TRP Donor Advised Fund (DAF) experience?

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herrtodd
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TRP Donor Advised Fund (DAF) experience?

Post by herrtodd »

I've read the threads and the wiki on Donor Advised Funds.

Everybody seems to like Fidelity Charitable, but it looks like T. Rowe Price would be cheaper for me due to the lack of a minimum administrative fee and my planned fund size.

Are there any past or present users of T. Rowe Price Charitable who can share their experience using their service? Good enough? wish it were better?

Thank you!
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dodecahedron
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Re: TRP Donor Advised Fund (DAF) experience?

Post by dodecahedron »

I have experience with Fidelity, Schwab, and Vanguard DAFs. (I kicked tires at all three before consolidating into Schwab.)

No experience with TRP but out of curiosity I looked at their website after reading the OP.

The OP is correct that admin fees at TRP are a bit less than at Fidelity *but* check out the expense ratios (ER) on the investments inside TRP DAF. Fidelity has some very cheap index funds (as low as 1.5 basis points in ER) while investments in TRP DAF are all much higher.

If you are going to maintain balances invested inside your DAF, the higher ER at TRP will quickly more than eat up any savings in admin fees.
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neurosphere
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Re: TRP Donor Advised Fund (DAF) experience?

Post by neurosphere »

I've been thinking about DAFs recently, and find the fees in general quite high?

For example Schwab and Vanguard charge 0.6%. That's quite a drag on balance. On a $25,000 minimum at Vanguard (for example) that's $150/year.

Isn't the best "play" to be to only keep the minimum balance in the fund, then contribute additional amounts (most appropriately via appreciated shares) just prior to a donation/distribution? I realize that some people may have income windfalls or other tax-year specific reasons to contribute to the DAF and decouple that from any one particular donation. Or maybe some form of market timing, to "lock in" the most tax deduction if one thinks the market may drop. But otherwise, why not fund the DAF just prior to any contemplated donation? Keeping a balance in the DAF seems very expensive. Keeping a minimum of $25,000 (e.g. Vanguard) is a cost of $150/year to have the DAF "ready". Schwab has a minimum fee of $100/year. All of which I think is reasonable. But why otherwise keep a large amount in the DAF? Or did I answer my own question already (e.g. tax/estate considerations which are not tied to a particular donation intention)?
Silk McCue
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Re: TRP Donor Advised Fund (DAF) experience?

Post by Silk McCue »

neurosphere wrote: Tue Oct 22, 2019 7:05 am I've been thinking about DAFs recently, and find the fees in general quite high?

For example Schwab and Vanguard charge 0.6%. That's quite a drag on balance. On a $25,000 minimum at Vanguard (for example) that's $150/year.

Isn't the best "play" to be to only keep the minimum balance in the fund, then contribute additional amounts (most appropriately via appreciated shares) just prior to a donation/distribution? I realize that some people may have income windfalls or other tax-year specific reasons to contribute to the DAF and decouple that from any one particular donation. Or maybe some form of market timing, to "lock in" the most tax deduction if one thinks the market may drop. But otherwise, why not fund the DAF just prior to any contemplated donation? Keeping a balance in the DAF seems very expensive. Keeping a minimum of $25,000 (e.g. Vanguard) is a cost of $150/year to have the DAF "ready". Schwab has a minimum fee of $100/year. All of which I think is reasonable. But why otherwise keep a large amount in the DAF? Or did I answer my own question already (e.g. tax/estate considerations which are not tied to a particular donation intention)?
If your goal is to be able to itemize the deductions and you don't otherwise have sufficient deductions to exceed the standard deduction making smallish contributions won't do you any good beside provide for the possibility of anonymity in your giving if you choose.

Cheers
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dodecahedron
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Re: TRP Donor Advised Fund (DAF) experience?

Post by dodecahedron »

neurosphere wrote: Tue Oct 22, 2019 7:05 am For example Schwab and Vanguard charge 0.6%. That's quite a drag on balance. On a $25,000 minimum at Vanguard (for example) that's $150/year.

[...]

But otherwise, why not fund the DAF just prior to any contemplated donation? Keeping a balance in the DAF seems very expensive. Keeping a minimum of $25,000 (e.g. Vanguard) is a cost of $150/year to have the DAF "ready". Schwab has a minimum fee of $100/year. All of which I think is reasonable. But why otherwise keep a large amount in the DAF? Or did I answer my own question already (e.g. tax/estate considerations which are not tied to a particular donation intention)?
Thus far I have not been keeping large balances in my Schwab DAF, and, as you say, the $100 per year minimum fee is reasonable for the convenience and recordkeeping advantages. (I will note that Vanguard gets annoyed and threatens to shut you down if your balances drop too much below their minimums, whereas Schwab seems happy to let you draw them down as much as you want as long as they can continue you charging their $100 per year minimum fee.)

But in *my* current tax environment, it looks like it may make sense for me to do some deduction lumping (alternating itemized deductions with the expectation of taking standard deduction in future years) and possibly build up a larger balance in my DAF in advance of future giving.

The 0.6% admin fee in Schwab (or Fidelity or Vanguard) needs to be viewed in the light of a comparison to tax drag of keeping investments intended for future donation in taxable. Although my tax *bracket* is not that high, my effective marginal tax rate on MAGI is around 50% (due to a variety of factors associated with being older, e.g., taxable SS, IRMAA, senior property tax exemption qualification, etc.) Assuming that investments throw off about 2% in yield of some form, that is a 1% tax drag on keeping my investments in my taxable portfolio in advance of donating them.

This is, of course, highly idiosyncratic to my circumstances and may not make sense for everyone.
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neurosphere
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Re: TRP Donor Advised Fund (DAF) experience?

Post by neurosphere »

Silk McCue wrote: Tue Oct 22, 2019 7:28 am If your goal is to be able to itemize the deductions and you don't otherwise have sufficient deductions to exceed the standard deduction making smallish contributions won't do you any good beside provide for the possibility of anonymity in your giving if you choose.
Yes, that's a great use of a DAF.

I'm wondering how hard it is to "close" a DAF. For example, contribute $30,000 to a Vanguard DAF. Donate $5,000 this year. Then donate the remaining $25,000 and "close" the DAF in the near future. I'm thinking of situation where I want to make a donation of $5000 now this year, but want some time to think about where to send the rest. And also, don't want/need to keep it open, as I'm not going to be making any large donations for say, 5 more years.
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neurosphere
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Re: TRP Donor Advised Fund (DAF) experience?

Post by neurosphere »

dodecahedron wrote: Tue Oct 22, 2019 7:36 amAlthough my tax *bracket* is not that high, my effective marginal tax rate on MAGI is around 50% (due to a variety of factors associated with being older, e.g., taxable SS, IRMAA, senior property tax exemption qualification, etc.) Assuming that investments throw off about 2% in yield of some form, that is a 1% tax drag on keeping my investments in my taxable portfolio in advance of donating them.
Yes, good point about tax drag. It's one thing if one has a share of a non-dividend paying stock laying around waiting to donate, and yet another if it's a share of a balanced mutual fund. Tax inefficiency considerations can mitigate some (most? all?) of that 0.6% (and/or $100) fee.
If you have to ask "Is a Target Date fund right for me?", the answer is "Yes".
Silk McCue
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Re: TRP Donor Advised Fund (DAF) experience?

Post by Silk McCue »

neurosphere wrote: Tue Oct 22, 2019 7:43 am Yes, that's a great use of a DAF.

I'm wondering how hard it is to "close" a DAF. For example, contribute $30,000 to a Vanguard DAF. Donate $5,000 this year. Then donate the remaining $25,000 and "close" the DAF in the near future. I'm thinking of situation where I want to make a donation of $5000 now this year, but want some time to think about where to send the rest. And also, don't want/need to keep it open, as I'm not going to be making any large donations for say, 5 more years.
I would expect that it would be very easy to close a DAF at anytime once all holdings were distributed. There certainly can't be any requirement to keep it open after full distribution.

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TN_Boy
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Re: TRP Donor Advised Fund (DAF) experience?

Post by TN_Boy »

neurosphere wrote: Tue Oct 22, 2019 7:05 am I've been thinking about DAFs recently, and find the fees in general quite high?

For example Schwab and Vanguard charge 0.6%. That's quite a drag on balance. On a $25,000 minimum at Vanguard (for example) that's $150/year.

Isn't the best "play" to be to only keep the minimum balance in the fund, then contribute additional amounts (most appropriately via appreciated shares) just prior to a donation/distribution? I realize that some people may have income windfalls or other tax-year specific reasons to contribute to the DAF and decouple that from any one particular donation. Or maybe some form of market timing, to "lock in" the most tax deduction if one thinks the market may drop. But otherwise, why not fund the DAF just prior to any contemplated donation? Keeping a balance in the DAF seems very expensive. Keeping a minimum of $25,000 (e.g. Vanguard) is a cost of $150/year to have the DAF "ready". Schwab has a minimum fee of $100/year. All of which I think is reasonable. But why otherwise keep a large amount in the DAF? Or did I answer my own question already (e.g. tax/estate considerations which are not tied to a particular donation intention)?
We batch donations every three or four years so we can itemize in those years. For various reasons, it is not practical or desirable for us to also donate everything in the year we batch.

Thus we leave a fairly large balance in the DAF, which dwindles each year as we donate until the next round of batched donations.

Though I think a focus on costs is admirable, the complaints some folks (neurosphere you are not the only one) have about the yearly costs of a DAF (a massive $150 a year!!) is misplaced given the general usefulness (at least to us) of the DAF. I simply cannot get worked up over that cost. The convenience and tax savings are worth it.
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neurosphere
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Re: TRP Donor Advised Fund (DAF) experience?

Post by neurosphere »

TN_Boy wrote: Tue Oct 22, 2019 8:07 am Though I think a focus on costs is admirable, the complaints some folks (neurosphere you are not the only one) have about the yearly costs of a DAF (a massive $150 a year!!) is misplaced given the general usefulness (at least to us) of the DAF. I simply cannot get worked up over that cost. The convenience and tax savings are worth it.
I'm not necessarily complaining about the cost. I did say (buried in one of my posts) "Keeping a minimum of $25,000 (e.g. Vanguard) is a cost of $150/year to have the DAF "ready". Schwab has a minimum fee of $100/year. All of which I think is reasonable." Meaning that I'm not really worried about a $100/$150 fee for small balances. But on very large balances (many hundreds of thousands), the fee is not trivial, even with price breaks.

I've never really thought about DAFs much before, so I'm just trying to learn how people use them. I dropped my paid employment to half time 5 years ago in order to volunteer with the other half of my time, so I don't have cash contributions (bunched or otherwise!) I can afford to give, lol. And previously, I had always been an itemizer anyway, so...

Your main point about the tax savings is the key one. That those who use a DAF will likely save much more on taxes than they pay in fees. If I can fund a DAF with a million dollars this year and save $500,000 in taxes, I don't care about a few years of $3000/year fees. :) Alternately, for the cost of a nice dinner each year, one can keep a DAF open with a smallish balance to fund/use when needed.

[edited to add, I just saw this thread on DAF fees, lol: viewtopic.php?p=4794459#p4794459]
inbox788
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Re: TRP Donor Advised Fund (DAF) experience?

Post by inbox788 »

neurosphere wrote: Tue Oct 22, 2019 7:05 am Isn't the best "play" to be to only keep the minimum balance in the fund, then contribute additional amounts (most appropriately via appreciated shares) just prior to a donation/distribution?... But why otherwise keep a large amount in the DAF? Or did I answer my own question already (e.g. tax/estate considerations which are not tied to a particular donation intention)?
How many more working years do you have remaining? Do you plan to be in a lower tax bracket in retirement? Optimizing high tax years is worth more IMO.

Also, some people donate property or other illiquid assets.
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neurosphere
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Re: TRP Donor Advised Fund (DAF) experience?

Post by neurosphere »

inbox788 wrote: Tue Oct 22, 2019 9:31 am How many more working years do you have remaining? Do you plan to be in a lower tax bracket in retirement? Optimizing high tax years is worth more IMO.
Working years? Too many! Although yes, I will likely be in a lower bracket in retirement, but I don't have cash I wish to donate at this time. I took a 50% pay cut to be able to donate that time to three charities I'm on the board of (and president of one of them). :D Besides, I don't have any appreciated investments in taxable accounts to get "rid of" (have never been able to fill all employer accounts).

My questions on DAF are solely for education. The "trigger" was that I did indeed contemplate a small donation ($500 or less) to the Bogle Center for Financial Literacy and lamented that the new SALT rules ensure that the first $14,000 of my donations would not get any special tax break. And if I intend $500 annual donations, I'd have to fund more than 28 years of future donations to get any back in taxes. :D

By the way, I just posted this in another thread on DAF fees:
fyi, I just had a nice chat with a woman at Vanguard Charitable who said that Vanguard's low balance fee of $250 kicks in at $15,000. And I believe (but don't remember for sure) that it's assessed in March and perhaps based on the value at that time? E.g. not a dollar amount trigger but an amount-at-the-time trigger. I wish I would have asked more about that. Maybe that info is codified somewhere in their documents and is not "inside" info.
[Edited to add: Yes, there is this very small footnote listed in a pdf brochure online "Accounts with balances less than $15,000 will be charged an annual $250 maintenance fee in March."]
inbox788
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Re: TRP Donor Advised Fund (DAF) experience?

Post by inbox788 »

neurosphere wrote: Tue Oct 22, 2019 9:59 amWorking years? Too many! Although yes, I will likely be in a lower bracket in retirement, but I don't have cash I wish to donate at this time. I took a 50% pay cut to be able to donate that time to three charities I'm on the board of (and president of one of them). :D Besides, I don't have any appreciated investments in taxable accounts to get "rid of" (have never been able to fill all employer accounts).
You've knocked out a few reasons for using a DAF there. And depending on your annual donations and number of charities, a DAF may not be all that helpful. If you ever max out the employer accounts and have taxable investments, many working years of growth should lead to big gains that would benefit donating to a DAF or charity directly. Another direct donation is a QCD from RMD, but can't be mixed up with a DAF. See which makes more sense when you reach that point. https://www.bogleheads.org/wiki/Qualifi ... tributions

I just started lumping so I can take standard deduction a few years. Last few work years, I will build up the DAF so it can last me until RMDs.
TN_Boy
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Re: TRP Donor Advised Fund (DAF) experience?

Post by TN_Boy »

neurosphere wrote: Tue Oct 22, 2019 8:26 am
TN_Boy wrote: Tue Oct 22, 2019 8:07 am Though I think a focus on costs is admirable, the complaints some folks (neurosphere you are not the only one) have about the yearly costs of a DAF (a massive $150 a year!!) is misplaced given the general usefulness (at least to us) of the DAF. I simply cannot get worked up over that cost. The convenience and tax savings are worth it.
I'm not necessarily complaining about the cost. I did say (buried in one of my posts) "Keeping a minimum of $25,000 (e.g. Vanguard) is a cost of $150/year to have the DAF "ready". Schwab has a minimum fee of $100/year. All of which I think is reasonable." Meaning that I'm not really worried about a $100/$150 fee for small balances. But on very large balances (many hundreds of thousands), the fee is not trivial, even with price breaks.

I've never really thought about DAFs much before, so I'm just trying to learn how people use them. I dropped my paid employment to half time 5 years ago in order to volunteer with the other half of my time, so I don't have cash contributions (bunched or otherwise!) I can afford to give, lol. And previously, I had always been an itemizer anyway, so...

Your main point about the tax savings is the key one. That those who use a DAF will likely save much more on taxes than they pay in fees. If I can fund a DAF with a million dollars this year and save $500,000 in taxes, I don't care about a few years of $3000/year fees. :) Alternately, for the cost of a nice dinner each year, one can keep a DAF open with a smallish balance to fund/use when needed.

[edited to add, I just saw this thread on DAF fees, lol: viewtopic.php?p=4794459#p4794459]
Fair enough. I don't have the "problem" of donating hundreds of thousands of dollars!

For low to mid 5 figures, I'm okay with the fees. Actually, if I was in a position to donate hundreds of thousands of dollars, I don't think the fees would bother me either though I imagine my tax situation would be more complicated than what I have now ....
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herrtodd
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Re: TRP Donor Advised Fund (DAF) experience?

Post by herrtodd »

dodecahedron wrote: Tue Oct 22, 2019 6:05 am I have experience with Fidelity, Schwab, and Vanguard DAFs. (I kicked tires at all three before consolidating into Schwab.)
--snip--
If you are going to maintain balances invested inside your DAF, the higher ER at TRP will quickly more than eat up any savings in admin fees.
In reverse order: I'm not going to maintain enough of a balance, at least not initially, such that it's advantageous from a purely admin + fund fee perspective to be a TRP customer for this. I'll happily switch providers in the future. FTR, I don't have a problem with paying the admin fee - I see the value. But if I can get a fee that's a straight up percentage, rather than one with a minimum, it will mean more money for giving in the short term.

Why did you choose Schwab over Fidelity?
Last edited by herrtodd on Tue Oct 22, 2019 9:14 pm, edited 1 time in total.
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dodecahedron
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Re: TRP Donor Advised Fund (DAF) experience?

Post by dodecahedron »

herrtodd wrote: Tue Oct 22, 2019 5:39 pm Why did you choose Schwab over Fidelity?
Not much difference between the two DAFs as such, but I liked Schwab´s overall customer service better than Fidelity´s. (In particular, Schwab had been much more helpful in faciltiating transfer of my late husband´s accounts into my name after his death. Fidelity was extremely annoying to deal with in that respect.

Once I chose the Schwab DAF, I also transferred my taxable account from Vanguard to Schwab in order to make it easy to donate appreciated securities to my Schwab DAF. Schwab allowed me to transfer Vanguard Admiral class mutual funds as in-kind transfers (and they even allow me to purchase more Vanguard Admiral mutual fund for no fee.) I do not think that Fidelity would have done that.

I am hopeful that Schwab will ultimately be as helpful to my daughters when it comes time to transfer my assets into their names after my eventual death as they were with me in transferring my late husband´s accounts. Also hopeful that they will make it easy for my POA to exercise her authority if and when that might be needed during my lifetime due to possible incapacity.
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dodecahedron
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Re: TRP Donor Advised Fund (DAF) experience?

Post by dodecahedron »

neurosphere wrote: Tue Oct 22, 2019 7:43 am I'm wondering how hard it is to "close" a DAF. For example, contribute $30,000 to a Vanguard DAF. Donate $5,000 this year. Then donate the remaining $25,000 and "close" the DAF in the near future. I'm thinking of situation where I want to make a donation of $5000 now this year, but want some time to think about where to send the rest. And also, don't want/need to keep it open, as I'm not going to be making any large donations for say, 5 more years.
It is very easy to close a DAF. I closed out my Vanguard and Fidelity DAFs simply by directing them to donate the entire remaining balances in those DAFs to my Schwab DAF. (I could have closed them out by directing them to donate the balances to any remaining charities of my choice.)

(I had originally opened all three DAFs as part of my tire-kicking process after death of my late husband, who had accounts in many different places.)
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PhysicianOnFIRE
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Re: TRP Donor Advised Fund (DAF) experience?

Post by PhysicianOnFIRE »

I have experience with TRP, Vanguard and Fidelity DAFs.

I started with TRP because that's where my money was at the time. Andrew Tobias' book recommended either T. Rowe Price or Vanguard and T. Rowe Prices sounded more regal. He made Vanguard sound kinda cheap. Anyway, I was invested with them, and they sent me information on their Program for Charitable Giving (DAF) and it sounded like a great idea. I didn't look into other options at the time.

Eventually, I came around to comparing TRP & Vanguard for myself and realized I was paying a 0.38% expense ratio on an S&P 500 fund. I slowly transferred my investments from TRP to Vanguard and opened a Vanguard charitable DAF.

I still have the Vanguard DAF but I also opened a FIdelity DAF because I like the ability to give grants of less than $500. Comes in handy when we have school fundraisers and I don't feel right sending my kids door to door or having them hit up neighbors or friends to buy crappy frozen pizza, cookie dough or popcorn.

I don't recall the fes at TRP, but if they're a bit lower than the 0.6% that Vanguard and Fidelity charge, the expense ratios on the TRP funds probably more than make up the difference.

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