I previously wrote about why you should use a donor-advised fund (“DAF”) for your charitable giving and that I had opened a DAF at Schwab Charitable. In this post, I’m going to write about how I chose Schwab and the process for opening my account.
While I was researching DAFs, I found Fidelity, Schwab and Vanguard to be the easiest, most accessible and lowest cost providers of donor-advised funds. While you can open a DAF at a myriad of different places, each of the big three had name recognition with me already as providers of brokerage accounts and low-cost mutual funds for retail investors. Each of the three also had good websites that explained the details of their DAF offerings, including types of contributions accepted, fees and expenses and how donations are made to charities the DAF account holder chooses.
While I ultimately chose Schwab Charitable, I found all all three to be very competitive in their offerings. Below is a table that compares the DAF offerings at Fidelity, Schwab and Vanguard’s DAF offerings (note: applicable only to DAF accounts of <$500K. If you have more than $500K to contribute, that’s amazing, and you should look in particular at Vanguard and Fidelity’s offerings for larger accounts):
Once you’ve selected a DAF provider, just go to the provider’s website where you can fill out an application online. Once you’ve submitted the application to open a new account, you’ll receive instructions on how to make your irrevocable contribution of assets into your new account.
Out of the whole process, this was the step where I ran into a minor hiccup. The assets that I contributed to my DAF account included fractional shares of stock purchased pursuant to an old DRIP program. The problem was that Schwab Charitable was unable to accept fractional shares. After trading a few voicemails, I was finally able to connect with Schwab and the solution was to just leave the fractional shares behind, which was a minor annoyance as I still have those fractional shares and get a dividend check every quarter for a few pennies.
All in all, I’ve been happy with my Donor Advised Fund at Schwab. We’ve made several contributions to charities from our DAF and the process was very easy. Most of the recommendations for disbursements were made to charities that were already pre-approved by Schwab, which meant that the funds were disbursed very quickly. For the charities that Schwab previously had not done their diligence on, our recommendations for grants were quickly approved.
