DAF question and Portfolio Review

[Paul777]

I'd appreciate any advice/perspectives and portfolio review for how to allocate investments in a DAF (Donor Advised Fund).

The current situation is that there is ~$550K at the Fidelity DAF, all currently in a money market. The goals are:
* Donate ~$50K annually in real dollars (so expect this will go up with inflation)
* Maintain the account for as many years as possible, but certainly would not be a tragedy to spend it down at some point given that the point is to give it all away to charity!

First question is where would be the best place to have the account? From the research I've done, it seems Vanguard provides the most/best investment choices (at least compared to Fidelity and Schwab)? And given that I want to keep this account around for a long time, I'd be worried about investing through a startup... And I can keep enough at Fidelity to make small grants from there while transferring the bulk to Vanguard to invest for the long term. So, any better choices to host the DAF than Vanguard?

For the asset allocation, I read William Bernstein's books, and the FAQs here (all of which I greatly appreciate!), and a few reasons why I want to tilt a bit differently than standard recommendations:
* US Growth has negative expected value for the next 7-10 years due to being priced extraordinarily high right now
* Emerging Markets is the best value right now, followed by International Developed Markets
* I want to keep enough at Fidelity to justify their $100 annual fee
* I want to keep enough in fixed income to cover two years of grants
* I'm limited to only invest in the funds that are available for Vanguard's DAF

So, here's what I'm thinking for using Vanguard's DAF funds:

https://docs.google.com/spreadsheets/d/ ... sp=sharing

I'd appreciate hearing if this might make sense, or how it could be improved (and why).

And the one other question I have is whether I should enter all these positions all at once (which I think is the standard recommendation), or buy in stages over time...

Thanks!

[stan1]

Where: Vanguard Charitable has higher minimum grants than Fidelity Charitable. If you will never make a grant under $500 then this won't impact you at Vanguard.

Yes you can effectively transfer assets by granting from one DAF to another. I did this once from Vanguard Charitable to Fidelity Charitable. I called Fidelity to confirm instructions on how to receive the grant.

Investments: My DAF that will cover about 20 years of gifting is 60% total US stock and 40% total bond for the same reasons that my personal retirement portfolio is mostly the same. You can add in some international equity if you want.

[mhc]

Welcome to the forum!

How long do you expect your DAF to last when you are granting ~9%/yr?

I have a large DAF at Vanguard Charitable. I only do large grants, so the minimums do not affect me. FWIW, I am 80% Total Stock Market 20% Total Bond Market. I think we grant about 5%/yr.

[Mike Scott]

I will be topping off a DAF at Vanguard this year which is intended to be spent down to 0 over the next 10 years. It is in their "moderate growth" which is essentially a 60/40 three 3 fund portfolio. I will be satisfied if it keeps up with inflation and covers the DAF fees along the way. Any growth beyond that is just more $.

[Stinky]

Welcome to the Forum!

FWIW - I’m a 10+ year customer of Fidelity Charitable, and am delighted with all aspects of their offering (app, website, fund selection, costs, etc).

I’d never consider moving to Vanguard Charitable. Much less maintaining accounts at both places (and incurring double fees and double complexity).

All the rest of my money is at Vanguard. But I do like the Fidelity Charitable account.

[sunnywindy]

I can understand the attraction of US Large Value, but I wouldn't over think a DAF allocation. To me, DAFs are there for the charities you donate to, not an investment vehicle to try to outsmart the market. Is it really worth the risk if Value does not rebound? How much in donations would that cost? I would recommend just plain old Total US Market. (I do manage a family DAF and our allocation roughly correlates to the global stock market cap.)

[Wash.Invest]

10+ years at Fidelity Charitable (after moving DAF from vanguard). I MUCH prefer Fidelity Charitable for ease of investing, adequate investment options, very simple gifting process, excellent very fast Customer service and support. (They have stopped payment on a Grant that was spammed by an illegitimate 'Shadow' 501c3)
No reason to be in cash, unless you're within 3 yrs of intentionally depleting. I have gifted in excess of 10% since inception (20+ yrs) and maintain ~75/25 allocation (no cash, since each grant can be specified as to how it matches your desired allocation). My DAF has grown during our recent generous market years.

In positive/ growth years, I don't disturb my winners. In lean yrs, I rebalance via gifting the realized gains in growth allocation portion, until I reach 60/40, then disburse equal to allocation.

DAF @ Fidelity has been a gem (after disasters at vanguard charitable and a community foundation).
Basically, hands off, simplified and efficient handling of my charitable gifting.
And really easy to contribute equities of substantial gains that are in my Fidelity trading acct.

[PhilipS]

Where: Vanguard Charitable has lower minimum grants than Fidelity Charitable. If you will never make a grant under $500 then this won't impact you at Vanguard.

I think you meant to say Vanguard Charitable ($500) has HIGHER minimum grants than Fidelity Charitable ($50).

[Stinky]

Where: Vanguard Charitable has lower minimum grants than Fidelity Charitable. If you will never make a grant under $500 then this won't impact you at Vanguard.

I think you meant to say Vanguard Charitable ($500) has HIGHER minimum grants than Fidelity Charitable ($50).

Another strike against Vanguard (at least in my case).

[stan1]

Where: Vanguard Charitable has higher minimum grants than Fidelity Charitable. If you will never make a grant under $500 then this won't impact you at Vanguard.

I think you meant to say Vanguard Charitable ($500) has HIGHER minimum grants than Fidelity Charitable ($50).

I did, thanks (and corrected)

[Paul777]

10+ years at Fidelity Charitable (after moving DAF from vanguard). I MUCH prefer Fidelity Charitable for ease of investing, adequate investment options, very simple gifting process, excellent very fast Customer service and support. (They have stopped payment on a Grant that was spammed by an illegitimate 'Shadow' 501c3)
No reason to be in cash, unless you're within 3 yrs of intentionally depleting. I have gifted in excess of 10% since inception (20+ yrs) and maintain ~75/25 allocation (no cash, since each grant can be specified as to how it matches your desired allocation). My DAF has grown during our recent generous market years.

In positive/ growth years, I don't disturb my winners. In lean yrs, I rebalance via gifting the realized gains in growth allocation portion, until I reach 60/40, then disburse equal to allocation.

DAF @ Fidelity has been a gem (after disasters at vanguard charitable and a community foundation).
Basically, hands off, simplified and efficient handling of my charitable gifting.
And really easy to contribute equities of substantial gains that are in my Fidelity trading acct.

What was the disaster at Vanguard charitable? And when you say 75/25, but no cash, what is the 25% in? And how exactly do you match grants to your allocation?

And, FWIW, my first experience with Fidelity cust service was terrible, in that they provided me false info about how the fees were charged (they said that it was deducted via an annual charge in July vs. what I think is the case is that it is charged as an added 0.6% to the expense ratio of investments...) So I suppose mileage does vary...

[Paul777]

Welcome to the forum!

How long do you expect your DAF to last when you are granting ~9%/yr?

I have a large DAF at Vanguard Charitable. I only do large grants, so the minimums do not affect me. FWIW, I am 80% Total Stock Market 20% Total Bond Market. I think we grant about 5%/yr.

Thanks!

I'm hoping for the DAF to last a long time, but I'd say the expected life is ~14 years, assuming I grant $50K in 2024 dollars per year, and get the ~4.1% real return my asset allocation is expected to achieve...

[mhc]

I have used Vanguard Charitable (VC) for more than 10 years. They are great. I have never had an issue.

75/25 means 75% equities/25% bonds.

When one grants from VC, VC asks where the money comes from.

[Faith20879]

Personally I would not want to keep two DAFs for simplicity.
I had a Fidelity charitable once but emptied it awhile ago.
I now only have Vanguard Charitable because that's where my assets are and the higher minimum is not an issue for me.
However I do find Fidelity Charitable's user interface slightly easier to follow and they do ACH directly to participating charities. I liked the bold part a lot for two reasons.
1. It is more instantaneous and secure and
2. It bypasses any potential problem of erroneous addresses. I don't know where Vanguard got the charities' addresses from. Several of the ones I give to had moved and Vanguard never updated their database. Or, some have separate corporate office address and donation box address and Vanguard would only have the corporate office address on file. The check would take a long time to arrive at the needy party. There is no way to override the address on the "grant" screen. I've inquired about them adding the ACH like Fidelity but was told "sorry no can do" in a very nice way. It took me several months to work out all the kinks with them. So I am good for now until somebody makes a change again.

[mhc]

I don't know where Vanguard got the charities' addresses from. Several of the ones I give to had moved and Vanguard never updated their database.

One of the charities I use to give to from VC had the wrong address listed. I contacted the charity, and they updated the address with VC.

[angelescrest]

I intend to grow my Fidelity DAF over the next 20 years, so I have it invested 100% in equities. I think they call it the aggressive pool or something like that. I have not at all thought about optimizing it as you describe, like I would my own retirement portfolio. Any fluctuations will not keep me up at night.