Betterment does not provide tax advice. Donors should consider consulting their tax and/or legal advisors before initiating donations.
Donors should be aware that there may be small discrepancies between the requested dollar value of a donation and the value of the deduction reported on the tax receipt Betterment provides. The value of the deduction is the fair market value of the shares on the date the donation is completed, which is calculated by averaging the highest and lowest values at which the shares trade over the course of that day. That value may differ from the value of the shares at the time a donor initiates the donation.
Once a donor completes a donation by clicking “Donate now,” there will be no opportunity for the donor to undo the transaction or receive a refund in the amount of the value of the donated shares. Donors should carefully consider and review donations before completing them to ensure that the donations are consistent with their wishes.
The IRS requires taxpayers to complete and file a Form 8283 with their federal income tax returns for gifts of property (including publicly traded and other securities) valued at $500 or more. Donors are ultimately responsible for ensuring that the information they file with their tax returns, including the information on Form 8283, is complete and accurate. For additional information, see IRS Form 8283, Noncash Charitable Donations.
By completing a donation, donors agree to allow Betterment to provide their names and email addresses to the recipient charities. Partner charities have committed to not disclosing to the public a donation indicated as anonymous. However, a donor’s identity will still be provided to the recipient charity.
Betterment does not charge any of its partner charities management fees for donations they receive so long as the total assets managed by Betterment for each charity do not exceed $1 million. Charity administrators are able to withdraw funds to avoid accruing fees on balances over $1 million.
Betterment does not conduct independent due diligence on its partner charities and is not responsible for how the charities will use donations. Before completing a donation, donors should ensure that they fully understand and are satisfied with how a charity uses donated funds.
Betterment’s algorithm chooses from a donor’s account the tax lots held for more than one year with the most gain in value regardless of whether donating those shares would cause the portfolio’s allocation to drift. In the absence of a deposit to replace the donated shares, making a donation could accelerate the sale of assets to rebalance a donor’s portfolio, which could cause the donor to incur taxes that would not otherwise have been owed in the absence of a donation.