Pension Protection Act of 2006

On Thursday, August 17, 2006, President Bush signed the Pension Protection Act of 2006 [pdf] (PPA, formerly H.R. 4) into law. This act includes a number of charitable reforms and incentives. The Joint Committee on Taxation has provided a technical explanation [pdf] of the legislation.

The effective dates for charitable provisions of PPA vary; a few provisions apply retroactively, some take effect immediately and the remaining provisions will take effect on later dates. The PPA passed the House on July 28 by a vote of 279-131 and the Senate on August 3 by a vote of 93-5.  The official date of enactment of the act is August 17, 2006.

On this page:

• Summaries and FAQs 
• Sample Documents for Community Foundations 
• Council Analyses of the Charitable Provisions of PPA
  • IRA Charitable Rollover 
  • Donor-Advised Funds 
  • Supporting Organizations 
  • Private Foundations 
  • Charitable Giving 
  • Other Provisions 
• Treasury/IRS Guidance 
• Requests for Guidance 
• Presentations  

QUESTIONS? - Continue to email your questions on the PPA charitable provisions to govt@cof.org 

Disclaimer: The information provided here is based on our continuing analysis of the law. Every effort has been made to ensure accuracy of these documents. Please understand, however, that due to the complexity of the law and the fact that many of these provisions introduce issues that are new to the Internal Revenue Code, this information is subject to change. This information is not a substitute for expert legal, tax or other professional advice and we strongly encourage grantmakers and donors to work with their counsel to determine the impact of this legislation on their particular situations. This information may not be relied upon for the purposes of avoiding any penalties that may be imposed under the Internal Revenue Code. 

 Summaries and FAQs

• Council Summary of the Charitable Provisions in PPA   - a general overview of provisions affecting grantmakers in the act.
• New IRS Guidance on Determining Whether a Grantee Is a Supporting Organization ( 3/28/07)
• Council Summary of IRS Interim Guidance on Supporting Organizations and Donor-Advised Funds [pdf] (12/6/06)
• Frequently Asked Questions about H.R. 4 [pdf]
• Guide to H.R. 4 Effective Dates [pdf]
• H.R. 4 affects the National Standards for U.S. Community Foundations confirmation of compliance process 

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Sample Documents for Community Foundations  

From Member Foundations 

• Scholarship Policies and Procedures– a document that describes The Saint Paul Foundation’s scholarship policies and procedures (courtesy of The Saint Paul Foundation). 

Share your sample documents by sending them to Heather Scott at heather.scott@cof.org.

From the Council on Foundations

• Cover Memo on Sample Scholarship Procedures and Board Resolution to Community Foundations with Donor-Advised Scholarship Funds [pdf] [doc] (February 21, 2007) 
  • Procedures of the XYZ Community Foundation for Awarding Scholarship, Fellowships, and Other Grants to Individuals [pdf] [doc]
  • XYZ Community Foundation, Board Resolution [pdf] [doc]

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Council Analyses of the PPA Charitable Provisions

 IRA Charitable Rollover

• IRA Charitable Rollover Issue Paper - Information to share with members of Congress and their staff
• IRA Charitable Rollover Analysis [pdf] - Description of the provision and its impact on donors. (revised 9/17/06) 

 Donor-Advised Funds

• Donor-advised Funds: A Face of American Philanthropy [pdf] - How donor-advised funds strengthen and improve communities. (8/16/07)
• Excess Business Holdings Rules for Donor-Advised Funds [pdf] (revised 12/28/06)
• What is a donor-advised fund? [pdf] - The new legal definition of donor-advised fund. (revised 9/7/06) 
• Flowchart: Is the Fund a Donor-Advised Fund? [pdf] - A tool to help identify donor-advised funds. (revised 9/17/06) 
• What should I do about my scholarship funds? - Read how to determine whether your scholarship fund is considered a donor-advised fund under the new law and, if so, how to make appropriate changes to the fund. (revised 12/6/06) 
• Changes in Intermediate Sanctions for Donor-Advised Funds and Sponsoring Organizations [pdf] - A description of provisions that, in part, prohibit certain payments to donors and advisors to donor-advised fund. (revised 9/17/06) 
• Taxable Distributions for Donor-Advised Funds [pdf] - Information about rules for distributions from donor-advised funds including rules for grants to non-charities. (revised 9/17/06)
  • Article: Confirming Section 501(c)(3) Status is Not Enough: Determining Grantee Status for Grants from Donor Advised Funds After the Pension Protection Act of 2006 - html | pdf 
  • Flowchart: Grants to Organizations from Donor Advised Funds: Is Expenditure Responsibility Required? [pdf]
• Deductibility Requirements for Contributions to Donor-Advised Funds [pdf] - A description of substantiation requirements for all gifts to donor-advised funds. (revised 9/17/06) 
• Prohibited Benefits from Donor-Advised Funds [pdf] - A description of when payments from a donor-advised fund result in impermissible benefits to the donor/advisor. (revised 9/17/06) 
• Reporting for Organizations that Hold Donor-Advised Funds [pdf] (revised 9/17/06) 

 Supporting Organizations

• What is a Supporting Organization? 
• Determination of Supporting Organization Status [pdf] (4/10/07)
• Provisions Affecting Supporting Organizations [pdf] (revised 12/28/06) 
• Changes in Intermediate Sanctions for Supporting Organizations (Types I, II and III) - Description of provisions that, in part, prohibit certain payments to substantial contributors and loans to disqualified persons. (revised 12/28/06) 
• Supporting Organizations Reporting (revised 12/28/06) 

 Private Foundations

• Distributions from a Private Foundation to a Supporting Organization - Information about requirements for making grants to certain supporting organizations. (revised 12/28/06) 

 Charitable Giving

• Other Provisions Affecting Charitable Giving (revised 12/28/06)
• Contributions of Fractional Interests in Tangible Personal Property (revised 12/28/06)
• Deductions for Contributions of Qualified Conservation Property [pdf] - Allowable tax deductions for contributions of qualified conservation property. (revised 9/17/06) 
• Contributions of Historic Preservation and Façade Easements [pdf] - A description of reforms enacted for contributions of historic preservation and façade easements. (revised 9/17/06) 
• Non-Cash Contributions: Qualified Appraisals and Valuation Penalties for Donors and Appraisers [pdf] - A description of appraisal requirements and penalty provisions for gifts of non-cash property worth more than $5,000. (revised 9/17/06)  
• Recordkeeping Requirements for Monetary Gifts [pdf] - Substantiation requirements for donors making gifts of cash or by check. (revised 9/17/06) 

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 Other Provisions

• Public Disclosure of Form 990-T for Private Foundations and Public Charities 
• Section 4947(a)(2) Split-Interest Trust Reporting 
• Annual Reporting for Charities Not Required to File Form 990 

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 Treasury/IRS Guidance

• IRS Interim Guidance on Public Disclosure of Form 990-T [pdf]
• IRS FAQs on Annual Filing for Small Charities (Form 990-N) [pdf] - April 3, 2007
• IRS Guidance on Determining Whether a Grantee is a Supporting Organzation - March 27, 2007
• Reporting on Acquisitions of Interests on Insurance Contracts in which Certain Tax-Exempt Organizations Hold an Interest [pdf] - February 23, 2007
• IRS Notice 2007-21 (Study on Donor Advised Funds and Supporting Organizations) - February 6, 2007
• IRS Notice 2006-109 (IRS Interim Guidance on Supporting Organization and Donor-Advised Fund Reforms includes guidance on grants by private foundations to supporting organizations) [pdf] - December 4, 2006
• IRS Guidance on Recordkeeping Requirements for Charitable Contributions made by Payroll Deductions [pdf]
   - December 1, 2006
• IRS Announces Process for Supporting Organizations Seeking Reclassification as Public Charities – November 7, 2006
• IRS Transitional Guidance on Requirements for Qualified Appraisals [pdf] – October 19, 2006

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 Requests for Guidance

• Comments of the Council on Foundations in Response to Notice 2007-21 [pdf] - April 9, 2007
• Comments of the Council on Foundations on Notice 2006-109 [pdf] - February 1, 2007
• Council on Foundations and Independent Sector Memo to IRS on H.R. 4 Provisions that Require Immediate Guidance and Effective Date Relief [pdf] – October 18, 2006
• Council on Foundations Requests Transition Relief for Scholarship Funds [pdf] – October 17, 2006
• Council Follow-Up Letter to Treasury Department [pdf] – September 26, 2006
• Council’s Draft Notice for Treasury Department [pdf] – September 26, 2006. Please note that this is not official guidance.
• Council on Foundations Requests H.R. 4 Clarification – August 16, 2006

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Presentations  

• H.R. 4 Conference Call audio  
  The Council has several audio files of teleconference calls and conference sessions to help members understand charitable reform provisions of the Pension Protection Act of 2006.
• 2006 Fall Conference session: Legal Seminar  
  Get the complete set of handouts, which focused on charitable reform provisions in the Pension Protection Act of 2006.

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