Through Betterment’s charitable giving feature, we support direct, fee-free donations to 12 charities.
If your client would like to give to a charity that’s not a direct partner yet, we have partnered with SocialGood Fund, a 501(3)(c) (EIN 46-1323531). SocialGood provides donation distribution services to most U.S. charities in good standing. This allows donations of appreciated Betterment shares to any charity, but the donation will process through SocialGood, which will vet the charity and distribute the funds. For this service, SocialGood charges 1% of the donation value or $10, whichever is greater. The maximum fee SocialGood will charge for any single donation is $350.
To donate to a charity using Betterment via SocialGood Fund:
- Your client must make a donation from their Betterment account to SocialGood Fund. To do this, they must utilize the following link, since SocialGood is not a primary charity available in the normal giving screen:
- After they’ve made the donation, contact SocialGood Fund at firstname.lastname@example.org to specify the end charity to which SocialGood should grant the funds. They need to provide: donor (client's) name, email, phone, charity name, charity address, charity EIN (EINs can be looked up at Guidestar.org)
- SocialGood Fund will provide an with a online form to complete setup of your client's Donor account at the Fund. (They will only need to do this once, for the first donation.)
- SocialGood will validate the charity’s standing and will likely distribute your client's funds via check to their charity of choice within 1-2 weeks.
- If you or the client do not contact SocialGood to specify a charity, they will reach out to your client at their Betterment account email within 1-2 weeks.
SocialGood fund charges 1% of the donation fair-market value or $10, whichever is greater. There is also a maximum fee of $350 per donation. Betterment does not receive any fees from these or any donations, nor does Betterment receive any financial compensation from SocialGood Fund.
Similar to other donor-advised funds, even though the donation ultimately goes to the charity your client specifies, for tax purposes the donation is deemed a completed gift to SocialGood Fund (a 501(3)(c) charity), not the final charity. The tax receipt will state “SocialGood Fund” as the recipient charity. Disregard any donation receipts your client may receive from the granted charity, as an additional deduction is not available from that charity. For additional information regarding the tax treatment of the donation, please consult a tax advisor.
Even though it may take a couple of weeks for donated funds to reach your charity via SocialGood Fund, the donation will be deemed to be completed on the date Betterment transfers the shares to SocialGood Fund. This date appears on your client's tax receipt document in their Betterment account.
Betterment’s algorithm automatically selects the shares to donate that are held over a year and have the highest embedded gain. It prioritizes maximizing gains donated over maintaining allocation, so donations can cause portfolio drift. For this reason, we prompt for an optional deposit after the donation is made which will correct the drift and avoid future sale-based rebalances. If your client will not be making a follow-on deposit, you should consider requesting rebalancing to be turned off on the account (through Advisor Support) prior to making the donation.
If your client would like their donation to be made anonymously, they should indicate this in the Betterment giving flow. SocialGood Fund will not specify your name on the check. If you indicate you are OK with public acknowledgement, the distribution check will contain your name.
- Will the granted charity know who donated the funds?
- Yes, SocialGood will provide the donor's name to the charity, unless your client indicated to Betterment during the donation process to keep it anonymous.
- What happens if SocialGood does not approve the charity?
- SocialGood will get in contact with your client to select another charity.
- How do I know when donated funds will get to the charity?
- SocialGood can follow-up with the recipient charity as needed to ensure they have received the funds. Most charities also send a confirmation, if the donation was not anonymous.
- Can I choose the investment allocation for my client's donated funds?
- No, donated funds are moved into cash by SocialGood shortly after they are received, and paid out to the charity as quickly as possible.
- Why does the amount the charity received differ from the amount I donated originally to SocialGood fund?
- Small variations in fund value during the transfer process may mean the donated amount is slightly less or more than the amount donated (less the fees charged by SocialGood)
Your donation will be subject to a separate agreement between you and SocialGood Fund, and Betterment is not a party to that agreement. SocialGood Fund may determine, in its sole discretion, not to grant funds to certain charities, and Betterment is not responsible if SocialGood Fund is unable or unwilling to make grants to certain charities. Although SocialGood Fund will receive the entire value of your donation through Betterment’s platform, SocialGood Fund will assess fees as part of the transfer to the charity of your choice.