Questions about donating appreciated fund shares

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fundseeker
Posts: 699
Joined: Mon Dec 24, 2007 9:02 am

Questions about donating appreciated fund shares

Post by fundseeker » Wed Dec 13, 2017 8:29 pm

So, our taxable fund has more than doubled, and I really want to give some of these fund shares to charity instead of using cash, but it seems like such a pain! I am trying to use VG's form for donating securities, but apparently I must have a brokerage account to pull this off.

I have filled out that form, and I will fund the new brokerage account by exchange (from the MF account to the new brokerage account), but is this going to be a taxable event? Also, does anyone know if I can donate the VG mutual fund shares, or do I have to convert the shares to ETFs?

My plan, if the answers are as I hope, is to submit the form and put the exact number of MF shares into the new brokerage account for transfer to the charity. It just shouldn't be this hard. Thanks for any help!

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FiveK
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Re: Questions about donating appreciated fund shares

Post by FiveK » Thu Dec 14, 2017 12:57 am

Have you considered a Donor Advised Fund?

Just did one at Fidelity and it was straightforward. Vanguard appears to have a similar capability.

letsgobobby
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Re: Questions about donating appreciated fund shares

Post by letsgobobby » Thu Dec 14, 2017 1:07 am

Donor advised funds were invented for quandaries like this.

Pigeye Brewster
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Re: Questions about donating appreciated fund shares

Post by Pigeye Brewster » Thu Dec 14, 2017 9:21 am

fundseeker wrote:
Wed Dec 13, 2017 8:29 pm
So, our taxable fund has more than doubled, and I really want to give some of these fund shares to charity instead of using cash, but it seems like such a pain! I am trying to use VG's form for donating securities, but apparently I must have a brokerage account to pull this off.

I have filled out that form, and I will fund the new brokerage account by exchange (from the MF account to the new brokerage account), but is this going to be a taxable event? Also, does anyone know if I can donate the VG mutual fund shares, or do I have to convert the shares to ETFs?

My plan, if the answers are as I hope, is to submit the form and put the exact number of MF shares into the new brokerage account for transfer to the charity. It just shouldn't be this hard. Thanks for any help!
You can donate fund shares directly out of your existing Vanguard mutual fund account. I have done so several times. The form to use is "Giving Fund Shares to Organizations" (Form FGSF) on the Vanguard website.

A couple of caveats:
1) the charity will have to set up a Vanguard account if they don't already have one. The paperwork for that is part of the form.
2) if the charity doesn't already own that particular fund, the amount of the donation has to meet the fund minimum.

I found it somewhat cumbersome and the fund minimum requirement limited the usefulness for me since I was gifting shares of a fund with a $10K minimum. So I recently set up a DAF at Fidelity and funded it with the Vanguard mutual fund shares. Very pleased with it so far.

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vinnydabody
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Location: Chicagoland

Re: Questions about donating appreciated fund shares

Post by vinnydabody » Thu Dec 14, 2017 9:55 am

For some reason, gifting/transferring shares in a mutual fund has always been more difficult than transferring stock (maybe for proprietary reasons among the various mutual fund companies). With stock, the DTC system works incredibly smoothly.

It is a pain to get all the paperwork, but in reality even with stock transfers that paperwork is required, except it's only on a one-time basis for the charity to set up their brokerage account to receive the gifts (which can generally come from any other brokerage). With mutual fund transfers, if the recipient organization doesn't have an account with the mutual fund company then they have to go through the process of opening an account to receive the shares. So going the DAF route is a lot simpler.

afan
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Re: Questions about donating appreciated fund shares

Post by afan » Thu Dec 14, 2017 11:12 am

The Fidelity and Schwab DAFs have much lower minimums than does Vanguard. There is a minimum annual fee. By paying this fee you buy simplicity. I think it is around $100, but easy to check. You transfer in your shares and earn the deduction at that time. The DAF then makes the contributions to the charities you direct. Much easier for you and for them. One problem is if you want to support small charities that the DAF does not know about. The fund will need to make sure that the charities are eligible. But with a DAF you already got your deduction when you made your donation so you don't care if it takes longer for your charities to get on the list.

If you know where you are sending money you can make the donation to the DAF then immediately send the contributions to the charities. That way you are paying the expense ratio of the DAF for only a few days.

Well worth the small cost.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama

SRenaeP
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Re: Questions about donating appreciated fund shares

Post by SRenaeP » Thu Dec 14, 2017 11:13 am

Pigeye Brewster wrote:
Thu Dec 14, 2017 9:21 am
fundseeker wrote:
Wed Dec 13, 2017 8:29 pm
So, our taxable fund has more than doubled, and I really want to give some of these fund shares to charity instead of using cash, but it seems like such a pain! I am trying to use VG's form for donating securities, but apparently I must have a brokerage account to pull this off.

I have filled out that form, and I will fund the new brokerage account by exchange (from the MF account to the new brokerage account), but is this going to be a taxable event? Also, does anyone know if I can donate the VG mutual fund shares, or do I have to convert the shares to ETFs?

My plan, if the answers are as I hope, is to submit the form and put the exact number of MF shares into the new brokerage account for transfer to the charity. It just shouldn't be this hard. Thanks for any help!
You can donate fund shares directly out of your existing Vanguard mutual fund account. I have done so several times. The form to use is "Giving Fund Shares to Organizations" (Form FGSF) on the Vanguard website.

A couple of caveats:
1) the charity will have to set up a Vanguard account if they don't already have one. The paperwork for that is part of the form.
2) if the charity doesn't already own that particular fund, the amount of the donation has to meet the fund minimum.

I found it somewhat cumbersome and the fund minimum requirement limited the usefulness for me since I was gifting shares of a fund with a $10K minimum. So I recently set up a DAF at Fidelity and funded it with the Vanguard mutual fund shares. Very pleased with it so far.
After going around and around with Vanguard and experiencing the caveats above, I too opted to set up a Fidelity DAF. It was pretty easy and I opt not to maintain a balance there. I simply transfer Vanguard shares as needed then immediately make a grant.

-Steph

Pigeye Brewster
Posts: 184
Joined: Thu Oct 05, 2017 7:33 pm

Re: Questions about donating appreciated fund shares

Post by Pigeye Brewster » Thu Dec 14, 2017 2:33 pm

SRenaeP wrote:
Thu Dec 14, 2017 11:13 am
Pigeye Brewster wrote:
Thu Dec 14, 2017 9:21 am
fundseeker wrote:
Wed Dec 13, 2017 8:29 pm
So, our taxable fund has more than doubled, and I really want to give some of these fund shares to charity instead of using cash, but it seems like such a pain! I am trying to use VG's form for donating securities, but apparently I must have a brokerage account to pull this off.

I have filled out that form, and I will fund the new brokerage account by exchange (from the MF account to the new brokerage account), but is this going to be a taxable event? Also, does anyone know if I can donate the VG mutual fund shares, or do I have to convert the shares to ETFs?

My plan, if the answers are as I hope, is to submit the form and put the exact number of MF shares into the new brokerage account for transfer to the charity. It just shouldn't be this hard. Thanks for any help!
You can donate fund shares directly out of your existing Vanguard mutual fund account. I have done so several times. The form to use is "Giving Fund Shares to Organizations" (Form FGSF) on the Vanguard website.

A couple of caveats:
1) the charity will have to set up a Vanguard account if they don't already have one. The paperwork for that is part of the form.
2) if the charity doesn't already own that particular fund, the amount of the donation has to meet the fund minimum.

I found it somewhat cumbersome and the fund minimum requirement limited the usefulness for me since I was gifting shares of a fund with a $10K minimum. So I recently set up a DAF at Fidelity and funded it with the Vanguard mutual fund shares. Very pleased with it so far.
After going around and around with Vanguard and experiencing the caveats above, I too opted to set up a Fidelity DAF. It was pretty easy and I opt not to maintain a balance there. I simply transfer Vanguard shares as needed then immediately make a grant.

-Steph
I was pleasantly surprised by how quick and easy it is to transfer Vanguard shares to a Fidelity DAF.

fundseeker
Posts: 699
Joined: Mon Dec 24, 2007 9:02 am

Re: Questions about donating appreciated fund shares

Post by fundseeker » Fri Dec 22, 2017 8:08 am

I should have listened and NOT tried to do this through VG! They still have not completed the transaction. As instructed, I faxed them their GIFF form (they do not accept the form via email), and they lost it! I have called them twice this week and they could not find it, so I had to fax it in again, and fortunately, they received my form this time.

When I called to confirm receipt of my form, and they said they may not get to it because they "are slammed." Seems like maybe they could do this simple transaction with a few mouse clicks, but maybe they still use faxing for their transactions? Anyway, I hope this is not a sign of how their Brokerage Service does all business.

A Boglehead
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Re: Questions about donating appreciated fund shares

Post by A Boglehead » Fri Apr 20, 2018 8:42 pm

I'm trying to give Admiral shares of a Vanguard fund to a charity that has an account at Fidelity.

Vanguard said I have to change the cost basis method from specific ID to first in first out, then demote all the shares to Investor, then change the cost basis back to specific ID, then gift the lots, then promote the remaining shares back to Admiral, then change the cost basis back to specific ID.

Considering I've been trying to do this since Dec., and have spent hours on the phone w/Vanguard, I have no confidence they will do this correctly.

Have any of you successfully done this? It might be easier just to invest in my Fidelity account to gift shares to the charity.

Thanks!

drzzzzz
Posts: 204
Joined: Sat Sep 22, 2012 9:56 pm

Re: Questions about donating appreciated fund shares

Post by drzzzzz » Fri Apr 20, 2018 9:50 pm

I have gifted shares a few times, most recently the process was changed for me on how to gift since I was on the brokerage platform and the charitable institution had an older mutual fund account and Vanguard couldn't do across platform gifting (this time) so I had to change ownership of the shares (a different form) and then gift them (although for the last year they did it using the gift form for the same charity at least 3 times).

Vanguard's form does allow you to do specific ID, but not sure they can do it with non-covered shares - in my case the shares that I was gifting were old and they had no cost basis so I used average cost - not sure that part mattered to me since the dollar amount of gifting was the same number of shares, and when they gift they will use FIFO approach which for me had the largest appreciation. Lastly, I have decided Vanguard has become way too complicated for donating shares since the receiving institution has to have a Vanguard account to receive the shares, so I am planning to open a Fidelity DAF since it is less expensive to fund and you can give smaller donation amounts than at Vanguard - and fewer hassles I hope.
Last edited by drzzzzz on Sat Apr 21, 2018 8:55 am, edited 1 time in total.

Pigeye Brewster
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Re: Questions about donating appreciated fund shares

Post by Pigeye Brewster » Fri Apr 20, 2018 11:35 pm

drzzzzz wrote:
Fri Apr 20, 2018 9:50 pm
I have gifted shares a few times, most recently the process was changed for me on how to gift for aince I was on the brokerage platform and the charitable institution had an older mutual fund account and Vanguard couldn't do across platform gifting (this time) so I had to change ownership of the shares (a different form) and then gift them (although for the last year they did it using the gift form for the same charity at least 3 times).

Vanguard's form does allow you to do specific ID, but not sure they can do it with non-covered shares - in my case the shares that I was gifting were old and they had no cost basis so I used average cost - not sure that part mattered to me since the dollar amount of gifting was the same number of shares, and when they gift they will use FIFO approach which for me had the largest appreciation. Lastly, I have decided Vanguard has become way too complicated for donating shares since the receiving institution has to have a Vanguard account to receive the shares, so I am planning to open a Fidelity DAF since it is less expensive to fund and you can give smaller donation amounts than at Vanguard - and fewer hassles I hope.
Donating Vanguard mutual funds to charities is cumbersome. A Fidelity DAF funded by Vanguard mutual funds has worked much better for me.

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Taz
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Location: Florida

Re: Questions about donating appreciated fund shares

Post by Taz » Sat Apr 21, 2018 6:20 am

I also had a difficult time trying to do this from the new VG brokerage account setup this past Dec. Previous donations to the same organization were also a pain. I opened a DAF at Fidelity in March and funded it with a ETF sitting in an old USAA account. Gave Fidelity the account number, security & shares. No medallion signature or questions from USAA. Simple.

Sending checks to your "recommended" charities was also a breeze. A few clicks & done.
The destination matters.

SRenaeP
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Re: Questions about donating appreciated fund shares

Post by SRenaeP » Sat Apr 21, 2018 10:54 am

A Boglehead wrote:
Fri Apr 20, 2018 8:42 pm
I'm trying to give Admiral shares of a Vanguard fund to a charity that has an account at Fidelity.

Vanguard said I have to change the cost basis method from specific ID to first in first out, then demote all the shares to Investor, then change the cost basis back to specific ID, then gift the lots, then promote the remaining shares back to Admiral, then change the cost basis back to specific ID.

Considering I've been trying to do this since Dec., and have spent hours on the phone w/Vanguard, I have no confidence they will do this correctly.

Have any of you successfully done this? It might be easier just to invest in my Fidelity account to gift shares to the charity.

Thanks!
I had a similar experience with Vanguard. I gave up dealing with them and opened a DAF with Fidelity. I then donated the shares from Vanguard and made the grant from Fidelity. MUCH easier.

bryansmile
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Re: Questions about donating appreciated fund shares

Post by bryansmile » Sat Apr 21, 2018 11:41 am

fundseeker wrote:
Wed Dec 13, 2017 8:29 pm
So, our taxable fund has more than doubled, and I really want to give some of these fund shares to charity instead of using cash, but it seems like such a pain! I am trying to use VG's form for donating securities, but apparently I must have a brokerage account to pull this off.

I have filled out that form, and I will fund the new brokerage account by exchange (from the MF account to the new brokerage account), but is this going to be a taxable event? Also, does anyone know if I can donate the VG mutual fund shares, or do I have to convert the shares to ETFs?

My plan, if the answers are as I hope, is to submit the form and put the exact number of MF shares into the new brokerage account for transfer to the charity. It just shouldn't be this hard. Thanks for any help!
OP,
I had the exact same problem. The easiest way is to upgrade your mutual fund account to a brokerage account and then fill out the giving to charity form. Nothing else to do. The receiving party does NOT have to have a Vanguard account. And it also makes any future donations easy. No extra costs like those with a DAF account, no tax involved.

One tip though, you have to let your charity know the funds are coming from you, since the funds are sent over from Vanguard, with no donor name.

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