Simplifying Charitable Giving

Throughout the year you donate to charities and then either save the emailed receipt or try and remember to save the mailed receipt that the non-profits send out.

Does this process seem similar to anyone else?

For years I did this and tried to make it as easy as possible when it came to doing my taxes by scanning everything into PDF format and saving it in an encrypted folder labeled by the year the donation happened. While the tax benefit isn’t the point of the donation, obviously, it is still a nice feature that should be taken advantage of.

Enter donor-advised funds. Most larger financial institutions, like Schwab and Fidelity have them. It is essentially a single 501(c)(3) that you can direct single or recurring donations into and then instruct them to donate that money to whatever charity you want.

A major benefit of this is that there is only one donation amount that you have to keep track of. You will no longer get paperwork from every charitable donation but rather a single receipt for the amount you donate into the donor-advised fund.

It is a single place that you can keep track of all your donations. Rather than needing to collect receipts from every charity, you have just one receipt to get at the end of the year.

The way the process works is that you recommend that the donor-advised fund send a certain amount of money to another charity. While the DAF is not required to follow your instructions, they pretty much do 100% of the time as long as the charity is a registered 501(c)(3).

My initial donor-advised fund was with Schwab. When I was using them they charged 0.6% per year on assets held OR a flat $100 minimum per year, whichever was greater. This may have been changed to just a flat fee of 0.6% per year with the $100 minimum removed.

When I was listening to a Meb Faber podcast, I learned about an alternative to Schwab’s donor-advised fund outside of the legacy system called Daffy. Episode #398: Adam Nash, Daffy – Why This Prominent Silicon Valley Operator & Investor Wants To Make Charitable Giving A Habit

Daffy charges a flat rate of $3/month. I have since switched from the Schwab Charitable donor-advised fund and moved my charitable giving to the Daffy platform. The concept is the same; Daffy is a 501(c)(3) that you can transfer cash into as needed or on a recurring basis. They also take cryptocurrencies, cars, art, etc, etc. Basically any asset they will be able to take. Cryptos are unique to Daffy compared with Schwab.

Once there are funds in Daffy you then can recommend a single donation or recurring donations. The platform is very simple. You can search for a charity of your choice or search nearby charities in your area. You then put the donation amount (minimum of $18) and how often you want to repeat that donation. You can then customize the donation by asking it to be used for specific purposes and choose whether you want your donation to be visible and/or private.

Here’s an example:

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Daffy has a social component where, if you choose, you can display the name of your donor-advised fund on the non-profit’s page on Daffy. The donation is never displayed, just that your fund gave a donation. You can also choose to make the donation privately.

You also get the choice to reveal your fund’s name and your address to the charity or choose to donate anonymously.

One of the fun things you can do is come up with a really official sounding name that will be displayed on your donation should you just to make that information available to the charities. For example, the name of Two Investing’s fund could be “Two Investing Family Charitable Fund.”

One last thing to consider with a donor-advised fund is that the funds contributed to the account do not have to be all donated at once. In fact, you can keep the contributed funds invested until the very moment that you send a donation.

Daffy gives you the ability to keep your funds in a “Conservative,” “Standard,” “ESG,” or even a “Crypto” portfolio. I have elected to keep my contributed funds in a 100% bitcoin allocation though Ethereum is another possibility.

If you have some money that you want to still donate this year to get any tax benefits but have not yet decided where you want the donations to be sent, a donor-advised fund like Daffy is perfect for you. The donation is counted as soon as you send the contributions to Daffy and not when you schedule Daffy to send out the donations. Please do remember that once you donate money to Daffy, you no longer have access to those funds for personal use. The money is already considered donated and out of your direct control. This is true with all donor-advised funds.

Should you want to start using Daffy, consider using a referral link. You’ll get $25 to send to your favorite charity and the referrer will also get $25 to send to a charity of their choice. While I would give out my own referral link here, it does have my real name on it, which I am trying to keep more private. For that reason, please use Meb Faber’s Daffy referral link. His podcast was where I learned about Daffy in the first place.

If you know me and would like to use my referral link, please reach out to me on the comments or directly and I can contact you privately to give you that information.

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