Find out why donor-advised funds may be right for your portfolio

When you give, you want your charitable contributions to be as effective as possible. Donor-advised funds are one of the easiest and most tax-advantageous ways to give. Find out more about why they may make sense for your portfolio.

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Talli Sperry: Jane, perhaps you could start us off with discussing donor-advised funds.

Jane Greenfield: Sure, I’ll tell you what a donor-advised fund is or a DAF as we often call it. They are very flexible, cost-effective, easy-to-use charitable giving tools that allow you to give both today and tomorrow. They are really effective because they separate the timing of your tax deduction from your granting decisions, and here’s how it works. If you are philanthropically inclined, you open a DAF account, perhaps at Vanguard Charitable, and when you make your donation, you immediately get a charitable deduction because we are a charity.

Talli Sperry: Wow, so this year, right now, if we opened it, we would get the deduction.

Jane Greenfield: Absolutely.

Talli Sperry: For the full amount donated.

Jane Greenfield: For the full amount of your contribution into the account, absolutely.

Now, you can donate cash, appreciated securities. You can even donate illiquid securities, such as private securities or hedge funds or even real estate.

Talli Sperry: That’s really interesting.

Jane Greenfield: But once the money goes into the donor-advised fund, you actually lose legal control of it; but you retain three important advisory privileges. The advisory privileges are you get to tell us how you want to invest the money.

Talli Sperry: Always important, right?

Jane Greenfield: Always important talking to Vanguard. And those investments grow tax free because we’re a charity.You tell us how you want to grant the money, and we do so on your behalf.

Talli Sperry: So that’s the giving of the money, right, to a charity?

Jane Greenfield: That’s the giving from the account to operating charities.

Talli Sperry: Right.

Jane Greenfield: And then you also have an opportunity to tell us who your successors to the account are so we know what to do with the account after you pass.

Talli Sperry: That’s wonderful. That’s really well thought out.

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This webcast is for educational purposes only. We recommend that you consult a tax or financial advisor about your individual situation.

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