I have spent one-third of my life in financial services sector. The financial service is a broad sector of the economy made up of companies and institutions that provide a wide range of money management, wealth management, portfolio advice and products, and financial intermediation services to individuals investors, institutional investors, businesses, and governments.
I have worked for two major investment firms — Morningstar and Charles Schwab which either help with facilitating buying and selling of securities, managing investment portfolios, and/or offering financial advice.
This is my notepad of everything I have learned and learning over time.
| Name | Bio |
|---|---|
| Donor Advised Funds | A Donor-Advised Fund (DAF) is a charitable giving account established at a public charity, known as the sponsoring organization, which manages and administers the fund on behalf of the donor. When you contribute cash, securities, or other assets to a DAF, you are generally eligible for an immediate tax deduction. The assets in the DAF can then be invested for tax-free growth, and you can recommend grants from your fund to any eligible IRS-qualified public charity at any time. |
Donor Advised Funds
- DAF is mostly the United States concept.
- DAFs were originated by community foundations to boost charitable giving. The first DAF was created in 1931 by the New York Community Trust. Overtime commercial investment services got involved which boosted charitable giving further.
- DAF — donor advised fund is an investment account which could be opened via a brokerage service that lets you take a tax deduction when contributions are made and give the money to a charity later.
- DAF allows for maximizing granting by investing the money tax-free.
- A grant can be made anytime from a DAF to a charity of your choice. Approval of a grant is at DAF sponsor's discretionary based on their internal policies.
- DAF provider charges an administrative fee to invest your DAF and make donations when you recommend them. Administrative fee varies based on an account balance and contributions.
- Investment options are limited to index funds unless you have a professionally managed account which requires a high account balance. There are certain players who are starting to offer ETFs but not widely adopted.
- DAF is a 501(c)3 organization which needs to comply with IRS guidelines.
- While there are certain charity exemption rules, IRS qualified charities need to meet eligibility requirements. More from IRS.
- IRS provides The Exempt Organizations Business Master File Extract which provides information about an organization from the Internal Revenue Service's Business Master File. It has the most recent information the IRS has for these organizations.
- There are IRS guidelines on charitable contributions. Contribution type varies from cash to non-cash to complex assets.
- To be eligible to claim a tax deduction in a given tax year, you must complete the contribution to your DAF by the last day of the year — December 31.