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A great service for good people who pay US taxes, who would like to support charities

What to do with your money

"Deo Dante Dedi" was the motto at my school. That translates, roughly, to "God having given, I will give".

The following may be of interest to US taxpayers. Don't stop reading during the "background" paragraphs, please? I am going to tell you something not obvious before very long!

If you wish to make a "serious" gift to a charity, you can give them shares you own which have appreciated in value since you bought them.... AND NO ONE PAYS the capital gains TAX which would otherwise be payable.

Now, if you want to give, say, $500 to amazonmedical.org, I'm sure they'll take your $500 worth of stock and sell it.... but it isn't necessary to inflict the overheads on them for such a "small" gift. And you get a whole bunch of other benefits if you open a Donor Advised Fund (DAF).

A DAF is....

Many firms will administer a DAF for you. I "studied the field", and decided that the one that had the best mix of features for my needs was the Vanguard Charitable Endowment Program. But you should look around, too. Different firms' products do differ in significant ways.

Once I'd decided on Vanguard, it was easy to establish my DAF. A big part of that was creating something that (allowing for the fact that I am neither an accountant nor a lawyer of any kind) looks and feels to me like an IRS approved charity... and Vanguard did all the work of that for me. And it was not a drawn out process.

I then had my broker send some shares to Vanguard, to be "given" to the "charity". And in that tax year was allowed to take a tax deduction for the value of the shares, just as if I had given them to, say, the Mayo Clinic Foundation.

And the value of the shares was forever "gone" from the assets I can spend on myself. But! I was left with a pile of "cash", in the DAF, and, as the person controlling the DAF, I can give that cash to any IRS approved charity! And I can split it up. Say I gave $2,000 worth of shares to my DAF. I can make gifts of $500 to each of four charities... without any of them having the hassle of selling the shares.

What if I don't want to make gifts of all of the money immediately? That's why the nice people at Vanguard do the work for me. That money can sit in Vanguard managed funds. There's the usual range of funds... money market, bond, equity, mixed.

And giving is really easy... you fill in a form online, and the money just goes. And if you give to that charity again next year, most of the information you filled in once can be fetched from your DAFs "charities I've supported" "address book". And Vanguard keeps track of "address changes", so you don't have to check and re-check.

Biggest "downside", as far as I'm concerned? All of your gifts must be at least $500. Well, fair enough. And I sometimes "get around" that by giving a charity $500 every other year. Probably plays havoc with the charity's donor tracking systems... but they seem to manage to cope with that.

So! Enough about DAFs? Do have a look at .... the Vanguard Charitable Endowment Program? (That link will open in a new tab or window)


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