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by Ben
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Hello folks, I'm interested in giving over the long term and I've found some of the research (1) around patient philanthropy convincing. I'm interested in investing some money (say 10% of income) and putting this in something like the things suggested here (2). I've looked a bit at DAFs but the fees look quite high and I wonder if I could assemble something better myself. My donations would be to longtermist causes. Does anyone know of a good guide on setting up a simple long term fund that I could use specifically for donations in the future please? The ideal would be something as simple as EA funds where I can clearly track my donations and keep them separate from everything else. Thanks!

(1) https://philiptrammell.com/research

(2) https://80000hours.org/2015/10/common-investing-mistakes-in-the-effective-altruism-community/

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Avi Norowitz

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Assuming you're in the US: How about a Vanguard Brokerage account and a Google spreadsheet?

In a Vanguard Brokerage account, you can invest in something like Total World Stock Market. Then to donate from the account, you could do any of the following:

  • Donate appreciated shares through a Vanguard DAF. I understand that you can open a DAF and close it after you're done making your donation to avoid annual minimums and fees.
  • Donate appreciated shares directly, which you should do only if the recipient organization can easily accept them.
  • Sell the shares, preferably after holding them for at least 1 year, and then donate cash. This might be worthwhile (a) if you decide to donate to something that is not a 501(c)(3) or (b) to try to get your donations matched by Facebook on Giving Tuesday, if you judge the expected value to be higher than the tax benefits forfeited.

You should also tax loss harvest as needed.

And then you can keep track of your contributions, donations, and other details you want to keep track of in a Google spreadsheet.

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Patrick Brinich-Langlois 🔸1
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I've looked a bit at DAFs but the fees look quite high and I wonder if I could assemble something better myself.

By "quite high," do you mean 0.6% per annum in addition to the mutual-fund expense ratio? That's the fee charged by Vanguard, Fidelity, and Charles Schwab on the first $500k. To me, the benefits a DAF offers seem worth the price:

  • immediate tax-deductibility
  • untaxed dividends and interest
  • ease of granting (you don't have to coordinate with the recipient to transfer appreciated assets)
  • pre-commitment (the money must go to a 501(c)(3) charity)

For people looking to invest millions of dollars, 0.6% would seem excessive. But larger accounts have lower fees. Here the fees for Vanguard's "Select" accounts:

| First $500K | 0.60% |
| Next $500K  | 0.30% |
| Next $29M   | 0.13% |
| Next $70M   | 0.05% |

So a $100m account would cost $77,200 in DAF fees, plus the mutual-fund fee. That seems like a steal to me (although high-rollers might prefer something with more-flexible investment options).

The main reason I can think of not to use a DAF is that you think that there's a high chance you'll want to do something with the money other than donate it to a 501(c)(3).

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