How to set up a donor-advised fund
Setting up a DAF is relatively straightforward, says Pirozzolo. You can do so through a sponsoring organization like Fidelity Charitable or Vanguard Charitable, or through a community foundation. Most major brokerage firms like Schwab, Fidelity, and Vanguard also offer DAFs.
Here’s how to get started:
- Choose a sponsoring organization. This is the entity that will manage your DAF. Consider factors like investment performance, fees, and minimum contribution amounts.
- Open your account. You’ll need to fill out an application, similar to opening any other type of financial account.
- Contribute to your DAF. You can contribute cash, stocks, real estate, private business interests, and more. Many sponsoring organizations have a minimum contribution amount, often $5,000 or $10,000. Some will also allow you to set up automatic contributions.
- Invest your contribution. Most sponsoring organizations offer a variety of investment options, from basic index funds to more sophisticated strategies. You can choose how your contribution is invested, and can change your investment choices over time.
- Recommend grants. Once your contribution is invested, you can recommend grants to IRS-qualified public charities. Your sponsoring organization will vet the charity to ensure it meets IRS guidelines, then issue the grant.
Keep in mind that DAFs are subject to certain rules and regulations, so it’s important to familiarize yourself with these guidelines before setting up your account. And while DAFs offer a number of benefits, they may not be the right choice for everyone. Be sure to consult with a financial advisor or tax professional to determine if a DAF is the best option for your charitable giving.
“Charitable giving is a very personal decision,” says Pirozzolo. “It’s important to understand the options available to you and choose the one that aligns best with your values and financial goals.”
Whether you choose to set up a DAF or use an app like Daffy to streamline your charitable giving, the important thing is to give back in a way that makes sense for you. With the right tools and resources, you can make a meaningful impact on the causes that matter most to you.
Los empleadores pueden igualar las contribuciones o hacer donaciones benéficas a cada empleado.
Los mínimos de cuenta y las tarifas varían dependiendo de cada organización patrocinadora. Además de la tarifa pagada por la cuenta, puede haber una tarifa de gestión por cualquier inversión realizada, algo a tener en cuenta y considerar.