If you want to invest in the charities you feel most passionate about over the course of your lifetime, you may be interested in a Donor-Advised Fund (DAF).
You can contribute cash, stocks, and other assets to a DAF. Assets in a DAF could grow tax-free for the benefit of your philanthropies. Plus, your contributions to a DAF are tax deductible.
Fidelity runs its own DAF called The Giving Account. You can open a Fidelity DAF with as little or as much as you’d like and there’s no minimum balance requirement.
How does the Fidelity DAF work?
You can open a Fidelity Giving Account by signing up for one online. And you can contribute a variety of assets to your Giving Account including the following.
- Cash
- Stocks
- Bonds
- Mutual funds
- Proceeds from IRAs, Roth IRAs and 401(k)s
- Private company stock
- Cryptocurrencies: Bitcoin, Ehtereum, and Litecoin
- Life insurance
Fidelity offers a variety of diversified investment options to place your contributions into. Earnings on these investments are tax-free.
And even though your contributions to the Fidelity DAF are irrevocable – meaning you can’t get them back – you have a certain degree of control over the account. You choose your charities, the grant amounts they’d receive, and how often.
Your grants can support any IRS-qualified charity. These can include your local food bank, your alma-mater, or a national organization. You can recommend grants online, via the Fidelity Charitable app, or over the phone.
Tax benefits
The Fidelity DAF or Giving Account is run by Fidelity Charitable, an official charity recognized by the IRS under Sections 501(c)(3). This means you’re eligible for an immediate tax deduction for the year you contribute to the fund, as you would with any other IRS-recognized charity. Additional contributions are tax deductible as well.
If you donate cash, you could deduct up to 60% of your adjusted gross income (AGI). And if you’re contributing securities or appreciating assets like stocks, you could deduct up to 30% of your AGI.
However, Fidelity recommends you focus on contributing long-term appreciated assets such as stocks and mutual fund shares, because you could potentially avoid capital gains taxes you’d face if you were to sell those assets for a profit.
You won’t owe capital gains tax on assets you put into a DAF. Moreover, assets in a DAF won’t be counted toward your total estate value. So you won’t owe any applicable estate tax on these assets.
Fidelity DAF Fees
Fidelity Giving Account fees vary depending on the balance. Take a look at the tiered fee schedule below.
| Average Giving Account Balance | Fee |
| First $500,000 | Greater of 0.60% or $100 |
| Next $500,000 | 0.30% |
| Next $1,500,000 | 0.20% |
| Next $2,499,999 | 0.15% |
However, you’d also face fund fees depending on your choice of investment options. These can range from 0.015% to 0.91%.
Fidelity Giving Account Investment Options
When it comes to your Giving Account, Fidelity offers a variety of mutual fund portfolios to choose from across four categories.
Simplified investment strategies (Asset Allocation Pools): These are funds that offer exposure to stocks, bonds, and short-term instruments based on a specific risk goal ranging from 20% equity to 85% equity.
Customizable investment strategies (Single Asset Class Pools): These funds invest in specific asset classes and may be index-based or actively managed.
Sustainable and impact investing strategies: These portfolios are designed for donors who want to invest in funds that adhere to environmental, social and governance (ESG) standards.
Charitable Legacy Pool: This is designed to be an “all weather” portfolio with an aim to deliver inflation-adjusted returns while preserving capital across various market cycles in order to support ongoing grant-making.
Why we covered this
When you’re contributing money to a charity you care about, you’d want to make sure your dollars go as far as they can. Donor-advised funds (DAFs) can help you invest these dollars so they could grow in the stock market. But not all DAFs are created equal. You need to be aware of key points like fees and investment options. So to ease your search, we analyzed the Fidelity DAF or Giving Account. This is the one of the largest DAFs run by an investment management company today.
If you want to learn more about Fidelity, check out our regularly-updated list of Fidelity Investments guides, news, and coverage.
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