If they do close down, they will almost certainly let you transfer your money to another DAF provider—it’s unlikely that you will lose your money permanently.

Here’s why I don’t believe you are likely to lose your money:

Charityvest and Daffy both use a financial structure that is (as far as I know) novel for DAF providers. They were founded concurrently with sister corporations (Vennfi, Inc. for Charityvest and Aside, Inc. for Daffy). Vennfi/​Aside receive funding from VC firms and Charityvest/​Daffy pay the corporations to develop their technology. This lets the corporations run at a loss using VC funding until the DAF providers grow large enough to make the corporations profitable.

This structure works in donors’ favor. If the for-profit corporation declares bankruptcy, VC funders can only make bankruptcy claims against the corporation, not against the DAF provider, so donors’ money is safe. And according to their 2022 public filings (viewable through the Florida Check-A-Charity website), Charityvest/​Daffy have very little debt (or at least they did as of 2022).[13]

The best DAF provider(s)

This flowchart shows the best DAF provider depending on your circumstances.

A text description of this flowchart:

  • If you want an advisor-managed account, use Greater Horizons.

  • If you want to set your own investment allocation from a list of index funds:

    • If you feel comfortable giving your money to a startup with an unproven track record, use Charityvest.

    • Otherwise, use Vanguard (if your DAF will hold at least $25,000) or Schwab (otherwise).

  • If you are happy to use the DAF provider’s default investment allocation:

    • If you feel comfortable giving your money to a startup with an unproven track record, use Daffy (if your DAF will hold at least $53,000) or Charityvest (otherwise).

    • Otherwise, use Vanguard (if your DAF will hold at least $25,000) or Schwab (otherwise).

Some other factors you might care about, that I didn’t put on the flowchart because it would be too big:

  • If you only plan on keeping money in your DAF for a short time, use Schwab or Charityvest because they let you keep an empty account without charging you (the others charge a flat fee).

  • If you want to invest in cryptocurrency (without using an advisor-managed account), use Daffy.

  • If you want to donate complex assets (such as real estate or artwork), don’t use Daffy, but any of the other providers should be able to accommodate you.

This table illustrates my evaluation of the providers along five dimensions, ranked as bronze, silver, or gold.

So far, I have only looked at Charityvest, Daffy, Greater Horizons, Schwab, and Vanguard. That’s not because I believe these are better across the board than the other providers I didn’t discuss. For example, I think Fidelity has a better UI than Vanguard; and NPTrust offers more flexibility than Schwab for advisor-managed accounts. Rather, I chose these five DAF providers because each one is the best at something, while the other providers are not the best at anything (even though they are good at some things).

More on Fidelity, AEF, NPTrust, and T. Rowe Price

Even though I didn’t compare them in detail, here are my impressions of the other four DAF providers, ranked from best to worst.

  • Fidelity Charitable is as good as Schwab for most purposes. I like it better than T. Rowe Price, AEF, or NPTrust. I like Fidelity a little bit less than Schwab because it provides fewer investment options and the UI is slightly harder to use[14], but Fidelity still seems like a fine choice as long as you’re careful to avoid their high-fee investment options.

    • Bonus fact: If you have at least $5 million, Fidelity Charitable lets you manage your own investments (without appointing an advisor). I don’t believe any of the other DAF providers let you do that.

  • AEF and NPTrust are passable but they have some serious issues:

    • They’re more opaque than the other DAF providers, and I had a bad experience talking to them.[15]

    • They make it more difficult to set up an account.

    • For advisor-managed accounts, they impose more restrictions on the investment advisor than Greater Horizons does.

    • They charge somewhat higher administrative fees than Fidelity/​Schwab/​Vanguard.

    • NPTrust’s pre-selected investment funds are too expensive. NPTrust should only be used with an advisor-managed account. AEF does not have pre-selected funds—you must appoint an investment advisor.

    • AEF’s website is so buggy that it’s unusable on Firefox. Even ignoring the bugs, AEF has a much worse UI than Fidelity/​Schwab/​Vanguard.

  • T. Rowe Price Charitable is too expensive to be worth using. The other DAF providers on my list are basically fine, but if you have a DAF at T. Rowe Price, you should consider switching to a new provider.

Appendix: Table of administrative fees

Fees can be found at these links: AEF[16], Charityvest, Fidelity, NPTrust, Schwab, T. Rowe Price, Vanguard.

Greater Horizons does not publish its fees online. I learned what it charges by speaking to a representative. I don’t like it when companies don’t publish their fees, but I will respect Greater Horizons’ preferences by not disclosing them. If you want to know the specifics, contact them directly.

Minimum fees:

AEF Charityvest Daffy Fidelity NPTrust Schwab T. Rowe Price Vanguard
Minimum Fee $500 $48 $36 $100 None None None $250

Percentage-based fees:

Account Value AEF Charityvest Fidelity NPTrust Schwab T. Rowe Price Vanguard
First $250K 0.70% 0.45% 0.60% 0.85% 0.60% 0.50% 0.60%
Next $250K 0.70% 0.45% 0.60% 0.70% 0.60% 0.50% 0.60%
Next $500K 0.35% 0.25% 0.30% 0.60% 0.30% 0.39% 0.30%
Next $1.5M 0.25% 0.10% 0.20% 0.45% 0.20% 0.18% 0.13%
Next $2.5M 0.15% 0.10% 0.15% 0.25% 0.15% 0.12% 0.13%
Next $5M 0.15% 0.10% 0.15% 0.13% 0.10% 0.13%
Next $5M 0.15% 0.05% 0.10% 0.12% 0.10% 0.13%
Next $15M 0.10% 0.05% 0.10% 0.10% 0.09% 0.10%
Over $30M 0.10% 0.05% 0.10% 0.10% 0.09% 0.05%

Caveats:

  • Charityvest has no minimum fee on cash-only accounts.

  • Daffy charges $36 per year, $60 per year, or $240 per year, depending on your account type. It does not charge any percentage-based fees.

  • Fidelity uses a flat fee schedule on accounts with over $5 million.

Some observations:

  • Daffy is the cheapest if you have more than $53,000.

  • Other than Daffy, Charityvest is cheapest or tied for cheapest above $6,000, and Schwab is cheapest below $6,000.

  • T. Rowe Price has the 3rd lowest administrative fees, but its investment options charge high expense ratios. It only offers two reasonably-priced funds (an S&P 500 index fund and a “balanced” index fund). T. Rowe Price only has the 3rd lowest all-in fee if you invest in the S&P 500 and nothing else.

  • Even though Schwab has lower fees than Vanguard at one tier, there is no account value at which Vanguard has a higher total fee.

  • Even though NPTrust has lower fees than Schwab at one tier, there is no account value at which Schwab has a higher total fee.

  • Fidelity’s flat fee structure above $5 million means that near the bottom of a tier (e.g., $11 million), it’s cheaper than Schwab or Vanguard, and near the top of a tier (e.g., $19 million), it’s more expensive.[17]

Disclaimers

The original version of this article did not include Charityvest or Daffy. I updated the article when representatives from Charityvest and Daffy reached out to ask me to include them. Everything I wrote about them is my own opinion.

I learned about Charityvest in May 2021, when the CEO, Stephen Kump, emailed me to ask me to review it prior to its public launch. He gave me access to the beta (which I used to check out Charityvest) and added $20 to my account (which I did not use, to avoid any conflict of interest). I did not receive any other compensation for writing about Charityvest.

In early 2022, a representative from Daffy reached out to me, and I proceeded to forget about their message for a year. I rediscovered it in late 2023, when a couple of other people asked me for my opinion on Daffy and I decided to update this article to include it. I did not receive any incentive from Daffy.

Changelog

  • 2022-03-10: Add a Charityvest review and add it to the recommendation flowchart.

  • 2023-01-06: Update fee minimums.

  • 2024-04-24: Significant revisions:

    • Add changelog.

    • Add a Daffy review.

    • Add a new section on default investment options.

    • Correct an error: I previously wrote that Vanguard’s account minimum is $0, but it is $25,000.

    • Update information on T. Rowe Price: I originally wrote that it only offered one reasonably-priced fund, but now it offers two.

    • Substantially change recommendations based on a number of factors:

      • Add consideration to a provider’s default investment options. Previously, I hadn’t considered them at all, but I expect many (most?) DAF users will use the defaults, so that was an oversight.

      • Downgrade my recommendation of Schwab. Previously, I had Schwab as my top recommendation for most people, but their default funds are too expensive.

      • Add Daffy as a possible recommendation and rearrange the flowchart accordingly.

      • Remove the “best DAF provider for most people” recommendation (previously I recommended Schwab). Every DAF provider has some hiccup that a significant number of people won’t like, so I don’t think I can reasonably give a general recommendation. (Schwab’s default funds are too expensive; Vanguard is too expensive for small donors; Charityvest/​Daffy are new orgs that might go out of business.)

      • Generally rewrite to increase clarity.

  1. ↩︎

    I don’t know how DAFs work outside the United States. If you do have DAFs in your country, you could use this post as a guide for what sorts of things to look for when choosing a DAF provider.

  2. ↩︎

    I can’t provide a link for Greater Horizons because its fees are not publicly available. But I will say that they’re broadly similar to Vanguard and Schwab.

  3. ↩︎

    At $53,000, Charityvest’s 0.45% fee costs $239 per year, which just about equals Daffy’s $240/​year. At smaller account sizes, Charityvest is cheaper than Daffy’s premium account.

    At $6,000, Charityvest is (marginally) more expensive than Daffy’s basic account. But Schwab’s 0.6% fee costs $36/​year, the same as Daffy.

  4. ↩︎

    At $8,000, Schwab’s 0.6% fee equals Charityvest’s $48/​year minimum.

  5. ↩︎

    Vanguard requires an initial contribution of $25,000, but you do not need to maintain a balance of $25,000.

  6. ↩︎

    An advisor-managed account will probably still have limits on how much cryptocurrency you can hold, something like 50% of your portfolio. Daffy lets you invest up to 100% of your portfolio in crypto.

  7. ↩︎

    Schwab actually got sued for its high fees (see Philip Pinkert v. Schwab Charitable Fund), but the court ruled in Schwab’s favor on the basis that Schwab legally owns donated funds so they have no fiduciary duty toward donors.

  8. ↩︎

    Some rough math, which embeds a whole bunch of assumptions that I’m not going to try to justify:

    1. If markets are efficient, US markets and international markets should have the same risk-adjusted return. Let’s say they both have 4% geometric return and 17% standard deviation.

    2. That gives them each an arithmetic return of 4% + 17%<sup>2</​sup>/​2 = 5.5%.

    3. The correlation between US and international stock markets is probably something like 0.8.

    4. Therefore, the standard deviation of a 50% US /​ 50% international market equals 16.1%.

    5. A diversified 50⁄50 portfolio would then have an arithmetic return of 5.5% and a geometric return of 5.5% − 16.1%<sup>2</​sup>/​2 = 4.2%.

    6. Diversifying from 100% US to 50⁄50 improves geometric return from 4% to 4.2%, or 0.2 percentage points.

    7. For sufficiently large accounts, that’s less than the difference in fees between Daffy and Schwab/​Vanguard.

    8. In actuality, Daffy’s investment options don’t put 100% in the US, they’re more like 70⁄30, so the diversification benefit is smaller than that.

    I believe markets aren’t 100% efficient and it’s possible to weakly predict future returns. I would look at something like AQR’s capital market assumptions, which (as of January 2024) predicts international stocks to outperform US stocks by 0.6 percentage points per year over the next 10 years. After factoring that in, Daffy (with fixed investment options and lower fees) looks about as good as Schwab/​Vanguard. Except market returns are uncertain and fees are guaranteed, so I’d still take the guaranteed savings over the higher-in-expectation but volatile market return.

  9. ↩︎

    Vanguard’s website does not state that they can accept cryptocurrency, but I confirmed with a representative that they take donations of cryptocurrency if the value of the contribution is at least $50,000.

  10. ↩︎

    AEF, Fidelity, and NPTrust also use Charitable Solutions LLC. It seems that Charitable Solutions LLC has something of a monopoly on managing donations of complex assets.

  11. ↩︎

    h/​t Barak Gila for talking to me about his experiences with Daffy.

  12. ↩︎

    I have strong private evidence for this claim. The public evidence for this claim is weak because review site protection rackets, much like the mafia, know how to avoid leaving any incriminating evidence. But you can find many anecdotes, such as here, here, and here (see also the comment section on LinkedIn) from business-owners who claim Trustpilot extorted them, and here from an alleged former employee of Trustpilot. I didn’t look for evidence on Better Business Bureau, but in my experience it’s more widely known that BBB is a protection racket, so evidence shouldn’t be hard to find.

  13. ↩︎

    They both had less than $20,000 of debt against tens of millions of dollars of assets. The debt was entirely accounts payable, with no other sources of debt. I had to look up what “accounts payable” means but if I understand correctly, that means they were charged a fee (presumably by the partner corporation) and they haven’t paid the fee yet.

  14. ↩︎

    Fidelity’s and Schwab’s UIs are nearly identical. The only real difference I noticed is that Schwab does a better job of conglomerating your accounts. If you have both a brokerage account and a DAF at Schwab, you can easily switch between them from the landing page. If you have both types of accounts at Fidelity, you can navigate to your DAF from the landing page, but it sends you to a separate URL and sometimes requires you to log in again.

  15. ↩︎

    My incredible customer service experience with NPTrust:

    • I send them an email to ask what types of investments they allow.

    • A representative replies and says we need to set up a phone call.

    • On the phone call, I repeat my question. They then email me a PDF that contains their investment requirements.

    I’m tempted to send them one of those “this meeting could have been an email” coffee mugs. Or, better yet, don’t make me email you, just list your offerings on your website.

  16. ↩︎

    AEF does not provide a fee schedule, only a fee calculator. I used the calculator to reverse-engineer the fee schedule.

  17. ↩︎

    For the mathematically inclined, this function converts Fidelity’s flat fee into an equivalent tiered fee on amounts over $5 million, given two variables AUM and flat_fee:

    tiered_fee = ((AUM * flat_fee) - $11,250)
             / (AUM - $5,000,000)
MichaelDickens9 Mar 2022 18:53 UTC
103 points
29 comments12 min readEA link