A donor advised fund (DAF) is a type of charitable giving fund that is established by a donor with an eligible charitable sponsoring organization (i.e. a community foundation) to support a cause (or causes) that the donor cares about. A donor advised fund allows the donor to remain involved and active in charitable giving by retaining “advisory privileges” to recommend how the sponsoring organization should make grants from that fund.
DAFs were legislatively addressed in the Pension Protection Act (PPA) of 2006 and it remains the current law to this day. When the PPA became law, it provided the first legal definition by Congress of a DAF as any fund or account: 1) which is separately identified by reference to the contributions of a donor or donors; 2) which is owned and controlled by the sponsoring organization, like a community foundation; and 3) with respect to which a donor or person appointed by the donor has or reasonably expects to have advisory privileges with respect to investments or distributions. The PPA also laid out basic rules and criteria for making grants from DAFs.
The Council strongly opposes payout requirements for DAFs. We continue to highlight the enthusiasm of the majority of community foundations to voluntarily institute strict operating policies and preserve the highest degree of integrity and excellence by engaging in peer-regulation through the National Standards for U.S. Community Foundations® program.
Policy Proposals that Impact DAFs:
- IRS Notice 2017-73 (and the Council's Washington Snapshot analysis of this Notice)
- House Bill H.R. 1 – Tax Cuts and Jobs Act
- House Bill H.R. 2916 – CHARITY Act of 2017
- Senate Bill S. 1343 – CHARITY Act of 2017
- Council Statement on the CHARITY Act
- House Bill H.R. 1 – Tax Reform Act of 2014
- Council Summary of Tax Reform Act of 2014
Council Issue Paper:
The Council Takes Action:
- Council Comments on IRS Notice 2017-73
- Council Donor-Advised Fund Letter of Support
- Council Participates in June 2015 Urban Institute Conference on Donor Advised Funds: How Have They Changed Philanthropy?
- Op-ed, June 2015—New Regulations for Philanthropy?
- Op-ed, Feb. 2015—A Vital Pipeline: How Donor Advised Funds Engage New Donors and Boost Communities
- Op-ed, Oct. 2014—Taxes and Charity: A View From the Foundations
- Op-ed, Aug. 2013—Charitable Giving is More Than Just a Tax Deduction
- Council Response to DAF Proposal Timeline: 2013-2014
Council Colleagues Speak Out:
- High Noon for Charity?—Joanne Florino, June, 2015
- Who’s Afraid of DAFs?—Jack Shakely, Summer 2015
- Dave Camp’s Tax Reform Could Kill Community Foundations—Gene Steuerle, April 2014
- Just What Do Charitable Endowments, Advised Funds, & the Mutual Fund Industry Provide?—Gene Steuerle, January 1999
Promoting the Value of DAFs for Your Community:
- Handout: The Power of Community Foundation DAFs
- Handout: Community Foundation DAF Impact Map
- Key Talking Points and Terms
Studies and Research:
- 2014 Urban Institute Survey of Community Foundations: Overview
- 2014 Urban Institute Survey of Community Foundations: Local Stories
- Webinar Recording: 2014 Urban Institute Survey on Community Foundations: What we Learned and Why it Matters
- 2012 CRS Report: An Analysis of Charitable Giving and Donor Advised Funds
- 2011 Treasury Report on Supporting Organizations and DAFs
- 2009 Council on Foundations Survey: DAFs Provide the Majority of Grant Funds Awarded by Community Foundations