One year ago, I opened up a Donor Advised Fund (DAF). I wrote here about the reasons I choose to do so, along with some practical tips on setting it up.
I thought this might be a good time to talk about the real benefits I have received (being totally selfish), in the hopes that I might inspire someone to consider setting up their own DAF.
I can be more generous
The money in my DAF doesn’t belong to me now. It belongs to Fidelity Charitable.
So when Mr. PiN wanted us to make a donation that was much larger than our usual gifts; or when I decided to participate in Physician On Fire’s Giving Tuesday event; I was able (after a few minutes of catching my breath) to say yes. Because I’m not really giving out of my pocket anymore–I’m directing Fidelity to give away money that’s not mine (anymore).
Donations to the charities I used to write checks to also got a little bigger. Because, why the heck not? In fact, most donations doubled.
I can enjoy market timing
Yes, yes, market timing while investing is a very bad thing.
However, I can enjoy the knowledge in my heart of hearts (and brag anonymously on this blog), the fact that I gave away stock near its one-year high.
Last year, I gave away individual stock shares worth $338 (each); this year, they would now be worth $241. Put another way, I got the same bang from my stock buck by giving away 3 shares then instead of 4 shares now.
This allowed me to donate plenty of money to charity, but still keep more of my hoard for myself.
And, in further market timing, I can wait to fund my DAF again until stocks go up again.
A tax break
It’s true that before funding my DAF, I received a small tax break from donating to charity. However, this April, I saw a refund from the Federal Government of nearly one (net) paycheck, which is solely attributable to my large donation.
Regular, recurring support
I know it’s better for charities to receive money monthly, or quarterly, rather than getting a random check once or twice a year. Most charities support needs year-round, not just in November and December. Also, if they know they will be getting paid regularly, rather than just once (with less guarantee of more), it helps a lot with budgeting.
It is a little more fun to write lots of checks at once and give to charity once or twice a year. I probably release more endorphins that way.
However, sometimes life gets busy, and I don’t have the time (or mental energy) to scoop up the check book, the envelopes, and the stamps.
I can set the DAF to send a check regularly, with very little effort on my part, which is better for the groups that I want to support.
A bigger paycheck
I suppose this is a little bit of a cheat, as I am technically giving away less this year.
However, I am cutting back on my monthly gift to the United Way–which comes out after-tax from my paycheck–in order to support the same charities through my DAF.
The charities still get the money, but I get to keep a little more every month in my checking account. Which helps with rising prices.
Self-Image
This sounds odd, especially as I have made a habit of giving money to charity since I graduated from college and had a (very small at the time) income.
I grew up in a family, and a community, where charitable giving was a norm. It was almost shocking to me to meet friends (very good people) who nevertheless did not make a habit of giving to charity. None of us specifically tithed, but nevertheless, we gave.
Some years I gave more, but most I years I ended up donating about 2 to 3% of my gross salary. Maybe a half-month’s net paycheck.
I thought of myself as supporting charity, but nothing amazing.
Funding my DAF changed that.
Which shouldn’t be such a surprise. I mean, I donated a sum equivalent to 6 months’ worth of spending; or 10-12 times more than usual.
Now, I think of myself as someone who gives large amounts. These amounts may not be as large as someone else’s (I am never going to compete with Bill or Melissa Gates as a big donor). Nevertheless, giving such a significant (to me) amount of money made a difference in how I view myself.
I feel better able to give, which has made a small but significant change in my self-image. I am a generous person is a great addition to one’s identity.
What benefits have you found (or hope to find) from setting up a donor advised fund?